Scheduling of Valuable Personal Articles
Includes copyrighted material of Insurance Services Office, Inc., with its permission.
Reviewed November 9, 2020
Summary: The personal articles floater is a method used to provide coverage on those particular classes of valuable personal possessions that are most frequently insured on a scheduled, open perils basis. It constitutes a convenient alternative to the use of a number of separate policies, most notably the personal jewelry and fur, fine arts, camera, golfer's equipment, musical instruments, silverware, and stamp and coin collection floaters.
Scheduling personal property on the homeowners is more common, so the use of the personal articles floater as a separate policy has diminished. However, there may still be some instances where the use of a separate contract is desirable.
Insurance Services Office (ISO) form IPA 06 01 was replaced with form PM 00 01 12 02, which forms the basis for the coverage. Class-specific forms may then be attached, or the personal articles form may be used to cover several types of property such as cameras, golf equipment, and jewelry. Loss settlement for cameras, coin collections, furs, golfer's equipment, jewelry, musical instruments, silverware, and stamp collections may be on an agreed value basis. Fine arts losses typically are adjusted on an agreed value basis, but the current program allows for blanket coverage for this property. Loss adjustment is thus on a proportional basis.
The American Association of Insurance Services (AAIS) form is IM-175. Both programs have similar forms and manuals.
Following is a general discussion of the coverages and exclusions of these forms.
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Although the use of standalone forms to cover personal property has decreased over the years, there are still instances where it may be desirable to have such coverage. For example, an insurer may not wish to insure the total exposure of a high-value home, hundreds of thousands of dollars in personal property, and a substantial schedule. The use of stand-alone forms makes it possible for the schedule to be placed with another carrier or through an excess insurer. The common forms in use today for personal articles are the ISO PM 00 09 12 02 (standard loss settlement) or PM 00 10 12 02 (agreed value loss settlement) forms, which must be attached to the PM 00 01 (discussed later), and AAIS form IM-175. The following discussion is based on those forms.
Alternatively, in the ISO program, a separate policy for, say, musical instruments, may be formed by attaching musical instrument form PM 00 14 12 02 to the PM 00 01. A separate policy may be combined with the common provisions form to schedule a variety of different items including jewelry, furs, golfers equipment, cameras, stamps and coin collections, ground maintenance vehicles, and other property.
In the AAIS program, a stand-alone policy may be formed by using the IM-175 and attaching the common conditions form CL-100, or the inland marine form may be part of a package without attaching form CL-100, so long as the other forms address the common policy conditions.
ISO rules state that property of an individual, spouses who reside together, or their resident relatives may be insured. Property in the name of unrelated persons who reside together may be written, so long as each is a genuine co-owner of the property. Policies may be issued to an executor or administrator of an estate to cover estate property if the property is otherwise eligible. AAIS rules state that property owned by individuals may be written, including eligible property under control of an executor or administrator of an estate.
Both programs allow the following property to be insured on a personal articles floater: jewelry; furs and garments trimmed with fur; cameras, including video and digital cameras and equipment such as telescopes; musical instruments and related articles of equipment; silverware, including silver-plated ware, goldware, platinumware, and pewter ware; golfer's equipment, including clubs, clothing, and equipment; fine arts; stamp collections; and coin collections. The AAIS program includes coverage for bicycles; the ISO program requires attaching form PM 00 18 to the PM 00 01. Other property may be covered by using additional forms.
Ineligible property includes cameras or other camera property belonging to dealers or manufacturers, TV cameras and related equipment, aerial cameras or radar cameras, and coin or token operated devices. Presumably, the intent here is to preclude covering the type of equipment often found at any scenic view, where a coin opens the lenses. The AAIS manual adds that motorized golf carts are not considered golfing equipment.
Each class will be discussed in detail later in this article. Property in each of these classes is also insurable under a separate policy as noted earlier, but because of the similarity between the separate policies and the personal articles form, all of these classes may be insured together under the latter form. Property in these classes may also be scheduled in the personal property floater. (See Personal Property Floater).
A limit of insurance must be inserted in the declarations in order to trigger coverage for a class of property. It is important to remember, however, that the limit shown is not an agreed value for the property unless form PM 00 10 is used. (The only exception to this rule is fine arts property, which is generally scheduled on an agreed value basis.) The amount an insurer pays for a claim is based on the valuation clause, which is discussed later in this article. The limits shown in the schedule do define the maximum amount of insurance available for a class of property.
