AAIS JEWELRY DEALERS
COVERAGE ANALYSIS
(August 2025)
|
IM 1205–Schedule of Coverages–Jewelry
Dealers IM 1200–Jewelry Dealers Coverage Analysis
What Must Be Done in Case of Loss
Additional Coverage Limitation |
The American
Association of Insurance Services (AAIS) Jewelry Dealers Coverage insures the
stock of jewelry dealers, including diamonds, gems, jewelry, watches, watch
movements, and other precious and semi-precious stones. It also covers
semi-precious and precious metals and alloys, such as gold, silver, and
platinum. Additionally, coverage extends to similar or related merchandise and
other inventory held for sale, typical of the jeweler’s business.
This coverage form is
limited to businesses with a stock value of less than $250,000.
Entities with a stock
value of $250,000 or less that buy, sell, manufacture, or pawn jewelry,
silverware, or watches qualify. This includes both retailers and wholesalers.
Multiple entities can be covered under a single coverage form, provided that a
single individual or entity owns the majority interest in each involved entity.
The following risks are
ineligible:
Businesses with stocks exceeding $250,000 or ineligible for other reasons
should review the following articles that analyze non-filed policies offering
coverage for their higher risk exposures.
Related Articles:
ISO
Jewelers Block Coverage Form
AAIS Jewelry Dealers
Coverage requires at least these five forms:
Related Article: CL 0100 AAIS
Commercial Lines Common Policy Conditions
This Schedule of
Coverages can be used with either IM 1200–Jewelry Dealers Coverage or IM
1201–Jewelry Dealers–Named Perils Coverage.
The appropriate
coverage form must be selected by checking either IM 1200–Jewelry Dealers
Coverage Form or IM 1201–Jewelry Dealers Named Perils Coverage.
The location number and
its description are entered along with the corresponding insurance limit in the
provided spaces.
The property described
below is only covered if a limit is shown on the Schedule of Coverages.
Property in transit is
covered based on the type of transportation. Coverage for transit by specific
transport types depends on the insurance limit entered. If no limit is
specified, there is no coverage for this type of transportation.
Property at a location
not described above or in transit by any means other than those described above
is covered, but only if there is a limit shown in the space provided.
The deductible amount
the named insured retains for each covered loss must be entered in the space
provided.
Four optional coverages
are available. Coverage applies when selected in the spaces provided:
This section excludes
certain types of property by entering a mark
in the Property Excluded box and then describing the property to be excluded.
NOTE: This optional
coverage must be used very carefully, and the description should be precise. The
property's value is excluded from the insurance limit, which will affect the
coinsurance calculation and premium determination. Problems often occur when an
actual loss involves excluded property, and memories fade about what was agreed
upon. Clear wording and signed documentation are crucial to prevent coverage
disputes and agency errors and omissions claims.
Coverage applies to
damage or theft of safes if a checkmark and a limit are indicated in the
provided space.
The peak season limit
to be entered is the sum of the Schedule of Locations limit above, PLUS the
peak season increase. This limit replaces the Schedule of Locations limit, but
only during the peak season Period of Coverage dates shown on the schedule.
The dates during which
the coverage is effective and the location number where coverage applies are
entered in the provided spaces.
NOTE: The dates are very important because
the peak season limit applies only during the scheduled dates. Once the dates
are over, the schedule of location limit for the entered location applies.
Coverage for property
in show windows is provided only when limits for the coverage is specified on
the schedule of coverages. Limits are flexible and vary based on whether the
premises are open or closed, as well as whether the windows are protected or
unprotected. Limits are entered for the following:
The following eight
optional endorsements are available:
Coverage applies when
the appropriate entries are made in the spaces provided. These endorsements are
examined under Endorsements and Schedules.
Jewelry Dealers
Coverage is typically written on a non-reporting basis. This section provides
spaces to enter the annual premium and the non-reporting rate per $100
applicable.
This analysis is of the
01 05 edition.
This section states that the insurance company provides coverage as
described, in exchange for the named insured paying the required premium. This
agreement is subject to all terms of the coverage form, the Schedule of
Coverages, and any additional conditions. Endorsements or additional schedules
listed on the Schedule of Coverages also apply.
There is a statement indicating that certain words and phrases
highlighted in bold print in the coverage form are defined in the Definitions
section immediately following this Agreement.
NOTE: The schedule
of coverages does not have a clearly designated space to list endorsements or
additional schedules that apply at inception.
Defined words are used
throughout the coverage form. When these terms appear in the coverage form, the
meaning provided in this section must be applied.
NOTE: The Editors added
titles to enhance clarity.
You and Your
The
parties specifically listed on the declarations as insureds.
We, Us, and Our
The
insurance company providing the insurance coverage.
Earth Movement
Earth's surface movement or vibration includes, but is not
limited to, earthquakes, landslides, mudflows, mudslides, mine subsidence, and
other forms of earth sinking, rising, or shifting. Sinkhole collapse is
excluded from this definition.
