December 8, 2014

Summary: The Jewelers Block Coverage Form, written subject to commercial inland marine rules and forms promulgated by Insurance Services Office (ISO), provides open perils coverage specifically tailored for the needs of insureds in the retail jewelry trade. Coverage is written on a nonreporting basis using form CM 00 59 01 13 and is available at standard rates to retailers with average inventories no larger than $250,000. This article offers an analysis of the changes in the CM 00 59 01 13 from the earlier CM 00 59 03 10 form. Various risks are listed in the ISO Commercial Lines Manual, division eight, as ineligible for jewelers block coverage: retailers with average inventories of $250,000 or over; wholesalers and manufacturers; pawnbrokers; loose diamond risks; bullion and precious metal dealers; industrial diamond risks; auction dealers; fine arts and antique dealers; watch repair shops; and exhibitions, provided such risks are not on the premises of the insured. However, the policy may be extended by endorsement to cover exhibitions promoted or financially assisted by a public authority or trade association, such as trade shows. The premium for the extension of coverage is at the judgment of the underwriter and the endorsement must specify the site and duration of the exhibit.

Topics covered:

Coverage Exclusions Limits of insurance Deductible Additional conditions

Coverage

We will pay for direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss.

1.   Covered Property, as used in this Coverage Form, means:

a. Your stock in trade consisting of jewelry, precious and semi-precious stones, precious metals and alloys and other stock used in your business;

b. Such property sold but not yet delivered;

c. Similar property of others not in the jewelry trade in your care, custody or control; and

d. Similar property of others in the jewelry trade in your care, custody or control. But we only cover to the extent of money you have advanced or your legal liability for that property.

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 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. For example, the insured has the property on consignment, 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, Additionally Covered Property, CM 99 01, is required. The 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 percent of their total value. See Commercial Inland Marine Endorsements for comments on the standard endorsement, CM 99 01 03 10.