ISO rules require that the personal articles forms be attached to the common policy provisions form PM 00 01. This form serves as the basis for coverage. Some of the conditions and provisions are similar to those in the homeowners forms, such as the HO 00 03. However, because coverage for personal articles may be on a stand-alone basis as noted above, it is necessary that conditions such as concealment and fraud be contained in the PM 00 01. The AAIS program requires common policy conditions form CL-100 to be attached. And, where the ISO program places the "loss to a pair or set" clause in the PM 00 01, the AAIS program places it in the personal articles coverage form IM-175. Keep in mind, therefore, in the following discussion that the location of a given provision may vary depending upon which program is being used.
Both AAIS and ISO forms promise to provide the insurance in return for the required premium. The insured is also advised that coverage is subject to compliance with applicable terms and provisions. The ISO form states that "you" and "your" refer to the named insured; insured refers as well to the named insured's spouse and relatives of either who are residents of the named insured's household. When the word an immediately precedes the word "insured," the words an insured together mean one or more insureds.
The AAIS form defines "you" and "your," and adds that insured also refers to persons under the age of twenty-one if in the named insured's or a resident relative's care.
As noted, the AAIS program requires form CL-100 when the personal articles form is issued as a stand-alone policy. This form contains conditions such as changes to the policy and cancellation. In the ISO program, these are in the PM 00 01. However, there are other conditions common to both forms.
Both forms include concealment or fraud conditions. The ISO form states that coverage will not be provided for any insured if an insured has intentionally concealed or misrepresented material facts or circumstances. This is a change from the earlier form, which said there would be no coverage for any insured who intentionally concealed or misrepresented any material fact. The AAIS form states that coverage will be void if before or after a loss an insured has committed misrepresentation, concealment, or fraud.
Both forms promise to conform to any state law. Both forms state no one having custody of any of the property and being paid for services performed on it may benefit from the insurance.
Both forms contain liberalization clauses; in event of any revision that would broaden coverage without additional premium, the broadened coverage applies. In the ISO form, the revision must be within sixty days prior to or during the policy period; in the AAIS form the change must be made during the policy period or within the six months prior to the date coverage is effective.
Both forms contain appraisal clauses that are similar to those found in the homeowners forms. The AAIS form, however, allows an appraisal if the insured and insurer do not agree on the value of the property or the amount of the loss, while the ISO form allows an appraisal to determine the amount of the loss.
The AAIS form states that suit against the insurer may be brought within two years after first knowledge of the loss. The ISO form states that action must be commenced within two years after the date of loss; however, no action can be brought unless there has been full compliance with all policy terms. The previous form restricted the time for bringing suit to one year after the "occurrence causing loss or damage."
The AAIS form contains a subrogation clause and a provision requiring insurer or insured to notify the other if property is recovered after settlement has been made.
Some conditions found in the AAIS IM-175 are in the personal articles forms PM 00 09 or PM 00 10, but not the PM 00 01. For example, the PM 00 01 contains a loss settlement provision, but this is superseded by the personal articles standard loss settlement form or the personal articles agreed value loss settlement form.
The ISO form loss payable clause states that the insurer will settle losses with the insured or an insured legally entitled to receive payment, or with a loss payee if one is named in the Declarations. The policy period condition declares that the policy applies only to loss, which occurs during the policy period. Another condition states that the insurer will not be liable for more than an insured's insurable interest or the applicable policy limit.
The ISO form declares that the insurer has no duty to provide coverage if failure to comply with the duties prejudices the insurer's position. These duties may be fulfilled by the named insured, another insured seeking coverage, or a representative of either. The policy does not state that this must be a legal representative. The AAIS form states "you must take all reasonable steps to protect or recover covered property after a loss has occurred." The ISO form, likewise, instructs the insured to "protect the property from further damage," and "make reasonable and necessary repairs to protect the property." Note that the forms require this whether or not coverage applies. Unlike the homeowners, the ISO inland marine forms will not reimburse reasonable expenses for steps taken to protect covered property; rather, the insurer and the insured will share expenses according to the interests of each.
Prompt notice must be made either to the insurer or to an authorized representative such as an agent. The ISO form does not require notice in writing as it had in the past. The AAIS form requires notice in writing only if the insurer requests it. The AAIS form requires that the police be notified if the loss is the result of a violation of a law; the ISO form requires police notification in event of a theft loss.
