A monoline AAIS commercial inland marine policy contains: a declarations page; a common policy conditions form (CL-100); the appropriate inland marine coverage form; any applicable coverage endorsements; and the appropriate state amendatory endorsement. The common policy conditions form provides the standard provisions regarding policy assignment, cancellation, changes, inspections, and examination of the insured's books and record. The inland marine coverage form describes the coverage for the particular line chosen.

When an inland marine coverage form is added to other coverage parts (property, liability, or crime, for instance), the reader is refereed to the policy writing instructions that apply to the other policy forms.

Although each line of coverage contains unique rating provisions, AAIS does publish “individual risk premium modifications” that may be applied to all risks. These include modifications to the base rate for the following characteristics:

1.     Location – Accessibility and environment.

2.     Premises – General condition, care, and suitability for operations conducted.

3.     Equipment – Types, condition, and care taken on premises or job site.

4.     Employees – Selection, training, and stability.

5.     Management – Attitude toward compliance with company recommendations.

6.     Dispersion or concentration of property.

7.     Storage practices and control of hazards.

8.     Roof anchorage and other windstorm related features.

9.     Other superior or inferior structural features.

10.     Obsolescence.

11.     Damageability of property.

12.     Protection not otherwise recognized.

The rest of this discussion highlights the filed AAIS coverage forms and some comparisons between the forms of the AAIS and the ISO commercial inland marine programs.

Note: The term “specified perils” refers to the perils of: 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 ice, snow, or sleet; and windstorm.

Form: IM-1000. AAIS accounts receivable coverage may be written on either a reporting or non-reporting basis. If the insured chooses the reporting basis, it may be on either a monthly or quarterly basis. Form IM-1013, Accounts Receivable Reporting Conditions, requires values to be reported within thirty days of the end of the chosen reporting period.

Coverage: The IM-1000 covers direct physical loss to accounts receivable records on the described premises. The property may also be covered in transit or away from the described premises, by showing a limit on the declarations. The premises are described on the declarations. A physical loss to accounts receivable may result in one or more of the following monetary losses to the insured:

1.     Sums the insured cannot collect from his customers;

2.     Interest on a loan that the insured must take out until the insurance proceeds are collected;

3.     Any collection cost above the insured's normal collection costs;

4.     The reasonable cost to reconstruct the insured's record.

Under the ISO accounts receivable coverage form, records are covered while within the insured's premises—”premises” defined as the interior portion of the building at the described premises—and while in transit and temporarily off premises, but not in storage. For records away from the described premises, the AAIS form covers them whether or not they are in storage.

ISO requires that accounts receivable records be kept in the described receptacles when the business is closed and during business hours when the records are not being used. AAIS only requires such storage when the business is closed. Both forms also exclude coverage for contraband.

While both forms cover the accounts receivable on an open perils basis, the AAIS form appears broader. The ISO form contains the typical exclusion—and then the give back—of loss caused by collapse. AAIS does not mention collapse.

Both forms cover the property when it must be moved to protect it from further damage from a covered peril. AAIS automatically provides this coverage for ten days after the property is first moved; ISO requires a written notice from the insured within ten days after the property is moved.

Exclusions: The AAIS accounts receivable form contains the following exclusions:

1.     Civil authority; nuclear; and war.

2.     Dishonest or illegal acts, except those of carriers or bailees for hire. The form does cover destruction of the property by the insured's employees, but not employee theft. Nor does it cover loss caused by any actions to conceal a crime. This exclusion is intended to address crimes of a financial nature such as embezzlement, fraud, etc.

3.     Electronic damage to or erasure of data, if the cause of the damage is a programming error or faulty maintenance/installation of computer equipment. Disturbances of electrical power that take place more than 100 feet from the premises are also excluded.

4.     Bookkeeping, accounting, or billing errors.

5.     Losses discovered by discrepancies found in the insured's books or records (through audits or inventories), but only if this is the only way to prove a loss occurred. However, such discrepancies may be used to support a claim of loss, if other evidence of loss exists.

6.     Similar to “trick or device” provisions in a garage form, AAIS does not cover loss caused by the insured's “voluntary parting” with the covered property

7.     Loss of use or market or business interruption caused by damage to the property.

Because the form covers direct damage only, the last AAIS exclusion may seem redundant. However, the form clarifies that it does not cover any “loss of use, market” etc. that the insured may suffer as a consequence of a direct loss to his accounts receivable.

