1. Forms
2. CM
3. CM-00-01

Commercial Inland Marine Conditions - Form CM 00 01

1. What the form is

The Commercial Inland Marine Conditions form (CM 00 01) serves as a foundational document in Commercial Inland Marine insurance. It establishes the general terms and conditions that apply to various Commercial Inland Marine coverage forms, unless a specific coverage form explicitly modifies or replaces them. Think of it as the rulebook that governs how the specialized Inland Marine coverages will operate. This form is typically part of a larger policy structure that includes Common Policy Conditions (like ISO form IL 00 17), declarations pages, and the specific Inland Marine coverage form(s) that address the particular risks being insured. Key provisions within CM 00 01 often address aspects like:

• Duties in the Event of Loss: Outlines the policyholder's responsibilities when a loss occurs, such as providing prompt notice, protecting property from further damage, and cooperating with the insurer's investigation.
• Appraisal: Details the process for resolving disagreements over the value of property or the amount of loss.
• Other Insurance: Explains how coverage will apply if other insurance policies also cover the same loss.
• Valuation: While specific coverage forms often have their own valuation clauses, the CM 00 01 may provide a general valuation basis (e.g., actual cash value) if not otherwise specified.
• Abandonment: States that property cannot be abandoned to the insurer.
• Legal Action Against Us: Sets conditions for bringing a lawsuit against the insurer, often requiring full compliance with policy terms and a specified time limit for filing suit.

2. Classes of business it applies to

The CM 00 01 form is not specific to one industry but underpins a wide array of Commercial Inland Marine coverages. Therefore, it indirectly applies to any business that utilizes these specialized coverages for property that is mobile, in transit, or of a unique nature. Examples include:

• Contractors: Businesses using contractors equipment coverage for their mobile machinery and tools (e.g., bulldozers, cranes, excavators). The CM 00 01 would lay the general groundwork for how claims on that equipment are handled.
• Dealers:
  • Camera and Musical Instrument Dealers: For their inventory of cameras, musical instruments, and related accessories.
  • Equipment Dealers: Covering their stock of mobile agricultural or construction equipment.
  • Jewelers: For jewelers block coverage, which insures their stock of diamonds, jewelry, precious metals, and similar items of others in their care.
• Businesses with Accounts Receivable: Companies needing coverage for losses due to the destruction of their accounts receivable records.
• Businesses with Valuable Papers and Records: Firms that require coverage for important documents like blueprints, client files, or maps.
• Transportation and Logistics: Companies shipping goods via various modes of transport may use an Annual Transit Coverage Form, which would be subject to the conditions in CM 00 01.
• Service Providers:
  • Physicians and Dentists: For their specialized medical equipment.
  • Businesses with Signage: For coverage on their signs (neon, mechanical, billboards).
• Specialized Industries:
  • Theatrical Productions: For theatrical property.
  • Film and Media Companies: For exposed motion picture film or videotapes.
  • Financial and Fiduciary Institutions: For mail coverage when sending valuable papers and securities.

Essentially, if a business has property that doesn't fit neatly into standard commercial property policies due to its mobile nature, specialized valuation, or transit exposures, a Commercial Inland Marine coverage form will likely be used, and the CM 00 01 will provide the overarching conditions.

3. Special considerations

Several important points should be considered when the CM 00 01 is part of an insurance policy:

• Hierarchy of Forms: The conditions in CM 00 01 are general. If a specific Inland Marine coverage form (e.g., Contractors Equipment Coverage Form, Jewelers Block Coverage Form) contains a condition that conflicts with or is more specific than one in CM 00 01, the condition in the specific coverage form will typically prevail for that particular coverage. For example, the Mail Coverage Form (CM 00 60) has its own valuation clause that replaces the general valuation condition in CM 00 01.
• Mandatory Form: For policies written under an ISO (Insurance Services Office) Commercial Inland Marine program, the CM 00 01 is generally a mandatory component of the policy, along with the Common Policy Conditions and relevant declarations and coverage forms.
• Read in Conjunction: It's crucial to read the CM 00 01 in conjunction with all other parts of the policy, including the specific coverage form(s), endorsements, and declarations pages, to get a complete understanding of the coverage.
• Loss Reporting and Duties: Policyholders must strictly adhere to the "Duties In The Event Of Loss" outlined in this form (and potentially modified by the specific coverage form). Failure to do so, such as not providing prompt notice or failing to protect property from further damage, could jeopardize claim payment. For example, a common duty is to notify the police if a law may have been broken.
• Valuation Disputes: The appraisal process detailed in CM 00 01 provides a mechanism for resolving disagreements about the value of lost or damaged property, but it's important to understand that the insurer still retains the right to deny the claim even if an appraisal is conducted.
• Subrogation (Transfer of Rights of Recovery): While not explicitly detailed in the summary provided for CM 00 01, general policy conditions (often found in the Common Policy Conditions or within CM 00 01 itself) will address the insurer's right to recover payments from a third party responsible for the loss. The CM 00 01 may specify when the insured can waive their rights of recovery against others, often allowing it in writing prior to a loss, or after a loss if the other party is an insured or an affiliated business.

Real-world example: A construction company has a Contractors Equipment policy. A vital piece of machinery is vandalized on a job site. The company must promptly notify the insurer as per the conditions in CM 00 01, take steps to prevent further damage (e.g., secure the equipment), and cooperate with the adjuster. If there's a dispute over the repair cost, the appraisal clause in CM 00 01 might be invoked.

4. Key information for agents and underwriters

Agents and underwriters should be keenly aware of the following when dealing with policies that include CM 00 01:

• Foundation for Coverage: Recognize that CM 00 01 provides the standard framework. The real tailoring of coverage and risk assessment happens at the level of the specific Inland Marine coverage forms and endorsements.
• Interaction with Other Forms: Understand how CM 00 01 interacts with other policy forms, particularly the specific coverage forms which may modify its terms. This is critical for identifying potential coverage gaps or overlaps.
• Clarity on Loss Procedures: Agents should clearly explain the insured's duties in the event of a loss as outlined in this form to manage expectations and ensure smooth claims handling. Underwriters rely on these conditions being upheld to manage loss exposure.
• Valuation Consistency: While specific forms dictate valuation, CM 00 01’s general valuation clause (often Actual Cash Value unless otherwise stated) is a default. Underwriters need to ensure the valuation method on the specific coverage form aligns with the nature of the property and the premium charged. For instance, high-value or unique items might necessitate an "agreed value" endorsement, which would override a standard ACV provision.
• Risk Assessment Focus: The conditions in CM 00 01 are generally not subject to significant underwriting discretion on their own, as they are standard terms. The underwriter's primary risk assessment will focus on the exposures presented by the specific class of business and type of property being insured under the applicable Inland Marine coverage form (e.g., assessing theft risk for a jeweler using a Jewelers Block form, or damage risk for a contractor's mobile equipment).
• Endorsement Impact: Be aware that endorsements can significantly alter the effect of CM 00 01 or the specific coverage forms. For example, an endorsement might change reporting requirements for a reporting form, which could interact with conditions related to premium adjustment or coverage accuracy.
• No Coverage Gaps by Default: CM 00 01 itself doesn't create coverage gaps; rather, it sets the stage. Gaps usually arise from improperly selected specific coverage forms, inadequate limits, or unendorsed exposures. For instance, if a client frequently ships goods overseas but only has domestic transit coverage, the CM 00 01 conditions won't extend that coverage territory.
• Pricing Considerations: The premium is primarily driven by the specific Inland Marine coverage, the nature of the property, limits, deductibles, and the insured's loss history. The CM 00 01 itself doesn't directly influence rating beyond establishing common operational parameters for the coverages it supports.

Real-world example for underwriters: An underwriter is evaluating an application for an Equipment Dealers coverage form. While the CM 00 01 will apply generally, the underwriter's focus will be on the dealer's inventory controls, security measures for high-value equipment, transit exposures if equipment is moved between locations, and the values at risk to determine appropriate limits and pricing for the Equipment Dealers form itself. The conditions in CM 00 01 regarding loss reporting and cooperation will be standard expectations for any claim under that policy.