ARE YOUR CLIENT S PRIZED POSSESSIONS COVERED...WELL? SPONSORED BY

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Brooke Fleming
5 years ago
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1 ARE YOUR CLIENT S PRIZED POSSESSIONS COVERED...WELL? SPONSORED BY

Antiques Loss Settlement Issues Irene and Bud have some antique furniture and collectibles left to them by

Bud and Irene were the only grandchildren interested in preserving the family history v.

They inherited: Antique brass bed 200 years old $5,000 200+ Hand carved wooden bellows $15,000-20,000 200

2 Antiques Loss Settlement Issues Irene and Bud have some antique furniture and collectibles left to them by their respective grandparents. Bud and Irene were the only grandchildren interested in preserving the family history v. selling the stuff and getting some quick cash. They inherited: Antique brass bed 200 years old $5, Hand carved wooden bellows $15,000-20, yr. old Birdseye maple dresser & mirror $5, yr. old silver tea set made by Paul Revere $20,00-25, yr. old roll top desk $8,000 Answer the following scenarios 1. These items are NOT SCHEDULED. If these items were stolen, what would the HO policy pay: 1

3 HO-91 unendorsed loss settlement provision The unendorsed ISO HO-2000/HO-2011 policy loss settlement Provision: 2

For relatively new articles it is easier for the carrier

4 HO personal property, which includes antiques, are settled on an ACV basis. ACV means like, kind and quality. For relatively new articles it is easier for the carrier to adjust ACV by a formula replacement cost minus depreciation. 3

5 This formula does not work for antiques or collectibles because these items cannot be replaced. In Massachusetts we utilize the broad evidence rule for ACV which encompasses many things including market value. Market value is the closest thing to ACV for antiques that is available. It is the burden of the insured to prove that it truly was an antique and what the approximate value would be. This should be done BEFORE the loss!!!! If the HO replacement cost endorsement were attached to the H-91 or HO-2000/HO-2011 would that change loss settlement? 4

6 Antique Loss Settlement Issues This endorsement would NOT change the loss settlement provision for antiques. Antique Loss Settlement Issues This endorsement would NOT change the loss settlement provision for antiques. WHY? 5

Even with HO 04 90 Antiques STILL adjusted on ACV basis Consider increasing Coverage C Antiques ARE covered for

7 Even with HO Antiques STILL adjusted on ACV basis Consider increasing Coverage C Antiques ARE covered for value unless Special limit applies or Property excluded HO-2000/2011 language HO-91 similar Consider coin collections 6

8 HO-2000/2011 language HO-91 similar Can antique jewelry ever REALLY be replaced??? Antique firearms? family silver? HO-2000/2011 language HO-91 similar $1,000 HO-91 These limits apply whether antique or not 7

being painted and the painters drop the desk while moving it out of the room.

9 Coverage C exclusions not really antiques Many. Business related. Pets Recreational vehicles Perils Issues & Antiques unendorsed HO Their house is being painted and the painters drop the desk while moving it out of the room. What would the unendorsed HO policy pay? Bud and Irene have authentic appraisals, but have not scheduled these items 8

(His CGL policy would exclude this loss under the PD to property in his care, custody and control exclusion.

10 The unendorsed HO policy covers Coverage C items on a named peril basis. Dropping is not a named peril and therefore the HO policy would NOT respond to this loss. The insured would have to sue the painter. (His CGL policy would exclude this loss under the PD to property in his care, custody and control exclusion.) The insured would have to recover from the personal assets of the painter The painter was playing with the bellows and pulled too hard, ripping the bellows in half. What would the unendorsed policy pay? Bud and Irene have authentic appraisals, but have not scheduled these items 9

11 The unendorsed HO policy provides named peril coverage for Coverage C items. Pulling too hard and ripping is not a named peril. There would be no coverage under the HO policy for this loss. The insured would have to sue the painter. (His CGL policy would exclude this loss under the PD to property in his care, custody and control exclusion. ) The insured would have to recover from the personal assets of the painter. 10

12 The roll top desk is in front on the living room window. The window was left open and the lawn sprinkler was turned on. All day long, water was sprinklered into the house and ruined the roll top desk. What would the unendorsed policy pay? Bud and Irene have authentic appraisals, but have not scheduled these items 11

coverage. Bud and Irene s house is flooded due to heavy Spring rains.