Rating: A base rate per $100 of valuation is assigned. If the insured chooses the reporting form option, that rate is typically 10 percent lower than the rate applicable to the nonreporting form. If the insured is covering accounts receivable at more than one location, an average rate may be developed and applied to each location. The insured may receive rate credits based on the type of container where the records are kept; duplicate records; and the type of business he conducts.

The following types of storage containers qualify for a rate credit:

1.     UL class A, B, or C with a 4 hour, 2 hour, or 1 hour exposure label.

2.     A safe with two inch walls.

3.     A vault with 12 inches of air space between the inner and outer doors.

A credit applies if the insured has at least 51 percent of his records duplicated. A higher credit applies if at least 90 percent are duplicated. Endorsement IM-1012 should be added.

Finally, a credit applies if the insured derives at least 51 percent of his income from one of these activities: wholesalers, manufactures, and insurance agents.

Individual risk premium modification also applies.

Valuation: The methods for determining accounts receivable losses (when actual losses cannot be determined by the insured) are essentially the same for both AAIS and ISO.

Nonreporting Policies:

The policy promises to pay the lesser of the following three amounts:

1.     The total sum of accounts receivable. The insurer then subtracts the following five amounts from this amount to arrive at a total due:

     a. Amounts from records not lost.

     b. Amounts that can be established by other means.

     c. Amounts that the insured has already collected.

     d. Unearned interest and service charges.

     e. An allowance for bad debts.

2.     The insured's costs to reconstruct his records.

3.     The limit of liability.

If the insured cannot establish the actual amount of accounts receivable lost, the policy sets out a formula to determine what will be paid. It is the average monthly accounts receivable amounts for the twelve months immediately prior to the loss. The insurer also agrees to adjust for any “verifiable variance” in the accounts receivable amount for the month in which the loss occurs. The payment is subject to an 80 percent coinsurance requirement. ISO's form adjusts losses in the same way.

Reporting Policies:

The amount of accounts receivable for the same month of the previous year is determined. A trend factor, developed using the average monthly accounts receivable for the preceding year, is applied to that amount. Adjustments are made for normal fluctuations and changes in the insured's business in the month of the loss. ISO's reporting form now also uses the previous twelve months of accounts receivable (previously it used 24 months).

Available endorsements: Branch locations—those that send accounts receivable to a central location to be processed—may be covered for no additional premium by addition of endorsement IM-1011. Coverage is limited to the smaller of 10 percent of the coverage amount for the central location or $250,000. If the insured needs a higher amount of coverage at the branch location, the premium is determined in the same manner as for the primary location.

The insured may wish to exclude the accounts receivable of certain customers (IM-1014). Their names and addresses must be shown on the declarations. In addition, the amount of these accounts must not be used in calculating the base premium.

Form: IM-1050. The AAIS camera and musical instrument dealers form covers the stock of such dealers. It may be used for dealers who are primarily manufacturers, though property is not covered while it is being manufactured. Under the ISO program, dealers who are primarily manufacturers are specifically ineligible.

Coverage: The AAIS form covers the property in one of the following four locations, when a limit appears on the declarations:

1.     On the premises.

2.     In transit.

3.     In the custody of the insured or employees away from the premises.

4.     On other premises that the insured does not use for business.

Coverages 3 and 4 provide an automatic amount of $10,000. Additional limits may be purchased.

AAIS also provides “removal coverage” for property being moved to protect it from loss. The form also covers damage done to the building by thieves if the insured owns the building or is responsible for it. As in the accounts receivable form, AAIS is silent on the matter of collapse.

The AAIS form also lists property not covered: property being manufactured; contraband; sold property; property shipped by mail (other than by registered mail); money and securities; and office supplies or fittings, molds, dies, and patterns. The last category is new with the current edition of the form.

Exclusions: The AAIS form excludes volcanic eruption, but covers volcanic action (airborne volcanic blast or airborne shock waves, ash, soot, particulate matter, or lava flow).

Territory: Previous editions of this form did not cover property in transit to or from Alaska, Hawaii, or Puerto Rico. That limitation does not appear in the current edition, with the territory being the United States (including territories and possessions), Canada, and Puerto Rico.

Premises protection: Protective devices must be maintained in proper working order. As with the ISO form, AAIS specifies that coverage is suspended unless such devices are in working condition and are also in operation when the business is closed.

