January, 1993

The Current ISO Commercial
Inland Marine Program

Under the current commercial inland marine program, all classes of inland marine property are insured against “risks of direct physical loss.” The insuring agreement and exclusions appear in each of the coverage forms rather than as a separate form. As in other open perils contracts, actual coverage is defined through the exclusions and other limitations appearing in the forms. A number of these exclusions and limitations are common to each of the inland marine classes. These are discussed below. (Where exceptions to these common exclusions exist, they are noted.) Other exclusions and limitations unique to particular inland marine forms of the program are treated within the individual coverage form discussions later in this tab.

Concurrent Causation Exclusions

The following exclusions, standard in the simplified language forms, operate to remove coverage as specified, regardless of any other concurrent causes or events (covered or not) that contribute to the loss.

Governmental action: The seizure or destruction of covered property as an act of governmental authority is not covered, except for destruction of property ordered to prevent the more general spread of fire when the fire itself is a covered cause of loss.

Nuclear hazard: The nuclear hazard exclusion eliminates coverage of loss by any weapon using atomic fission or fusion or by nuclear reaction, radiation, or radioactive contamination regardless of the cause. Ensuing fire loss is covered. (The mail form employs a weapons exclusion, instead. See “Mail Coverage Form”, Fire & Marine, Inland Marine pages).

War and military action: This exclusion applies under the simplified language commercial inland marine program to three related causes of loss: war (including undeclared or civil war); warlike action by any governmental military force; and acts of insurrection, rebellion, revolution, or usurped power. (The mail form modifies this exclusion. See “Mail Coverage Form”, Fire & Marine, Inland Marine pages).

Two other concurrent causation exclusions—earthquake on the jewelers block and camera and musical instrument dealers forms and water on the jewelers block, camera and musical instrument dealers, equipment dealers, and floor plan forms—are discussed under those respective coverage treatments.

Other Common Exclusions

The following five exclusions appear in all the inland marine forms except the mail form. Any ensuing losses by a nonexcluded cause of loss are covered.

· Weather conditions: This exclusion is operational only “if weather conditions contribute in any way” with one of the concurrent causation exclusions to cause a loss—excessive rain contributing to damage by surface water or flood, for instance. The exclusion is not intended to eliminate coverage for losses caused by weather conditions alone, such as windstorm.

· Acts or decisions, including the failure to act or decide, of any person, group, organization, or governmental body.

· Faulty, inadequate, or defective:

1.     Planning, zoning, development, surveying, siting;

2.     Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;

3.     Materials used in repair, construction, renovation, or remodeling; or

4.     Maintenance of part or all of any property wherever located.

As an example of a covered ensuing loss regarding the last two exclusions, the insured whose house burns because the repairman decided to repair a furnace instead of replacing it will be covered for the fire damage.

· Collapse: This exclusion removes coverage for collapse except as provided under the collapse additional coverage provisions (see below).

· Wear and tear: The content of this exclusion varies from form to form. At its most complete—in the camera and musical instrument dealers, equipment dealers, and theatrical property forms—it appears as follows:

Wear and tear; any quality in the property that causes it to damage or destroy itself; hidden or latent defect; gradual deterioration; depreciation; mechanical breakdown; insects; vermin, or rodents; corrosion, rust, dampness, cold, or heat.

The rest of the inland marine forms (except accounts receivable, film, and mail, that do not contain such an exclusion) contain a variety of combinations of these items, but all do include “gradual deterioration,” and “any quality in the property that causes it to damage or destroy itself” (the old inherent vice exclusion).

Additional Coverage—Collapse

On these forms, as in the other simplified language commercial lines forms, collapse is covered only if caused by any of the following causes of loss:

a. fire; lightning; windstorm; hail; explosion; smoke; aircraft; vehicles; riot; civil commotion; vandalism; breakage of glass; falling objects; weight of snow, ice or sleet; water damage; all only as covered in the form;     

b. hidden decay;

c. hidden insect or vermin damage;

d. weight of people or personal property;

e. weight of rain that collects on a roof;

f. use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.

Section f. above deserves special note. It allows recovery for collapse losses caused by defective materials or construction methods only if the collapse occurs during the course of the construction. Once a building is completed, collapse will be covered only if caused by one of the other specified causes.