AAIS requires a proof of loss to be filed with the insurer within ninety days after the insurer requests it. The ISO form requires this within ninety days after discovery of the loss. The insured agrees to submit to examination under oath (while not in the presence of another insured) and to help the insurer examine others under oath (members of the insured's household, for example) if at all possible. The insured agrees to produce any necessary records to assist in verifying the loss.
No deductibles apply to the ISO personal articles forms, but optional deductible amounts are available. The AAIS program allows deductibles applying to each class of property. In the AAIS program, if cycling equipment, coins, fine arts, furs, jewelry, musical instruments, cameras, or stamps are covered on a blanket basis, then a coinsurance clause applies. The insured must maintain at least the full actual cash value (which includes a deduction for depreciation, no matter how caused) of the property. At the time of the loss, if the limit shown on the declarations is less than the minimum required, the insurer will pay only a part of the loss. This will be determined by dividing the limit shown by the limit required; the resulting percentage will be applied to the amount of the loss.
Form PM 00 01 details three ways to settle covered losses. The first of these is for scheduled property not insured on an agreed amount basis. The insurer will not pay more than the least of: 1) the actual cash value of the property at the time of the loss or damage; 2) the amount for which the property could reasonably be expected to be repaired to its condition immediately prior to the loss or damage; 3) the amount for which the article could reasonably be expected to be replaced with one "substantially identical" to the lost or damaged article; or 4) the applicable limit of insurance.
If property is insured on an agreed value basis, that must be indicated by a double asterisk (**) next to the article in the class-specific form's schedule. The PM 00 01 therefore states that the amount shown for any article or item marked with (**) is agreed to be the value of the article, and in event of a covered loss that is the amount paid. If that article is part of a pair or set, the insurer will pay the full amount shown; the insured agrees to surrender the remaining part at the insurer's request. Although previously agreed value settlement was only available for fine arts, current ISO rules permit cameras, coin collections, furs, golfer's equipment, jewelry, musical instruments, silverware, and stamp collections to be insured on an agreed value basis.
If the item insured for agreed value is one of a pair or set, or consists of several parts when complete, the insurer pays the full amount shown in the schedule. The insured then agrees to surrender the remaining property to the insurer (if not lost or stolen), but has the option to buy back the item at an agreed-upon price. If the lost or stolen property is recovered and the insurer has paid the claim, the insured agrees to surrender the property to the insurer.
The ISO personal inland marine rules allow property to be written on either a blanket or scheduled basis on the same form. Losses to property insured under blanket coverage (stamps, coins, cameras, fine arts, golfer's equipment, musical instruments, and silverware) are settled on a proportional basis. For stamps or coins, the insurer pays the proportion of the loss that the amount of blanket insurance bears to the actual cash value of the property at the time of loss, but not more than $1,000 for any unscheduled coin collection or $250 for any one stamp, coin, or one pair, strip, series, cover, frame, or card. Losses to cameras, fine arts, golfer's equipment, musical instruments, and silverware, are settled thus: the proportion that the amount of blanket insurance bears to the actual cash value of the property at the time of loss, but not more than $500 for any one item.
The PM 00 01 contains a provision that for any property without a double asterisk (**), the value of property is to be established at the time of a loss.
The AAIS form states that the smallest of: 1) the part of the loss over the deductible shown in the declarations; 2) the amount determined under the valuation provision (actual cash value); 3) the cost to repair, replace or rebuild the property with material of like kind and quality; 4) the applicable limits of coverage indicated on the declarations; or 5) the amount of the named insured's insurable interest in the property is the amount that will be paid. And, in the AAIS form, the insurer may elect to pay the smallest of the amounts as outlined in the loss provisions for fine arts.
The loss to a pair or set provision is applied differently to property not insured for agreed value. The loss conditions in ISO PM 00 01 and PM 00 09 give the insurer the choice of repairing or replacing any part to restore the pair or set to pre-loss value, paying the difference between actual cash value of the property before and after the loss, or paying for the value of the lost or damaged part. In event of loss to a piece of fine art, the insurer pays the actual cash value of the article before the loss, and takes the remaining part(s). Note that this latter provision applies only when the fine art is not insured for an agreed value.
The AAIS form treats the pair, set, or parts clause differently. If the loss is to a pair or set, the insured has the option—not the insurer—of receiving a full actual cash value payment up to the limit of coverage shown on the declarations. Or, the insured may elect to be paid only for a "reasonable part" of the actual cash value. If there is a loss to a part, where the item consists of several parts, the insurer pays only for the value of the lost or damaged part or the cost to repair or replace it.
