Summary: With the surge in popularity of unmanned aircraft, such as drones, the Insurance Services Office (ISO) has developed a form—Unmanned Aircraft Property And Cargo Coverage, IH 00 61 01 16—to address the coverage needs of these type of craft. The form also provides coverage for some cargo that these aircraft carry.
Unmanned Aircraft Systems (UAS), such as drones, are robots with the ability to hover, which makes them useful for using video cameras to record data; hence their use in firefighting, surveillance, and traffic monitoring. They can also be used for delivering smaller packages or spraying crops. They can be controlled remotely similar to how remote hobby aircraft are controlled, but they can also be programmed to fly independently using GPS navigation.
The IH 00 61 form is used in conjunction with the Commercial Inland Marine Conditions Form, CM 00 01 09 04, and the Common Policy Conditions Form, IL 00 17 11 98, to cover unmanned aircraft and cargo against direct physical loss or damage, including that which occurs when the unmanned aircraft are used in commercial or civil operations.
The coverage can be written on a blanket or scheduled basis. Some types of cargo that are listed as property not covered may be added via a description in the declarations.
ISO's Inland Marine Handbook lists several factors and characteristics that should be considered when underwriting unmanned aircraft, including if the craft is manufactured commercially or built from a kit; the year it was built; the maximum speed and flight radius; the altitude and duration of flight; payload capacity; if the aircraft has been modified after manufacture in order to increase speed, range, payload capacity, or other capacities; if the craft can be operated beyond line-of-sight; if geofencing technology is included (which aids in avoiding restricted airspace); if collision avoidance and return-to-home technology is included; if the operating software uses encrypted link technology; how complex the aircraft is to operate; if the insured owns, rents, or leases the aircraft; and the number of unmanned aircraft the insured owns, rents, or leases.
The Inland Marine Handbook also urges underwriters to consider cargo—the type, who owns it, and its susceptibility to theft and damage—and the types of operations and uses, such as aerial photography, fire fighting, utility inspection, movement of inventory, and delivery of goods. Other factors to consider include the frequency, duration, and distance of flights; if the aircraft is flown indoors; the flight path—over water, in urban or rural areas, or on the insured's private land; and alignment of operations with the capabilities of the aircraft.
1.Covered Property – Unmanned Aircraft
We will pay for direct physical loss of or damage to the following Covered Property from any of the Covered Causes of Loss:
"Unmanned aircraft" owned by you, or rented or leased to you if you have a contractual responsibility to insure, that are described in the Declarations. However, if loss or damage occurs while such "unmanned aircraft" are in flight, in preparation for flight or being transported to or from the launch or landing site, coverage applies only if such use is part of "unmanned aircraft operations".
Coverage for such "unmanned aircraft" includes:
a.Equipment used with such "unmanned aircraft" provided such equipment is essential for operation of the "unmanned aircraft" or for executing "unmanned aircraft operations"; and
b.Data generated as part of "unmanned aircraft operations" and the electronic media on which such data is processed, recorded or stored, such as software, films, tapes, discs, drums or cells.
Analysis
The form promises to pay for direct physical loss or damage to unmanned aircraft. "Unmanned aircraft" is a defined term on the form, meaning an aircraft that is not designed, manufactured, or modified after manufacture to be controlled directly by a person from within or on the aircraft. Such aircraft are generally operated by remote control or programmed to fly via GPS navigation.
The aircraft must be owned, rented, or leased by the insured or for which the insured has a contractual responsibility to insure. Loss to such craft is covered in flight, in preparation for flight, or being transported to or from the launch or landing site only if this use is part of the unmanned aircraft operations. "Unmanned aircraft operations" is a defined term in the policy meaning the operations described in the declarations. Operations may include fire fighting, aerial photography, or delivery of goods. If, for instance, the insured's unmanned aircraft operations are described in the declarations as delivery of goods and the aircraft is damaged in flight while being used to take wedding photos for the insured's cousin, that damage would not be covered if aerial photography was not described as part of the operations.
The associated equipment and data generated as part of the operations are also covered, as well as the media on which the data is processed, recorded, and stored. Such items as remote controls and the software that processed the data collected would be covered.
