AAIS
INSTALLATION FLOATER COVERAGE FORMS ANALYSIS
(February 2024)
INTRODUCTION
The American Association of Insurance
Services (AAIS) Installation Floater Coverage Forms insure personal property
the named insured (usually a contractor) installs, fabricates, or erects in
buildings being renovated, upgraded, or remodeled. Coverage applies to both owned
property and the property of others. Covered property consists of materials,
supplies, machinery, fixtures, and equipment that will become a permanent part
of an installation or construction project on the construction site. Coverage
also applies while that property is at temporary locations and in transit.
AAIS has developed three
installation floater coverage forms. Each has its own corresponding schedule of
coverages. This analysis examines the IM 7100–Installation Floater first,
compares the other forms to it, and analyzes the differences.
ELIGIBILITY
Various contractors usually purchase
this coverage, but there are no restrictions on who may do so. Any party with a
financial interest in covered property being installed in an existing building
or structure is eligible.
POLICY CONSTRUCTION
AAIS
Installation Floater coverage requires
at least these four forms:
SCHEDULES OF COVERAGES
IM 7105–SCHEDULE OF
COVERAGES–INSTALLATION FLOATER COVERAGE (01 12 changes)
This Schedule of Coverages is used with
IM 7100–Installation Floater Coverage. IM 7105 contains the following
information:
Policy Number (01 12 addition)
The 01 12 edition added a space to enter the policy
number.
Property Covered
Coverage can be
on either a blanket or scheduled basis. The following entries are made based on
which basis is selected:
Blanket Coverage
This is the most paid for
loss at any one jobsite.
This is the most paid for
loss in a single occurrence.
Scheduled
Locations Coverage
The 01 12 edition added the word Limit (“Limit”) in three places because Limit is a defined word.
Coverage Extensions
The limits on the Schedule of Coverages for the
following coverages apply to all covered locations:
The limit is $5,000 unless a different limit is entered.
This applies for ten days unless a different number of days is entered.
The limit is $15,000 during each 12-month period unless a different limit
is entered.
Supplemental Coverages
Each of these coverages provides
additional limits and/or additional coverage. Required entries vary by type of
coverage.
The
limit is $10,000 unless a different limit is entered.
The
limit is $5,000 unless a different limit is entered.
The
limit is $5,000 unless a different limit is entered.
Deductible
The occurrence deductible that applies
is entered in the space provided.
Coinsurance
One of the following coinsurance options must be
selected:
This section of the schedule of coverages lists endorsements and forms included when the policy is issued.
The previous edition referred to this section as Optional Coverages and
Endorsements.
IM 7100–INSTALLATION FLOATER
COVERAGE FORM ANALYSIS
This analysis
is of the 08 10 edition. Changes from the previous edition are in bold print.
Introduction
The lead-in
language states the terms you and your mean the persons or parties named on the
declarations as the insured. We, us, and our means the insurance company that
provides coverage. It also refers to the Definitions section at the end of the
coverage form.
Note: The definitions for you,
your, we, us, and our were in the Definitions section in the previous edition.
In addition, the Definitions section was after the Agreement in the previous
edition. The 08 10 edition has the Definitions section at the end of the
coverage form.
Agreement
The insurance company agrees to provide
the coverage described in the coverage form and in the schedule of coverages in
return for the named insured’s agreement to pay the premium. These agreements
are subject to all the coverage form's terms, conditions, endorsements, and
definitions.
Property Covered (08 10
changes)
Coverage
applies to the property described below but this coverage is subject to any
exclusions or limitations that apply.
1. Coverage (08 10
change)
Coverage
applies to direct physical loss or damage
that a covered peril causes to the following:
a. Materials, supplies,
machinery, fixtures, and equipment that belong to the named insured.
b. Similar property
described above but that belongs to other(s) and is in the named insured’s
care, custody, or control
Coverage for this property applies while at the named insured’s jobsite where
the named insured is performing construction, rigging, or installation
operations. For coverage to apply, the property must be part of an installation
project.
2. Coverage Limitations
a. The only property covered
are those materials, supplies, machinery, fixtures, and equipment intended to
become a permanent part of the named insured's installation project.
b. When the coverage is
written on a scheduled basis this coverage is limited to only at an installation
project taking place at a jobsite listed on the schedule of coverages.
3. We Do Not Cover (08
10 addition)
Coverage does not apply to materials, supplies,
machinery, fixtures, and equipment that the named insured does not (and will not)
install, construct, or rig.
Note: This is similar to the
language in the previous edition, but this provides more emphasis and clarity.
|
Example: Perfection Plumbing is the plumbing subcontractor on a major renovation
of an older apartment building. Perfection is responsible for retrofitting
and installing an automatic sprinkler system, domestic plumbing lines, and
all plumbing fixtures, such as sinks, faucets, and toilets. Because of
transportation cost efficiencies and pressure from its supplier, all property
that Perfection will install arrives at the job site at one time. Because the
sprinkler system installation is the first order of business and storage
space is limited, the remaining property is stored at a location other than
the job site until it is installed. Perfection separates the values at the
job site from those at the storage location, enters them in the appropriate
spaces on the schedule of coverages, enters a transit limit to cover the
transit exposure between the two locations, and has all its exposures
properly covered. |
4. We Do Not Pay (08 10 addition)
The insurance company
does not pay penalties that are imposed against it because:
a. A building or
structure is completed late or not completed at all. This applies even if such
penalties are agreed to by the named insured in the construction contract's
conditions or provisions.
b. The named insured has
breached conditions or provisions in the construction contract.
5. Limit (08 10 addition)
a. When coverage is on a
blanket basis, the most the insurance company pays for covered loss to covered
property in any one occurrence is the Jobsite limit on the schedule of
coverages.
b. When coverage is on a
scheduled locations basis, the most the insurance company pays for covered loss
to covered property in any one occurrence is the Jobsite limit on the schedule
of coverages for that specific jobsite.
Property Not Covered
Six specific types of property are
excluded:
1. Airborne Property
This property
is not covered except when the property is in transit on regularly scheduled
airline flights.
2. Buildings,
Structures, and Land (08 10 change)
None
of these items is covered. There are no exceptions.
Note: The previous
edition had an exception for property that is part of the named insured’s installation
or construction project in connection with any building or structure. This change
narrows coverage.
3. Contraband
Property that is illegal to possess is not covered. Property that is
legal to possess, but that is being used as part of an illegal trade or
transported illegally is also not covered.
4. Machinery, Tools, and Equipment
This property and similar property not intended
to become a permanent part of the named insured’s installation project is not
covered.
5. Trees, Shrubs, or Plants
Lawns are also not covered property.
6. Waterborne Property
This property is not covered except when the property is in transit with a
carrier for hire.
Note: The
previous edition excluded Money and Securities. The 08 10 edition does not. However,
money and securities are not properties installed at a jobsite.
Coverage Extensions
Provisions That Apply
To Coverage Extensions (08 10 Change)
There are three coverage
extensions. The limit for each is either the limit on the schedule of coverages
or the default limit in the coverage form. This limit is part of the applicable
limit for covered property and not in addition to it unless otherwise
indicated. This limit is not added to or combined with limits for any other
coverage extension, supplemental coverage, or
other coverage, and is not subject to any coinsurance provisions that apply
elsewhere in the coverage form.
