(June 2006)
The ISO Theatrical Property Coverage Form covers risks of direct physical loss or damage unless the loss or the property is excluded or limited. It provides insurance coverage and protection for all the property needed to put on a stage play or production. This consists of costumes, scenery, props and similar and related property. This coverage form is based on the play or the production and, as a result, does not restrict coverage to a specific location. This means that coverage applies wherever the traveling company and the production may be. Coverage does not apply to buildings, improvements and betterments or furniture and fixtures that do not accompany the theatrical troupe in its travels.
The following forms are mandatory for the theatrical property policy:
· Commercial Inland Marine Declarations Form CM DS 02
· Common Policy Conditions IL 00 17
· Commercial Inland Marine Conditions CM 00 01
· Advisory Theatrical Property Declarations Form CM DS 16
· Theatrical Property Coverage Form CM 00 29
Theatrical property coverage may be issued as a stand-alone, monoline inland marine policy or as part of a commercial package policy.
Any theatrical production or play performed on a stage is eligible. However, coverage under this form is not available for carnivals, circuses, rodeos, costume rental companies or theatrical supply houses.
The Advisory Theatrical Property Declarations does not have a place for name, mailing address and other named insured identification information since it is part of and attached to a broader inland marine policy declarations. It does contain spaces for entry of the policy number, the coverage effective date or the effective date of an endorsement or coverage change, the rate and the premium charge for this coverage form.
This part of the declarations consists of two different sections.
Section A. is where the name of the production or productions is entered in the spaces provided along with the limit for that particular production. More than one production may be listed as long as a limit is provided for each.
Section B. is used to declare a total aggregate or catastrophe limit in any one occurrence for all coverages and at all locations.
The standard deductible is $500 but different deductibles are available and, if selected, that deductible is shown in the space provided.
80% coinsurance applies to all covered property unless a different percentage is shown in the space provided.
If the policy is subject to any additional endorsements, coverages, conditions or other provisions, the details of them, if any, are shown in this area.
A. Coverage. The
insurance company pays for direct physical loss or damage to covered property
by a covered cause of loss.
1. Covered property is property used or intended for use in the production or productions shown on the declarations. It includes:
a. Scenery, costumes and other theatrical property owned by the insured; and
b. Similar or related property of others in the care, custody or control of the insured or on which the insured has made partial payments.
Note: The important point in this area is that everything must be in or part of the current play or production, going to be used in the play or production or has been used in the production in the past. Another important point to consider with this form is the nature and types of property not covered, as outlined and discussed immediately below.
2. Property Not Covered includes six types or classes of property:
a. Buildings or improvements and betterments made to buildings;
b. Vehicles, except those actually used on stage as part of the production;
c. Jewelry made up of precious or semi-precious stones, gold, silver, platinum and other precious metals or alloys. This does not include costume jewelry that does not include precious stones or metals;
d. Money, securities, bills, deeds, transportation or admission tickets, notes, evidences of debt, accounts and other similar or related documents;
e. Animals; and
f. Illegal property, contraband or any property transported or traded illegally.
Note: The property excluded is noteworthy and unique relative to the class of business and other property covered. For example, most property policies exclude motor vehicles but an exception here permits narrow coverage for them in cases where they are part of the production. Similarly, costume jewelry that does not include precious stones or metals is specifically illustrated as covered, in order to differentiate between the two. Even though circuses and rodeos are excluded, the form still excludes animals under all circumstances, just in case the production happens to have animals as part of it. Live animal floater policies are available to cover this exposure if it arises. Along the same line, transportation and admission tickets, while unique to this class of business, are also specifically excluded and included with other similar excluded items.
3. Covered causes of loss are all risks of direct physical loss or damage except for events or causes of loss listed in the exclusions.
4. Additional coverage–collapse applies to covered property for direct physical loss or damage caused by collapse of a building or a part of a building where the property is located and that is insured under this coverage form. Coverage is limited to collapse caused by one or more of the following:
a. To the extent they are insured under this coverage form, fire, lightning, windstorm, hail, explosion, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing devices, sinkhole collapse, volcanic action, building glass breakage, falling objects, weight of ice, sleet or snow, water damage and earthquake.
b. Hidden decay that cannot be observed visually, unless the insured knows about the presence of the decay before the collapse occurs.
c. Insect or vermin damage that cannot be observed visually, unless the insured knows about the presence of such damage before the collapse occurs.
d. Excessive weight of property or persons.
e. Excessive weight of water that accumulates on a roof.
f. Defective materials or methods used in construction, remodeling or renovation if the collapse actually occurs during construction, remodeling, or renovation activities. However, if collapse occurs after the project is completed, and is caused by one of the causes of loss listed in the paragraphs above, the insurance company pays for the loss or damage, even if the use of defective materials or construction methods contributes to the collapse.
