1. Forms
2. IH
3. IH-99-17

What the Form Is

The IH 99 17 Earthquake Exclusion is an endorsement used in non-filed inland marine insurance. Its function is to explicitly remove coverage for losses or damages directly or indirectly caused by earthquakes. Non-filed inland marine forms often provide broad coverage, and this endorsement serves to carve out the earthquake peril, which insurers may wish to cover separately, not at all, or subject to different terms and conditions.

Classes of Business It Applies To

This endorsement applies to various classes of business covered under non-filed inland marine policies. Since inland marine can cover a wide array of property types and situations, this exclusion can be relevant for many insureds. Examples include, but are not limited to:

• Jewelers Block: Policies covering jewelry for manufacturers, wholesalers, or retailers.
• Contractors Equipment: Coverage for mobile machinery and equipment used by contractors.
• Motor Truck Cargo: Protection for goods being transported by truckers.
• Fine Arts: Insurance for valuable artwork and collectibles, whether on premises or in transit.
• Miscellaneous Floaters: Policies covering various types of movable property that doesn't fit standard categories.

Real-world example: A commercial art gallery in a region with seismic activity might have an inland marine policy covering its collection. If the insurer wishes to exclude earthquake damage from this policy, or if the insured declines the coverage, the IH 99 17 endorsement would be added.

Special Considerations

• Mandatory vs. Optional: In some jurisdictions, restrictive endorsements like the Earthquake Exclusion may be required to be optional for the insured, meaning the insurer cannot unilaterally impose it without offering the choice to retain the coverage (potentially at a higher premium).
• Clarity for Insured: It is crucial that the insured understands the impact of this exclusion – that no coverage will be provided for earthquake-related damage to their insured property under the policy to which this endorsement is attached.
• Alternative Coverage: If earthquake coverage is desired, it may need to be sought through a separate, specific earthquake policy or endorsement, which will likely have its own limits, deductibles, and premium.
• Regulatory Scrutiny: Exclusionary endorsements, especially for significant perils like earthquakes, can be subject to regulatory review to ensure they are not overly broad or ambiguous and that the insured is adequately informed.

Real-world example: An underwriter for an insurer may require the IH 99 17 on all inland marine policies written for properties located in high-risk earthquake zones unless a specific, separate earthquake coverage part is purchased by the insured.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters use this endorsement to manage their aggregate exposure to catastrophic earthquake losses, particularly in seismically active areas.
• Pricing: Adding this exclusion may result in a premium credit or a lower base premium for the inland marine policy, as a significant hazard is being removed. The amount of any credit would depend on the perceived earthquake risk of the insured property.
• Coverage Gaps: Agents must clearly communicate the coverage gap created by this exclusion to the insured. They should discuss alternative options for earthquake coverage if the client needs or wants it.
• Documentation: It is best practice to have the insured acknowledge in writing that they understand and accept the earthquake exclusion.
• Underwriting Guidelines: Company underwriting guidelines will typically specify when the IH 99 17 should be used, based on factors like geographic location, construction type of buildings where property is stored (if relevant), and the nature of the insured property.