1. Debris Removal (08 10 changes)
a. When a covered peril
damages or destroys covered property, the cost to remove any created debris is
covered under this extension. The 08 10
edition defines debris removal as the costs to demolish, clear, and remove
debris.
b. Debris removal does not include any costs for
removing, restoring, or replacing polluted land or water, or to extract
pollutants.
c. There are two parts of
the Limit section. The first is restricting any debris removal payment to no
more than 25% of the amount paid for the actual direct physical loss or damage. To calculate the 25%, only the
direct physical damage loss is considered. This means any debris removal costs
must be excluded before the calculation is made. (08 10 addition).
The second part is that
when the debris removal and the physical damage loss are added together, no
more than the limit of insurance is paid.
d. An additional $5,000 (or
a higher amount entered on the schedule of coverages) is available if the
debris removal expense is more than 25% of the loss amount or if the combined
cost of loss and debris removal is more than the limit of insurance for the
covered property.
e. The named insured must
report debris removal expenses to the insurance company within 180 days of the
loss date for this coverage extension to apply.
2. Emergency Removal (08 10 change)
a. This covers direct physical
loss or damage (08 10 addition) to
covered property removed from the scheduled location to avoid loss or damage
from an impending covered peril. The loss can occur while in transit between
the scheduled and sanctuary locations. This coverage is unique in that the
property that is being moved is not subject to any exclusion while in transit
or at a sanctuary location. However, the reason for moving the property must be
due to covered peril.
b. Coverage applies for up
to ten days after the property is first moved but does not extend past the
policy’s expiration date. An entry can be made on the schedule of coverages to
increase the number of days.
Note: Coverage does not extend
past the expiration date, which means if the insured has property at a
sanctuary location when coverage renews, the sanctuary location must be listed
as a premises, or coverage no longer applies.
|
Example: Perfection Plumbing's owner becomes aware of an impending demonstration
that could become a riot. He is very concerned, removes property kept in the
storage facility to a different location, and keeps it there until the
problem demonstration ends. He returns everything he removed to the jobsite
five days later. On the trip back, the truck that transports the goods
overturns. The damage the overturn causes is covered because the items were
removed to protect them from loss or damage by a covered peril. |
3. Limited Fungus Coverage (08 10 changes)
Note: This
coverage extension is actually a very limited give back to offset the coverage
eliminated when the fungus exclusion was introduced.
a. Coverage
This coverage extension pays
for the following:
· Costs and expenses arising because fungus is on covered property but only
if the fungus is a result of a covered peril
· Direct physical loss or
damage to covered property due to the existence or any activity of fungus
b. Coverage Limitation
c. Limited Fungus Coverage Limit (08 10 minor title change)
The most paid for all loss or damage at all jobsites is $15,000 during any 12-month period, regardless of the
number of claims, locations, buildings, or structures. This limit can be
increased.
d. If the Policy Period is Extended
The 12-month aggregate time period will follow
any extension of a policy period that is less than 12 months.
|
Example: Jeremy’s Installation Floater policy period is
12/1 – 12/1. The job is almost complete, but not quite, so he asks for it to
be extended for an additional two months. The fungus aggregate time period is
extended from being a 12 month aggregate to 14 month aggregate at that time. |
e. Recurrence and Continuation of Fungus
A
reoccurrence of a fungus event is considered a continuation of the initial
fungus occurrence and does not provide any additional coverage, and is subject
to the aggregate in place at the time of the initial event. f. Cleanup, removal, and testing activities and costs
related to a fungus incident are covered but are subject to the same aggregate
limit.
f. Limited Fungus Coverage Limit Applies to Other Costs or Expenses (08 10
change)
This
limit can be used to pay the following costs or expenses incurred to do any of the
following:
g. Loss Not Caused By Fungus
This coverage does not
limit coverage for otherwise covered loss or damage that fungus does not cause.
When fungus damage increases an otherwise covered loss, any such increase
because of that fungus is subject to this coverage extension’s limitations.
Supplemental Coverages
Provisions That Apply
To Supplemental Coverages (08 10 Change)
There are four
supplemental coverages. The limit for each is the limit for the supplemental
coverage unless there is a limit for that coverage on the schedule of coverages.
Limits for any supplemental coverage are separate from and not part of the
applicable limit for covered property.
The limit available for
coverage described under a supplemental coverage is the only one available. It
is not the total of the limit for a supplemental coverage and the limit for
covered property. The limits are not added to or combined with limits for any
other supplemental coverage, coverage extension, or other coverage. They are also not subject to any coinsurance
provisions that apply elsewhere in the coverage form.
1. Pollutant Cleanup and Removal
a. The insurance company pays the named insured's expenses to extract pollutants from land or water if a covered peril that occurred during the policy period caused the pollutants to be released or discharged.
b. This is immediate coverage, so any expenses to extract pollutants are only paid when reported to the insurance company within 180 days of the date of loss.
c. Costs related to testing, evaluating, observing, or recording pollutants are excluded except for those costs that are part of the extraction process.
d. The most paid at any one location is $10,000 for all such
expenses that a covered peril that occurs at that location during each separate
12-month policy period causes. This limit can be increased.
2. Sewer Backup (08 10 changes)
a. Coverage applies to direct physical loss or damage to covered property caused by or that
results from the following:
b. Coverage does not apply to loss or damage that
result from any of the following:
c. $5,000
is the most paid in any one occurrence. This limit can be increased.
3. Temporary Storage Locations (08 10 changes)
a. Coverage
Coverage applies to direct physical loss
or damage by a covered peril to
covered property intended to become a permanent part of a covered installation
project. This coverage applies only when the property is temporarily in storage
away from a covered installation jobsite. Covered property includes materials,
supplies, fixtures, machinery, or
equipment.
b. We Do Not Cover (08
10 addition)
Coverage does not apply to such property if it is not
specifically destined for or identified with a covered installation jobsite.
Note: This
could be a difficult provision to satisfy when multiple jobs are taking place
and property that could be used at any of the jobs is in a central temporary
storage facility. This property would be better covered under a commercial
property coverage form.
c. Limit
The most paid in a single occurrence
is $5,000. This limit can be increased.
4. Transit (08 10 change)
a. Coverage
Coverage applies to direct physical loss
or damage by a covered peril to
covered property while that property is in transit. This coverage only applies if
the property is intended to become a permanent part of a covered installation
project.
b. Limit
The most paid in a single occurrence is $5,000. This
limit can be increased.
Note:
The following Supplemental Coverages
in the previous edition are not in the 08 10 edition:
Perils Covered (08 10
Change)
Coverage applies to risks
of direct physical loss or damage
unless the loss is limited or caused by an excluded peril.
Perils Excluded
1. Primary Exclusions
The first group of exclusions is essentially absolute. Subject to specific
exceptions, loss or damage by each is totally excluded, regardless of any other
cause or event that contributes to a loss, either concurrently or in any other
sequence. The insurance company does not pay for any direct or indirect loss or
damage caused by or that results from any of these events.
a. Civil Authority
There is no coverage for
loss that results from an order any civil or government authority issues. These
orders may include seizure, confiscation, destruction, or quarantine of
property, but this exclusion is not limited to only these. The only exception
is when the loss or damage is caused by a civil authority destroying property to
control a fire. This exception applies only if the fire results from a covered
peril.
|
Example: Oscar’s client demanded a type of wood was under
a trade embargo. Oscar had connections and was installing the wood at the
jobsite when the FBI raided the site and removed all of the wood. Oscar is
not covered for the value of the seized wood nor the damage to other property
that resulted from the raid. |
b. Earth Movement (08 10
changes)
Earth
movement is not covered except for the following four exceptions:
c. Flood (08 10 changes)
The insurance company does not pay for loss or damage that flood causes.