2.Covered Property – Cargo Owned By You
We will pay for direct physical loss of or damage to the following Covered Property from any of the Covered Causes of Loss:
Cargo owned by you and described in the Declarations, when carried by "unmanned aircraft" described in the Declarations, as part of "unmanned aircraft operations". We cover loss or damage to such cargo while in transit from the time such "unmanned aircraft" leaves the premises where the shipment begins until such "unmanned aircraft" arrives at its destination.
Analysis
Cargo the insured owns that is carried by the unmanned aircraft is covered while it is in transit from the time it leaves the premises where the shipment begins until the aircraft arrives at its destination. The form does not define "cargo." Merriam-Webster Online defines "cargo" as "the goods or merchandise conveyed in a ship, airplane, or vehicle." That definitions leaves the meaning of "cargo" pretty broad. The cargo must be part of the insured's unmanned aircraft operations, which are the operations described in the declarations. If, for instance, the operations are described as "delivery of goods," and the cargo consists of the insured's goods being delivered, this coverage would apply.
3.Covered Property – Cargo In Your Care, Custody Or Control
We will pay those sums that you become legally obligated to pay for direct physical loss or damage to the following Covered Property by a Covered Cause of Loss:
Property of others as described in the Declarations that you have accepted for transportation by "unmanned aircraft" described in the Declarations, as part of "unmanned aircraft operations" in your capacity as a carrier-for-hire under a shipping receipt or manifest issued by you.
We only cover such cargo while in your custody as the carrier, until the property is delivered to its destination or, if the cargo is not delivered, until it is returned to its owner. However, we do not cover:
a.Import shipments until discharged from the import conveyance or until Ocean Marine insurance ceases, whichever occurs last; or
b.Export shipments after placed on the outbound conveyance or when Ocean Marine insurance applies to the shipment, whichever occurs first.
Analysis
In contrast to the provision for cargo the insured owns, this section provides coverage for property of others that the insured delivers with the unmanned aircraft as part of the insured's unmanned aircraft operations. In this case, the operations could still be described as "delivery of goods," but the goods would be owned by someone else, and the insured would be acting as a carrier for hire.
The insured must be working with a shipping receipt or manifest that it issues, and the cargo is covered only for the scenarios listed. If, for example, the cargo is still covered by ocean marine insurance, this form will not kick in until that insurance ends.
4.Property Not Covered
Covered Property does not include:
a.Contraband or property in the course of illegal transportation or trade;
b.Any of the following unless described in the Declarations:
(1)Accounts, bills, coins, currency, documents, records, deeds, money, notes, securities, evidences of debt or stamps;
(2)Bullion, gold or other precious metals, jewelry, watches, precious or semiprecious stones;
(3)Furs or garments trimmed with fur;
(4)Live animals; or
(5)Works of art.
Analysis
As with most property policies, contraband and property in the course of illegal trade or transportation is not covered. Legal pharmaceuticals may be considered covered cargo, but a shipment of crack cocaine would not.
The rest of the items listed here can be added as property covered via a description in the declarations and by paying the appropriate premium.
5.Covered Causes Of Loss
a.With respect to the coverage addressed in Paragraphs A.1. and A.2., Covered Causes of Loss means direct physical loss or damage to Covered Property except those causes of loss listed in the Exclusions.
b.With respect to the coverage addressed in Paragraph A.3., Covered Causes of Loss means direct physical loss or damage to Covered Property for which you are liable except those causes of loss listed in the Exclusions.
6.Coverage Extension – Earned Freight Charges
We also cover your earned freight charges that you are unable to collect arising from a loss covered under Paragraph A.3. of this Coverage Form. The most we will pay in any one occurrence is $2,500.
This limit is in addition to the applicable Limit Of Insurance shown in the Declarations.
Analysis
The form contains the statement that covered causes of loss are those that cause direct physical loss or damage to covered property, except the causes that are excluded.
IH 00 61 provides a coverage extension for earned freight charges. If the insured delivers cargo of others that is in its care, custody, or control and unable to collect the freight costs due to a covered loss, an additional limit of $2,500 is available to cover the costs.