Flood
Flood refers to overflow from
bodies of water, including surface water, waves, tidal water, and other forms.
It can be caused by wind or not. Spray resulting from any of these situations
is also flood, whether wind-driven or not.
Limit
The applicable coverage
amount.
Pollutant
This term is broad
and covers various contaminants and irritants, including solids, liquids,
gases, or thermal or radioactive substances. It encompasses acids, alkalis,
chemicals, fumes, smoke, soot, vapor, and waste. Waste includes materials meant
for recycling, reclamation, reconditioning, or disposal.
Additionally,
visible and invisible electrical or magnetic emissions, along with sound
emissions, are also classified as pollutants.
The application, signed
and dated by the named insured, becomes part of the policy. The statements made
by the named insured in that proposal are warranted to be true.
NOTE: Placing a
warranty in the definition is unusual. It states if the named insured’s
statements are found to be false, this policy may be voided.
Schedule of Coverages
Any page labeled as
such that includes coverage details, including declarations or supplemental
declarations.
Sinkhole Collapse
A sinkhole occurs
when the earth’s surface suddenly sinks or collapses into an underground cavity
formed by water erosion on limestone or other rock types. This definition of
sinkhole collapse excludes considerations of the land value or expenses involved
in filling sinkholes.
Specified Perils
The definition
contains the following specifically named perils:
Two terms require
further clarification:
This coverage does
not extend to personal property stored outdoors. Additionally, it does not
cover damage to the interiors of buildings or personal property stored inside
buildings unless a falling object first breaches the building's exterior.
This refers to the
sudden or accidental release or leakage of water or steam. However, it must
directly result from a crack or break in a part of the system or appliance that
contains the water or steam.
Terms
All provisions, limitations, exclusions, conditions, and definitions
relevant to the coverage provided.
Volcanic Action
An airborne volcanic
blast or shock wave, which also includes ash, dust, and particulate matter, as
well as any lava flow. The term does not include the expenses for removing
dust, ash, or particulate matter from the covered property unless
there is direct physical damage to the property.
The insurance company
covers the property described below, subject to any exclusions or limitations.
This covers the stock
owned by the named insured as well as similar property owned by others if it
has been delivered to or entrusted to the insured, for direct physical loss or
damage caused by a covered peril.
The only inventory
covered includes jewels, jewelry, precious and semi-precious stones, precious
metals and alloys, along with other items that are usual and incidental to the
business of a jewelry dealer. All must be held for sale at locations specified
in the Schedule of Coverages.
The amount of coverage for
property of others is limited to either of the following circumstances:
·
The
amount paid by the named insured for it.
·
The
amount for which the named insured is legally responsible.
NOTE: The policy does not state whether the
lesser or the greater of the two will be paid. It only lists both options.
When a limit is entered
on the Schedule of Coverages for off-premises coverage, it applies to loss or
damage caused by a covered peril to owned stock and similar property of others
located away from the scheduled coverage locations.
This off-premises
coverage is limited to when the named insured's stock and/or similar property
of others is at one of the following:
·
In
a bank, trust, or safe deposit company vault or safe.
·
On
another jewelry dealer's premises.
·
In
a sales representative's possession.
·
In
the named insured's possession, in the possession of its principal officer, or an
employee away from a designated location.
·
In
transit by registered mail, armored car messenger service, private paid
delivery service, or common or contract carriers for hire.
·
At
a location or in transit other than described above
The coverage amount
depends on the limits shown on the Schedule of Coverages for the above.
Coverage is excluded
for the following property:
Property not located on the described premises
and displayed in a show window or showcase is not covered.
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Example: Jeremy’s Jewels is located on the second floor of
the Mercantile Plaza. Mercantile Plaza has four display windows on the first
floor, and Jeremy’s Jewels placed its inventory in one of those windows. A
tornado rips through town, damaging the windows. Some of Jeremy’s inventory
is lost. The description of Jeremy’s Jewels on the Schedule of Coverages
lists only its second-floor premises. Because the window was not part of the
premises, the inventory lost from the display window is not covered. |
Property at exhibitions
that public authorities or trade associations promote or financially support is
not covered.
The Optional Coverages
section of the Schedule of Coverages includes an item called Property Excluded.
When the box for this item is checked, the property described in it is
excluded.
When the recipient of a
C.O.D. sent parcel is allowed to open and inspect the property before accepting
delivery, any loss or damage to that property is not covered.
Property sold is no
longer covered once it leaves the custody of either the named insured or a
carrier for hire delivering it on the insured's behalf. This includes property
sold on an installment plan.
Watch dealers' property
stored in any type of storage facility or warehouse is not covered unless that
facility or warehouse is listed on the Schedule of Coverages.
