We begin with the story of an insured who has purchased, for the first time in his life, a policy of personal articles floater Insurance (PAF) scheduling $125,000 worth of ladies’ jewelry.

When he first acquired the insurance, he advised the insurance agent that he always kept the jewelry in a class E safe (one that requires at least 30 minutes to drill out the lock) at his residence. He also told the insurer that he was employed full-time as the owner of a gasoline service station, and that he had neither suffered a previous (insured) loss, nor had a carrier ever canceled his policy for any reason.

One month after the policy was issued, and just before the first installment of the premium finance contract was due, the insured reported a loss. It was a rather large one at that. He claimed two armed robbers came to his door at midnight—while his wife and child were fortuitously away helping a neighbor fill out immigration and naturalization forms—and forced him, at gun point, to open the safe. They allegedly removed only the jewels, striking him on the head with the weapon. The assailants then tied the insured up like a mummy with 56 feet of rope  they just happened to have the foresight to bring with them.

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