Theatrical Property Coverage Form
December 12, 2011
ISO Commercial Inland Marine Program
Summary: The Theatrical Property Coverage form (CM 00 29 03 10) is used to cover scenery, costumes, theatrical properties, and similar property belonging to others in the insured's care, custody, or control that are intended to be used or that have been used in a production stated in the policy declarations. Like the other coverage forms in the Insurance Services Office (ISO) commercial inland marine program, the form is combined with a declarations page, common policy conditions, inland marine general conditions, and any appropriate coverage form(s) to make a comprehensive policy. This article discusses CM 00 29, with its coverage agreement, exclusions, and conditions. Coverage is subject to a declared per occurrence deductible. A coinsurance provision applies to all property except property in transit. This article provides information on the 2010 edition of the form.
Topics covered: Coverage Property not covered Covered causes of loss Additional coverage—collapse Exclusions Limits of insurance Deductible Additional conditions
A. Coverage
We will pay for direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss.
1. Covered Property, as used in this Coverage Form, means:
a. Your scenery, costumes and theatrical properties; and
b. Similar property of others in your care, custody or control or on which you have made partial payments;
that are intended to be used or have been used in a production stated in the Declarations.
Analysis
The insurer agrees to pay for direct physical loss of or damage to covered property. Covered property is defined as the named insured's scenery, costumes, and theatrical properties, as well as similar property of others in the insured's care or on which the named insured has made partial payment. All these items are personal property used for theatrical productions or plays. Coverage may be written on a specific production or on a blanket production basis (for example, the entire season of productions for a community theater group).
2. Property Not Covered
Covered Property does not include:
a. Buildings or their improvements and betterments;
b. Vehicles unless actually used on the stage in the covered production.
c. Jewelry comprised of precious or semi-precious stones, gold, silver, platinum, or other precious metals or alloys.
d. Accounts, bills, currency, deeds, money, documents, transportation or admission tickets, notes, securities and evidences of debt;
e. Animals;
f. Contraband, or property in the course of illegal transportation or trade.
Analysis
CM 00 29 specifically lists the type of property that it does not cover. This property is real property, vehicles, and other property that is better insured under other inland marine forms, or, as in the case of contraband, not insurable.
3. Covered Causes of Loss
Covered Causes of Loss means Direct Physical Loss or Damage to Covered Property except those causes of loss listed in the Exclusions.
Analysis
The Theatrical Property Coverage form provides coverage on an open perils basis. The coverage is defined through the exclusions and other limitations appearing in CM 00 29 and in CM 00 01 09 00, the Commercial Inland Marine Conditions form. For information on CM 00 01, see Introduction, General Rules, and Conditions. The 2010 form removed reference to risks of direct physical and states that covered cause of loss means direct physical loss; it's not the risk that is covered, but the loss or damage itself.
The coverage provided under this Additional Coverage – Collapse applies only to an abrupt collapse as described and limited in Paragraphs a. through c.
a. For the purpose of this Additional Coverage – Collapse, abrupt collapse means an abrupt
falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.
b. We will pay for direct physical loss or damage to Covered Property, caused by abrupt collapse of a building or any part of a building that contains Covered Property insured under this coverage form, if such collapse is caused by one or more of the following:
(1) Building decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse;
(2) Insect or vermin damage that is hidden from view, unless the presence of such damage is known to an insured prior to collapse;
(3) Use of defective material or methods in construction, remodeling or renovation if the abrupt collapse occurs during the course of the construction, remodeling or renovation.
(4) Use of defective material or methods in construction, remodeling or renovation if the abrupt collapse occurs after the construction, remodeling or renovation is complete, but only if the collapse is caused in part by:
(a) A cause of loss listed in Paragraph (1) or (2);
(b) One or more of the following causes of loss: Fire; lightning; windstorm; hail; explosion; smoke; aircraft; vehicles; riot; civil commotion; vandalism; leakage from fire extinguishing
equipment; sinkhole collapse; volcanic action; breakage of building glass; falling objects; weight of snow, ice or sleet; water damage; earthquake; all only as insured against in
this coverage form;
(c) Weight of people or personal property; or
(d) Weight of rain that collects on a roof.
Analysis
The additional coverage clause for collapse was substantially revised in 2010. The form provides coverage for direct physical loss or damage to covered buildings or any part of a building that contains covered property caused by an abrupt collapse as described. The prior policy did not specify that the collapse must be abrupt. Abrupt collapse is then defined as an abrupt falling down or caving in of a building or any part of a building with the result that the building cannot be used for its intended purpose.