7.Additional Coverages
a.Additionally Acquired Unmanned Aircraft
If during the policy period you acquire "unmanned aircraft" of a type described in the Declarations (including the related property addressed in Paragraph A.1.), for use in "unmanned aircraft operations", we will cover such "unmanned aircraft" (including the related property addressed in Paragraph A.1.) for up to 30 days, but not beyond the end of the policy period.
In any one occurrence, the most we will pay for the total of all loss or damage to all such "unmanned aircraft" (including the related property addressed in Paragraph A.1.) is the lesser of:
(1)25% of the total of the Limits of Insurance shown in the Declarations for "unmanned aircraft" described in the Declarations; or
(2)$50,000.
You will report values of such "unmanned aircraft" (including the related property addressed in Paragraph A.1.) to us within 30 days from the date you take possession and will pay any additional premium due. If you do not report such "unmanned aircraft" (including the related property addressed in Paragraph A.1.), coverage will cease automatically 30 days after the date the "unmanned aircraft" (including the related property addressed in Paragraph A.1.) is acquired or at the end of the policy period, whichever occurs first.
The Coinsurance Additional Condition does not apply to this coverage.
This Additional Coverage does not increase the applicable Limit Of Insurance shown in the Declarations.
This Additional Coverage does not apply to "unmanned aircraft" (including the related property addressed in Paragraph A.1.) covered on a blanket basis.
Analysis
The form provides minimal coverage for additionally acquired property—the lesser of 25 percent of the limit or $50,000—for up to thirty days or until the end of the policy period, whichever is first. The insured must report the values of the acquired aircraft within thirty days of taking possession in order for coverage to be provided. Additional premium must also be paid. If not reported, the coverage will cease after thirty days or at the end of the policy period.
b.Debris Removal
(1)We will pay your expenses to remove debris of Covered Property caused by or resulting from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date of direct physical loss or damage.
(2)The most we will pay under this Additional Coverage is 25% of:
(a)The amount we pay for the direct physical loss or damage to Covered Property; plus
(b)The deductible in this Policy applicable to that loss or damage.
(3)Payment under this Additional Coverage will not increase the applicable Limit of Insurance, but if:
(a)The sum of direct physical loss or damage and debris removal expense exceeds the Limit of Insurance; or
(b)The debris removal expense exceeds the amount payable under the 25% limitation;
we will pay up to an additional $5,000 in any one occurrence under this Additional Coverage.
(4)This Additional Coverage does not apply to costs to:
(a)Extract "pollutants" from land or water; or
(b)Remove, restore or replace polluted land or water.
Analysis
Some debris removal expenses are covered by the form. The cost to remove debris of covered property caused by or resulting from a covered cause of loss, up to 25 percent of the amount paid for the direct physical loss or damage to covered property plus the deductible, is available, which is not in addition to the limit of insurance. However, if the amount of the direct physical loss or damage plus the debris removal exceeds the limit of insurance or the debris removal expense exceeds the 25 percent amount, an additional $5,000 is available. The costs to extract pollutants from land or water or to remove, restore, or replace polluted land or water are not covered but are addressed in the pollutant cleanup and removal additional coverage. The insured has 180 days from the time of loss to report the debris removal expenses.
c.Pollutant Cleanup And Removal
We will pay your expense to extract "pollutants" from land or water if the discharge, dispersal, seepage, migration, release or escape of the "pollutants" is caused by or results from a Covered Cause of Loss to an "unmanned aircraft" covered under this Coverage Form, which occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date on which the Covered Cause of Loss occurs.
This Additional Coverage does not apply to costs to test for, monitor or assess the existence, concentration or effects of "pollutants". But we will pay for testing which is performed in the course of extracting the "pollutants" from the land or water.
The most we will pay under this Additional Coverage is $10,000 for the sum of all covered expenses arising out of Covered Causes of Loss occurring during each separate 12-month period of this Policy.
The limit for this Additional Coverage is in addition to the Limit of Insurance.
Analysis
The typical pollutant cleanup and removal additional coverage language applies to expenses to extract pollutants from water or land if their escape is caused by a covered cause of loss to an unmanned aircraft. Up to $10,000 is available above the form's limit of insurance.
d.Rental Reimbursement
(1)If a Limit of Insurance is shown in the Declarations for Rental Reimbursement, we will pay you the actual rental expenses, up to such Limit of Insurance, for renting property of the type addressed in Paragraph A.1., when all of the following apply:
(a)You have a covered loss to such Covered Property;
(b)The rented property is necessary to continue as much as possible the normal "unmanned aircraft operations"; and
(c)You do not have the equivalent, idle property available.
