1. Forms
2. IH
3. IH-00-71

What the form is

The IH 00 71 Annual Transit Coverage Form is an Insurance Services Office (ISO) form designed to protect against financial loss due to direct physical loss or damage to an insured's property while it is in transit. This form covers personal property of the insured or personal property of others in the insured's care, custody, or control, provided it is related to the insured's business and in transit at the named insured's risk. Coverage applies when the property is being shipped by various means, including contract carriers, common carriers, the insured's own vehicles, messengers, or air carriers. It is a key component of an Inland Marine policy for businesses with regular shipping exposures.

Classes of business it applies to

This form is suitable for a wide range of businesses that regularly ship or receive goods. Examples include:

• Manufacturers: Shipping finished products to distributors or customers, or receiving raw materials.
• Wholesalers and Distributors: Transporting goods from manufacturers to retailers.
• Retailers: Receiving inventory from suppliers.
• Businesses using messengers: For delivery of documents or valuable property.
• Companies transporting their own goods: Using their own vehicles for deliveries or moving property between locations.

For instance, a clothing manufacturer shipping a large order to a department store via a trucking company would be protected under this form if the goods are damaged during transit. Similarly, a company that uses its own trucks to deliver appliances to customers would find this coverage applicable.

Special considerations

• Policy Term: Coverage can be written on an annual basis or for a continuous term subject to annual re-rating.
• F.O.B. Point: The terms of sale, specifically F.O.B. (Free on Board) point of destination or departure, are crucial. If merchandise is shipped F.O.B. point of destination, the seller is responsible for damage during transit. If shipped F.O.B. point of departure, the buyer is liable. This form covers transit at the named insured's risk.
• Bills of Lading: The named insured is permitted to accept shipping receipts and/or bills of lading from carriers for hire that limit the carrier's liability (e.g., released rates).
• Reporting vs. Non-Reporting: The form can be structured on a non-reporting basis (fixed premium) or a reporting basis, where the insured reports the value of shipments periodically, and the premium is adjusted accordingly. The IH 99 09 Values Shipped Reporting Form endorsement can be used to convert coverage to a reporting basis.
• Optional Premises Coverage: Coverage can be extended to property at a named premises or any one unnamed location if a limit is entered on the declarations for such.

Key information for agents and underwriters

• Policy Construction: The Annual Transit Coverage typically involves a package of forms, including Common Policy Declarations (IL DS 00), Common Policy Conditions (IL 00 17), Commercial Inland Marine Declarations (CM DS 02), Commercial Inland Marine Conditions (CM 00 01), and the Annual Transit Declarations (IH DS 71) in addition to the IH 00 71 coverage form itself.
• Declarations (IH DS 71): This is a critical document where the description of covered property, specific limits of insurance for different modes of transport (e.g., by contract carrier, by your vehicles, by air carrier), and any deductibles are specified. Only modes of transportation with an entered limit are covered.
• Covered Causes of Loss: The form generally covers direct physical loss or damage from any covered cause of loss, unless specifically excluded.
• Exclusions: Agents and underwriters must carefully review the exclusions section (Section B of the form) to understand what perils or types of property are not covered.
• Limits of Insurance: The 'All Covered Property in Any One Occurrence' limit is the maximum paid in a single event, even if the sum of individual limits for different transport modes is higher.
• Deductible: A deductible amount may apply to all losses, or separate deductibles might apply to specific perils like water damage or earthquake.
• Coverage Territory: The standard coverage territory includes the United States of America, its territories and possessions, Puerto Rico, and Canada. This includes property shipped by air within and between these points.
• Underwriting Considerations: Key factors include the nature of the property being shipped, its susceptibility to damage, packaging, mode(s) of transport, shipping distances, loss history, and the financial stability and reputation of carriers used. The choice between reporting and non-reporting forms will depend on the frequency and variability of shipments. Endorsements like IH 99 23 Theft from Unattended Vehicle Exclusion might be considered depending on the risk profile.