What it does
CM 00 52 insures property at the insured's risk that is specified in the declarations, including property specifically encumbered to a secured lender named in the declarations. It can be written as dual interest (protecting both dealer and lender) or single interest (the lender's or dealer's interest only). Coverage is open perils in the United States, its territories, Puerto Rico and Canada, and ends when the insured's interest ceases or the property is sold and delivered.
Who needs it
Dealers that finance inventory through floor plan arrangements and the lenders who must protect their collateral. Floor plan agreements usually require the dealer to insure the inventory and name the lender.
Key provisions
- Exclusions: bankruptcy or foreclosure, breakage of glass or fragile property except by named perils, rain, hail, sleet, snow or freezing to property in the open (transit excepted), dishonest acts, artificially generated current, wear and mechanical breakdown, plus standard exclusions.
- Valuation: unsold property at the least of restoration cost, replacement cost or the dealer's purchase price including transportation; sold property at net selling price; single-interest losses paid in proportion to the insured's interest.
- Dual interest: the lender's protection is not impaired by the dealer's breach if the lender is diligent.
- Reports and premium: monthly reports within 30 days of total values (dual interest) or outstanding balances or payments (single interest); late or missing reports cap recovery at the last report or 90%, and under-reporting reduces recovery proportionally. Annual rerating applies, and property in transit stays covered after cancellation.
Quoting and selling notes
Ask whether the dealer or the lender is buying, the lender's insurance requirements, peak inventory, outdoor storage (weather exposure to property in the open is excluded) and the dealer's reporting discipline. Equipment dealers can use CM 00 22 instead.