Property worn by the
named insured or others is not covered. The only exception is for watches being
worn while they are being serviced.
NOTE: While Property Covered
seems broad and comprehensive, a careful review of Property Not Covered reveals
various restrictions, limitations, and details that the insurance agent must
review thoroughly and discuss with the named insured. In most cases, the named
insured is the only party who knows enough about their business to address
these issues and communicate them effectively.
Coverage applies to direct physical loss or damage caused by thieves to
the part of the building the named insured occupies, as well as damage to
equipment used to maintain or service the building.
This coverage applies only if the named insured owns the building or is
legally responsible to the building owner for this type of damage. The covered
property must be located in a premises listed on the Schedule of Coverages.
Damage or loss caused by fire is
not covered. Additionally, damage to glass, glass lettering, or glass
decorations is also not covered.
This coverage is part of the
applicable limit available for coverage as described under Property Covered,
not in addition to it.
|
Example: Martin was a patient thief who
carefully studied the patterns of his intended victims. He noticed that
Veronica, the main clerk at Pleasant Times Jewelers, would lock the front
door and sneak out of the building to take a smoke break whenever her boss would
leave her alone on the premises. As he watched the owner walk out the front,
Martin watched Veronica quickly lock the front door. He waited one minute and
then smashed open the door, grabbed all the jewelry he could stuff in his
backpack, and was out within two minutes. Veronica was quite surprised when
she returned to find the destruction. The jewelry loss was covered, as was
the damage to the front door. |
Three optional
coverages are available and apply only when shown on the Schedule of Coverages.
Loss or damage to the
safes or vaults described in Part 15 of the IM 1211–Jewelry Dealers Proposal is
covered, but only if the loss or damage is due to any of the following perils:
Coverage applies only
to safes or vaults at locations shown on the Schedule of Coverages. The most
paid for a loss is the limit on the Schedule of Coverages for this optional
coverage.
This coverage applies
only when it is marked on the Schedule of Coverages as applicable. A location
number, Peak Season Limit, and dates for the Period of Coverage must be listed
on the Schedule of Coverages. The limit entered here replaces the limit listed
on the Schedule of Locations for the described premises, but it is only valid
during the specified dates listed on the Schedule of Coverages.
NOTE: This coverage
is necessary since 2. Secondary
Exclusions—m. Show Window or Showcase Theft specifically excludes theft coverage for store windows or showcases if
the theft results from the window being smashed or cut to access the
merchandise.
Theft losses from a cut
or smashed show window or outside showcase are covered if there is a specified
limit for Show Windows Coverage listed in the Schedule of Coverages. This
coverage only applies to show windows or showcases at the locations specified
in the Schedule. The maximum payout for a loss is the limit shown in the
Schedule of Coverages.
Selecting this optional coverage removes
the Show Window or Showcase Theft exclusion under Perils Excluded for any
location listed on the Schedule of Coverages.
|
Example: Martin is still interested in Pleasant Times
Jewelers. He likes the display in their windows and notices that the security
cameras do not cover a corner of one of the windows. He watches and discovers
a quiet time in the morning when he can work unobserved. Within 10 minutes,
he had cut a hole in the glass and removed the necklace that caught his eye.
Veronica does not notice the necklace is gone until she is removing the
display items that evening. This loss is covered because Pleasant Time
Jewelers had purchased Show Windows Coverage.
|
Coverage protects against direct physical
loss, except when the loss is limited or caused by excluded perils.
Coverage for collapse is provided when caused by one
or more of the following:
However,
coverage applies if a collapse occurs after the work is completed and is partly
caused by defective materials or methods used, as well as one or more of the
factors mentioned in the bullets above also contribute to the loss.
Collapse
refers to the sudden and unexpected sinking or caving in of a building,
structure, or parts of it, making the structure unusable for its intended
purpose.
The
following buildings and structures are not considered to be in a
state of collapse:
The
covered property limit does not increase for this coverage.
There is no coverage
for loss resulting from an order issued by any civil or government
authority. These orders may include seizure, confiscation, destruction, or
quarantine of property, but this list is not exhaustive.
The only exception is when a civil authority destroys property to control a fire that causes loss or damage. This
exception applies only if the fire is caused by a covered peril.
Earth movement,
volcanic eruptions, explosions, or effusions are not covered. However, there
are exceptions as follows:
·
Eruption, explosion, or effusion of a volcano may lead to volcanic
action. While the damage from the eruption, explosion, or effusion itself is
not covered, the policy includes coverage for loss or damage caused by volcanic
action.
·
Damage or loss
caused by a fire resulting from earth movement is covered, but damage caused by
earth movement itself remains uncovered.
·
Damage or loss
caused by an explosion resulting from earth movement is covered, but damage
from earth movement itself remains excluded. This exception does not apply to
volcanic activity.
·
Sinkhole collapse is
covered.