As an example of how this clause applies, assume that an insured owns and has scheduled five commemorative medals that are individually worth $500, but together as a complete set are worth $5,000. One is lost. The insurance company may, for $500, replace the lost medal with another like it if the full value of the set would be restored by doing so. But if the lost medal is irreplaceable, the insurance company will be liable for $3,000, that is, the difference between the value of the set—$5,000—and the value of the property remaining after the loss—four at $500, or $2,000.
The loss clause on PM 00 01 notes that the amount of insurance under the policy is not reduced except for a total loss of a scheduled article; so if the insured suffers only a partial loss to scheduled golf equipment, for example, the amount of insurance scheduled on the policy for covering that equipment is not diminished. The insurer will refund the unearned premium applicable to that article, or the named insured may apply such premium to any premium due for coverage on the replacement of the scheduled article. Likewise, in the AAIS form, a loss paid will not reduce the amount of insurance unless it is a total loss to a scheduled item. The unearned premium on that item will be refunded.
Much of the property commonly insured by means of the personal articles forms—jewelry, cameras, silverware—is sometimes replaceable by insurance companies at a discounted price. For this reason, insurers frequently respond to personal articles claims with offers of actual replacement of the lost or damaged property rather than a cash payment. For an insured who rejects the replacement offer, cash recovery could still very well be limited to "the amount for which [the insured] could reasonably be expected to replace the article" if that replacement amount is the lesser amount. Insurers are likely to understand this replacement language to mean their own replacement cost based on information as to where a lost or damaged article can be replaced at a discounted price; therefore, the insured can "reasonably be expected to replace" the article for that price.
The fact that an amount of insurance is stated for each scheduled item in the policy once led many people to believe that the personal articles forms are, in effect, valued contracts, i.e., with the amount shown in the schedule being the agreed measure of a loss. Insureds must therefore be made aware that unless agreed value settlement is selected, loss settlement will be as discussed earlier.
Finally, the ISO form states that valid claims must be paid within sixty days after agreement is reached with the insured, or after a court judgment is entered or an appraisal award is filed with the insurer. The AAIS form gives thirty days for the insurer to pay a covered loss.
An important feature of the personal articles forms is automatic coverage on certain newly acquired property. This extension applies only to jewelry, furs, cameras, fine arts, and musical instruments. The policy provides protection for thirty days as respects the classes of jewelry, furs, cameras, fine arts, and musical instruments so long as insurance is already written for the class of property. To illustrate, if an insured buys a diamond ring, there is automatic coverage on it only if the contract already covers some piece or pieces of jewelry. There would be no automatic protection on the ring if the policy previously insured only a fur coat. Acquisitions must be reported to the company within thirty days (ninety days for fine arts) and a pro rata premium paid from the date the property is acquired.
Recovery for newly acquired jewelry, furs, musical instruments, and cameras is the lesser of 25 percent of the amount of insurance for the particular class of property or $10,000. The AAIS form adds that the $10,000 applies to each class, and that newly acquired items will be covered for actual cash value. The ISO form does not cover newly acquired musical instruments owned by or rented to a school, board of education, or municipality.
Automatic coverage on newly acquired property in the fine arts class is available on somewhat different terms—up to 25 percent of the amount of fine arts currently scheduled.
Very few exclusions apply to the personal articles coverage. There are general exclusions which apply to all covered property, and there are some that are specific to a particular class of property. Those exclusions will be discussed under the appropriate property heading, such as Fine Arts.
Both ISO and AAIS exclude coverage for damage caused by or resulting from war, whether declared or undeclared. (This is common in inland marine contracts. See War Exclusion Clause and see Nuclear Exclusion Clauses for discussions of standard war and nuclear exclusions.) Both forms exclude loss caused by nuclear hazard. But if fire ensues, loss caused by the fire is covered. AAIS adds another exclusion, for civil authority. This means: "1) seizure or destruction under quarantine or customs regulations; 2) risks of contraband or illegal transportation or trade; or 3) confiscation or destruction by order of a government or public authority. We do pay for loss which results from acts of a civil authority to prevent the spread of fire." The current MP 00 01 adds a new exclusion for governmental action, which means "the destruction, confiscation or seizure of covered property by order of any governmental or public authority." Like the AAIS exclusion, acts taken to prevent the spread of fire "if the loss caused by fire would be covered under this policy" are excepted. The nonconcurrent causation language prefaces these exclusions, so that no matter what else may contribute to a loss involving one of the perils, there is no coverage. The nonconcurrent causation language also precedes the AAIS exclusions for wear and tear, insect or vermin damage, and deterioration or inherent vice. The ISO exclusions for wear and tear, deterioration, inherent vice, or loss caused by insects or vermin are not in the PM 00 01; they are in the personal articles forms PM 00 09 and PM 00 10. The PM 00 01 contains two additional exclusions for intentional loss and neglect.