Rating: A loading for cameras or musical instruments is added to the base rate per $100 of value. A rate credit is available for U.L. certified central station alarms. The basic rates contemplate a $100 deductible. A “nil” deductible is available for a 20 percent surcharge. Other deductibles, with credits, are available up to $10,000. Individual risk premium modification also applies.

Valuation: The AAIS form values unsold property on an actual cash value basis. The ISO form defines the value of unsold property as the least of: its actual cash value; the cost of its restoration; or the cost of its replacement with substantially similar property.

Under the valuation provision for films and prints, AAIS has added the cost of labor or materials for developing. Previous editions of this form did not cover this cost.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; coinsurance (80 percent); insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Records: There is no specification of length of time to maintain records regarding covered property; the ISO form requires they be maintained for three years.

Available Endorsements: The insured may buy-back the “unattended vehicle” exclusion, via endorsement IM-1265. Also available is an endorsement (IM-1263) to cover the insured's business personal property, such as furniture and fixtures; patterns; and tenant's improvements. Seasonal fluctuations in inventory may be covered with a “peak season endorsement” (IM-1262).

Form: IM 1100. Floor plan coverage is written to cover dealers' merchandise that has been financed through a lending institution. It covers property in which the insured has an interest or in which the insured and a secured lender have an interest. Manufacturers and processors are not eligible. The form covers the property on premises; in transit; or at unscheduled premises.

Limits: There is no provision for a per occurrence limit on the AAIS form.

Valuation: The value of unsold property is the purchase price to the dealer including transportation charges. Under the ISO form, the value of unsold property is the smallest of the following: the cost to restore the property; the cost to replace the property with substantially identical property; or the dealer's purchase price including transportation charges.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; full reporting; late reports; insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Reporting: AAIS and ISO both address single interest and dual interest reporting.

Exclusions: Differences in the exclusions of the AAIS floor plan coverage from the ISO coverage are as follows:

1. The exceptions under the breakage exclusion (i.e., where coverage is provided) include breakage due to the “specified perils,” (see above) or collision or overturn of a transporting conveyance.

2. The exclusion of losses due to flood or ground water does not provide an exception for subsequent losses by theft, as ISO does. On the other hand, AAIS provides coverage for subsequent loss from sprinkler leakage, which is not in ISO.

3. Insect or vermin damage is no longer excluded, as in previous editions.

4. Losses due to obsolescence or depreciation of property are no longer excluded, as in previous editions.

Dual Interests: Similar to a “mortgagee clause” in a homeowners policy, the protection for a named secured lender is not jeopardized by the failure of another interested party to comply with the policy provisions.

Form: IM-1150. This form covers the stock of agricultural, construction, or materials handling equipment dealers. It may not be used to cover property being manufactured or sold on an installment plan.

Covered property: The implement dealers coverage form covers the insured's stock, accessories, and supplies. Coverage applies while the stock is on the described premises; in transit; or at other premises owned by the insured, but not for business purposes. It also covers similar property of others in the insured's care.

Additional Coverages: The implement dealers coverage form extends coverage to newly acquired locations (30 days); to building damage caused by thieves; emergency removal of property from an endangered premises; pollutant clean-up ($10,000 annual aggregate per location); and to removal of debris of covered property damaged by a covered peril. Only the coverage for pollutant clean-up is in addition to the limits shown.

Excluded property: The following items of property are not covered:

1. Contraband.

2. Office furniture, etc.

3. Property of others transported by the insured, when the insured is acting as a carrier for hire. This exclusion also applies if the insured arranged the transportation of the property.

4. Property rented to others.

5. Vehicles designed for highway use.

6. Property being manufactured or assembled.

7. Money, securities, etc.

8. Property sold to others, once it leaves the insured's custody.

Limits: The insured may specify limits for: property at each location where the insured does business; property in transit; property at newly acquired locations; and for property that is at “other premises.”

Rating: Modification factors apply to the base rate for items such as deductible, theft protection, and experience. Individual risk premium modification also applies.

Exclusions: AAIS' form excludes ground water. However, AAIS' water exclusion provides an exception for loss from sprinkler leakage, but not from theft.

Territory: Coverage territory encompasses the United States, Canada, and Puerto Rico. The exclusion of property while in transit to or from Alaska, Hawaii, or Puerto Rico has been deleted.

Coinsurance: An 80 percent coinsurance provision applies to all covered property. However, this provision does not apply when the insured chooses a reporting form.

Reporting provisions: If the insured chooses a reporting form, those provisions are attached via form IM-1264. The reporting provisions require the insured to submit reports showing the amount of the “premium base” as indicated on the declarations. Reporting periods may be monthly, quarterly, semiannually, or annually.