B. Exclusions
1. Tier 1 exclusions are essentially absolute and apply whether or not the loss event results in widespread damage or affects a significant geographical area. The insurance company does not pay for any direct or indirect loss or damage caused by any of the following events. These events are totally excluded, regardless of any other cause or event contributing to the event, either concurrently or in any other sequence.
a. Governmental action is the legal and authorized seizure or destruction of property by order of a government entity. An exception exists and coverage applies for loss or damage caused by or resulting from such acts of destruction ordered and done at the time of a fire and for the purpose of preventing the spread of the fire.
b. Nuclear hazard applies to any weapon that uses atomic fission or fusion. It also applies to nuclear reaction, radiation, or radioactive contamination from any cause or source. An exception applies for cases where the nuclear reaction, radiation or radioactive contamination results in a fire. In that case, the insurance company pays for the direct loss or damage caused by the fire, if this form covers fire.
c. War and military action applies to undeclared or civil war. This includes any warlike action by a military force or actions to hinder or defend against an actual or expected attack by any government or sovereign authority that uses military personnel or other agents. It also includes acts of insurrection, rebellion, revolution, usurped power or action taken by any government authority to hinder or defend against any of these actions.
2. Tier 2 exclusions apply to loss or damage caused by or resulting from any of the following. Some of these exclusions have exceptions that should be noted carefully.
a. Theft of covered property from an unattended vehicle is excluded. However, coverage does apply if the windows, doors and compartments of the vehicle were closed and locked at the time of the theft and visible signs are present that the theft resulted from forced entry. This exclusion does not apply to property in the custody of a carrier for hire.
Example: The Traveling Troupe used two large furniture moving vans they owned to haul their props, scenery and costumes to cities where they put on their plays. They usually removed the property needed for a particular production as soon as they reached the theater where the show would be done and secured it inside the theater building. The day after arriving and unloading, they discovered that burglars had gained access to the vans and removed some other props that had not been unloaded. Unfortunately, they also discovered that the van had been left unlocked after the property for the current production had been removed and the burglars only needed to open the doors. Because of this oversight and this exclusion, there was no coverage for the stolen props.
b. Marring, scratching, exposure to light, breakage of tubes, bulbs, lamps or articles made mostly of glass, but excluding lenses is not covered. However, loss or damage to this property caused by fire, lightning, explosion, windstorm, vandalism, aircraft, rioters, strikers, theft or attempted theft, or accident to vehicles carrying such property is covered, if this form covers those causes of loss.
Example: The Traveling Troupe had several extensive tableware settings of china and stemware for use with their various productions, including the present one. This property remained in the van until it was needed and the van was securely locked. Burglars pried open one of the doors of the van but apparently found little to their liking. Disappointed with their "take," and apparently having little appreciation for fine tableware, the burglars took out their frustration at their wasted efforts by smashing every piece of the collection on the pavement outside the van before departing. In this case, the van was locked and the damage was covered.
c. Delay, loss of use, and loss of market are examples of consequential or indirect losses that arise after direct loss or damage and are not covered.
d. Unexplained disappearance of property is excluded. This is where covered property is simply gone and there is no obvious cause or explanation of what happened to it.
Example: The Traveling Troupe returned to the theater the next morning and began to unpack and arrange the property they brought in the night before. They searched high and low but the costumes were gone. Everybody remembered bringing them and where they were put but now they were simply gone and could not be found. There was no evidence that the building had been broken into or that anybody else had been in the building overnight. In this case, there was no coverage for the property that simply "disappeared."
e. Shortage discovered after taking inventory is similar to unexplained disappearance and is similarly not covered. In this case, the loss of the property is discovered only after taking a physical count and finding the quantity on hand is not what it should be. This is sometimes referred to as "inventory shrinkage."
f. Dishonest or criminal acts committed by the insured, partners, employees, directors, trustees, authorized representatives or managers and members of a limited liability company are excluded. This includes anyone with an interest in the property, their employees or their authorized representatives, as well as anyone to whom the property is entrusted for any reason. This exclusion applies whether or not persons act alone or in collusion with others, or if the acts occur during regular employment hours. It does not apply to covered property entrusted to carriers for hire or to acts of destruction by employees of the insured. However, loss due to theft of covered property by employees is excluded.
g. Processing activities or work on the covered property resulting in loss or damage to the property is not covered. However, if the activity or work results in fire or explosion, the direct loss or damage caused by that fire or explosion is covered, if this form covers fire or explosion.
h. Artificially generated current that creates a short circuit or other electrical disturbance within property covered by this form is excluded. However, if the artificially generated current causes a fire or explosion, the direct loss or damage caused by that fire or explosion is covered if this form covers fire or explosion. The net effect is that this exclusion applies only to the loss or damage within the article of property in which the short circuit or electrical disturbance occurs.
i. Voluntary parting with covered property by the insured or anyone else entrusted with the property when they are induced to do so by a fraudulent scheme, trick, device, or false pretense is not covered.