(2)Subject to the applicable Limit of Insurance, payment is limited to rental expense incurred during the period starting immediately after the covered loss occurs and ending when the Covered Property has been:
(a)Replaced;
(b)Restored to service; or
(c)Is no longer needed;
whichever occurs first and regardless of the expiration date of this Policy.
Analysis
The insured may choose to add coverage for rental reimbursement by entering a limit of insurance in the declarations for this coverage. The coverage applies to unmanned aircraft the insured rents to continue as much as possible its unmanned aircraft operations and if the insured does not have an equivalent and unused property available. If, for instance, and insured's aerial photography business is booming and he is hired for five weddings but has only three aircrafts, he can use this coverage to apply to additional aircraft he rents to cover the two additional weddings.
1.With respect to the coverage addressed in Paragraphs A.1. and A.2., this insurance does not apply to loss or damage caused directly or indirectly by any of the following. With respect to the coverage addressed in Paragraph A.3., this insurance does not apply to your liability 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 or damage.
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.
Analysis
These are typical property exclusions with the anti-concurrent causation lead-in language.
2.With respect to the coverage addressed in Paragraphs A.1. and A.2., this insurance does not apply to loss or damage caused by or resulting from any of the following. With respect to the coverage addressed in Paragraph A.3., this insurance does not apply to your liability for loss or damage caused by or resulting from any of the following:
a.Delay, loss of use, loss of market or any other consequential loss.
b.Dishonest or criminal act (including theft) committed by:
(1)You, any of your partners, employees (including temporary employees and leased workers), officers, directors, trustees, or authorized representatives;
(2)A manager or a member if you are a limited liability company; or
(3)Anyone else with an interest in the property, or their employees (including temporary employees and leased workers) or authorized representatives;
whether acting alone or in collusion with each other or with any other party.
This exclusion applies whether or not an act occurs during your normal hours of operation.
This exclusion does not apply to acts of destruction by your employees (including temporary employees and leased workers) or authorized representatives; but theft by your employees (including temporary employees and leased workers) or authorized representatives is not covered.
c.Theft by any person (except carriers for hire) to whom you entrust the property for any purpose, whether acting alone or in collusion with any other party. This exclusion applies whether or not an act occurs during your normal hours of operation.
d.Work upon the property.
But if work upon the property results in fire, explosion or collision, we will pay for the direct loss or damage caused by that fire, explosion or collision.
e.Unexplained disappearance.
f.Artificially generated electrical, magnetic or electromagnetic energy that damages, disturbs, disrupts or otherwise interferes with any:
(1)Electrical or electronic wire, device, appliance, system or network; or
(2)Device, appliance, system or network utilizing cellular or satellite technology; creating a short circuit or other electric disturbance within an "unmanned aircraft" or the related property addressed in Paragraph A.1.
For the purpose of this exclusion, electrical, magnetic or electromagnetic energy includes, but is not limited to, electrical current, including arcing; electrical charge produced or conducted by a magnetic or electromagnetic field; pulse of electromagnetic energy; electromagnetic waves or microwaves.
But if artificially generated electrical, magnetic or electromagnetic energy, as described above, results in fire, explosion or collision, we will pay for the direct loss or damage caused by that fire, explosion or collision.
This exclusion only applies to loss or damage to that "unmanned aircraft" (including the related property addressed in Paragraph A.1.) in which the disturbance occurs.
However, if an exception is indicated in the Declarations, this exclusion does not apply when the short circuit or other electric disturbance originates within and is limited to the "unmanned aircraft" or the related property addressed in Paragraph A.1.
g.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.
h.Unauthorized instructions to transfer property to any person or to any place.
i.Neglect of an insured to use all reasonable means to save and preserve property from further damage at and after the time of loss.
j.That occurs while an "unmanned aircraft" or the related property addressed in Paragraph A.1. is rented, leased or loaned to others. However, if so indicated in the Declarations, this exclusion does not apply.
k.Improper packing or stowage, or rough handling of cargo.
l."Unmanned aircraft" (or the related property addressed in Paragraph A.1.) being used in any professional or organized racing or demolition contest or stunting activity, or while practicing for such contest or activity.