Loss or damage from
waterborne material carried or moved by flood, whether driven by wind or not is
excluded. Storm surge or material carried or moved by mudslide or mudflow is
also excluded.
There are two exceptions:
d. Fungus
Coverage does not apply to
loss or damage caused by or related to the existence or any activity of fungus.
There are four exceptions:
e. Nuclear Hazard
The insurance company does not cover loss or damage caused by or that
results from any nuclear reaction, radiation, or contamination. This is
absolute and applies whether or not the nuclear incident was controlled, and by
whatever means caused. Any loss the nuclear hazard causes is not treated as a
loss that fire, explosion, or smoke causes. The only exception is when a fire
results from the nuclear fire, direct loss or damage from that fire is covered,
but the damage from the nuclear hazard remains excluded.
f. Ordinance or Law
There is no coverage for
any loss or increased construction costs because of enforcing any government
regulation that controls the use, construction, or repair of any property. Loss
because of a requirement to demolish property and remove its debris is also
excluded.
This exclusion also
applies to enforcement that takes place even if the property was not damaged
and to increased costs incurred due to complying with the regulation that could
include construction, demolition, or debris removal activities.
g. Sewer, Septic Tank, Sump, or Drain Backup and Water below the Surface
(08 10 changes)
This exclusion applies to
the following except to the extent of the coverage that Supplemental Coverages 2.
Sewer Backup provides.
Coverage does not apply
to loss or damage that any of the following causes:
There are two exceptions:
|
Example: The carpet arrived before the house was
completed, so Jeremy stored it in the basement. Heavy rains came. The ground
was already saturated and exerted pressure on the foundation, causing it to crack.
The water that entered soaked and ruined the carpet. There is no coverage for
the damage to the carpet. |
h. War and Military Action
The insurance company does not pay for loss or damage caused by any act of
war. Undeclared and civil war or warlike action by a military force are all
considered war. All actions taken to hinder or defend against an actual or
expected attack by any government or sovereign authority that uses military
personnel or other agents are also considered war and excluded. In addition,
acts of insurrection, rebellion, revolution, or unlawful seizure of power and
any action any government authority takes to prevent or defend against any such
acts are excluded. If any action within the terms of this exclusion involves
nuclear reaction, radiation, or contamination, this exclusion applies in place
of the nuclear hazard exclusion.
Note: This means that the
exception for resulting fire under the nuclear hazard is not covered when it is
the result of war.
Note: The Penalties exclusion in the previous edition is
not in the 08 10 edition.
2. Secondary Exclusions
The second group of exclusions applies to loss or damage caused by or resulting
from any of the following loss events. Some of these exclusions have
exceptions, conditions, or limitations that should be noted and reviewed
carefully. The insurance company does not pay for any loss or damage caused by
or that results from any of these events.
a. Contamination or Deterioration (08 10 change)
Loss or damage that
is caused by contamination or deterioration is excluded. This applies to corrosion,
decay, fungus, mildew, mold, rot, and rust. It also applies to any quality,
fault, or weakness in covered property that causes it to damage or destroy
itself. However, this exclusion is not limited to only these described causes.
There is an exception. When damage to property is due to a covered peril that resulted
from any contamination or deterioration there is coverage for the resulting
damage.
b. Criminal, Fraudulent,
Dishonest, or Illegal Acts (08 10 change)
Coverage does not apply
to loss or damage caused by or that
result from criminal, fraudulent, dishonest, or illegal acts that any of the
following commit alone or in collusion with another:
Coverage applies if employees destroy property. It does not apply if
employees steal.
This exclusion does not apply to covered property in a carrier for hire’s
custody.
Note: Crime coverages should
be used to cover this type of loss. Because client’s property is often being
covered under an installation floater, the CR 04 01–Client’s Property should be
considered in addition to standard employee dishonesty coverage.
Related Article: CR 04 01–Clients’
Property
c. Defect, Weakness, or
Inadequacy in Materials (08 10 addition)
There is no
coverage if defects, faults, inadequacies, unsoundness, or weakness in
materials cause the loss or damage. However, if any of these cause a covered
peril to occur, the loss or damage form that covered peril is covered.
Note: This exclusion was previously part of the
exclusion for Defects, Errors, or Omissions in Property.
|
Example: The design called for
the floor joists to be a minimum of 2 X 10, but Kris’ measurements were
incorrect, and he installed 2 X 6 joists instead. Scenario 1: As the build
continued, the bow of the joists became noticeable. A check found the error,
and everything that had been
installed had to be removed and the joists replaced. There is no coverage for
any loss or damage to the joists or the installed material that had to be
removed. Scenario 2: No one noticed the bow of the joints until one collapsed
from the pressure. The property damage caused by the collapse is covered, but
the cost to replace the other problem joists remains uncovered. |
d. Defects, Errors, and
Omissions in Property (08 10 change)
There is no
coverage for loss or damage caused
by any act, defect, error, or omission that relates to specific construction
activities regardless if due to acts of negligence or otherwise. The excluded acts,
defect, error, or omission are excluded if they involve any of the following
activities:
If any of the above result
in a covered peril coverage does apply to the loss or
damage from that resulting covered peril.
|
Example: The specifications
called for 1/2-inch screws, but Paul could not find any, so he used the 1/4-inch
ones he had. When the shelving crashed to the floor, Paul had to pay for the
damaged shelving because he had altered the specifications, and this
exclusion applied. The shelving crashed down upon a salamander, heating the
building, and a fire ensued. The damage caused by that fire was covered. |
e. Delay in Completion
and Increased Construction Costs (08 10 addition)
Direct or indirect
loss or damage that is caused by either of the following:
This exclusion
applies regardless of the reason for the delay or change in sequence. Increased
construction costs that result from such delays or changes in sequence are also
not paid. The following are examples of increased construction costs that are
excluded:
|
Example: Kushing is scheduled to
install an air conditioning unit at the Hightime building on 08/01. He pays a
nonrefundable deposit to reserve the crane he needs for the time period 08/01
to 08/10. A windstorm damaged the rooftop on 07/28, and the project manager
rescheduled Kushing’s work to install the unit on 08/20. Kushing loses his
deposit and cannot rent the crane from his chosen equipment supplier. He ends
up paying more to rent the crane from another supplier. He also must cancel
another smaller job that he had on 08/20 to complete this job. None of his
additional costs or expenses are covered. |
f. Electrical Currents
(08 10 changes)
Loss or damage caused by
electrical currents or arcing is not covered unless the source of the
electricity is lightning. The exception is that loss is covered when caused by
a specified peril resulting from the electrical current or arcing.
Notes:
This exclusion applies only to property
that artificially generates the current.
The previous edition used covered peril. The 08 10 edition uses specified peril. This is a reduction in
coverage. In addition, the Testing exception in the previous edition is not in
the 08 10 edition. This further reduces coverage.
g. Loss of Use and
Consequential Loss (08 10 changes)
Loss or damage caused by
or that results from loss of use, delay, loss of market, or any consequential loss or damage of any kind is excluded.