The AAIS personal articles floater may be used to insure bicycles. Replacement coverage may be selected. The ISO program requires form PM 00 18 bicycle form to be attached to form PM 00 01. (Bicycles are also covered under the personal property form PM 00 19, but they cannot be scheduled on that form.) Exclusions include wear and tear, gradual deterioration, rust, or corrosion. The ISO form excludes damage caused by mechanical breakdown or disarrangement (as when a gear is reassembled improperly); the AAIS form does not. Both forms exclude damage caused by being worked on or handled or repaired; the ISO form has an exception for ensuing damage caused by fire or explosion. For example, if someone were using a welding torch to repair a bent frame and the bicycle caught fire, the fire damage would be covered.
There is no coverage for motorized bicycles, scooters, mopeds, or other types of motorized vehicles. Tires are not covered unless another part of the bicycle is first damaged by a peril insured against.
The ISO program has optional deductibles of $25 to $500. The territory is anywhere in the world. In event of a theft, the police must be notified. The provision for newly acquired property does not apply to bicycles. The loss settlement provision for scheduled property not covered on an agreed value basis applies.
AAIS permits the insured to select a deductible, if desired. The AAIS territory is anywhere in the world. If theft of the property occurs, the police must be notified. A feature of the AAIS coverage is that 10 percent of the total limits may be applied to cover miscellaneous cycling equipment. The AAIS program allows bicycles to be blanketed; the ISO program does not.
The cameras form PM 00 13 is attached to the PM 00 01 and PM 00 09 (or PM 00 10) to provide inland marine coverage for cameras. Cameras include projection machines, films, and related equipment as well as video cameras and common cameras and lenses. Cameras also include digital cameras and digital video discs and compact discs. Coverage is worldwide. Cameras may either be individually described and valued, or they may be blanketed. If they are blanketed, then the loss settlement provisions of PM 00 01 apply (see earlier in this article for a discussion). Additionally, the blanket coverage may not exceed 10 percent of the total amount insured in the schedule. Blanket coverage in excess of this 10 percent limit is permitted if, by the nature of the articles, it is impractical to schedule them individually. However, this additional coverage requires approval of the insurer.
If cameras are individually scheduled, there must be a specific amount of insurance indicated for each item. Current rules allow cameras to be scheduled for an agreed value; this is indicated through noting these items with a double asterisk (**). Manual rules permit the use of one of the large schedule endorsements when insuring property in the camera class (PM 02 01 or PM 02 02). When the number of items to be insured under the camera, fine arts, musical instrument, or stamp and coin class would result in a very long schedule, one of these endorsements may be attached to the personal inland marine floater. The first may be maintained at the agent's office; the second is signed by an insurer representative and kept at the insurer's office. The use of one of these endorsements does not eliminate the need for a complete schedule of insured items, but merely makes it unnecessary to attach a bulky schedule to the policy itself, and permits changes by filing a revised schedule with the insurer and obtaining a simple updated endorsement referring to the date of the revised schedule and showing any premium adjustment needed instead of a new detailed schedule of the insured items. In some instances, it may be necessary to furnish evidence of the value of property to be insured. Generally the description of the property includes the make, model, serial number, and date of purchase and this information should be given when an application is submitted.
The AAIS program also allows coverage for cameras used professionally at an increased rate. ISO rules do not address this.
Automatic coverage for newly acquired cameras is 25 percent of the amount of insurance or $10,000, whichever is less, and applies for thirty days or until the end of the policy period, whichever is first.
ISO form PM 00 12 stamp and coin collections form insures all types of postage stamps including due, envelope, official, revenue, match and medical stamps, covers, locals, reprints, essays, proofs, and other types of philatelic property owned by or in the custody or control of the insured. In addition to this, books, pages, and mountings are covered.