Valuation: The AAIS form values unsold property on an actual cash value basis. The ISO form defines the value of unsold property as the least of: its actual cash value; the cost of its restoration; or the cost of its replacement with substantially similar property. Property sold but not delivered is valued at selling price less discounts and allowances; property of others at the amount for which the insured is liable.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; coinsurance (80 percent); insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Records and Protective Safeguards: Unlike the ISO equipment dealers form, there are no provisions regarding the maintenance of records or protective safeguards on the AAIS implement dealers form.

Deductible: A $250 deductible is standard, but amounts up to $10,000 are available for further credit. For an additional premium, the policy may be written at $100 or “nil” deductible.

Available Endorsements: Two endorsements are available, with no change in premium: waiver of coinsurance (IM-1261); and exclusion of property belonging to named individuals (IM-1161). For an additional premium, the insured may endorse “peak season” coverage to account for seasonal fluctuations in inventory (IM-1262). Also available is coverage for the insured's office furniture, fixtures, etc. (IM-1263).

Forms: Under the AAIS inland marine program, two jewelry dealers coverage forms are available: form IM-1200 provides coverage on an open perils basis; and form IM-1201 provides coverage on a named perils basis. Form IM-1211, Jewelry Dealers Proposal, must be submitted for each location.

The AAIS jewelry dealers forms are available for use by manufacturers, wholesalers (including those defined as loose diamond risks), retailers, and pawnbrokers with inventories of $250,000 or less. The program does not cover jewelry, silverware, and watch departments of department stores.

Listed as ineligible risks include: fine arts or antique dealers; and those not otherwise engaged in the jewelry trade. ISO has a similar list of ineligible operations.

Neither the AAIS nor the ISO jewelry dealers coverage forms may be used to insure auctioneers, exhibitions off the insured's premises, or watch repair risks.

Coverage: The coverage provided under the AAIS jewelry dealers coverage forms varies as follows:

1. Jewelry dealers coverage form IM-1200 insures covered property on an open perils basis, subject to a number of exclusions: breakage; contamination; dishonest or criminal acts; defective packing; insects; loss of use or market; missing property; property while being worked on; inventory shortage; showcase theft; theft from an unattended vehicle; shortage from a package; and voluntary parting.

2. Jewelry dealers coverage form IM-1201 insures covered property against the following named perils: fire; lightning; windstorm; hail; explosion; strike, riot or civil commotion; vandalism; aircraft, spacecraft or self-propelled missile—including objects that fall there from; vehicles; smoke; water, except as excluded; and burglary and robbery, as these terms are defined in the form. In addition, there is no extension of coverage for damage to the premises done by thieves.

Covered property: Covered property includes the insured's stock of jewels, jewelry, precious and semiprecious stones, precious metals and alloys, and other items that are usual to the insured's business. Additionally, property of others for which the insured is liable, including the cost of the insured's labor and materials, is also covered under the insuring agreement.

Property in transit is covered under the jewelry dealers form only when: 1) sent by registered mail; 2) shipped by armored car messenger service; 3) shipped by private paid delivery service; 4) in the custody of the insured, an employee of the insured, or a commissioned salesperson; or 5) shipped by other common or contract carrier subject to the same conditions regarding the declaration of values as are found on the fur dealers coverage form.

Excluded property: The jewelry dealers form specifically excludes the following types of property:

1.     Sold on an installment plan after it is out of the insured's custody;

2.     Sent C.O.D., if the receiver has the right to inspect before accepting delivery.

3.     Contraband.

4.     Belonging to a watch dealer, while it is away from the described premises.

Also excluded is property while it is: at exhibitions; being worn (though watches worn while being serviced are covered); or in showcases or windows that are outside or off the described premises. (Coverage for property at exhibitions and in showcases is available on a “refer to company” basis.)

Limits: Like the ISO jewelers block form, limits are indicated on the declarations for all of the following property: 1) on the described premises: 2) property in transit by registered mail, armored car, private paid delivery service, or other common or contract carrier; 3) property in safes or vaults of banks, trusts, or safe deposit companies; and 4) property in the custody of another jewelry dealer.

The AAIS jewelry dealers coverage forms also require separate limits to be shown for property while away from the described premises while in the custody of a sales representative; or in the custody of the insured or the insured's employee. For property off the insured premises in any situations not covered by the foregoing, a separate limit may be indicated.