Note: This
was the Loss of Use exclusion in the previous edition. The words added
potentially reduce coverage.
h. Mechanical Breakdown
(08 10 change)
There is no coverage for
loss or damage due to mechanical
breakdown or the rupture or bursting of machinery’s moving parts that
centrifugal force causes. If one of these events results in a specified peril
occurring coverage applies to the loss or damage because of that specified
peril.
Note: The
Testing exception in the previous edition is not in the 08 10 edition. This
reduces coverage.
i. Missing Property
An unexplained or mysterious disappearance of covered
property is excluded when there is no physical evidence to suggest what
happened to it, and the only proof that a loss occurred is based on an audit or
physical inventory.
The one exception is that this does not apply to covered property while
it is in the custody of carriers for hire.
j. Pollutants (08 10 change)
There is no coverage for
loss caused by or resulting from any release, discharge, seepage, migration,
dispersal, or escape of pollutants. There are three exceptions:
k. Steam Boiler Explosion (08 10 addition)
The
insurance company does not pay for loss or damage caused by or that results
from explosions of steam boilers, pipes, turbines, or engines. There are two
exceptions:
Note: Equipment Breakdown
Protection Coverage can be purchased to cover this gap.
Related
Article: EB 00 20–Equipment Breakdown Protection
Coverage Form Analysis
l. Temperature/Humidity
(08 10 change)
Loss or damage that dryness, dampness, humidity, changes in, or extremes
of temperature cause is excluded. The one exception is that if any of these
events result in a covered peril, then the loss or damage because that covered peril
is covered.
m. Voluntary Parting (08 10 change)
Loss or damage that occurs
because covered property is voluntarily given to others is excluded. There is
no coverage even if the surrender was due to a fraudulent scheme, trick, or
false pretense.
|
Example: James was surprised when Larry, a new
employee, showed up at the site and explained that the president wanted some high-end
electronics moved from James jobsite to another jobsite. Larry was very
apologetic but insisted that the president was adamant that the transfer
happen and happen quickly. James knew the president was rather unreasonable
and would be rough on Larry if James did not comply immediately, so James
helped Larry load the equipment in his truck, but only after he signed a
receipt. The president was incredibly vocal when James told this story
because Larry was not an employee, and the president had made no such demand.
The equipment was never seen again, and its loss was not covered. |
n. Wear And Tear (08 10 change)
Loss or damage caused by wear,
tear, marring, or scratching is excluded.
Note: The Explosion, Bursting, or Rupture exclusion in the
previous edition is not in the 08 10 edition.
1. Notice
The named insured must promptly notify the insurance company or its agent
of a loss. The notice must include a description of the property lost or damaged.
If a criminal act caused the loss, the appropriate law enforcement agency must
also be notified. The insurance company has the right to require that any notice
be in writing.
2. You Must Protect Property
During and after a loss, the named insured must take all reasonable steps
to protect covered property from further loss. The insurance company pays
reasonable costs the named insured incurs to do so if the named insured maintains accurate records to
substantiate the costs. Paying these costs is not in addition to the policy
limits. There is no coverage for any repairs or emergency measures performed on
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.
3. Proof of Loss
The named insured must complete and return the insurance company's
prescribed proof of loss forms within 60 days after the company requests it.
The information provided must include the time, place, and circumstances
involved with the loss and information on any other insurance coverage that may
apply. It must also include the named insured’s interest and the interest of
others concerning the property involved, including lienholders, loss payees,
and mortgagees. Any changes in title to the property during the policy period
must be disclosed, in addition to providing any other reasonable information
the company may require to adjust and settle the loss.
4. Examination
Examination under oath may be required in matters that relate to the loss.
The insurance company may request these examinations more than once, but such
requests must be reasonable. If multiple persons are examined, the company has
the right to examine each individual separately.
5. Records
The named insured must produce any records related to the loss. The
insurance company must be allowed to make copies and take extracts of them as
often as it reasonably requests. Records include tax returns and bank
microfilms of all related cancelled checks, but records are not limited to just
these.
6. Damaged Property
Damaged and undamaged property must be made available for the insurance
company's inspection as often as reasonably necessary. It must also be allowed
to take samples of the property to the extent necessary to adjust and settle
the loss.
7. Volunteer Payments
The named insured may not voluntarily make payments, assume obligations,
pay or offer rewards, or incur other expenses without the insurance company's
express approval. If it does, it does so at its own expense. The only
exceptions are those costs incurred to protect property, as item 2. above
describes.
8. Abandonment
The named insured may not abandon damaged property to the insurance
company without its written consent.
9. Cooperation
The named insured must cooperate with the insurance company. Any actions
required of the named insured within this policy must be performed.
1. Cost to Repair,
Replace, or Rebuild (08 10 changes)
a. If Property Is
Repaired, Replaced or Rebuilt
Covered property that is actually repaired,
replaced, or rebuilt is based on the named insured's reasonable and necessary
costs and expenses to do so with similar materials to what was used in the
damaged installation project. The insurance company does not pay anything until
the named insured actually incurs the costs and expenses. Examples of covered
costs and expenses are material, delivery charges, labor, reasonable overhead,
and profit.
b. If Property Is Not
Repaired, Replaced, or Rebuilt
The valuation
of covered property that is not repaired, replaced, or rebuilt is based on an
estimate. The reasonable and necessary costs and expenses considered are those
that would have been necessary to repair, replace, or rebuild the property using
materials similar to those used in the damaged installation project. Overhead,
profit, and delivery charges are not included because they will not be incurred.
c. Payment Limitation
The insurance company will pay no more than the
limit on the schedule of coverages.
|
Example: Isaac's Installations sustains a loss and estimates that the repair
costs, excluding overhead, profit, and delivery, will be $10,000. The
insurance company approves and pays this amount. When the actual work is completed,
Isaac itemizes and files a claim that includes the $10,000 incurred in the
repair plus the profit, delivery costs, and overhead for a total of $14,000.
The insurance company pays the additional $4,000 of the claim. |
2. Pair or Set
The value of
a loss to part of a pair or set is not the entire value of the pair or set, but
it is also not merely the value of the individual item. Instead, it is a reasonable
proportion of the value loss of the entire pair or set because that one part is
lost.
Note: This recognizes that the value of the whole is greater than the value of
individual parts but that the remaining parts still have value as separates.
3. Loss to Parts
The value of a lost or damaged part of property that consists of several parts
is the cost to repair or replace only the lost or damaged part.
1. Insurable Interest
The insurance company
does not pay more than the named insured's insurable interest in the covered
property at the time of loss.
Note: One concern is how personal property of others claims are adjusted because the named insured has a minimal amount of financial interest in property of others.
|
Example: Jake
installs cabinets for Kelly Primary. Kelly owns the cabinets, but Jake has
control of them. Jake’s vehicle overturned as he was transporting them to the
project site, and the cabinets were destroyed. Jake never owned the cabinets,
but they were delivered to his location for temporary storage until the
project started. Could Jake’s loss be denied because Jake does not have a
financial interest in the cabinets? |
2. Deductible
The insurance company pays only the amount of loss that exceeds the deductible amount on the schedule of coverages.
3. Loss Settlement
Terms
Subject to other items in
this section, the insurance company pays the least of the following:
4. Coinsurance
a. When Coinsurance
Applies
The insurance company pays
only part of the loss if the limit is less than 100% of the estimated completed
value of the covered property at the time of loss.
b. How We Determine Our Part of the Loss
There are three steps to determine the
amount of the loss to be paid:
Step 1. Multiply the percentage on the schedule of coverages by the value
of the covered property at the time of loss.
