1. Forms
2. CM
3. CM-60-02

What the Form Is

The CM 60 02, titled "Flat Premium Per Shipping Package - First Class Mail Or Certified Mail," is an endorsement to the standard Mail Coverage Form (CM 00 60) in Commercial Inland Marine insurance. Its main function is to alter the method of premium calculation for eligible shipments. Instead of a premium based on reported values of mailings, this endorsement allows the insurer to charge a flat premium for each package sent by First Class Mail or Certified Mail.

Classes of Business It Applies To

This endorsement is specifically designed for financial and fiduciary organizations that regularly send valuable property through the mail. Such entities include:

• Banks and bankers
• Trust companies
• Insurance companies
• Security brokers and dealers
• Investment corporations whose business is primarily fiduciary in nature
• Corporations that act as their own security transfer agents or registrars

Real-world example: A bank that frequently mails nonnegotiable stock certificates or fractional share certificates to its clients via First Class Mail might use this endorsement to simplify its insurance premium payments, paying a set fee per package rather than reporting the specific value of each mailing.

Special Considerations

• Covered Property: The endorsement typically applies to "covered property" as defined, which often includes nonnegotiable securities, and fractional share or scrip certificates or subscription warrants, provided their actual value in any one shipping package does not exceed a specified amount (e.g., $150) on the date of mailing.
• Underlying Coverage: This endorsement modifies the Mail Coverage Form (CM 00 60), which must be part of the policy. The Mail Coverage Form provides open perils coverage against risks of direct physical loss for property sent by various mail types.
• Mail Types: The flat premium arrangement under CM 60 02 specifically applies to shipments made via First Class Mail or Certified Mail. Other mail types covered under the Mail Coverage Form (like Registered Mail or USPS Express Mail) would typically still be rated based on reported values unless otherwise specified.
• Valuation: The terms for valuation in the event of a loss will be governed by the Mail Coverage Form and any specific provisions within this endorsement.

Real-world example: If an investment firm uses this endorsement, they must ensure that the items they are mailing as "nonnegotiable securities" fit the definition and value limitations outlined in the policy to benefit from the flat premium per package. If a package containing scrip certificates valued at $200 is lost, and the endorsement has a $150 limit per package for such items for the flat rate, the coverage and valuation would need careful review based on the policy's full terms.

Key Information for Agents and Underwriters

• Pricing Advantage: For insureds with a high volume of relatively homogenous, lower-value shipments via First Class or Certified mail, this endorsement can offer administrative simplicity and predictable premium costs per package.
• Risk Assessment: While the premium is flat per package, underwriters still need to assess the overall exposure. This includes understanding the nature of the property being mailed, the average value per package (even if under a cap for the flat rate), the frequency of shipments, the geographical scope of mailings, and the insured's internal security and packaging procedures.
• Defining "Package": Ensure clarity on what constitutes a "shipping package" to avoid ambiguity in premium calculation.
• Coverage Limitations: Agents should clearly explain the definition of covered property and any per-package value limitations that apply for the flat premium rate. It's important the insured understands that items exceeding these limits or not meeting the definition might not be covered under this specific flat-rate provision or could be subject to different rating and coverage terms.
• Eligibility Verification: Underwriters should confirm that the insured's business operations fall within the eligible classes of financial and fiduciary organizations.
• Reporting Requirements for Other Mail: If the insured also uses other mail services covered by the Mail Coverage Form (e.g., Registered Mail for higher value items), ensure they understand the reporting requirements that still apply to those shipments.