The perils of decay or insect or vermin damage hidden from view and unknown by the insured, and use of defective materials or methods in construction or remodeling as long as the collapse occurs during the course of the construction or remodeling remain the same.
The perils of fire, lightning, windstorm, hail, explosion, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing equipment, sinkhole collapse, volcanic action, breakage of building glass, falling objects, weight of snow, ice or sleet, water damage, earthquake, weight of people or personal property or weight of rain collecting on a roof now apply only if defective materials were used in construction and the building collapsed after construction was finished and if the collapse was in part caused by one of the listed perils. This significantly narrows the covered perils for collapse if the collapse does not occur after the course of construction with defective materials.
For more information on the collapse coverage, see Causes of Loss; and see Meaning of Collapse.
Exclusions
1.We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
a.Governmental Action
Seizure or destruction of property by order of governmental authority.
But we will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread if the fire would be covered under this Coverage Form.
b.Nuclear Hazard
Nuclear reaction or radiation, or radioactive contamination, however caused.
But if nuclear reaction or radiation, or radioactive contamination results in fire, we will pay for the direct loss or damage caused by that fire if the fire would be covered under this coverage form.
c.War and Military Action
(1)War, including undeclared or civil war;
(2)Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or
(3)Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these.
Exclusions B.1.a. through B.1.c. apply whether or not the loss event results in widespread damage or affects a substantial area.
2.We will not pay for loss or damage caused by or resulting from any of the following:
a.Theft from any unattended vehicle, unless at the time of theft its windows, doors, and compartments were closed and locked and there are visible signs that the theft was the result of forced entry. But this exclusion does not apply to property in the custody of a carrier for hire.
b.Marring, scratching; exposure to light; breakage of tubes, bulbs, lamps, or articles made largely of glass (except lenses). But we will pay for such loss or damage caused directly by fire, lightning, explosion, windstorm, vandalism, aircraft, rioters, strikers, theft or attempted theft, or by accident to the vehicle carrying the property, if these causes of loss would be covered under this Coverage Form.
c.Delay, loss of use, loss of market, or any other consequential loss.
d.Unexplained disappearance.
e.Shortage found upon taking inventory.
f.Dishonest acts committed by:
(1)You, any of your partners, employees, directors, trustees, or authorized representatives;
(2)A manager or a member if you are a limited liability company
(3)Anyone else with an interest in the property, or their employees or authorized representatives; or
(4)Anyone else to whom the property is entrusted for any purpose.
This exclusion applies whether or not such persons are acting alone or in collusion with other persons or such acts occur during the hours of employment. This exclusion does not apply to Covered Property that is entrusted to others who are carriers for hire or to acts of destruction by your employees. But theft by employees is not covered.
g.Processing or work upon the property.
But, if processing or work upon the property results in fire or explosion, we will pay for direct loss or damage caused by that fire or explosion if the fire or explosion would be covered under this Coverage Form.
h.Artificially generated current creating a short circuit or other electric disturbance within an article covered under this Coverage Form.
But, if artificially generated current, as described above, results in fire or explosion, we will pay for direct loss or damage caused by that fire or explosion if the fire or explosion would be covered under this Coverage Form. This exclusion only applies to loss or damage to that article in which the disturbance occurs.
i.Voluntary parting with any property by you or anyone entrusted with the property if induced to do so by any fraudulent scheme, trick, device, or false pretense.
j.Unauthorized instructions to transfer property to any person or to any place.
k.Neglect of an insured to use all reasonable means to save and preserve property from further damage at and after the time of loss.
3.We will not pay for loss or damage caused by or resulting from any of the following. But if loss or damage by a Covered Cause of Loss results, we will pay for the loss or damage caused by that Covered Cause of Loss.
a.Weather conditions. But this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss or damage.
b.Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body.
c.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.
d.Collapse, including any of the following conditions of property or any part of the property:
(1)An abrupt falling down or caving in;
(2)Loss of structural integrity, including separation of parts of the property or property in danger of falling down or caving in; or
(3)Any cracking, bulging, sagging, bending, leaning, settling, shrinking or expansion as such condition relates to Paragraph (1) or (2).