Step 2. Divide the
limit for covered property by the result determined in step 1.
Note: There is no coinsurance penalty if the result is1.00 or higher.
Step 3. When step 2. is less than
1.00 a coinsurance penalty applies. Subtract the deductible from the amount of
loss and then multiply the total amount of loss by the percentage determined in
step 2.
The insurance company does
not pay more than the amount determined in step 3. or the limit, whichever is
less. It does not pay any remaining part of the loss.
c. If There is More
Than One Limit
If there is more than one
limit on the schedule of coverages, this procedure applies separately to each
limit.
d. If There is Only One
Limit
If there is only one limit
on the schedule of coverages, this procedure applies to the total of all
covered property to which that limit applies.
e. When Coinsurance Does Not Apply
Coinsurance does not apply
when coinsurance provisions are waived by an entry on the schedule of
coverages.
5. Catastrophe Limit (08 10 addition)
The most the insurance company pays in any one occurrence or loss is the
Catastrophe Limit on the schedule of coverages. This limit applies regardless
of the number of installation projects, jobsites, or any combination, as well
as coverages under Coverage Extensions or Supplemental Coverages.
Note: It is very important to
adjust this limit whenever jobsites are added, or other limits are increased.
|
Example: Miller’s had HVAC jobs
at 10 locations, and coverage was on a blanket basis. The jobsite limit was
$50,000, so a catastrophe limit of $500,000 was scheduled. Miller increased
the temporary storage location limit to $150,000 because that location was
convenient for five of the jobs, so that separate storage was not needed on
each site. When a tornado came through, all of the jobsites were damaged, as
was the temporary location. Miller was very unhappy when he learned his loss
was capped at $500,000 and he would not receive the $650,000 he thought he
should. |
6. Insurance under More
Than One Coverage
Two or more coverages in the coverage form may apply to the same loss. In
that case, the insurance company does not pay more than the value of the actual
claim, loss, or damage sustained.
7. Insurance under More Than One Policy
a. Proportional Share
The named
insured may have other coverage subject to the same terms as this coverage form.
In that case, this coverage form pays only its share of the covered loss. That
share is the proportion that its limit of insurance bears to the limits of
insurance of all insurance that covers on the same basis.
b. Excess Amount
There may be other coverage
available to pay for the loss other than as described in 7. a. above. In that
case, this coverage form pays on an excess basis. It pays only the amount of
covered loss that exceeds the amount due from the other coverage, whether
collectible or not. Any payment is subject to the limit of insurance that
applies.
1. Loss Payment
Options
a. Our Options
b. Notice of Our Intent to Rebuild, Repair, or Replace
The insurance company has 30 days from the date it receives a properly
completed proof of loss to notify the insured of its intent to rebuild, repair,
or replace the damaged property.
2. Your Losses
a. Adjustment and Payment
of Loss
The insurance
company adjusts all losses with and pays the named insured unless another loss
payee named in the policy is involved.
b. Conditions for Payment of Loss
The insurance company pays a covered loss within 30 days after it receives
a properly prepared proof of loss and the amount of loss is established. Either
the amount of loss is determined through a written agreement between the
company and the named insured or after an appraisal award is filed with the
company.
3. Property of Others
a. Adjustment and Payment
of Loss to Property of Others
The insurance
company has the option to adjust and pay losses that involve property of others
either to the named insured acting on the property owner’s behalf or to the
property owner.
b. We Do Not Have To Pay You if We Pay the Owner
When the insurance company pays the property owner, it is not obligated to
pay the named insured. In addition, if the property owner sues the named insured,
the company has the option to defend the named insured in that suit.
Note: Installation Floaters
often involve significant amounts of property of others in the named insured’s
care, custody, and control. The property owner is the named insured’s customer,
so a smooth claims settlement is very important to the named insured.
1. Appraisal
The insurance company and the insured may not always agree on the value of
a covered claim. This condition provides one method to resolve disputed claims.
Either party can request an appraisal to determine the value of a disputed
claim. Once requested, the parties have 20 days to obtain their own independent
and competent appraisers and give their appraiser's name to the other party.
The two appraisers then have 15 days to select a competent impartial umpire. If
they cannot agree on an umpire within that time period, either can request that
a judge in the court of record in the state where the property is located
appoint one.
The appraisers then determine the claim’s value. They submit any
differences to the umpire. Once any two of the three parties agree, the amount
of loss is set.
Each party pays its own appraiser. Both parties share the umpire’s cost
and other expenses equally.
2. Benefit to Others
The insurance provided does not directly or indirectly benefit any party with
custody of the named insured's property.
3. Conformity with Statute
Any condition in this coverage form that conflicts with any applicable law
is amended to conform to that law.
4. Estates
Note: This condition applies only if the named insured is an individual.
a. Your Death
This applies only when the named insured is an individual. When a named
insured dies, the person who has custody of the named insured's property is an
insured for that property until a qualified legal representative is appointed. Once
the named insured’s legal representative is named, that person is an insured
but only for the property covered under this policy.
b. Policy Period is not Extended
This coverage does not extend past the policy’s expiration date.
5. Misrepresentation, Concealment, or Fraud
This coverage is void if any insured at any time willfully concealed or
misrepresented a material fact related to the insurance provided, the property
covered, or its interest in the property. It is also void if fraud or false
swearing by any insured took place concerning 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 denying a particular claim.
6. Policy Period
Only covered losses that occur during the policy period are paid.
7. Recoveries
Paying the loss does not end the obligations of the named insured and the
insurance company toward one another. Additional provisions apply if the
insurance company pays a loss and the lost or damaged property is subsequently
recovered, or the parties responsible for the loss pay for it.
Either party that recovers property or payment must inform the other.
Recovery expenses that either party incurred are reimbursed first. If the named
insured keeps the recovered property, it must refund the amount of the claim
the insurance company paid unless the company agrees to a different amount. If
the claim paid is less than the agreed loss due to applying a deductible or another
limitation, any recovery is prorated between the named insured and the
insurance company based on the company's respective interest in the loss.
8. Restoration of Limits
Payment of a claim does not reduce the applicable limits that are available
to pay future claims. The only exception is Coverage Extensions 3. Limited Fungus Coverage provides that the coverage
is subject to an aggregate limit.
9. Subrogation
The insurance company acquires the named insured's rights of recovery from
third parties after it pays a loss. The named insured must help the insurance
company secure those rights. The company is not obligated to pay a loss if the
named insured hinders or impairs the company's rights of subrogation. However,
the named insured can agree in writing to waive recovery rights from others before
a loss occurs.
Note: Construction contracts
often include a mutual waiver of subrogation between the parties. This waiver
would be honored as long as the contract was signed prior to the loss.
10. Suit against Us
The insurance company cannot be sued by anyone for any coverage until all
the terms of the coverage form are met. Suits must be brought within two years
after the named insured first knew about a loss. If a state law invalidates
this condition, any suit brought must comply with the provisions of that law
and begin within the shortest period of time allowed by law.
Note: It is normal for a basic coverage form to be modified
by mandatory state-specific endorsements that address issues related to that
specific state.
11. Territorial Limits
Covered property must be located in the United States, its territories and
possessions, Canada, or Puerto Rico for coverage to apply.
12. Carriers for Hire
Many carriers for hire
limit their liability through shipping documents for less than the shipped
property’s actual cash value. The insurance company grants permission to the
named insured to accept those shipping documents.
