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12.3 Commercial Inland Marine Forms and Floaters

Movable property is often described as floating property, and the Inland Marine forms used to insure it are commonly called floaters. Commercial property floaters provide coverage for movable property used in connection with a business, profession, or occupation.

Bailees Customers Coverage Form​

A bailee is a person or organization that temporarily accepts possession of property belonging to another person. The property may be accepted for storage, repair, servicing, cleaning, or safekeeping. Common examples of bailees include dry cleaners, repair shops, warehouses, and parking facilities.

The Bailees Customers Coverage Form provides open perils coverage for personal property belonging to others while the property is in the insured’s care, custody, or control. Coverage applies to loss or damage caused by a covered peril, regardless of whether the insured is legally liable for the loss. Covered property does not include accounts, bills, records, documents, deeds, money, securities, animals, birds, fish, motor vehicles, trailers, aircraft, watercraft, furs, jewelry, watches, precious or semiprecious stones, gold, silver, property owned by the insured, or property shipped by mail. These items are either considered uninsurable under this form or must be insured under another policy or specialized Inland Marine coverage form.

Property accepted for storage is generally not covered under the Bailees Customers Coverage Form. However, coverage may apply when a specific limit of insurance for property in storage is shown in the Declarations and the insured has issued a storage certificate for the property.

The Preservation of Property Additional Coverage applies when covered property is moved or temporarily stored at another location to protect it from a covered cause of loss. The insurer will pay for direct physical loss or damage to the property while it is being moved or stored, provided the loss occurs within 30 days after the property is first moved.

Commercial Articles Coverage Form​

The Commercial Articles Coverage Form provides worldwide coverage for cameras, projection equipment, films, musical instruments, related accessories, and similar property used for business or commercial purposes. The form may also cover similar property belonging to others while it is in the insured’s care, custody, or control. For example, a professional photographer may use this form to insure cameras, lenses, lighting equipment, and other photography equipment.

The Newly Acquired Property Additional Coverage automatically covers eligible equipment acquired during the policy period for up to 30 days. The insurer will pay for loss or damage to the newly acquired property up to the lesser of 25% of the total limit of insurance shown in the Declarations for that category of property or $10,000. To continue coverage beyond the 30-day period, the insured must report the newly acquired property to the insurer and pay any additional premium required.

Electronic Data Processing Coverage Form (Computer Systems Coverage Form)​

Electronic Data Processing (EDP) coverage typically insures computer hardware and related equipment used in business operations, along with electronic data and media such as software, disks, tapes, and storage cells. Covered computer equipment may also include air-conditioning systems, fire-suppression equipment, and electrical equipment used exclusively to support the insured’s computer operations.

The Electronic Data Processing (EDP) Floater provides coverage for computer-related losses that are often excluded under standard commercial property policies. This coverage is especially important for businesses that rely heavily on computers and electronic systems to conduct their operations. EDP coverage may protect electronic equipment against losses caused by electrical arcing, power surges, changes in temperature or humidity, and mechanical breakdown. Coverage for computer viruses and other harmful code may be available as an Additional Coverage. The insured may also add Business Income and Extra Expense coverage to protect against income losses and additional operating costs resulting from covered damage to computer equipment or data.

Electronic Data Processing (EDP) coverage generally excludes property leased to others and located away from the insured’s premises, accounts, bills, records, documents, portable computers such as laptops, notebooks, and tablets, and stock in trade, meaning merchandise held for sale.

Under the Valuation condition, computer equipment that is repaired or replaced is valued at the cost of replacing it with new equipment that is functionally identical to the lost or damaged property. If the equipment is not repaired or replaced, it is valued at its actual cash value. Data is valued according to the actual cost required to reproduce it, while media is valued at the cost to repair or replace it with substantially identical property.

Signs Coverage Form​

Commercial property policies often provide limited coverage for signs. For example, coverage may apply only to signs attached to a building and may be subject to a separate, lower limit of insurance. The Signs Coverage Form may be used to provide broader coverage for signs, street clocks, and similar property owned by the insured or in the insured’s care, custody, or control. Eligible property may include neon signs, automatic or mechanical signs, billboards, and ordinary fixed or plastic-faced signs.

The Signs Coverage Form does not cover loss or damage that occurs while covered property is being transported, installed, repaired, or dismantled.

Installation Floater​

The Installation Floater primarily covers movable property that will be installed in a building, such as electrical, plumbing, and heating equipment. Coverage may also apply to carpeting, tile, glass, elevators, machinery, and similar property. Insurance applies while the property is being transported to the job site and during installation. Coverage may continue after installation until construction is completed and either the property is accepted by the owner or the insured’s interest in the property ends, whichever occurs first.

An Insurance Story

The Furniture Company should purchase an Installation Floater to protect appliances being delivered to and installed in customers’ homes. This coverage protects the appliances against covered physical loss or damage while they are in transit to the installation site and during the installation process.