·
Only property at a premises described in the Schedule of Coverages is subject to
this exclusion.
NOTE: This means coverage could apply to covered property in
transit and at unscheduled locations.
The insurance
company does not pay for loss or damage caused by flood. However, there are exceptions:
·
If fire, explosion,
or sprinkler leakage occurs due to a flood, the resulting loss or damage is
covered, but flood damage itself remains excluded.
·
This
exclusion applies only to the premises specified on the schedule of coverages.
NOTE: This means coverage could apply to covered property in
transit and at unscheduled locations.
Coverage does not
apply to loss or damage caused by any of the following:
·
Water that backs up from a drain or sewer.
·
Water below the
ground’s surface. Examples of such events are when the
water flows, leaks, seeps through,
or exerts pressure on or into a covered building or structure.
However, there are
exceptions:
·
This
exclusion applies only to the premises specified on the schedule of coverages.
NOTE: This means coverage could apply to covered property in
transit and at unscheduled locations.
In addition,
acts of insurrection, rebellion, revolution, or unlawful power seizure, along
with any government measures to prevent or defend against these acts, are
excluded. If any such action involves nuclear reactions, radiation, or
contamination, this exclusion overrides the nuclear hazard exclusion.
NOTE: This means the exception for
fire resulting from a nuclear hazard does not apply when it is caused by war.
a. Acts
or Decisions
However, there is an exception to this exclusion. If an act or decision,
or a failure to act or decide, leads to a covered peril, then the loss or
damage caused by that peril is covered.
b. Animal
Nesting, Infestation, or Discharge
Loss or damage due to the breaking of fragile items is excluded.
However, breakage due to a specified peril, theft, or attempted theft is
covered.
Coverage does not apply
to loss caused by or resulting from criminal, fraudulent, dishonest, or illegal
acts, committed by any of the following, whether alone or in collusion with
others:
·
The
named insured.
·
Others
with an interest in the property.
·
Others
to whom the property has been entrusted.
·
The
named insured's partners, officers, directors, trustees, joint venturers,
members, or managers, as applicable, based on the named insured’s type of business organization.
·
Employees
or agents of any of the groups listed above. Employees are excluded even if the
act occurs when they are not considered to be working.
However, coverage
applies if employees destroy property, but does not
apply to employees stealing.
Additionally, coverage does apply to losses
caused by dishonest acts committed by any of the following entities when
entrusted with covered property:
·
The United States Postal Service (USPS)
·
Armored car companies
·
Privately paid delivery services
·
Common or contract carriers for hire
·
Others hired by the named insured as helpers but
not on the insured's payroll.
|
Example: Pleasant Times Jewelers hires a costumed Easter
Bunny as part of a promotional spring event. He does a wonderful job with the
families that attend. When Veronica is putting away the displays that evening,
she notices certain pieces are missing. She is dismayed when watching the
surveillance tapes to see the hired Bunny removing the items. Yes, Martin has
struck again. Because the Easter Bunny had been hired and not employed, the
loss is covered. |
NOTE: This exclusion differs
from the same exclusion in all other AAIS filed inland marine coverage forms
because of the listed exceptions. They relate to how jewelers operate their
businesses and conduct transactions.
Loss or damage due to
errors, faults, or defects in planning, zoning, surveying, site plans, grading,
compaction, land use, or development is not covered. Additionally, losses
caused by errors, faults, or defects related to property design, blueprints, specifications,
workmanship, building, maintenance, installation, renovation, remodeling, or
repair are also excluded.
An
important provision is that this exclusion applies both on and off the
designated premises, regardless of negligence. However, if loss or damage from
one of these events results in a covered peril, then the loss or damage caused
by that peril is covered.
The insurance
company will not cover loss or damage caused by inadequate, inferior, or
defective packing.
|
Example: Veronica’s new assistant, Chaz, was instructed to
get a fragile gift item to an important client as soon as possible. Chaz
called a friend who agreed to deliver the item. Chaz knew the customer lived close,
so he skimped on the packing material. Chaz’s friend arrived,
picked up the parcel, and, wanting to impress Veronica with his
responsiveness, drove at a high rate of speed. He missed a turn and hit a
tree. The package went flying, and because of the loose packing, the item was destroyed. All coverage for the item
is denied, Chaz is fired, and his friend never does business with Pleasant
Times again. |
Coverage does not apply to losses from delays, loss of use,
or loss of market.
The unexplained or mysterious
disappearance of covered property is not covered if there is no
physical evidence of what happened to it, and the only proof of loss comes from
an audit or physical inventory. However, this exclusion does not
apply to covered property held in the custody of carriers for hire.
There is no coverage
for loss caused by or resulting from any release, discharge, seepage,
migration, dispersal, or escape of pollutants. However, when a pollutant
release results in a specified peril, the resulting loss from that specified
peril to covered property is covered.
