Mail Coverage Form (CM 00 60) - Comprehensive Description
1. What the form is
The Mail Coverage Form, CM 00 60, is a specialized Commercial Inland Marine insurance form designed to protect financial and fiduciary organizations from direct physical loss or damage to valuable property shipped through specified mail services. These services typically include First Class Mail, Certified Mail, USPS Express Mail, and Registered Mail. The form provides "all-risk" or open perils coverage, meaning it covers any cause of loss not specifically excluded. Coverage applies while the property is in the custody of the government postal service or while in transit by a common carrier or messenger to or from the post office. It also covers property being returned to the sender if undeliverable, but not while at the premises of a mail-receiving agency. This form is written on a reporting basis, requiring the insured to regularly report shipment values and pay premiums accordingly.
2. Classes of business it applies to
This coverage is specifically tailored for financial and fiduciary organizations. Real-world examples of businesses that would utilize this form include:
- Banks and Bankers: For sending items like credit cards, new checks, or other non-negotiable securities to customers.
- Trust Companies: When mailing trust documents, stock certificates, or other papers of value related to estate management.
- Insurance Companies: For sending policies, claim checks (though checks are often excluded if not specifically endorsed), or other important documents.
- Securities Brokers and Dealers: When mailing stock certificates, bonds, or other investment-related documents to clients.
- Investment Corporations whose business is primarily fiduciary in nature: Similar to securities brokers, for mailing valuable papers.
- Corporations acting as their own security transfer agents or registrars: For mailing new stock certificates to shareholders or other related documents.
Covered property typically includes items such as non-negotiable securities, postage and revenue stamps, postal and express money orders, checks, drafts, notes, bills of lading, warehouse receipts, and other commercial papers and valuable documents. However, contraband and property in the course of illegal trade are not covered.
3. Special considerations
Several important factors should be considered when using the Mail Coverage Form:
- Reporting Basis: This is a critical aspect. The insured must accurately and regularly report the value of shipments to the insurer. Failure to do so, or errors in reporting, could impact coverage, although the form does contain provisions for errors or oversights if the insured notifies the company promptly upon discovery and corrects the error.
- Limits of Insurance: The declarations page will specify limits for different types of mail and potentially an aggregate limit for shipments to any one addressee on any one day. It's crucial that these limits are adequate for the values being shipped.
- Valuation: The form typically values property at its actual value on the date of mailing, which will not be less than its market value.
- Excluded Property: While broad, the form does not cover all types of property. For instance, currency and unsold traveler's checks are generally excluded. Contraband or property involved in illegal activities is also excluded.
- Endorsements: Depending on the specific needs of the insured, endorsements may be necessary. For example, the "Transfer Agents Mail" (CM 60 08), "Securities Sent Under Air Bill" (CM 60 09), or "Securities Sent By The Treasury Department" (CM 60 10) endorsements can modify coverage for specific situations. The "Flat Premium Per Shipping Package" (CM 60 02) endorsement is also available.
- Policy Composition: A complete Mail Coverage policy typically includes the Mail Coverage Form (CM 00 60), a Mail Coverage Declarations, a Reporting Declarations, the Common Policy Conditions (IL 00 17), and the Commercial Inland Marine Conditions (CM 00 01), along with any applicable endorsements.
Real-world example: A bank that regularly mails new credit cards to customers must ensure they accurately report the number and aggregate value of these mailings as required by the policy. If they underestimate the values or fail to report a significant batch of mailings, they could face a coverage shortfall in the event of a large loss, such as a mail truck hijacking.
4. Key information for agents and underwriters
- Risk Assessment: Underwriters will assess the types of property being mailed, the frequency and volume of mailings, the chosen mail services (registered mail is generally more secure than first-class), geographical areas of shipment, and the insured's internal security and record-keeping procedures for mailings. The insured's loss history will also be a significant factor.
- Pricing: Premiums are based on the reported values of shipments and the rates applicable to the types of mail used. A deposit and annual minimum premium are typically required. The more secure the mail service (e.g., registered mail), the lower the rate might be compared to less secure methods.
- Coverage Gaps: Agents should identify potential gaps. For example, if an insured frequently uses a courier service not explicitly covered, or ships items exceeding the per-package or per-addressee limits, additional coverage or endorsements may be needed. Property at the premises of a mail receiving agency is not covered.
- Underwriting Guidelines: Underwriters will scrutinize the insured's adherence to reporting requirements. They may also have specific guidelines regarding the maximum value per package or to one addressee in a single day. The financial stability and reputation of the applicant are also key considerations.
- Loss Prevention: Encourage insureds to use the most secure mailing options feasible for the value of the items being sent. Proper logging and tracking of mailed items are crucial not only for reporting but also for substantiating claims.
- Endorsement Awareness: Be aware of available endorsements that can tailor the coverage. For instance, Endorsement CM 60 09 extends coverage to negotiable securities sent via air bill with named carriers. Endorsement CM 60 08 broadens coverage for entities acting as trustees or transfer agents sending securities via first-class, certified, or registered mail.
Real-world example: An underwriter reviewing an application from a regional bank that frequently mails renewed debit cards (which might be considered non-negotiable until activated) would assess the bank's procedures for tracking these mailings, the security of their mailroom operations, and the typical geographic destinations. They would also verify that the requested limits align with the bank's reported exposure and might suggest specific mail services for higher-value shipments if not already in use.