Valuation: The valuation clause of each of the jewelry dealers coverage forms provides for the adjustment of insured losses on the basis of the lowest of four values: the cost to repair, rebuild, or replace the property; the lowest amount listed for the property on the insured's books at the time of loss; the unpaid part of an amount the insured loaned on pledged property, including the interest earned on such property as of the date of loss; or the coverage amount shown.

No antique or historic value of property enters into the computation of a settlement for loss.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” the lowest figure shown in the insured's records as applying to the damaged property; the unpaid amount of any loan that the insured has made on the property; or the limit of insurance.

Available Endorsements: The insured may cover damage to or loss of safes due to theft or attempted theft via endorsement IM-1221. Endorsement IM-1218 may be used to exclude certain types of stock from coverage and, thus, from the premium base. Fire and lightning may be excluded for a premium credit (IM-1212). Coverage may be extended to property at exhibitions. Members of the Jewelers Security Alliance receive a rate credit, as long as they remain members (IM-1213). A peak season endorsement (IM-1262) is available, as well as an endorsement covering items in a vault that have been pledged as security (IM-1220).

Protective inflation guard coverage may be provided with or without increasing the coverage amount for stock (IM 1219).

Finally, coverage for property located in show windows or outside showcases may be endorsed for theft that results from the smashing of the window or showcase (IM-1222).

Form: IM-1250. This form covers musical instruments, sheet music, music stands, cases, and other accessories. Stationary organs are also eligible. The items must be owned or used by a professional musician, business, or educational institution. The following risks are unacceptable: instruments for sale by a dealer; and coin/token operated devices.

ISO does not have a form devoted exclusively to musical instruments. Rather, that program uses form CM 00 20 06 95, commercial articles coverage. The list of covered property on the ISO form is not nearly as extensive as AAIS', with ISO apparently relying on the wording “related equipment and accessories” to encompass any other items related to musical instruments.

Coverage: The form provides open perils coverage for the property on either a scheduled or blanket basis. Scheduled property must be listed on the declarations and is adjusted on an “agreed value basis.” Blanket coverage—subject to a 100 percent coinsurance requirement—applies to the insured's property and to that of others in the insured's care. The only class of property not covered is “contraband.”

Form IM-1250 also covers, for thirty days, newly acquired musical instruments. These are covered for the lesser of: 25 percent of the limit for a scheduled item; 25 percent of the blanket limit; or $10,000.

Exclusions: In addition to exclusions discussed previously, form IM-1250 also excludes theft from an unattended automobile. However, it does not exclude voluntary parting or breakage.

Rating: A base rate per $100 of value applies. The base deductible for stationary organs is $100; for all other instruments, “nil.” Different rates apply for dance bands and rock groups; chamber ensembles; orchestras; etc. The rating for stationary organs is graduated, with different loadings at each level of value. Individual risk premium modification also applies.

Coinsurance: When blanket coverage is chosen, a 100 percent coinsurance requirement applies.

Under the AAIS form, coinsurance penalties are calculated by dividing the limit of insurance applicable to the damaged piece(s) of property by the full actual cash value of that piece of property and multiplying that resulting amount by the amount of loss. This differs from the settlement method under the ISO form where the calculation is based on the proportion that the limit of insurance for all covered property bears to the actual value of all covered property at the time of loss. With the ISO provision, it is possible that damaged property may be insured to value, but if other, undamaged property is not, the insured will still suffer a coinsurance penalty.

Valuation: All losses are adjusted on an actual cash value basis, unless otherwise noted. As mentioned, scheduled items are “agreed value.” Blanket items are ACV, subject to a 100 percent coinsurance clause. AAIS also applies the marine clauses of “pair and set” and “loss to parts” to limit payment for certain types of losses.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; coinsurance (100 percent); insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Options: Available by endorsement: Named perils coverage—fire, lightning, windstorm, flood, theft, and accident to a transporting vehicle—is available (IM-1251). Also available is theft from an unattended auto (IM-1265).

Form: IM-1300. Individuals, as well as commercial insureds, are eligible for this coverage. The form covers exposed film, including its sound track. It also covers video tape that has been “properly recorded.” A video tape is properly recorded if it has been “checked and replayed.”

The coverage is provided on a per production basis. It is a reporting form, with reports due at the end of each production. The declarations must show: a description of the production; the media used; minimum and deposit premium; and limits. After each production, the insured must submit a report showing: the actual cost, overhead, and related expenses of that production. The earned premium for each production is then subtracted from the deposit premium, until the deposit premium has been fully earned.