We also will not provide coverage while "unmanned aircraft" (or the related property addressed in Paragraph A.1.) is being prepared for such contest or activity.
Analysis
Most of these exclusions are standard to property policies. Worth noting for the specific implications to unmanned aircraft are the exception to exclusion f. for artificially generated electrical, magnetic, or electromagnetic energy—the exclusion applies only to loss or damage to the "unmanned aircraft" in which the disturbance occurs, but if an exception is indicated in the declarations, the exclusion does not apply when the short circuit or other electric disturbance originates within and is limited to the unmanned aircraft or related property; the exclusion for loss or damage to the aircraft when it is rented, leased, or loaned to others—the coverage is meant to apply only to the insured; and the exclusion for loss or damage due to racing or stunts, risky activities this insurance was not meant to cover.
3.With respect to the coverage addressed in Paragraphs A.1. and A.2., this insurance does not apply to loss or damage caused by or resulting from any of the following. With respect to the coverage addressed in Paragraph A.3., this insurance does not apply to your liability 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.Wear and tear, depreciation.
b.Any quality in the property that causes it to damage or destroy itself, hidden or latent defect, gradual deterioration.
c.Insects, vermin or rodents.
d.Corrosion, rust, dampness, extremes of temperature.
e.Mechanical breakdown, malfunction or failure to operate
Analysis
The ordinary wear and tear exclusions found on most property policies apply to this coverage.
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 Limit of Insurance exceeds the applicable Deductible shown in the Declarations. We will then pay the amount of the adjusted loss or damage in excess of the applicable Deductible, up to the applicable Limit of Insurance.
In the event that more than one Deductible applies to loss or damage as a result of one occurrence, we will apply only the largest Deductible.
Analysis
The form pays only after the deductible amount has been surpassed by the amount of the adjusted loss or damage. The declarations page, IH DS 61, allows entry of a deductible for each section of covered property—unmanned aircraft, owned cargo, and cargo of others. If more than one deductible applies to the loss, only the largest one will be used.
Valuation of Cargo Owned by the Insured
With respect to the Covered Property addressed in Paragraph A.2., the following is added to the Valuation General Condition in the Commercial Inland Marine Conditions:
If the property was sold under invoice, the value of the property will be the actual net invoice price, including prepaid or advance freight.
Analysis
The Commercial Inland Marine Conditions form's valuation general condition states that property is valued at the least of the actual cash value of the property, the cost of reasonably restoring the property to its condition immediately before loss or damage, or the cost of replacing the property with substantially identical property. That condition is replaced with this valuation for cargo owned by the insured if sold under invoice, which is the actual net invoice price, including prepaid or advance freight.
Valuation of Cargo in the Insured's Care, Custody, or Control
With respect to the Covered Property addressed in Paragraph A.3., the Valuation General Condition in the Commercial Inland Marine Conditions is replaced by the following:
The value of such property will be the least of the following:
1.The cost of reasonably restoring that property to its condition immediately before loss;
2.The cost of replacing that property with substantially identical property;
3.The value, if any, stated in the bill of lading or shipping receipt; or
4.The limitation stated in the tariff.
In the event of loss, the value of property will be determined as of the time of loss or damage.
Analysis
The Commercial Inland Marine Conditions form's valuation general condition states that property is valued at the least of the actual cash value of the property, the cost of reasonably restoring the property to its condition immediately before loss or damage, or the cost of replacing the property with substantially identical property. That condition is replaced with this valuation for cargo in the insured's care, custody, or control, which is the least of the cost to reasonably restore the property to its condition immediately before loss, the cost of replacing it with substantially identical property, the value stated in the bill of lading or shipping receipt, or the limitation stated in the tariff.
Valuation of Data and Electronic Media
With respect to data and electronic media addressed in Paragraph A.1., the Valuation General Condition in the Commercial Inland Marine Conditions is replaced by the following:
The value of data will be the actual cost to reproduce. If the data is not replaced or reproduced, we will pay the cost of the value of the electronic media with no stored data. The value of electronic media will be the cost to repair or replace such media with substantially identical property.
