1. Forms
2. CM
3. CM-00-59

What the Form Is

The Jewelers Block Coverage Form, CM 00 59, is an inland marine insurance form that provides open perils coverage (also referred to as 'all-risk' coverage) for jewelers. This means it covers direct physical loss or damage to the insured property from any cause unless specifically excluded. The primary purpose of this form is to protect against losses to a jeweler's valuable inventory and property of others in their care.

Classes of Business It Applies To

This form is specifically designed for businesses in the retail jewelry trade. Examples include jewelry stores that sell items such as rings, necklaces, watches, precious and semi-precious stones, and precious metals. While primarily for retailers, it can sometimes be modified for other related exposures. However, certain risks are typically considered ineligible for standard coverage under this form unless specifically endorsed by the insurer. These can include:

• Retailers with average inventories exceeding a certain threshold (e.g., $250,000 as mentioned in one source).
• Wholesalers and manufacturers of jewelry.
• Pawnbrokers.
• Dealers specializing in loose diamonds, bullion, or industrial diamonds.
• Auction dealers or fine arts and antique dealers whose primary business is not jewelry.
• Watch repair shops (though some incidental repair might be covered).
• Exhibitions, unless specifically endorsed (e.g., for trade shows).

Special Considerations

• Nonreporting Basis: The standard form is often written on a nonreporting basis, particularly for retailers with inventories below a certain value (e.g., $250,000). This means the insured doesn't have to regularly report inventory values, but it's crucial that the limits of insurance are adequate.
• Covered Property: Includes the insured's stock in trade (jewelry, stones, metals), property sold but not yet delivered, and similar property of others in the insured's care, custody, or control (e.g., customer items left for repair or appraisal, or items on consignment from other jewelers).
• Exclusions: As an open perils form, the exclusions are very important. Common exclusions include, but are not limited to: consequential losses (like loss of business income, unless added by endorsement), unexplained or mysterious disappearance, inventory shortages discovered upon taking inventory, theft from an unattended vehicle, and damage caused by processing or work upon the property.
• Building Damage: The form may provide limited coverage for damage to the insured's building if caused by thieves during the act of stealing covered property, provided the insured owns the building or is legally liable for the damage.
• Travel and Off-Premises Coverage: Coverage for property away from the described premises (e.g., in transit, with sales staff, or at exhibitions) often has specific sublimits and conditions, such as requirements for attendance or secure storage.
• Security Requirements: Underwriters will typically have stringent requirements regarding safes, alarms, and other protective safeguards. Failure to maintain these safeguards can jeopardize coverage.
• Valuation: The policy will specify how losses are valued, which is critical for high-value items.

Key Information for Agents and Underwriters

• Proposal Form (e.g., CM 59 90): A detailed proposal form is usually required, where the insured must disclose all locations, inventory values (including maximums and averages), security measures, and loss history. Accuracy in this proposal is vital.
• Risk Assessment: Underwriters will closely examine the nature of the inventory, geographic location, security measures, transit exposures, and the insured's experience and reputation.
• Limits and Sublimits: Careful attention must be paid to the overall policy limit and any specific sublimits for property in safes, outside of safes, in display windows, in transit, or in the custody of others. If goods in the custody of another dealer exceed a certain amount (e.g., $50,000), special rating and underwriter approval may be necessary.
• Moral Hazard: Given the high value and portability of jewelry, underwriters are particularly sensitive to moral hazard. A thorough background check and understanding of the insured's business practices are essential.
• Endorsements: Various endorsements can be used to modify the coverage, such as adding coverage for exhibitions, increasing limits for property with other dealers, or adjusting terms for specific risks. For example, endorsement CM 99 01 can add coverage for furniture, fixtures, and office supplies.
• Market Conditions: The jewelers block market can be specialized, with some insurers having specific expertise and appetite for these risks.