In addition to “contraband,” form IM-1300 does not cover: cut-outs; library stock; positive prints; and unused footage.

While similar to ISO's film coverage form, CM 00 45 06 95, the AAIS form does not contain the limitation on the policy period found in ISO. That limitation reads as follows:

“We cover property until:

       a. The full quota of positive prints or films has been made;

       b. Your interest in the property has ceased;

       c. The end of the policy period; or

       d. This coverage is cancelled;

whichever occurs first.”

Coverage: Form IM-1300 covers the property on an open perils basis, subject to certain exclusions.

Exclusions: In addition to the typical marine exclusions discussed elsewhere, the AAIS form also excludes loss caused by: developing chemicals; film processing or cutting; electrical or magnetic injury to video tape or sound recordings (lightning loss is covered); or exposure of negative film to light.

Rating: In addition to individual risk rate credits, a deductible credit is available. The base deductible is $250; nil and $100 deductibles are available for a surcharge, with other deductibles ranging up to $10,000. Individual risk premium modification also applies.

Valuation: The form settles losses by adding together the cost to repair or reproduce the damaged property; and the reduction in value of the undamaged parts of the production. It specifically excludes from the valuation items such as: the cost of the story, scenario, sets, and props. The form also applies the “pair and set” and “loss to parts” clauses.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Options: The insured may receive a rate credit by restricting coverage to the “studios, laboratories, cutting rooms, and vaults” at the described location and while in transit between these locations (IM-1311). Another credit is available for coverage restricted to property in vaults only (IM-1312).

Form: IM-1350. Commercial insureds and nonprofit organizations may use the AAIS photographic equipment form to cover their cameras and photographic equipment. Projection machines and related equipment are also eligible, as well as movable sound equipment used in producing motion pictures. The final category of eligible property is miscellaneous equipment (such as lenses, tripods, camera bags, etc.) used in connection with motion pictures. Property of others may also be covered.

The rules list the following equipment as ineligible: TV cameras and equipment; coin operated cameras; equipment owned by dealers or manufacturers; and aerial or radar cameras.

Form IM-1350 also covers, for thirty days, newly acquired photographic equipment. These are covered for the lesser of: 25 percent of the limit for a scheduled item; 25 percent of the blanket limit; or $10,000.

The property may be covered on either a blanket or scheduled basis.

The ISO form that covers this type of property is CM 00 20, commercial articles form. The list of covered property on the ISO form is not nearly as extensive as AAIS', with ISO apparently relying on the wording “related equipment and accessories” to encompass any other film making necessities.

Coverage: Form IM-1350 covers the property on an open perils basis, subject to certain exclusions.

Exclusions: In addition to the typical open perils exclusions, form IM-1350 also excludes theft from an unattended vehicle. The exclusion does not apply if the insured's property is stolen from an unattended vehicle of a carrier for hire.

Rating: A base rate is assigned, along with deductible credits. Individual risk premium modification also applies. Rates for motion picture producers are 5 percent higher.

Coinsurance: When blanket coverage is chosen, a 100 percent coinsurance requirement applies.

Under the AAIS form, coinsurance penalties are calculated by dividing the limit of insurance applicable to the damaged piece(s) of property by the full actual cash value of that piece of property and multiplying that resulting amount by the amount of loss. This differs from the settlement method under the ISO form where the calculation is based on the proportion that the limit of insurance for all covered property bears to the actual value of all covered property at the time of loss. With the ISO provision, it is possible that damaged equipment may be insured to value, but if other, undamaged property is not, the insured will still suffer a coinsurance penalty.

Valuation: Scheduled items are adjusted on an “agreed value” basis, with actual cash value applying to all others. In addition, “pair and set” and “loss to parts” clauses also apply. “Blanket” items are subject to a 100 percent coinsurance requirement.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; coinsurance (100 percent); insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Form: IM-1400. Two coverages (for which separate limits must be shown) are available on the physicians and dentists equipment coverage form. Coverage A provides equivalent coverage to that found on the ISO physicians and surgeons equipment coverage form: equipment, tools, supplies, and scientific books used in the insured's profession; furniture, fixtures, office equipment; and use interest in improvements. The coverage for medical equipment, etc. also applies to the property of others that the insured uses.

