Analysis

Covered property includes the named insured's stock in trade, consisting of jewelry, precious and semi-precious stones, and precious metals and alloys. It also includes other stock used in the named insured's business, so things like porcelains and crystal in the insured's inventory are covered. The meaning of covered property applies as well to the stock that has been sold but is awaiting delivery.

Moreover, property of others that is similar to the named insured's stock in trade is considered covered property if in the care and custody of the named insured; this applies to those others not in the jewelry trade and to those in the jewelry trade, although the coverage is treated differently for the two groups. For those not in the trade, coverage is viewed in the same light as the stock in trade of the named insured; the insured has the property on consignment for example and it is treated the same as if it is the property of the insured. But, if the property belongs to another jewelry dealer, the coverage is restricted to the amount of the insured's legal liability for the property or to the amount of the insured's investment in the other property. These two concepts are not mutually exclusive; an insured might be liable to another dealer to the extent of $500 on a piece of jewelry to which the insured had added another $200 before the loss occurred. The covered loss is $700.

Note that other categories of property may also be covered by the form but a separate endorsement is required. These other categories are: furniture, fixtures, and office supplies; improvements and betterments; machinery, tools, and fittings; and patterns, dies, molds, and models. Furniture, fixtures, and office supplies and improvements and betterments, when insured, must be covered for their full actual cash value; the other items must be insured for at least 80% of their total value. See Commercial Inland Marine Endorsements for comments on the standard endorsement, CM 99 01 09 00.

Analysis

Property that the insured has sold under a deferred payment sales agreement is not covered after it leaves the premises. If a bad credit risk develops, coverage does not reapply to the goods at risk until they come back into the insured's possession at the insured premises.

Except for watches that are being worn “solely for purpose of adjustment”, property is not covered while being worn (or even kept for the purpose of being worn) by the named insured or any officer, employee, agent, member, or messenger “engaged in the jewelry trade.” That includes friends and relatives of any of the foregoing—and notice that the connection of these persons with the insured is of no concern. If they are in the jewelry trade, or are friends or relatives of those who are, there is no coverage of property while these people are wearing the property in question.

Property in transit is covered, but only under the circumstances defined by the limits described above. In other words, property in the mail is not covered unless it is sent by registered mail. Property in the charge of express carriers is not covered. Property in transit by other carriers—armored cars, parcel delivery service, etc.,—is covered, as long as the carriers are not railroads, waterborne, or air carriers. The point here is that the insured has some transit coverage, but he or she has to be careful in choosing a carrier; the transit guidelines set forth in CM 00 59 have to followed.

Property in the course of illegal transport or trade is, of course, not covered and neither are smuggled goods, i.e., contraband.

Property at exhibitions under the sponsorship of any public authority or trade association is not covered. And, property while exhibited in showcases away from the named insured's premises is not considered covered property. The idea here is that such exposures are not under the control of the named insured and so, bear an out the ordinary risk of loss for which the standard jewelers block premium is not adequate. Of course, individual underwriters may cover such exposures by endorsement when provided with the pertinent facts and proper premium.