Loss or damage resulting from a repair to, adjustment of, service of, or
maintenance of covered property is excluded. However, if any of these actions
result in a fire or explosion, the loss or damage from the fire or explosion is
covered.
Loss or damage caused by actual or attempted theft during which a show window or outside showcase at a
location listed on the Schedule of Coverages is smashed or cut is excluded.
NOTE: This is a “smash and grab” exclusion. There is no coverage for property taken from a
show window or showcase at a scheduled location after it is smashed or cut.
The only exception is when Optional Coverages 3. Showcase Window or
Showcase Theft is purchased to provide this coverage.
Coverage does not apply if a package
shipped to a consignee arrives in good condition and sealed but is missing some
of the property it was supposed to contain.
|
Example: Veronica’s favorite customer, who moved to
California, still orders from Pleasant Times. She recently purchased a
necklace, two rings, two pairs of earrings, and a bracelet. She contacted
Veronica to tell her that everything was in the package except for the
bracelet. The packaging was in good condition, and the seals were intact.
There is no coverage for the missing bracelet. |
There is no
coverage for loss due to theft from an
unattended vehicle. The vehicle is considered unattended when a person with the
sole duty of attending the vehicle is not
on or in the vehicle at the time of loss. However, this exclusion does not
apply to property in the custody of carriers for hire or the United States
Postal Service.
|
Example: Veronica is making multiple deliveries and takes
her son, Josh, to stay in the car while she makes the deliveries. Josh drives
and knows he is not allowed to leave the vehicle for any reason because of
the value of the items in the vehicle: Scenario
1: Josh notices
he is low on gas, so while waiting for
his mother, he stops at a nearby gas station. He gets out of the vehicle to
fill the car, and while he is buying the gas, someone slips in and removes
the items. There is no coverage because Josh was not on or in the vehicle at
the time of the theft. Scenario 2: John is waiting for his
mother when one person smashes Josh’s window and grabs him, as another person
grabs the packages. This loss is covered because Josh was attending the
vehicle. |
Related Court Case: Car-Jacked Jewelry Not Covered
Coverage does not apply
if a loss occurs due to property being transferred to another person or sent
elsewhere based on unauthorized instructions.
There is no coverage for loss to covered property willingly
handed over to others, even if the surrender occurs because of a fraudulent
scheme, trick, or false pretense.
The named insured must
promptly inform the insurance company or its agent of any loss. The notice
should describe the property lost or damaged. If a criminal act led to the
loss, the relevant law enforcement agency must also be notified. The
insurance company may specify the notice be provided in writing.
During and after a
loss, the named insured is required to take all reasonable steps to prevent
further damage to covered property. The insurance company will cover reasonable
costs incurred by the insured for this purpose, provided they keep accurate records
to verify the costs. The expenses are part of the policy limits and not in
addition to them.
Additionally, there is
no coverage for repairs or emergency measures taken for property not already
damaged by a covered peril.
NOTE: It is important to
realize that any such costs incurred will reduce the amount available to
pay the actual loss.
The named insured must
complete and return the insurance company's required proof of loss forms within
60 days of the company's request. The information provided should include the
time, place, and circumstances of the loss, as well as details about any other
insurance coverage that might apply.
The proof of loss must
also specify the named insured’s interest and the interests of others in the
property involved, including liens and mortgages. Any changes to the title
of the property during the policy period must be disclosed, along with any
other reasonable information the company may need, such as inventories,
specifications, and estimates for settling the loss.
An examination of the
named insured under oath might be required in matters concerning the loss. The
insurance company can request these examinations multiple times, provided the
requests are reasonable. If several people are examined, the company has the
right to examine each person separately.
The named insured is
required to provide any records related to the loss. The insurance
company must be permitted to copy and extract information from these
records whenever reasonably requested. Such records include, but are not
limited to, tax returns and bank microfilms of all related canceled checks.
Both damaged and
undamaged property must be accessible for the insurance company's
inspection as frequently as reasonably needed. Additionally, the insurance
company should be permitted to take samples and conduct inspections of the
property.
The named insured can
make payments, take on obligations, offer rewards, or incur other expenses, but
they should not expect reimbursement without written approval from the
insurance company. The only exception is if the costs are related to protecting
property, as described in item 2–You Must Protect Property above, which will be
covered by the insurance company.
The insurance company
determines when and if it will assume ownership of the property belonging to
the named insured. As a result, the named insured is not allowed to abandon
damaged property to the insurance company unless they receive written approval to
accept it.
The named insured is
required to cooperate with the insurance company and perform any actions
specified in the policy.
The
value of the covered property is its
actual cash value on the date of loss. Actual Cash Value is replacement cost
new minus depreciation. This item is subject to items 2. through 4. of this
section.
The value of covered
property excludes a value attributed to an item due to its antique, historical,
or sentimental importance.
