Personal inland marine insurance
The homeowners policy can cover many of the risks to which an average household is exposed.
But there are certain risks for which the insured will require additional coverage.
The homeowners forms contain exclusions and limitations for certain types of property that are particularly susceptible to loss, difficult to value, or of extremely high value.
In some cases, an individual who has no homeowners insurance may need coverage for personal property.
Broader coverage for personal property can be obtained through personal inland marine forms. Inland marine insurance originally developed
ocean marine insurance, which provides very broad coverage for property being transported over water.
Inland marine insurance provides the same type of broad, flexible coverage for portable personal property.
Because they provide coverage that moves with the property to protect it at various locations, inland marine forms are sometimes called floaters.
The three most commonly used personal inland marine forms are:
■personal property; and
To form a policy, the form must be attached to the personal inland marine form, a skeleton policy that contains basic conditions that apply to all personal inland marine coverages.
Personal inland marine floaters provide open peril coverage, although a few exclusions apply, such as:
■wear and tear;
■inherent vice (a condition or defect that exists within the property).
Like many other property policies, personal inland marine floaters contain a pair or set condition that states that the insurance company will not be liable for the entire value of a set when only a part of it is damaged. Inland marine floaters give the company two reimbursement options in this situation:
■Repair, replace, or restore the set
■Pay the insured the difference between the actual cash value of the full set and the actual cash value of the undamaged part
1. Personal Inland Marine Forms
1.1. Personal Articles Form
The personal articles form provides coverage for nine optional classes of personal property—the same nine categories covered under the homeowners scheduled personal property endorsement: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamps, and coins.
Generally, an appraisal is required when the personal articles form is issued to help develop an accurate description of covered property and to arrive at the value for which the property should be insured.
However, the personal articles form is not a valued policy. For purposes of loss settlement, the value is determined at the time of loss. In general, the company will reimburse the insured for the least of:
■actual cash value;
■cost to repair;
■cost to replace with a substantially identical item; or
■amount of insurance specified in the policy.
Another important feature of the personal articles form is that it provides automatic coverage for certain classes of newly acquired property when the property is in a category of property that is already insured. Automatic coverage is available for:
■musical instruments; and
■works of fine art.
For all property except fine art, coverage applies for 30 days; the property is covered for 25% of the applicable limit of insurance or $10,000, whichever is less. For fine art, coverage applies for 90 days and is provided for up to 25% of the applicable limit of insurance.
Coverage for newly acquired property ceases after the 30 or 90 days unless the insured notifies the insurance company about the property during this time
1.2. Personal Property Form
The personal property form provides open peril coverage on a blanket basis for most kinds of personal property found in a typical home. It is similar to the coverage provided for personal property under Coverage C in a homeowners policy endorsed to provide open peril coverage for personal property. The personal property floater is most often issued to condominium or apartment dwellers who cannot obtain this open peril coverage for personal property under the HO-4 or HO-6.
Property is divided into 13 basic categories (including an “all other personal property” category), and a separate limit of insurance is assigned to each category. Particularly valuable property can be scheduled separately.
1.3. Personal Effects Form
The personal effects form is designed for individuals and families who want to insure their personal belongings while traveling.
Open peril coverage on an unscheduled basis is provided for the types of property usually carried by tourists, such as clothing, cameras, sports equipment, and souvenirs.
Specifically excluded are valuable papers, tickets, passports, currency, contact lenses, artificial limbs, and salesperson’s samples.
Property is excluded from coverage while on the insured’s premises or while in storage. Insureds who travel frequently might carry this coverage on a permanent basis. Often, however, the coverage is taken out for a short term to cover a specific trip.
insured to have liability coverage under a homeowners policy or separate liability policy.