Coverage on coins applies to rare and current coins, medals, paper money, bank notes, tokens of money, and other numismatic property, including coin albums, containers, frames, card and display cabinets used in connection with such collections that are owned by or in the custody or control of the insured.
Both ISO and AAIS programs allow blanket coverage for both stamps and coins. If the insured has valuable items, they may be scheduled. This is advisable since blanket coverage recovery is limited to $250 on any one unscheduled stamp, coin, or other individual article, pair, strip, etc. An aggregate limit of $1,000 applies to any unscheduled coin collection. The large schedule endorsement may be used in connection with the scheduling of stamp and coin collections. Stamps or coins may be insured on an agreed value basis.
The newly acquired property clause of the personal articles form does not apply to stamp or coin collections. Thus, when additions are made, coverage should be increased by endorsement immediately.
A premium credit is allowed if the insured agrees to keep at least 75 percent (by value) of the insured stamps or coins in a fireproof combination-locked safe or vault when the collection is not being used or exhibited.
Coverage on stamps and coins under the personal articles forms does not extend to fading, creasing, denting, scratching, tearing, thinning, transfer of colors, wear, tear, inherent defect, dampness, extremes of temperature, depreciation, and damage sustained from handling or while being worked on and resulting from such work. The AAIS form does not cover theft from an unattended vehicle unless the property is being shipped by registered mail. The exclusion may be removed for an additional premium. The ISO form no longer contains this exclusion.
There is no coverage for mysterious disappearance of unscheduled items unless they are specifically described and scheduled, or are mounted in a volume and the page to which they are attached is also lost. The ISO form also excludes coverage for stamps or coins in the custody of a transportation company, and property that is not an actual part of a stamp or coin collection. There is no coverage under either form for property shipped by other than registered mail.
Fine arts—privately owned collections of paintings, etchings, pictures, tapestries, art glass windows, and other bona fide works of art such as valuable rugs, statuary, marbles, bronzes, antique furniture, rare books, antique silver, manuscripts, porcelains, rare glass, and bric-a-brac—may be insured under the personal articles form. There is coverage anywhere in the world. And, as with other classes of property eligible for the personal articles form, fine arts are covered on an open perils basis. Unlike other property insured under the ISO personal articles forms, the AAIS form restricts coverage to the United States, its territories and possessions, Puerto Rico, and Canada.
In the current ISO program, fine arts may be insured on a blanket (unscheduled) basis, scheduled subject to agreed value loss settlement, scheduled subject to the standard loss settlement provision (see Loss Settlement Provisions, earlier in this article), or scheduled with optional breakage of fragile articles coverage.
In territories where the exposure is great, AAIS has an endorsement excluding windstorm, tornado, and hurricane as covered perils, which may be required. This exclusion is an option on the ISO form. Further, both forms exclude coverage for property on exhibition at fairgrounds or on the premises of national or international expositions unless such premises are specifically covered by the policy to which the fine arts coverage is attached. A provision specific to fine arts is that the insured agrees that covered property will be packed and unpacked by competent packers if the property is transported.
In addition to the standard exclusions of the basic personal inland marine floater, there is no coverage for fine arts for damage resulting from repairing, restoring, or retouching. Neither is there coverage of breakage of art glass windows, statuary, marble, glassware, bric-a-brac, porcelains and similar fragile articles unless the breakage is caused by fire, lightning, aircraft, theft, windstorm, earthquake, flood, explosion, malicious damage, collision, derailment or overturn of a conveyance. As noted earlier, fragile articles otherwise subject to the breakage exclusion must be scheduled separately for this coverage, with a separate amount of insurance indicated for them subject to additional premium, of course.
Newly acquired fine art is covered for up to 25 percent of the total amount of insurance for scheduled fine arts. The insured must report any newly acquired fine art to the insurer within ninety days and pay an additional premium. Failure to do so results in coverage ceasing after ninety days of the acquisition, or the end of the policy period, whichever is first.
Personal furs, including imitation furs, garments trimmed with fur or consisting principally of fur, and fur rugs may be insured under these forms (ISO attaches PM 00 11 to the personal articles floater). Ensembles, such as matching hat and coat, may be scheduled as a unit. Other than this, no items may be blanketed. Each insured article must be listed separately with a specified amount of insurance applying to it.
