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10/28/2013
Antiques
Loss
Settlement
Issues
Antique 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
$5,000
200+ Hand carved wooden bellows
$15,000-20,000
200 yr. old Birdseye maple dresser & mirror
$5,000
225+ yr. old silver tea set made by Paul Revere $20,00-25,000
200+ 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:
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10/28/2013
Antique Loss Settlement Issues
HO-91 unendorsed loss settlement provision
Antique Loss Settlement Issues
The unendorsed ISO HO-2000/HO-2011 policy loss
settlement Provision:
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10/28/2013
Antique Loss Settlement Issues
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”.
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Antique Loss Settlement Issues
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!!!!
Antique Loss Settlement Issues
If the HO 04 90 replacement cost
endorsement were attached to the H-91
or HO-2000/HO-2011 would that change
loss settlement?
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10/28/2013
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?
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10/28/2013
Antique Loss Settlement Issues
Even with HO 04 90 …Antiques STILL adjusted on
ACV basis
Consider increasing Coverage C …
Antiques ARE covered for “value”…unless
Special limit applies
or
Property excluded
Antique Loss Settlement Issues
HO-2000/2011 language – HO-91 similar
Consider coin
collections
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10/28/2013
Antique Loss Settlement Issues
HO-2000/2011 language – HO-91 similar
Can antique jewelry ever REALLY be replaced???
Antique firearms? “family silver”?
Antique Loss Settlement Issues
HO-2000/2011 language – HO-91 similar
$1,000
HO-91
These limits apply whether antique or not
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10/28/2013
Antique Loss Settlement Issues
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
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10/28/2013
Antique Loss Settlement Issues
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
Antique Loss Settlement Issues
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
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10/28/2013
Antique Loss Settlement Issues
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.
Antique Loss Settlement Issues
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.
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10/28/2013
Antique Loss Settlement Issues
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.
Antique Loss Settlement Issues
What would the unendorsed policy
pay?
Bud and Irene have authentic
appraisals, but have
not scheduled these items
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10/28/2013
Antique Loss Settlement Issues
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.
Antique Loss Settlement Issues
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
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10/28/2013
Antique Loss Settlement Issues
Unendorsed HO policy does NOT cover
flood or earthquake.
In order to cover flood losses,
a flood policy is necessary
Antique Loss Settlement Issues
Suppose the HO 00 15 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?
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10/28/2013
Breakage
only
named
perils for
CERTAIN
type of
property
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10/28/2013
Open perils contents
In addition to
“normal” exclusions
found in HO-3 for
Coverage A/B…
Coverage C has some
additional exclusions
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10/28/2013
Section I exclusions
Still apply
Water damage
exclusion changed
by “Katrina”
endorsement –
HO-91 and HO2000 (HO-2011
built in)
Antique Loss Settlement Issues
The HO 00 15 and the HO-5 Comprehensive
Policy language
covers losses on a “covered unless excluded
basis”.
Dropping is not excluded.
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10/28/2013
Antique Loss Settlement Issues
“Breakage”
is only restricted for
certain articles.
The HO 00 15 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.
Antique Loss Settlement Issues
The HO 00 15 and the HO-5 Comprehensive
Policy language covers losses on a “covered
unless excluded basis”.
The HO 00 15 or HO-5 will NOT cover flood
damage to contents on insureds’ premises.
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10/28/2013
Antique Loss Settlement Issues
Flood is excluded and therefore the HO-5 and
HO 00 15 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
Antique Loss Settlement Issues
Is there any way to cover flood damage
to these antiques …
other than buying a flood policy?????
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10/28/2013
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
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10/28/2013
Scheduled Personal Property Floater
If these items are scheduled under the
Scheduled Personal Property Floater
HO 04 61
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 04 61
The HO 04 61
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.
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10/28/2013
Scheduled personal property
floater HO 04 61
The HO 04 61 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 04 61
More
exclusions if
fine arts
What IS a
“fine art”?
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10/28/2013
Scheduled personal property
floater HO 04 61
More
exclusions
if fine arts
What IS a
“fine art”?
Scheduled personal property
floater HO 04 61
The breakage
limitation for various
articles CAN be
removed by paying an
additional premium
under this
(HO 04 61 or HO 04
60) endorsement
where it could NOT be
removed under the
HO 00 15 or HO-5.
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10/28/2013
Scheduled personal property
floater HO 04 61
Endorsement has
own
loss settlement
provision
Separate from
the HO
policy
Scheduled personal property
floater HO 04 61
If the antiques
are considered
“fine arts” then
the loss
settlement
provision will be
on an “agreed
value” basis.
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10/28/2013
Scheduled personal property
floater HO 04 61
Agreed value is
NOT PERFECT!!!!!
Agreed value sets
A maximum limit
Of payment
Scheduled personal property
floater HO 04 61
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.
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10/28/2013
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
floater HO 04 61
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
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10/28/2013
Scheduled personal property
floater HO 04 61
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 00 15 would ONLY be subject to the
overall Coverage C contents limit!
Going back
replacement cost
endorsement …
Does it REALLY
modify the
HO 04 61
Scheduled
Personal
Property
endorsement?
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10/28/2013
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 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
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10/28/2013
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
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10/28/2013
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
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10/28/2013
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 04 90 Replacement Cost Loss
Settlement Provision …usually increase
Coverage C …from 50% to 70% ….
Is this enough for “regular” contents and
high valued articles?
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10/28/2013
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
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