The value of a loss
involving damage or loss of one item from a pair or set is determined by a
fair proportion of the total value of the entire pair or set. However, losing
one part of a pair or set does not constitute a total loss.
NOTE: This recognizes that the value of the
whole is greater than the value of individual parts, but the remaining part
still has value as a separate.
The value of a lost
or damaged part, which comprises several parts, is determined by the cost to
repair or replace just the lost or damaged part.
NOTE: This recognizes that the whole is more
valuable than the sum of its parts, but the individual parts still retain value
on their own.
The insurance company will not pay more than the
insured's insurable interest in the covered property at the time of loss.
The insurance company pays only the amount of loss
exceeding the deductible amount shown on the Schedule of Coverages.
All loss or damage from earthquakes, tremors, or
volcanic eruptions occurring within a 168-consecutive-hour period is considered
a single loss. This time frame is not limited by the policy’s expiration date.
The insurance company
pays the least of the following, subject to items 1., 2., 3., 5., and 6. in
this section:
o
The
material must be of like kind and quality, or as close
as practically possible.
Multiple coverages in a coverage form can cover the same loss. In such
cases, the insurance company will only pay up to the actual value of the claim,
loss, or damage incurred.
The named insured may
have other coverage subject to the same terms as this coverage form. In such
case, this coverage form pays only its portion of the covered loss. That
portion is determined by the ratio of its limit of insurance to the total
limits of all such insurance covers on the same basis.
There may be another
policy available to cover the loss, aside from what is described in item 7.a.
above. In such cases, this coverage will apply on an excess basis. It will only
pay the amount of the covered loss that exceeds the amount provided by the other
policy, regardless of whether that other coverage can be collected. Any payment
made is subject to the applicable limit of insurance.
The insurance company has the following loss payment
options in the event of a covered loss:
·
Pay the value of the property
that sustained loss or damage.
·
Pay the cost to repair or
replace the property that sustained loss or damage.
·
Rebuild, repair, or replace the
property with similar property, to the extent possible, and it must be
accomplished within a reasonable period of time.
·
Take any part or all of the
property based on the value agreed upon or determined through appraisal.
The insurance company is required to inform the named
insured of its intent to rebuild, repair, or replace within 30 days after
receiving a properly completed proof of loss.
The
insurance company settles all claims with the named insured. It will also only
pay the named insured, unless a loss payee is listed on the policy.
The insurance company settles a covered
loss within 30 days of receiving a properly prepared proof of loss, and the
loss amount is confirmed. The amount is determined either through a written
agreement with the insured or after an appraisal award is filed with the
company.
The insurance company
can adjust and pay losses involving others' property to either the named
insured on behalf of the property owner or directly to the property owner.
The insurance company
is not obligated to pay the named insured if it has already paid the property
owner. Additionally, if the property owner sues the named insured, the company
can choose to defend the named insured in the lawsuit.
Either
party can request an appraisal to determine the value of the disputed claim.
Once a request is made, both parties have 20 days to choose their own
independent appraisers and notify the other party of their appraiser's name.
The two appraisers then have 15 days to select a competent and impartial
umpire. If they cannot agree on an umpire within that time, either party can
ask a judge in the court of record in the state where the property is located
to appoint one.
The
appraisers will then determine the value of the claim and submit any
differences to the umpire. Once any two of the three parties (the two
appraisers and the umpire) agree, the amount of loss is finalized.
Each
party is responsible for paying its own appraiser, while the costs associated
with the umpire and other shared expenses are equally divided between both
parties.
The
insurance does not provide any benefit, directly or indirectly, to any party
with custody of the insured's property.
Any
condition in this coverage form that conflicts with any applicable law is
amended to conform to that law.
When the named
insured passes away, the individual in custody of the insured's property
remains an insured for that property until a qualified legal representative is
appointed. After the appointment of the legal representative, that person
becomes an insured, but only for the property covered under this policy.
This coverage does
not extend past the policy’s expiration date.
Any revisions to this
coverage form or applicable endorsements that become effective during the
policy period or within six months of the coverage effective date that broaden
coverage without an additional premium will apply to this policy.
This
coverage is void if any insured at any time willfully concealed or
misrepresented a material fact that relates to the insurance provided, the
property covered, or its interest in the property. It is also void if any
insured engaged in fraud or false swearing with respect to the insurance
provided or the property covered.
NOTE: The named insured must
deal with the insurance company honestly. Its rights of recovery may be voided
if it intentionally misrepresents or conceals a material fact or information.
This means the insurance is treated as simply having never existed, versus a
particular claim being denied.
Only
covered losses occurring during the policy period are paid.
Payment of the loss
does not end the obligations of the named insured and the insurance company
toward each other. Additional provisions apply if the insurance company pays a
loss and the lost or damaged property is later recovered, or if the responsible
party for the loss reimburses for the damage.