Most insurance companies will not permit furs to be covered for more than the original purchase price regardless of the garment's present appraisal value or the fact that it might have been purchased at some special price. Many underwriters prefer to have the bill of sale, even when an appraisal is furnished.
An optional fur depreciation endorsement is available under AAIS rules. Under the terms of this endorsement, the insured agrees that a specified percentage of depreciation will apply on each anniversary date of the policy. This insured value is reduced by the percentage of depreciation shown on the endorsement on the first policy anniversary and again reduced—usually by the same percentage figure—on the second anniversary date.
Newly acquired furs are covered up to 25 percent of the amount of insurance or $10,000, whichever is less, on the ISO form.
Worldwide coverage under the personal articles form may be applied to golf clubs, golf clothing, and other golf equipment owned by an individual (attach form PM 00 16). It may be written on either a scheduled or a blanket basis. Other clothing of the insured is covered while kept in a locker when the insured is playing golf.
Golf balls are covered for loss only by fire and, when there are visible marks of forcible entry, by burglary.
The newly acquired property clause does not apply to golfer's equipment. Under AAIS rules, coverage may be changed to named perils, and coverage may be provided on a replacement cost basis.
Jewelry is defined as articles of personal adornment composed in whole or in part of silver, gold, platinum, or other precious metals or alloys. The insured article may or may not contain pearls, jewels, or precious or semi-precious stones. Certain articles other than jewelry may be insured under this form at the jewelry rates. These include such items as pens, pencils, flasks, smoking equipment, cigarette cases, trophies, etc. Silverware, silver-plated ware, and pewter ware, bullion, gold, and unmounted gems may not be insured as jewelry.
As has already been noted, general rules governing the personal articles floater provide that the policy may be written for persons who are not related only when they reside together and are co-owners of the property to be insured. However, rules for the personal jewelry class permit the policy to be written on engagement rings, wedding rings, and guard rings in the name of the two interested individuals regardless of where they live. Such coverage applies "as interest may appear."Coverage is on an open perils basis and applies worldwide. Companies usually require the original bills of sale or a complete signed appraisal (at the applicant's expense) from a reputable jeweler. Some insurers require an appraisal only when the item is insured for a certain amount, which varies by company. The appraisal must also show the physical condition of the property at the time of the appraisal. Jewelry known to be in need of repair and stones in need of resetting are not usually accepted until restored to first class condition.
Each article to be insured must be completely described and a specified amount of insurance shown for it. It is not possible to blanket miscellaneous items of jewelry. Specific items of the jewelry schedule may be insured for a reduced premium if the schedule indicates (through use of a number symbol [#]). The insured agrees that they will be kept in a bank vault or a vault in a nonbank security facility acceptable to the insurer. Form PM 00 11 states that coverage on those articles stops unless the company is given advance notice of removal from the scheduled premises and the insured pays an additional premium for the time the articles are away from the premises.
Under ISO rules, if coverage on scheduled jewelry is agreed value, then in event of a covered loss to a pair or set, the full amount of insurance on the pair or set will be paid. For payment of an additional premium, in event of a covered loss the insurer agrees to pay the full amount of the set as shown in the schedule and the insured surrenders the remaining article or piece of the set to the insurer. Under AAIS rules, jewelry with gemstones that have been gemprinted—that is, scanned using non-invasive laser technology and then registered with a central databank—may be insured at a reduced rate.
The ISO form provides 25 percent of the amount of insurance or $10,000, whichever is less, for newly acquired jewelry. The insured has thirty days to report the acquisition, after which coverage ceases (or at the end of the policy period, whichever is first).
Musical instruments, sheet music, and equipment pertaining to musical instruments may be insured under the personal articles form on a worldwide basis. ISO form PM 00 14 is attached. The rules also provide for writing named perils coverage on the same property by indicating this on the declarations. Coverage is then limited to direct loss by fire, lightning, cyclone, tornado, flood, theft, and transportation hazards.
The policy may be used to cover individuals; orchestras, bands, chamber music ensembles, and similar groups; and schools, boards of education and municipalities. When the policy is written for a musical organization, it is not required that insured instruments be owned by the organization itself. There is a specific provision in the rules that policies may include instruments owned by individual members of the organization. Manual rules also emphasize that such policies may be written only for a formally organized performing group by stipulating that groups with no closer bond than membership in the same union, management by the same booking agent, attendance at the same school, etc. are not eligible risks.