13 The unendorsed HO policy covers contents Coverage C on a named peril basis. Water from the sprinkler entering the house during the day would not be a named peril and therefore there would be no coverage. Bud and Irene s house is flooded due to heavy Spring rains. Much of their contents is ruined due to flooding including the bellows and roll top desk. What would the unendorsed policy pay? Bud and Irene have authentic appraisals, but have not scheduled these items 12

Suppose the HO 00 15 with HO-91 was attached to the HO-3 policy or

14 Unendorsed HO policy does NOT cover flood or earthquake. In order to cover flood losses, a flood policy is necessary Suppose the HO with HO-91 was attached to the HO-3 policy or the HO-5 was sold, would your answers to questions 1, 2, 3,4 be any different? 13

15 Breakage only named perils for CERTAIN type of property 14

16 Open perils contents In addition to normal exclusions found in HO-3 for Coverage A/B Coverage C has some additional exclusions 15

HO 00 15 and the HO-5 Comprehensive Policy language covers

17 Section I exclusions Still apply Water damage exclusion changed by Katrina endorsement HO-91 and HO (HO-2011 built in) The HO and the HO-5 Comprehensive Policy language covers losses on a covered unless excluded basis. Dropping is not excluded. 16

the painter and sprinkler water damage done to the roll top desk.

18 Breakage is only restricted for certain articles. The HO and HO-5 would cover the damage done to the antique desk dropped by the painter, damage done to the bellows by the painter and sprinkler water damage done to the roll top desk. Breaking, dropping, rain coming in open window is covered as not excluded. The HO and the HO-5 Comprehensive Policy language covers losses on a covered unless excluded basis. The HO or HO-5 will NOT cover flood damage to contents on insureds premises. 17

Flood is excluded and therefore the HO-5 and HO 00 15 will NOT pay the

Don t count on Flood policy Limits coverage for antiques, jewelry, furs to

19 Flood is excluded and therefore the HO-5 and HO will NOT pay the flood loss to bellows and roll top desk. Don t count on Flood policy Limits coverage for antiques, jewelry, furs to maximum of $2500 Is there any way to cover flood damage to these antiques other than buying a flood policy????? 18

20 Importance of appraisals and Antiques Supposing there are NO appraisals on these items. Irene and Bud have pictures and a video of these items. If these items were stolen, how do you think the insurance carrier could respond? Importance of appraisals and Antiques There could be a SERIOUS problem in determining the value of these articles. Pictures and videos cannot PROVE the authenticity of the articles. Reproductions cannot be detected by pictures or videos. The insured MUST get true appraisals on the articles whether they schedule the items or not 19

Scheduled Personal Property Floater If these items are scheduled under the

endorsement is also on the policy, would the above losses described in 2,3,4 be

Scheduled personal property floater HO 04 61 The HO 04 61 Scheduled Personal

21 Scheduled Personal Property Floater If these items are scheduled under the Scheduled Personal Property Floater HO and the HO 04 90, Replacement cost endorsement is also on the policy, would the above losses described in 2,3,4 be covered and under what payment basis? Scheduled personal property floater HO The HO Scheduled Personal Property Floater covers the scheduled items on an open peril basis. There are fewer exclusions than under the HO 00 15/HO-5. 20

22 Scheduled personal property floater HO The HO WILL cover FLOOD damage and earthquake. (no exclusion) This endorsement would have covered the flood damage to the antique bellows and roll top desk. Scheduled personal property floater HO More exclusions if fine arts What IS a fine art? 21

Scheduled personal property floater HO 04 61 More exclusions if fine arts What IS a fine art?