Either party that
recovers property or payment must notify the other. Recovery expenses incurred
are reimbursed first. If the named insured keeps the recovered property, they
must repay the amount the insurance company paid on the claim, unless the company
agrees to a different amount.
If the paid claim is
less than the agreed loss because of a deductible or other limit, any recovery
is prorated between the named insured and the insurance company based on the
company's respective interests in the loss.
Payment
of a claim does not reduce the limit available for future claims.
The insurance company
gains the right of recovery from third parties on behalf of the named insured
after paying a loss. The named insured is required to assist the company in
securing these rights. The company is not required to pay the loss if the named
insured obstructs or weakens its subrogation rights.
The named insured can agree in
writing to waive recovery rights from any party, but only if this is done
before a loss occurs.
The insurance company
cannot be sued by anyone for any coverage until all the terms of the coverage
form have been met. Suits must be brought within two years after the named
insured first became aware of a loss. If a state law invalidates this condition,
any suit brought must comply with that law’s provisions and begin within the
shortest period of time allowed by law.
NOTE: It is common
for a basic coverage form to be modified by required state-specific
endorsements that address issues related to that state.
Coverage is only valid
if the covered property is located in the United States, its territories and
possessions, Canada, or Puerto Rico.
The named insured must
keep business records throughout the policy period and retain them for at least
three years after the policy expires. An itemized inventory of stock, updated
annually through a physical inventory, is also required.
The business records
the named insured must maintain should include all of the following:
The insurance company
can request access to business records and inventory at any time, and the
insured must comply, provided the requests are reasonable.
NOTE: This condition
may seem unusual, as it requires the named insured to maintain records in a
specified manner. However, it is common in Inland Marine dealer coverage forms,
but not in commercial property coverage forms.
The proposal prepared
and signed by the named insured is incorporated into and becomes part of this
policy.
NOTE: This means the
proposal must be attached to the policy when it is issued, and it is equally
important as the rest of the policy. It becomes a warranty and must be
completed more carefully than a standard application for coverage.
The protective devices
in operation as of the policy's effective date must remain functional
throughout the policy period. If any device is not installed or not working
properly at the named premises, coverage will be automatically suspended at
that location. Additionally, failure to activate the device when the business
is closed will automatically suspend coverage at the location where the device
is not in use. Coverage will automatically resume once the device is
operational again.
Furthermore, if a change in protection
at the named insured’s premises raises the risk of loss or damage, the
insurance company will not cover it unless they are notified of the change and has
given written approval.
|
Example: An
alarm salesperson convinces Veronica she can have the same protection at a
much lower cost by switching to his company. Scenario 1: Veronica changes protection, and a loss occurs.
The insurance company denies coverage because the risk of loss was increased
by the change in protection. Scenario 2: Veronica notifies her insurance agent that she is
considering a change in protection and asks for advice. Notice is provided to
the insurance company, which advises that it would refuse to provide coverage
if the change is made. Veronica notifies the salesperson to advise she is not
interested. |
This coverage form is
the same as IM 1200–Jewelry Dealers Coverage except for six sections. This
analysis focuses only on the six sections that differ.
The following definitions
are not included in the IM 1201 coverage form:
The following definitions
are added to the IM 1201, since burglary and robbery coverage is provided
instead of theft:
This is actual or
threatened forceful illegal entry when the premises is closed for business.
Visible signs of forced entry into the premises must be present.
This is the actual or
threatened use of force to illegally take property from a person.
The coverage extension
for Theft Damage to Building in
IM 1200 is not in IM 1201.
The optional coverage
for Damage to or Theft of Safes in
IM 1200 is not in IM 1201.
The perils covered in
IM 1200 are entirely replaced. IM 1201 applies only to loss of covered property
caused by or resulting from the perils of:
·
aircraft
·
civil
commotion
·
explosion
·
falling
objects
·
fire
·
hail
·
leakage
from fire extinguishing equipment
·
lightning
·
riot
·
sinkhole
collapse
·
smoke
·
sonic
boom
·
vandalism
·
vehicles
·
volcanic
action
·
water
damage
·
weight
of sleet, snow, or ice
·
windstorm
Coverage provided for Other Coverages–Collapse in IM 1200 is
not in IM 1201.
The excluded perils in
IM 1200 are not excluded in IM 1201.
NOTE: This does not imply
these perils are covered; they remain excluded because they are not included as
named perils.
In addition, the exception
in the Weather exclusion in IM
1200 states that if weather conditions result in a covered peril, the insurance
company pays the loss caused by or resulting from that covered peril. This
exception is not covered in IM 1201.
AAIS has developed one
proposal and eight endorsements to use with Jewelry Dealers Coverage.
This
is the application for Jewelry Dealers Coverage. The named insured must
complete and sign each section. The Jewelry Dealers Coverage Form and the
Jewelry Dealers Proposal are unique in the insurance industry because the
proposal is attached to and becomes part of the coverage form. Without it, the
policy is void, and there is no coverage. A separate proposal is required for
each covered location.