Additional Coverage
Limitations
When Coverage Ceases
Coverage at the earliest of the following events:
Note:
This could be a problem because the coverage includes property of others in the
care, custody, and control of the named insured. The named insured never has an
insurable interest in such property so does that mean there is never any
coverage?
Note: Because coverage
ends on the earliest date that one of these events occurs, it is extremely
important to inform the named insured of that fact. This is so that coverage
being in force is not automatically or incorrectly assumed.
Defined terms are used throughout the coverage form. Restricting their
meaning to its definition is how all parties have a clearer understanding of
the intended coverage. Twelve terms are
defined:
1. Earth movement (08 10 changes)
Note: Earth movement does not
include sinkhole collapse.
2. Flood (08 10 changes)
Water that overflows or
inundates usually dry areas, whether caused naturally or artificially, is flood.
It may be caused by human or animal forces or other acts of nature. All of the
following are examples of flood, but the definition is not limited to only
them:
3. Fungus
This is a very far-reaching
definition that includes the following
but is not limited to just them:
4. Installation project (08 10 addition)
An installation or construction project. A repair or
maintenance project requires installation, construction or rigging of
materials, equipment, supplies, machinery, or fixtures is an example, but the
term is not limited to only this.
5. Jobsite (08 10 change)
This is any location, project, or work site where the named insured is conducting an installation project that requires
installation, construction, or the
rigging of materials, equipment, supplies, machinery, or fixtures.
6. Limit
This is the amount of coverage that applies to the insured property.
7. Pollutant
This is a broad and expansive term. It is solids, liquids, thermal or
radioactive contaminants, and irritants. It includes, but is not limited to,
acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste includes
materials intended for recycling, reclamation, and reconditioning, as well as
for disposal. Visible and invisible electrical or magnetic emissions and sound
emissions are also considered pollutants.
8. Schedule of coverages
This is any page labeled as such that contains coverage information,
including declarations or supplemental declarations.
9. Sinkhole collapse
The earth’s
surface suddenly settling or collapsing into an underground opening that is created
by water acting on limestone or some other rock formation. Sinkhole collapse does
not include the collapsed land’s value or the cost to fill sinkholes.
10. Specified perils
The named perils of aircraft, civil commotion, explosion, falling objects,
fire, hail, fire extinguishing equipment leakage, lightning, riot, sinkhole
collapse, smoke, sonic boom, vandalism, vehicles, volcanic action, water
damage, weight of sleet, snow or ice and windstorm. Two terms need further
explanation.
Falling objects does not include loss to personal property stored in the
open. Damage to the interior of buildings or personal property stored in
buildings by a falling object is included in this definition only if the
falling object first breaches the building's exterior.
Water damage starts with a crack or break in a water or steam holding
system or appliance, and then a sudden or accidental discharge or leakage of
water or steam occurs.
11. Terms
All policy provisions, limitations, exclusions, conditions, and
definitions that apply to this coverage.
12. Volcanic action
An airborne volcanic blast or shock waves, ash, dust, and particulate
matter does not include the cost to remove that dust, ash or particulate matter
unless the covered property is first directly damaged. Lava flow is also
considered volcanic action.
This Schedule of Coverages is used with
IM 7101–Installation Floater Coverage–Reporting Form. IM 7106 contains the
following information:
The 01 12 edition added a space to enter the policy
number.
The
01 12 edition added “Limit” at the top of this section.
This is the most paid for
loss at any one jobsite.
This is the most paid for
loss in a single occurrence.
The limits on the Schedule of Coverages
for the following coverages apply to all covered locations:
The limit is $5,000 unless a different limit is entered.
The number of days is ten unless a different number of days is entered.
The limit is $10,000 unless a different limit is entered.
The limit is $50,000 unless a different limit is entered.
The limit is $15,000 during each 12-month period unless a different limit
is entered.
The limit is $10,000 unless a different limit is entered.
Supplemental Coverages
Each of
these coverages provides additional limits of coverage or additional coverage.
Required entries vary by type of coverage.
The limit is $10,000
unless a different limit is entered.
The limit is $10,000
unless a different limit is entered.
The
limit is $10,000 during each 12-month period unless a different limit is
entered.
The
limit is $1,000 unless a different limit is entered.
The limit is $10,000 unless
a different limit is entered.
The
limit is $10,000 unless a different limit is entered.
The
limit is $10,000 unless a different limit is entered.
Reporting Conditions
The reporting
condition applies if the box is checked. The reporting rate must be entered and
a monthly, quarterly, or annual reporting option must be selected.
Any Additional Premium Due after Expiration explains that additional premium
developed is due when it is billed. The reporting condition deposit and minimum
premiums are entered in this area.
Deductible
The deductible that applies to covered
property is entered in the space provided.
Additional
Information (01 12 change)
This section of the schedule of
coverages lists endorsements and forms included when the policy is issued.
The previous edition referred to this section as
Optional Coverages and Endorsements.
This analysis is of the 08 10 edition.
This coverage form is similar
to IM 7100–Installation Floater Coverage analyzed above except for six
sections. This analysis addresses only the differences in the six sections.
The option for coverage at only
scheduled locations provided in the IM 7100 is removed. This coverage is
blanket over all of the named insured’s jobsites, installations, or
construction project.
The following three coverage extensions
added:
3. Emergency Removal Expenses
This coverage
extension pays the expenses for the named insured to move covered property away
from a covered location threatened by a covered peril. It also pays for storage
fees incurred to keep it at a sanctuary location for up to ten days after the
property is initially moved. The most paid for such expenses in a single
occurrence is $10,000. Coverage ends when the policy expires, even if the
property is still at the sanctuary location.
Note: This is additional coverage. As a result, all such expenses paid are in
addition to the property’s limit of insurance.
4. Fraud and Deceit
Theft of covered property due to any of the following is
covered:
The most paid in a single
occurrence is $50,000.
6. Waterborne Property
The insurance company pays
up to $10,000 in any one occurrence for direct physical loss or damage to
covered property that is waterborne, but only if the loss or damage is caused
by or results from a covered peril. This limit can be increased.
Supplemental Coverages
Three supplemental coverages are added,
and the limits for three others are changed.
The following are the three
supplemental coverages added:
1. Business Personal Property
Business personal property on the named
insured’s jobsite but not intended to become a permanent part of the
installation. The most paid in a single occurrence is $10,000.
Note: The coverage does not limit this to property owned
by the named insured but does not specifically state that it applies to such
property in the care, custody, or control of the named insured.
|
Example: Jack sets up his scaffolding at Buzzy’s jobsite. One evening, the
scaffolding disappears. Jack has no insurance coverage for the scaffolding,
so he demands that Buzzy compensate him for the loss. Could this coverage
apply to Jack’s loss? |
2. Expediting Expenses
A covered loss may cause a job to fall behind schedule. In that case, the
insurance company pays up to $10,000 in a single occurrence for expenses the
named insured incurs to meet the construction contract's specified timetable. Examples
of covered expenses are overtime pay, hiring additional labor, transportation
costs, storage expenses, and costs to rent additional equipment.
Note: The
only expediting expenses paid are those needed to speed up delays resulting
from the covered loss. If delays because of other perils or for other reasons
have also occurred, this coverage will not pay for those.