23 Scheduled personal property floater HO More exclusions if fine arts What IS a fine art? Scheduled personal property floater HO The breakage limitation for various articles CAN be removed by paying an additional premium under this (HO or HO 04 60) endorsement where it could NOT be removed under the HO or HO-5. 22

24 Scheduled personal property floater HO Endorsement has own loss settlement provision Separate from the HO policy Scheduled personal property floater HO If the antiques are considered fine arts then the loss settlement provision will be on an agreed value basis. 23

25 Scheduled personal property floater HO Agreed value is NOT PERFECT!!!!! Agreed value sets A maximum limit Of payment Scheduled personal property floater HO If the antiques appreciate higher than the agreed value limit or the designated stated amount limit, then the insured will not be compensated for the full value of the antique. 24

Scheduled personal property floater HO 04 61 If the antiques are not considered fine arts, then there is a different loss settlement provision Scheduled personal property

26 Scheduled personal property floater HO If the antiques are not considered fine arts, then there is a different loss settlement provision Scheduled personal property floater HO loss settlement provision will be on an ACV basis subject to an overall scheduled limit stipulation. We pay the LEAST of.. ACV Repair Replace (our cost) Stated limit 25

Scheduled personal property floater HO 04 61 If one did NOT use the HO 04 61, then

be subject to the overall Coverage C contents limit!

27 Scheduled personal property floater HO If one did NOT use the HO 04 61, then a covered loss under the unendorsed HO-3 or HO-5 or HO-3 with HO would ONLY be subject to the overall Coverage C contents limit! Going back replacement cost endorsement Does it REALLY modify the HO Scheduled Personal Property endorsement? 26

HO 04 90 Personal Property Replacement Cost Loss Settlement endorsement states that for certain items you might schedule on the NON-agreed upon basis Then the option of ACV in the LEAST of

28 HO Personal Property Replacement Cost Loss Settlement endorsement states that for certain items you might schedule on the NON-agreed upon basis Then the option of ACV in the LEAST of discussion of (4) is NOT applicable What does that mean? Don t get happy The endorsement still states it pays the LEAST Of: Now instead of FOUR items It will be 3 Repair OUR replacement Stated limit 27

29 What should we consider when insuring Antiques??? What range of perils does the client need? Named perils open perils Special endorsement perils Loss settlement option ACV Stated Amount Agreed Amount Burden of proof on client Whether schedule or not NEED appraisals Need to update appraisals What should we consider when insuring Antiques??? What range of perils does the client need? Named perils Open perils Special endorsement perils 28

30 What should we consider when insuring Antiques??? Loss settlement option ACV Stated Amount Agreed Amount What should we consider when insuring Antiques??? Burden of proof on client Whether schedule or not NEED appraisals Need to update appraisals 29

31 Should Scheduled Personal Property Endorsement be used for high value articles??? Pianos, other musical instruments, paintings, expensive furniture All these are covered. no special limit HO-5 or (HO-3 + HO-15 in the HO-91 edition) Could be sufficient for perils Should Scheduled Personal Property Endorsement be used for high value articles??? Is your Coverage C limit sufficient???? With most voluntary carriers when HO Replacement Cost Loss Settlement Provision usually increase Coverage C from 50% to 70%. Is this enough for regular contents and high valued articles? 30

32 Should Scheduled Personal Property Endorsement be used for high value articles??? If not Increase Coverage C Or Schedule certain high valued identifiable articles only. Thank you for attending Are your clients prized possessions covered..well 62 31

C/C/C and You Just What DOES Property Damage Liability Cover (or Not)?

C/C/C and You Just What DOES Property Damage Liability Cover (or Not)? C/C/C and you... just what DOES property damage liability cover or not Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA, CPIW VP Technical