While the form does not specify that coverage A applies only to those items, located on the described premises, coverage B implies that limitation. That provision covers property normally used by the insured in his profession, that he “normally carr[ies] while. . .away from the premises described.” Again, this coverage seems superfluous, because nothing in coverage A limits it to property just on the described premises.

ISO's form CM 00 26 06 95, seems subject to the same confusion. It, too, does not limit coverage to the described premises. However, form CM 26 01 11 85, “Property Usually Carried by You” is supposed to be purchased by a physician to cover his equipment while away from the described premises. In fact, one of the provisions in form CM 00 26 says that “Paragraph A.5. COVERAGE EXTENSION is deleted.” This extension covers the insured's building for damage done by thieves (see following).

Additional coverages: The same additional coverages (called “coverage extensions” by ISO) are available on both the AAIS and ISO programs, but different methods are used to indicate coverage. The first AAIS additional coverage is damage to building done by thieves. It specifies that the insured must own the building or be responsible for it. It would not cover damage done by thieves at any other building.

ISO's coverage extension does, essentially, the same thing. However, when the insured purchases coverage for his equipment off-premises, that coverage extension is deleted in its entirety, leaving the insured open to damage done by thieves at his office, with no coverage.

The second additional coverage of the AAIS form is “emergency removal.” It covers the property for 10 days after it is moved to another location to prevent loss from a covered peril.

Excluded property: Neither AAIS nor ISO covers radioactive substances or contraband. AAIS also excludes property belonging to “dealers, clinics, hospital, medical schools,” etc.

Territory: Coverage territory encompasses the United States (and possessions), Canada, and Puerto Rico. The restriction on property in transit to or from Alaska, Hawaii, or Puerto Rico does not appear in the current edition of the form.

Exclusions: Under the AAIS physicians and dentists equipment coverage form, except for lenses of scientific instruments, breakage of glass, tubes, bulbs, or lamps, is excluded. In addition, losses resulting from marring, scratching, or chipping are excluded. Exposure to light is also excluded.

Both the AAIS and ISO forms contain an exception permitting coverage for “breakage” losses due to certain perils. However, those perils differ considerably. Both forms provide exceptions for: fire, lightning, explosion, windstorm, vandalism, aircraft, rioters, strikers, theft, attempted theft, or accident to a transporting vehicle. However, the AAIS coverage form also covers breakage losses from the following causes: hail; civil commotion; sprinkler leakage; collapse of buildings, objects falling from an aircraft, spacecraft, or self-propelled missile; and smoke.

“Described premises“: AAIS no longer defines a described premise. The ISO coverage form limits “described premises” to that part of the building occupied by the insured.

Valuation: AAIS adjusts all losses on an actual cash value basis, with the addition of the “pair or set” and “loss to parts” clauses. Tenant's improvements must be repaired within a reasonable time, and are settled based on the cost to repair, replace, or rebuild them with material of like kind and quality. Under the ISO coverage form, an actual cash value settlement is made for these items.

For losses to property other than tenant's improvements and betterments, the insurer may invoke an optional loss settlement provision. It calls for settlement based on the cost to repair, replace, or rebuild the damaged property with material of like kind and quality, subject to the deductible, coinsurance provisions, and the limit of insurance. If this valuation method is not chosen, the settlement provision from the inland marine general terms form applies. It prescribes payment based on the smallest of the following: the actual cash value; the cost to repair, replace, or rebuild; the amount of the insured's interest in the property; or the coverage amount.

Coinsurance: A coinsurance provision applies to property insured under coverages A and B of the physicians and dentists coverage form. It requires the insured to maintain coverage A and B limits equaling 80 percent of the full actual cash value of the covered property. There is no exception to this requirement for property insured under coverage A while it is in transit. The ISO form does contain such an exception.

Rating: In addition to the individual risk premium modifications and deductible credits, a rate credit is available for protective services. These must be either a U.L. certified central station alarm system or a watchperson service.

Optional coverages: The insured may choose to cover the following, via form IM-1411: office furniture away from described premises; extra expense; money and stamps; personal effects; and records.

Form: IM-1450. The AAIS sign coverage form (like the comparable ISO signs coverage form) may be used to insure neon, electric, and mechanical signs, but not billboards or ordinary fixed signs, even if they are directly illuminated by electric lights.

Coverage: As mentioned above, the AAIS signs form covers much the same property as ISO. However, AAIS adds coverage for: lamps and street clocks; and data processing equipment used with such signs. The property may be covered on a scheduled or blanket basis. ISO has no provision for blanket coverage.