4. Rewards
The insurance company pays
a reward for information leading to a conviction for arson, theft, or vandalism
when the conviction involves a covered loss caused by arson, theft, or
vandalism. The most paid in a single occurrence for a reward for information is
$1,000, regardless of the number of persons who provide information.
The following are the three supplemental
coverages with limits that changed:
5. Sewer Backup
The
limit is increased to $10,000 from
$5,000.
6. Temporary Storage
Locations
The
limit is increased to $10,000 from
$5,000.
7. Transit
The
limit is increased to $10,000 from
$5,000.
Perils Excluded
The only difference is that Exclusion 2.
k. Voluntary Parting in IM 7101 has an exception that provides coverage under
Coverage Extensions 4. Fraud and Deceit.
How Much We Pay
IM 7101 does not contain a coinsurance
condition.
REPORTING CONDITIONS
This section in IM 7101 is not in IM
7100. It is activated by entries on the schedule of coverages, including the
reporting rate or rates, deposit premium, and minimum premium. This condition
outlines the detailed steps in the reporting process, how premium is determined
and adjusted, and the penalties that result from failing to submit reports on
time or reporting inaccurate proper values.
IM 7107–SCHEDULE OF
COVERAGES–INSTALLATION FLOATER COVERAGE–CONTRACTORS' FORM (01 12 changes)
This Schedule of Coverages is used with
IM 7102–Installation Floater Coverage–Contractors' Form. IM 7107 contains the
following information:
Policy Number (01 12
addition)
The 01 12 edition added a space to enter the policy
number.
Catastrophe Limit
This is the most paid for loss in a
single occurrence.
Property Covered
This section
has five coverages available:
If this coverage is checked, a limit is entered in the space provided for
Unscheduled Jobsite Coverage.
If this coverage is checked, a limit is entered in the
space provided for All Scheduled Contractors' Equipment. IM 7130–Equipment
Schedule-Installation Floater Coverage-Contractors’ Form must also be attached
to provide limits for each item.
If Schedule on File is checked, a limit is entered in the
space provided for All Scheduled Contractors' Equipment. The Schedule on File has the limits for each
scheduled item.
If this coverage is
checked:
If this coverage is
checked:
This is Unscheduled
Tools Coverage. If it is checked:
Coverage Extensions
The limits on the Schedule of Coverages
for the following coverages apply to all covered locations.
Coverage Extensions That
Apply To All Covered Property:
The limit
is $5,000 unless a different limit is entered.
The
number of days is ten unless a different number of days is entered.
The limit is $15,000 during each 12-month period unless a
different limit is entered.
Supplemental Coverages
Each of these coverages provides
additional limits of coverage or additional coverage. Required entries vary by
type of coverage.
Supplemental Coverage That Applies To All Covered
Property:
The limit is $10,000 unless a different limit is entered.
These Supplemental Coverages apply when
Installation Floater is checked:
The limit is $5,000 unless a different limit is entered.
The limit is $5,000 unless a different limit is
entered.
The limit is $5,000 unless a different limit is
entered.
This Supplemental Coverage applies when Scheduled
Contractors' Equipment is checked:
The limit is $5,000 unless a different limit is entered.
Deductible
Two deductible options are available:
If this deductible is
checked, a single deductible that applies to all coverages is entered in the
space provided.
If this deductible is checked,
separate deductibles are entered in the spaces provided that apply to each
coverage provided. The coverages are:
Coinsurance
One of the following coinsurance options must be
selected:
Valuation
Actual Cash Value or
Replacement Cost must be checked for each coverage provided. The Coverages are:
Additional Information (01 12 change)
This section of the schedule of coverages lists endorsements and forms included when the policy is issued.
The previous edition referred
to this section as Optional Coverages and Endorsements.
IM 7102–INSTALLATION FLOATER
COVERAGE–CONTRACTORS' FORM ANALYSIS
This coverage form was introduced in 08
10 and is a combination of the installation floater and contractors equipment
coverages. The Installation Floater portion is very similar to the IM 7100. The
major change is the addition of the contractors’ equipment coverage.
This analysis addresses
only the differences between the two forms.
Property Covered
Five coverage
options are provided. The first is the Installation Floater which is similar to
the IM 7100 but contains important differences.
1. Installation Floater
This section in IM 7102 provides coverage only at Unscheduled Jobsites and
only when selected on the schedule of coverages. This eliminates the blanket
and scheduled locations coverages in the IM 7100 The limit for this coverage
cannot be combined with or added to the limit of any other coverage under
Property Covered.
2. Scheduled Contractors' Equipment
a. Coverage
Coverage
applies to covered direct physical loss or damage to the named insured's
contractors' equipment and to contractors' equipment that belongs to others in
its care, custody, and control.
b. Covered Equipment
c. Coverage Limitation
d. Limit
3. Contractors'
Equipment Leased or Rented from Others
a. Unscheduled Equipment Coverage
Coverage
applies to covered direct physical loss or damage to contractors' equipment the
named insured leased or rented from others. Any such equipment not scheduled on
the named insured’s equipment schedule is not covered.
b. Coverage Limitation
c. Limit
4. Owned, Leased, or
Rented Tools
a. Unscheduled Tools Coverage
Coverage
applies to covered direct physical loss or damage to the named insured's tools and
to tools that it leases or rents from others.
b. Coverage Limitation
c. Limit
5. Employee Tools
a. Unscheduled Tools Coverage
Coverage
applies to covered direct physical loss or damage to tools the named insured’s
employees own.
b. Coverage Limitation
c. Limit
Property Not Covered
Five types of
property not covered in IM 7100 are added deleted and one is eliminated.
Added property not covered
The following property is
added to the property not covered section:
Eliminated property not
covered
The following property is eliminated from the property not covered section:
Machinery,
Tools, or Equipment.
Supplemental Coverages
Newly Purchased Equipment is
added for only Scheduled Contractors' Equipment coverage.
Perils Excluded
The
following exclusions in the IM 7100 remain in the IM 7102 but do not apply to
contractors’ equipment or tools:
The following exclusion is added and applies to all coverages:
Valuation
Contractors'
Equipment and Tools is valued at Actual Cash Value or Replacement Cost based on
the selection on the schedule of coverages. Installation Floater valuation is unchanged.
How Much We Pay
Additional Coverage Limitations
This provision in IM 7102 applies to
only Installation Floater coverage.
Definitions
IM 7102 has these additional definitions:
ENDORSEMENTS AND SCHEDULES
AAIS has developed the following endorsements
and schedules to use with the various Installation Floater Coverage Forms.
IM 7111–Business
Personal Property Endorsement (01 12 change)
This endorsement covers the named
insured's business personal property not intended to become a permanent part of
the installation or construction project at installation jobsites or
construction projects. The 01 12
edition added a space to enter the policy number.
IM 7112–Reporting Conditions Endorsement
(Use with IM 7100)
This endorsement is used to change IM
7100–Installation Floater Coverage to a reporting form.
IM 7113–Reporting Conditions Schedule–Installation
Floater (01 12 change)
(Use with IM 7100)
This schedule is used with IM
7112–Reporting Conditions Endorsement when changing IM 7100–Installation Floater
Coverage to a reporting form. It has spaces to enter the reporting and adjustment
periods, the rates per project or installation, and the deposit and minimum
premiums. The 01 12 edition added
a space to enter the policy number.
IM 7114–Testing
and Commissioning Coverage
This endorsement adds coverage to the
Installation Floater Coverage Forms for direct physical loss or damage to
covered property caused by or that results from testing. This endorsement
defines three types of testing: Cold testing, hot testing, and commissioning.