This endorsement is
used to exclude coverage for fire and lightning at locations on the Schedule of
Coverages. Exceptions for items in safes or vaults can be selected on the Schedule
of Coverages.
This endorsement adds a
condition requiring the named insured to be a member of this organization
during the dates specified in the Schedule of Coverages. A premium discount is
provided when this endorsement is attached.
This endorsement covers
loss of money when it is kept in locked vaults or safes at scheduled locations.
The coverage is subject to the limits shown on the Schedule of Coverages for
this endorsement.
This endorsement covers
loss of money and securities from robbery at locations and limits shown on the Schedule
of Coverages for this endorsement.
This endorsement
removes the Loss Settlement Terms under How Much We Pay and replaces them. It
automatically increases the limit on covered property in two of the five
settlement terms throughout the policy period. The increased amount depends on
the percentage entered in the space provided on the Schedule of Coverages for
this endorsement.
This endorsement
excludes coverage for property items pledged as security while they are locked
in the safe or vault of a bank, trust, or safe deposit company at the locations
listed in the Schedule of Coverages for this endorsement. This property is considered
Property Not Covered.
This endorsement
restricts the loss to covered property to $5,000 when it is away from scheduled
locations and in the possession of the insured, a sales representative, a
principal or officer, or an employee. However, the Schedule of Coverages
includes an exception that allows additional names to be added, each with a
specific insurance limit for that individual.
This endorsement adds coverage to
include additional personal property such as furniture, fixtures, office
equipment and supplies, machinery, tools (and their parts), patterns, molds,
models, and dies. It also covers the insured's interest as a tenant in any
improvements and betterments made to the occupied premises. Entries must be
made on the Schedule of Coverages.
Underwriting
jewelry and related exposures covered by this form mainly addresses theft,
burglary, and holdup concerns. Factors such as alarm systems, vaults, and the
store’s location need to be considered.
Does
the named insured remove property from the premises, and what precautions are
taken if they do? How are precious stones and metals handled in the store? How
are the showcases and show windows secured, and who controls the keys? Showroom
windows and smash-and-grab hazards are always key underwriting considerations.
Underwriters
must also assess the physical characteristics of the risk and the named
insured's effectiveness in controlling and managing the property and exposures
involved. Typically, a jeweler's location is fixed, and these locations face
the same fixed location risks as any other business.
Jewelry
stock typically consists of several small, valuable items that are easily
transported, highly attractive, and vulnerable to theft or burglary. Other
covered property includes various types of precious stones and metals, whose
values can fluctuate significantly due to international commodities trading.
These factors require careful assessment of each risk’s inventory composition.
Off premises issues to consider involve goods in various forms of
transit and in the possession of salespersons.
Location
factors to consider include exposure to fire losses. This involves assessing
the building construction, all the features and operations of the occupancy,
exposing occupancies, and private and public fire protection. Jewelry not on
display should be stored in safes and vaults, and procedures should be in place
to remove high-value merchandise in case of a fire.
If
the risk is equipped with automatic sprinklers, storage and display
arrangements should be assessed, and stock that is especially vulnerable to
water damage should be placed away from these systems and protected in other
ways. Water damage can be minimized or prevented by keeping all storage on
shelves or in other elevated locations rather than on the floor. Additionally,
earthquake risks may be present in certain geographic areas.
Burglary
is an extremely serious issue, and the premises should always be protected by a
high-quality alarm system that covers all exterior openings and connects to a
certified central station alarm facility. Theft and mysterious disappearances
are common issues for this type of business.
The
named insured should conduct background checks on all persons before hiring
them. The premises should be equipped with video surveillance equipment.
Arrangements should be made and procedures implemented to address display and
storage issues. Jewelry displayed in show windows and showcases should have
appropriate protection, and merchandise should be removed from them when the
premises are closed. The same procedures should be applied to property at other
locations.
Transit
exposures should be managed using various transportation modes, diversifying
trip patterns and frequencies, and minimizing the values shipped. Implement
strict accounting and approval procedures, and assess carriers to ensure they
are experienced, qualified, and appropriate for the task.
Salespeople
should also vary their routes and schedules to prevent establishing a pattern
that a potential attacker could exploit. Security concerns such as traveling in
a personal vehicle, taxi, other public transportation, or on foot must be
assessed, suitable arrangements made, and procedures followed.
Ownership
and management issues may be the most significant of all. The financial
condition of the named insured determines the extent to which the business
adopts protective measures and procedures. The experience of the named insured
in the business and hiring practices are also key factors to assess and
consider.
Developing and
implementing plans, procedures, protocols, and actions for emergencies in
advance of need are other critical factors. Maintenance and care of the
premises and protective devices also influence the overall desirability and
success of a jewelry business.