Analysis
The Commercial Inland Marine Conditions form's valuation general condition states that property is valued at the least of the actual cash value of the property, the cost of reasonably restoring the property to its condition immediately before loss or damage, or the cost of replacing the property with substantially identical property. That condition is replaced with this valuation for data, which is the actual cost to reproduce the data; if it cannot be reproduced, the value is the cost of electronic media with no stored data. The value of electronic media is the cost to repair or replace the media with substantially identical property.
Option for Valuation at Replacement Cost (Unmanned Aircraft and/or Cargo Owned by the Insured)
If the Declarations indicate that Replacement Cost applies to certain property, then the following replaces the Valuation Commercial Inland Marine Condition with respect to such property:
1.If replaced, the value of Covered Property will be the cost of replacing that property with similar property without depreciation, but not more than the applicable Limit Of Insurance shown in the Declarations.
2.If not replaced, the value of that property will be the least of the following:
a.Actual cash value of that property;
b.Cost of reasonably restoring that property to its condition immediately before loss or
damage; or
c.Cost of replacing that property with functionally equivalent property.
3.In the event of loss, the value of property will be determined at the time of the loss.
4.This paragraph, H., does not apply to:
a.Property sold under invoice;
b.Cargo in your care, custody or control; or
c.Data or the electronic media on which data is processed, recorded or stored.
Analysis
Replacement cost coverage is an option for the unmanned aircraft or owned cargo. It cannot be applied to cargo in the insured's care, custody, or control; property sold under invoice; or data or electronic media.
The following conditions apply in addition to the Commercial Inland Marine Conditions and the Common Policy Conditions:
1.Coverage Territory
a.We cover property wherever located within:
(1)The United States of America (including its territories and possessions);
(2)Puerto Rico; and
(3)Canada.
b.We also cover property while airborne within and between points in Paragraph a.
Analysis
The coverage territory not only includes the U.S., its territories and possessions, Puerto Rico, and Canada, but also property while airborne between those points. Property that is airborne between Los Angeles and Toronto is covered; but, between Los Angeles and Mexico City, the airborne property is not.
2.Coinsurance – Unmanned Aircraft
If a Coinsurance percentage is shown for Unmanned Aircraft in the Declarations, the following condition applies to such "unmanned aircraft", including the related property addressed in Paragraph A.1.:
We will not pay the full amount of any loss or damage to Covered Property if the value of such Covered Property at the time of loss or damage 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 at the time of loss or damage 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 or damage, 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.
This provision does not apply to property covered on a blanket basis.
3.Coinsurance – Cargo Owned By You
The following condition applies to property covered under the terms of Paragraph A.2.:
We will not pay the full amount of any loss or damage to Covered Property in a shipment if the value of such Covered Property at the time of loss or damage exceeds the Limit Of Insurance shown in the Declarations for the shipment.
Instead, we will determine the most we will pay using the following steps:
a.Divide the Limit of Insurance for the Covered Property in the shipment by the value of the Covered Property in such shipment;
b.Multiply the total amount of loss or damage, before the application of any deductible, by the figure determined in Step a.; and
c.Subtract the deductible from the figure determined in Step b.
We will pay the amount determined in Step c. 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.
This provision does not apply to property covered on a blanket basis or to cargo in your care, custody or control.
Analysis
The form provides instructions for determining if a coinsurance penalty applies. Instructions are provided for both the aircraft itself and for the cargo. Cargo is subject to a 100 percent insurance-to-value clause. Neither applies to property covered on a blanket basis.
1."Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
2."Unmanned aircraft" means an aircraft that is not:
a.Designed;
b.Manufactured; or
c.Modified after manufacture;
to be controlled directly by a person from within or on the aircraft.
3."Unmanned aircraft operations" means the operations described in the Declarations.
Analysis
The definition of "pollutants" is standard to many property forms.
The form is intended to cover only unmanned aircraft, such as drones, and nothing that has been modified or designed to be controlled by an onboard human. The aircraft's operations are described in the schedule and may include such activities as aerial photography and pipeline locating.