Contractors Equipment Floater​

Contractors Equipment coverage provides open perils coverage for tools, equipment, and machinery used in the insured’s contracting operations. Covered property may include small hand tools, mobile equipment, forklifts, compressors, generators, and similar equipment used at job sites. The form may also cover similar property belonging to others while it is in the insured’s care, custody, or control.

Coverage is not provided for the following property:

  • Autos, trucks, aircraft, or boats
  • Plans, blueprints, or designs
  • Property while waterborne, except property transported on ferries
  • Property located underground or underwater
  • Property loaned, leased, or rented to others
  • Personal property belonging to employees

The Newly Acquired Property Additional Coverage automatically covers eligible equipment acquired during the policy period for up to 60 days. The insurer will pay for covered loss or damage to the newly acquired property up to the lesser of 25% of the total limit of insurance shown in the Declarations for all scheduled equipment or $50,000. To continue coverage beyond the 60-day period, the insured must report the property to the insurer within 60 days of acquisition and pay any additional premium required.

The coverage territory includes the United States, its territories and possessions, Puerto Rico, and Canada. Coverage also applies to covered property while it is being transported by air between locations within this territory.

Equipment Dealers Floater​

The Equipment Dealers Floater insures a dealer’s stock in trade that consists primarily of mobile equipment used in the agricultural and construction industries. Covered equipment may include binders, reapers, harvesters, tractors, bulldozers, road scrapers, and similar machinery. The form also covers mobile agricultural and construction equipment belonging to others while it is in the insured dealer’s care, custody, or control.

The following property is not covered under the Equipment Dealers Floater:

  • Autos, trucks, motorcycles, aircraft, or watercraft
  • Accounts, bills, currency, money, or securities
  • Property in the course of manufacture
  • Property that has been leased or rented to others
  • Property that has been sold and is no longer in the insured’s custody
  • Furniture, fixtures, and office supplies

Under the Valuation condition, unsold property is valued at the least of its actual cash value, the reasonable cost to restore it to its condition immediately before the loss, or the cost to replace it with substantially identical property. Property that has been sold but remains in the insured’s custody is valued at its net selling price. Property belonging to others is valued at the lesser of the amount for which the insured is legally liable or the property’s actual cash value. Both valuation amounts include the value of the insured’s labor and materials.

Under the Records condition, the insured must maintain accurate business records, including itemized inventories and sales records, and retain them for at least 3 years after the policy ends. Under the Protective Safeguards condition, the insured must establish and maintain the required protective safeguards at each insured location. If a required safeguard is not kept in working condition or is not operating while the business is closed, coverage at that location is automatically suspended until the safeguard is restored and placed back into operation.

Jewelers Block Coverage​

Jewelers Block insurance covers jewelry and related property held as stock by jewelry retailers, wholesalers, and manufacturers. Coverage also applies to similar property belonging to others while it is in the insured’s care, custody, or control, as well as stock that has been sold but not yet delivered to the customer. Covered property may include jewels, watches, gold, silver, platinum, pearls, and precious or semiprecious stones.

Jewelers Block insurance does not provide coverage for the following property:

  • Property located at an exhibition promoted by a public authority or trade association
  • Property displayed in showcases or show windows away from the insured premises
  • Property worn by an officer, director, employee, messenger, or member of that person’s family

Two optional coverages are available under Jewelers Block insurance, but each must be specifically added to the policy before coverage applies. The Show Windows Coverage Option provides coverage for theft of covered property displayed in show windows at the insured premises. It also covers damage caused by the smashing or cutting of a show window during an actual or attempted theft. The Money Coverage Option provides theft coverage for money kept in a locked safe or vault at the insured premises when the safe or vault is broken open.

Like the Equipment Dealers Floater, the Jewelers Block form is subject to both the Protective Safeguards condition and the Records and Inventory condition. Therefore, the insured must maintain the required security systems in proper working order and keep accurate business, sales, and inventory records as required by the policy.

Accounts Receivable Coverage Form​

Accounts Receivable coverage protects a business when records needed to collect amounts owed by customers are damaged or destroyed by a covered cause of loss. The coverage pays for amounts the insured cannot collect because the records are unavailable, as well as the reasonable cost of reconstructing those records and any additional collection expenses. It may also cover interest charges on loans required to offset the loss and other reasonable expenses resulting from the damage to the accounts receivable records.

Typical exclusions under Accounts Receivable coverage include:

  • Dishonest or criminal acts committed by the insured, employees, or other authorized persons
  • Bookkeeping, accounting, or billing errors
  • Bad debts that customers are unable or unwilling to pay
  • Alteration or falsification of records intended to conceal the wrongful giving, taking, or withholding of money, securities, or other property
  • War, governmental action, and nuclear hazards

Valuable Papers and Records Floater​

The Valuable Papers and Records Floater covers loss or destruction of valuable papers and records, including abstracts, books, deeds, drawings, films, maps, and mortgages. Coverage does not apply to money or securities, electronic data, property held as samples, property awaiting delivery after a sale, or property stored away from the insured premises.