Example: The Traveling Troupe had to scramble to get replacement costumes. Fortunately, they were performing in a large city and they were able to obtain what they needed with little trouble. Some of the costumes had not been used in some time and needed cleaning. A "patron" of the theater represented himself as the owner of a chain of dry cleaning establishments and offered to clean the costumes gratis, as a gesture of gratitude for the arts. The Troupe was more than willing to accept this gracious gesture after everything else they had been through. Whether the costumes ever got cleaned up will never be known but The Traveling Troupe was certainly cleaned out, because both the patron and the costumes disappeared without a trace. Of course, this exclusion applied and there was no coverage for the costumes that had been willingly given away under false pretenses.
j. Unauthorized instructions to transfer property to another person or place that results in the loss of the property transferred is excluded.
k. Neglect on the part of the insured to use every means available and at his or her disposal to save property and preserve it from further damage at the time a loss occurs as well as afterwards eliminates coverage.
3. Tier 3 exclusions apply to loss or damage caused by or resulting from any of the following. In every case, if loss or damage by a covered cause of loss results from the occurrence of one of these exclusions, coverage applies to the loss or damage caused by the resulting covered cause of loss.
a. Weather conditions but this exclusion applies only if the weather conditions contribute in any manner with one of the excluded causes or events listed in paragraph 1 above that produces the loss or damage.
b. Acts or decisions made by any person, group, organization, or government entity. This also includes the failure to act or make a decision.
c. Faulty, inadequate, or defective planning, zoning, development, surveying or siting of all or any part of any property, regardless of where it is located. The same also applies to design, specifications, workmanship, repair, construction, renovation, remodeling, grading or compaction activities, as well as to materials used in repair, construction, renovation, remodeling or maintenance.
d. Collapse, except to the extent of coverage provided for this cause of loss under the Additional Coverage–Collapse section of this coverage form.
e. Wear and tear also includes the quality in any property that causes it to naturally damage or destroy itself over time, including but not limited to hidden or latent defect, gradual deterioration, depreciation or mechanical breakdown. It also includes loss or damage caused by insects, vermin, rodents, corrosion, rust, dampness, cold or heat.
C. Limits of insurance as shown on the policy declarations represent the most the insurance company pays for covered loss or damage in any one event or occurrence.
D. Deductible is the amount of every covered loss retained by the insured. The insurance company does not pay for any covered loss or damage until the adjusted amount of loss or damage exceeds the deductible amount shown on the policy declarations. The insurer then pays the adjusted amount of loss or damage that exceeds the deductible amount, subject to and up to the applicable limit of insurance.
E. Additional
conditions
1. Coverage territory is the geographical location where insurance on covered property applies. It includes the United States of America, its territories and possessions, Puerto Rico and Canada.
2. Coinsurance applies and affects the amount of loss the insurance company pays. When a coinsurance percentage is shown on the policy declarations, the insurer does not pay the full amount of any loss or damage if the value of the covered property at the time of loss, multiplied by the coinsurance percentage that applies, exceeds the limit of insurance for the property. This provision does not apply to property in transit. The insurance company determines the amount they pay by the following steps:
a. Multiply the value of the covered property at the time of loss, other than the value of property in transit, by the coinsurance percentage that applies.
b. Divide the limit of insurance that applies to the property by the figure determined in step a. above.
c. Multiply the total amount of loss, before application of any deductible amount that applies, by the figure determined in step b. above.
d. Then subtract the amount of deductible from the figure determined in step c. above.
No specific endorsements are available for use with this coverage form.
Since coverage applies to property not usually at a single, fixed location, a number of other issues must be considered and addressed. In those cases, where is the property kept? What is the nature of the traveling production or troupe, if there is no permanent home? If a defined storage location is involved, it is helpful in the overall exposure analysis. Having one person in charge of the property is also important because that person must maintain the records needed by the insurance company for rating as well as for claims and loss adjustments.
Other questions include where is damaged property repaired? Are costumes, scenery and props stored separately in order to prevent smoke damage and reduce the spread of fire?