IM
7115–Testing and Commissioning Coverage Schedule–Installation Floater (01 12
change)
This schedule is used with IM
7114–Testing and Commissioning Coverage endorsement. It has spaces to enter the
testing limit, deductible, and period, the type of testing, a description of
the covered jobsite or project, and any protective safeguards that apply. The 01 12 edition added a space to enter
the policy number.
IM
7117–Waterborne Endorsement (01 12 change)
This endorsement extends the insurance
on covered property to apply when the property is waterborne, subject to the
limit and deductible entered in the spaces provided. The 01 12 edition added a space to enter
the policy number.
IM
7118–Fraud and Deceit Coverage (01 12 change)
This endorsement adds coverage for loss
due to theft of covered property caused by acts of fraud and/or deceit. These
acts include false representations, fraudulent bills of lading, or because of
electronic data processing hardware or software. The 01 12 edition added a space to enter the policy number.
IM
7119–Equipment Breakdown and Testing Coverage
This endorsement adds coverage for loss
or damage to covered property caused by or that results from explosion,
rupture, or bursting of steam boilers, mechanical breakdown, or electrical
currents.
IM 7120–Contract Penalty Endorsement (01 12 change)
This endorsement provides coverage for
contractual penalties when a project is not completed. The 01 12 edition added a space to enter
the policy number.
IM 7121–Earthquake and Flood Coverage Endorsement
This endorsement provides earthquake and/or
flood coverage. Separate limits per project, per occurrence, and per
catastrophe are available. It can also be used to provide Delay in Completion
coverage.
IM 7122–Earthquake and Flood Schedule–Installation
Floater Coverage (01 12 changes)
This endorsement is used with IM
7122–Earthquake and Flood Coverage Endorsement to indicate the coverages,
limits, and deductible amounts provided or not provided. The 01 12 edition added a space to enter
the policy number. It also added the word “Limit” in three places because Limit
is a defined word.
IM 7124–Equipment Breakdown and Testing
Schedule–Installation Floater Coverage (01 12 change)
This schedule is used with IM 7119–Equipment
Breakdown and Testing Coverage to list the coverages, limits, deductible amounts,
and waiting periods that apply. The
01 12 edition added a space to enter the policy number.
IM
7125–Delay in Completion Coverage Part–Installation Floater Coverage
This is a coverage form. It covers
Additional Installation Expenses, subject to the Installation Floater
deductible, and Additional Soft Costs, subject to the Delay in Completion
waiting period. It includes Coverage Extensions for Expenses to Reduce a Loss, Interruption
by Civil Authority, and Limited Fungus Coverage. It includes Supplemental
Coverage for General Administration Expenses. Sewer Backup is an Optional
Coverage in the Delay in Completion Coverage Part.
IM
7126–Delay in Completion Schedule–Installation Floater Coverage (01 12 changes)
This schedule is used with IM 7126–Delay
in Completion Schedule–Installation Floater Coverage with any of the
Installation Floater Coverage Forms. It is used to indicate the coverages,
limits, and waiting periods that apply. The 01 12 edition added a space to enter the policy number. It also added
the word “Limit” in one place because Limit is a defined word.
IM 7127–Additional
Coverages Endorsement–Contractors' Form
(Use with IM 7102)
This endorsement extends coverage to
apply to Construction Trailers, Continuing Rental or Lease Payments, Equipment
and Tools Leased or Rented to Others, Equipment Hauling, Reward for Recovery of
Stolen Property, Spare Parts, Fuel, and Lubricants, Waterborne Contractors'
Equipment and Tools, and Waterborne Property.
IM 7128–Additional Coverages Schedule–Contractors'
Form (01 12 change)
This schedule is used with IM
7127–Additional Coverages Endorsement–Contractors' Form to enter the limits for
the coverages selected. The 01 12
edition added a space to enter the policy number.
IM 7129–Blueprints and Construction Documents
Coverage (01 12 change)
This endorsement is used with any Installation
Floater Coverage Forms to cover blueprints, construction documents, specifications,
drawings, contracts, maps, deeds, abstracts, models, and similar property. The 01 12 edition added a space to enter
the policy number.
IM 7130–Equipment
Schedule–Installation Floater Coverage–Contractors' Form (01 12 change)
(Use with IM 7102)
This schedule is used to list, describe,
and enter a limit for each item of covered equipment. The 01 12 edition added a space to enter
the policy number.
UNDERWRITING
CONSIDERATIONS
Installation coverage forms insure building materials and supplies at the
construction site, in transit to the site, and similar property intended for
the construction project at other locations as necessary or due to lack of
storage space at the construction site. The principal exposures and causes of
loss are fire, theft, vandalism, windstorm, collapse, and transit. The
underwriting process involves evaluating the location and transit exposures and
the protective services and arrangements incorporated at the project to
eliminate or reduce the possibility of loss.
The key factors to effectively underwrite installation coverage are to
evaluate the contractors doing the work, the project's controls and specific
features, and the contracts that dictate each party's responsibilities when they
are at work at the jobsite.
The contractor should have experience doing the work called for in a
specific installation project. It is unlikely that a contractor who usually
works in residential settings will be similarly successful on commercial installation
or construction jobs. A contractor excels only by doing the same or similar
work repeatedly and well. Similarly, a contractor should not do work beyond its
area of expertise. For example, a plumbing contractor is not likely to do a
good job setting drywall in place. A qualified contractor should be able to
produce a list of references and jobs successfully completed during the
previous three to five years so their experience can be evaluated relative to
the work that must be done on the prospective job.
Controls and security at the jobsite should be adequate to eliminate or at
least reduce the chances of fire, theft, and other similar intrusions. In most
cases, the general contractor is responsible for site security and directs how
the various subcontractors are to work within those security arrangements. Sometimes,
and in some cases, the insured subcontractor is actively involved in project
oversight and might be responsible for arranging security. In a few rare cases,
only a single subcontractor is on the site at a given time, and it assumes responsibility
for security. Arrangements for and advance notice of deliveries and vendors on
the premises should be required, and others coming on the premises must be
challenged and denied access unless they can prove their need or reason to be
there.
The nature and content of the contracts the insured executes are extremely
important. They should clearly define subjects such as ownership of covered
property, the responsibilities of each party, and the obligations to purchase
and deliver materials intended to be a permanent part of the installation. The
arrangement and timing of subcontractors and their work must be scheduled and
in writing. If subcontractors, in turn, subcontract part of their work, that
relationship and detail must also be addressed. Evidence of insurance on the
part of all contractors who work on the job must be produced and filed for
future reference if a loss occurs, and responsibility must be established.
The project’s duration is a concern because security is more of an issue for
long-term jobs than shorter ones. The same concern applies to goods in transit because
losses are more likely to occur in cases with many deliveries of materials and
supplies. The nature of the property being installed is also a concern since high
valued items require extra care in handling to reduce the chance of damage.
Many of these items may also be subject to additional exposure to loss or
damage through extra hazardous operations such as rigging and installation at
extreme heights where cranes are involved.
The best way to evaluate, underwrite, and understand an installation
project is to consider these factors and have some security arrangement,
contractual, or risk management technique in place to address it. This results
in a more efficient, safe, and properly completed installation or construction
project.
Related Article: AAIS Builders' Risk Coverage Forms