When coverage is written for schools, municipalities, or boards of education the clause relating to additionally acquired property does not apply. Unscheduled instruments must be insured for 100 percent insurance to value. The use of blanket coverage eliminates the need for compiling a schedule—often a very tedious job when so many items are involved—but it also makes it necessary to adjust the amount of insurance each time additional instruments are purchased. The loss settlement (valuation) provisions apply and a careful check on values should be maintained.
In contrast, AAIS rules allow coverage only for individuals.
Coverage on musical instruments under both programs excludes instruments played for remuneration unless appropriate—usually much higher—rates are charged. This affects individual insureds only, not musical organizations, school boards, or municipalities, for which there are separate rate tables. The exact provision states that the insured agrees not to perform with any of the insured instruments for pay unless such performance is specifically provided for in the policy. This provision may be deleted for bands, orchestras, other similar musical groups, school boards, and municipalities; and for individuals paying professional rates.
Note that the exclusion of instruments played for remuneration, etc., does not affect full-time professional artists only. The ISO provision applies just as directly to an instrument played for remuneration at any time during the policy period (unless specifically noted on the policy). The AAIS provision regarding professional use does not apply unless the insured receives more than $250 per year.
All insured articles must be individually itemized with the amount of insurance shown for each. The ISO large schedule endorsement already discussed may be used in order to avoid attaching a bulky schedule to the policy. It is also possible to have this blanket limitation increased where, because of the nature of the items, it would be impracticable to schedule them.
Individually owned silverware, goldware, pewterware, platinumware, and silver-, platinum-, or gold-plated ware may be covered as an insured class of property under the personal articles form. As with other classes of property insured under this policy, this is open perils coverage on a worldwide basis. Obviously, it will not always be practical to schedule each item of property in this class. Hence, the rules permit writing protection on a blanket basis, if desired.
The silverware provisions of the personal articles form exclude pens, pencils, flasks, smoking implements and accessories, and articles of personal adornment. This property is insurable under rules applicable to the jewelry class.
Note that silverware is not one of the classes of property which are included under the additionally acquired property clause of the personal articles form. Any newly acquired property in this class must be specifically added to the policy if coverage is desired.
AAIS rules allow silverware to be insured on a valued or replacement cost basis by attaching endorsements IMF 175-19 or IMF 175-20; under ISO rules form PM 00 10 provides agreed value loss settlement.
Personal articles type insurance may be written in conjunction with a homeowners policy; homeowners scheduled personal property endorsements HO 04 61 or, under the ISO 2000 and 2011 program, HO 04 60 are used. The language of the insuring agreement in these endorsements corresponds to other homeowners open perils insuring agreements in its reference to "risks [not "all risks"] of direct loss to property described only if that loss is a physical loss to property."
Like the homeowners policy, the personal inland marine floater with personal articles coverage, despite its appearance as a mere endorsement attached to the homeowners policy, functions as a separate contract. The personal inland marine manual rules require that although the inland marine coverage may be provided in conjunction with other policies such as the homeowners policy, the terms and conditions of the supplemental floater be the same as if the policy were separately issued. However, the installment payment methods authorized for the homeowners policy are permitted with the supplemental floater, and, the cancellation provisions of the inland marine policy can be altered to correspond with the homeowners policy.
Despite such convenient allowances, it is of more than academic importance that the homeowners policy and personal inland marine floater are to be considered as separate contracts. For example, no package discounts apply to the floater; the rules require that full manual rates be charged. Perhaps most importantly, the homeowners policy applies to its coverage of unscheduled personal property an exclusion of articles that are separately described and specifically insured by the homeowners policy or any other insurance. (See ISO Homeowners Section I for a discussion of what constitutes "specifically insured" property in the context of this exclusion.) Clearly, the personal articles form must be written for an adequate amount as to property insured under it, for the exclusion rules out any contribution by the homeowners policy for a loss involving property that is scheduled in the floater.
Careful thought should also be given to the insuring of personal property under a separate personal articles policy in comparison to insuring under the homeowners coverage C, written on a replacement cost basis. When property subject to depreciation is involved (cameras, for instance), an insured may be penalized in the event of loss by the actual cash value provisions of separate personal articles coverage. But if the personal articles coverage is provided by using endorsement HO 04 61, in conjunction with personal property replacement cost endorsement HO 04 90, scheduled articles other than those specifically excluded from the replacement cost coverage (antiques, fine arts, collectibles, etc.) are covered for their replacement cost.
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