Exclusions: The typical open perils exclusions apply. Both ISO and AAIS exclude breakage of the property while it is being “installed, dismantled, repaired, or in transit.” However, AAIS gives back coverage if the breakage is caused by one of the “specified perils” or overturn of a transporting conveyance. ISO's give-back is only for the perils of fire, lightning, and accident to the transporting vehicle.

Territory: Under the AAIS neon and electric signs coverage form, policy territory includes the United States, Puerto Rico, and Canada . The exclusion of property while in transit to or from Alaska, Hawaii, or Puerto Rico has been deleted.

Coinsurance: When blanket coverage is chosen, a 100 percent coinsurance requirement applies.

Under the AAIS form, coinsurance penalties are calculated by dividing the limit of insurance applicable to the damaged piece(s) of property by the full actual cash value of that piece of property and multiplying that resulting amount by the amount of loss. This differs from the settlement method under the ISO form where the calculation is based on the proportion that the limit of insurance for all covered property bears to the actual value of all covered property at the time of loss. With the ISO provision, it is possible that a damaged sign may be insured to value, but if other, undamaged property is not, the insured will still suffer a coinsurance penalty.

Valuation: The AAIS form uses actual cash value for blanket items and agreed value for scheduled items. It also applies a “pair and set” clause and a “loss to parts” clause.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; coinsurance (100 percent); insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Rating: AAIS applies a base rate along with individual risk modification factors. Deductible are expressed as a percentage of the amount of insurance for each item. Percentages from 5 percent to 25 percent may be selected. Varying rate credits apply to each percentage. ISO offers only a 5 percent deductible.

Form: IM-1500. This form is intended to cover any property used in plays or theatrical productions. Ineligible risks include: carnivals; circuses; rodeos; costume rental companies; and theatrical suppliers. The form also covers similar property of others in the insured's care.

Coverage: Form IM-1500 provides open perils coverage for the property on a blanket basis. It also specifies certain types of property not covered: animals; buildings and improvements; contraband; furniture, etc.; jewelry; money and securities; valuable papers; and vehicles. It does, however, cover vehicles actually used in the production. ISO lists all of these items as not covered, except valuable papers and furniture, etc.

Exclusions: In addition to the typical open perils exclusions, the AAIS form (as well as the ISO form) also excludes theft from an unattended auto and missing property, when there is no physical evidence to indicate what happened to the missing property.

Valuation: The AAIS form adjusts losses on an actual cash value basis. It also applies a “pair and set” clause and a “loss to parts” clause. The adjustment is subject to an 80 percent coinsurance clause.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; coinsurance (80 percent); insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Rating: The typical deductible and individual risk factor credits apply. For an extra premium, the insured may buy-back the exclusions of breakage, marring, etc. and theft from an unattended auto.

Form: IM-1550. This form covers documents, records, manuscripts, maps, deeds, etc. Ineligible property includes: money, bank notes, checks, tokens, and data processing media.

Coverage: Form IM-1550 provides open perils coverage on the described property. Coverage is provided on a blanket basis, but individual items may be scheduled. It also specifies the following as property not covered: contraband; data processing media (but not the information contained on the media); money and securities; property held for delivery; property that cannot be replaced (unless scheduled); and samples for sale. The form also provides emergency removal coverage, as well as $5,000 coverage for property at a temporary location or in transit.

Exclusions: In addition to the typical open perils exclusions, the AAIS form (as well as the ISO form) excludes electrical or magneto damage to recordings and errors or omissions in processing, etc.

Conditions: In addition to the typical exclusions, AAIS and ISO both exclude coverage while the insured's business is closed, if the records are not kept in appropriate storage containers.

Rating: Factors for the type of container are applied to the base rate. Credits also apply if the insured maintains a certain percentage of the records in storage, as well as for the type of business (wholesalers, manufacturers, and insurance agents). Then the deductible and individual risk modification factors apply.

Valuation: Scheduled items are covered on an “agreed value” basis; unscheduled items at ACV. AAIS also applies the “pair and set” clause and the “loss to parts” clause.

Once an item's value is established, the form goes on to describe how much the insurer will pay in the event of a loss. Payment is subject to the following: insurable interest; deductible; insurance under more than one coverage; and insurance under more than one policy.

The final payment is the lesser of: the amount determined under valuation; the cost to repair, replace, or rebuild the property with “like kind and quality;” or the limit of insurance.

Options: Valuable papers coverage may be written for a library, via form IM-1561.