This Exclusion, d., does not apply to the extent that coverage is provided under the Additional Coverage – Collapse or to collapse caused by one or more of the following:
Fire; lightning; windstorm; hail; explosion; smoke; aircraft; vehicles; riot; civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; breakage of building glass; falling objects; weight of snow, ice or sleet; water damage; earthquake; weight of people or personal property; weight of rain that collects on a roof.
e.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, rodents; corrosion, rust, dampness, cold or heat.
Analysis
Most of the exclusions are self-explanatory, but other ones deserve some discussion.
The nuclear hazard exclusion has been changed and no longer references nuclear weapons; nuclear reaction, radiation, or radioactive contamination include the results of a discharge of a nuclear weapon.
The theft exclusion requires visible signs of forced entry into a vehicle before coverage applies. The theft exclusion does not apply to property in the custody of a carrier for hire because the insured has no control over such a situation. The carrier should have its own insurance coverage, and the inland marine insurer can look to the hired carrier's insurance for payment of a loss, either directly or through subrogation.
Breakage of glass articles is excluded because of the frequency exposure and the fact that separate glass coverage can be bought by the insured. However, if the glass breakage is caused by such perils as fire, explosion, or riot, the loss will be covered.
Delay, loss of use, and loss of market are excluded losses under this inland marine form because the form is meant to cover direct physical loss and not consequential, nonphysical losses.
Inventory shortages and dishonest acts by the insured or his employees or partners are not covered losses. Such instances smack of fraud or intentional acts on the part of the insured or his employees, which CM 00 29 is not meant to insure.
Exclusion h. has been broadened and no longer excludes only electrical current that causes a short circuit or disturbance within a covered article. It now excludes electrical, magnetic, or electromagnetic energy that damages, disrupts, or otherwise interferes with electrical appliances, wires, systems, networks, systems using cellular technology, or creates a short circuit or other electrical disturbance in a covered article.
The exclusion then states that electrical, magnetic, or electromagnetic energy includes but is not limited to electrical current, arching, charge produced by a magnetic or electromagnetic field, pulse of electromagnetic energy or microwaves. However, as with other exclusions, if the electrical energy results in fire or explosion, the damage from that fire or explosion is covered.
Exclusion 3.d., Collapse, has been greatly changed. In the prior policy it simply stated that collapse was excluded except for the coverage provided in the Additional Coverage section of the policy. Now collapse is defined as an abrupt falling down or caving in, and includes loss of structural integrity including separation of parts of the property, bulging, cracking, sagging, settling as relates to loss of integrity or abrupt falling down or caving in. The same exception for coverage provided under the Additional Coverage-Collapse section exists. This provides coverage for the standard listed perils of fire, lightning, windstorm, hail, et.al. but only if they cause a loss in conjunction with defective construction materials.
Limits of Insurance
The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations.
Deductible
We will not pay for loss or damage in any one occurrence until the amount of the adjusted loss or damage before applying the applicable Limits of Insurance exceeds the Deductible shown in the Declarations. We will then pay the amount of the adjusted loss or damage in excess of the Deductible, up to the applicable Limit of Insurance.
Additional Conditions
The following conditions apply in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions:
1.Coverage Territory
We cover property wherever located within:
a.The United States of America (including its territories and possessions);
b.Puerto Rico; and
c.Canada.
2.Coinsurance
If a Coinsurance percentage is shown in the Declarations, the following condition applies.
We will not pay the full amount of any loss if the value of Covered Property, except property in transit, at the time of loss times the Coinsurance percentage shown for it in the Declarations is greater than the Limit of Insurance for the property.
Instead, we will determine the most we will pay using the following steps:
a.Multiply the value of Covered Property, except property in transit, at the time of loss by the Coinsurance percentage;
b.Divide the Limit of Insurance of the property by the figure determined in Step a.;
c.Multiply the total amount of loss, before the application of any deductible, by the figure determined in Step b.; and
d.Subtract the deductible from the figure determined in Step c.
We will pay the amount determined in Step d. or the Limit of Insurance, whichever is less. For the remainder, you will either have to rely on other insurance or absorb the loss yourself.
Analysis
The additional conditions clause contains two items to note. The coverage territory includes the United States, Puerto Rico, and Canada; it does not include Mexico, Europe, or Asia.
The coinsurance clause is not out of the ordinary, but the insured should know about the penalty he or she will incur if there is an insurance to value problem. The clause sets out the procedures that the insurer will use to determine payment if there is a coinsurance problem.
For more information about the other policy conditions that apply to CM 00 29 03 10, as well as to other inland marine forms, see Introduction, General Rules, and Conditions.