1. Forms
2. IH
3. IH-00-93

What the Form Is

The Processors Coverage Form IH 00 93 is an Insurance Services Office (ISO) commercial inland marine form designed to insure the named insured's personal property while it is at a processor's location or in transit to or from that processor. Importantly, this form is not a bailee processors coverage form; it covers the named insured's interest in their property. It also covers the property of others for which the named insured is legally liable, provided it is in their care, custody, or control and at a processor's premises or in transit.

Classes of Business It Applies To

This form is particularly useful for businesses that utilize offsite processors as part of their manufacturing or operational strategy. While there's no limitation on the type of property, it's commonly used in industries such as:

• Manufacturing where components are sent out for specialized processing (e.g., heat treating, plating, assembly).
• Businesses that send raw materials or semi-finished goods to third-party contractors for further work before returning for final assembly or sale.
• Industries like textiles, electronics, or specialized component manufacturing often have such processing arrangements.

For example, a clothing manufacturer might use this form to cover fabric sent to a specialty dyer, or an electronics company might use it for components sent to a subcontractor for assembly.

Special Considerations

Several aspects of this form require careful attention:

• Valuation: Claims settlement is a key consideration. It is typically based on the value of the unfinished property at the time of loss, plus the value of labor, materials, and services that the processor has furnished, if the named insured is contractually responsible for these costs.
• Processor Identification: While the related Processors Declarations (IH DS 93) has space to list processors, the coverage form itself does not explicitly state that coverage applies only to those listed. However, clear identification of all processing locations is crucial for proper underwriting and coverage adequacy.
• Transit Coverage: The form includes coverage for property in transit to and from the processor's premises. The mode of transit and associated risks should be evaluated.
• Key Exclusions: The form contains typical commercial property exclusions, but some to note in the context of processors coverage (based on the 12 13 edition analysis) include:
  • Seizure or destruction of property by governmental order, with a limited exception for destruction to prevent fire spread.
  • Nuclear hazard.
  • Loss or damage from artificially generated electrical, magnetic, or electromagnetic energy.
  • Unauthorized transfer of property due to unauthorized instructions.
  • Neglect of the insured to use reasonable means to save and preserve property at and after the time of loss.
  • Theft by any person entrusted with the property by the named insured (with an exception for property in the custody of a carrier for hire).

Key Information for Agents and Underwriters

• Risk Assessment: A thorough understanding of the insured's operations, the nature of the property being processed, the types of processing performed by third parties, and the contractual agreements between the insured and their processors is essential.
• Limits of Insurance: Adequate limits should be established considering the maximum value of property at any single processor and in transit, including the value added by the processor if the insured is responsible for it.
• Declarations Accuracy: Ensure the Processors Declarations (IH DS 93) accurately reflects all processing locations and the nature of the operations, even if the form doesn't strictly limit coverage to listed processors.
• Coordination with Other Coverage: Determine if the processor carries their own insurance (e.g., bailee coverage) and how this form would interact. The IH 00 93 is designed to protect the named insured's interest directly.
• Moral Hazard: Given the exclusion for theft by persons entrusted with the property, the selection and reputation of processors can be an underwriting consideration.