1. Forms
2. IH
3. IH-99-18

What the form is

The IH 99 18 Water Exclusion is an endorsement used with Insurance Services Office (ISO) Non-filed Inland Marine coverage forms. Its primary purpose is to remove or delete coverage for loss or damage caused by water-related perils, such as flood, surface water, waves, tidal water, overflow of streams or other bodies of water, or spray from any of these, whether or not driven by wind. This form modifies the main coverage form by specifying that such water-related events are not covered causes of loss.

Classes of business it applies to

This endorsement can be applied to various classes of business insured under Non-filed Inland Marine policies where the underwriter deems the risk of water damage to be too high or where the insured agrees to the exclusion, potentially for a premium consideration. It is particularly relevant for:

• Property located in areas prone to flooding or near bodies of water.
• Goods or equipment that are highly susceptible to water damage.
• Situations where the insured may have separate, specific flood insurance (e.g., through the National Flood Insurance Program or a specialized private market) or chooses to self-insure this specific peril.
• Real-world example: A construction company storing building materials at a job site located in a designated flood zone might have the IH 99 18 endorsement added to their Inland Marine Builders Risk policy if the insurer is unwilling to cover the flood exposure under standard terms.
• Real-world example: A business that transports goods via waterways might have this exclusion applied to their Motor Truck Cargo or Transit coverage if the inherent flood/water damage risk during transit is significant and the insurer wishes to exclude it.

Special considerations

Important points to consider when using the IH 99 18 include:

• Restrictive Nature: This is a restrictive endorsement, meaning it reduces the scope of coverage provided by the policy.
• Insured's Agreement: It is crucial that the insured fully understands the implications of this exclusion. In some jurisdictions, restrictive endorsements like this may only be added if they are optional on the part of the insured.
• Coverage Gaps: Adding this endorsement creates a significant coverage gap for water-related losses. Agents should advise clients of this gap and discuss alternative risk management options, such as obtaining separate flood insurance.
• Policy Definitions: The specific definitions of terms like "flood" or "water damage" within the main policy and the endorsement itself are critical in determining how the exclusion will apply.
• Real-world example: If a business owner accepts the IH 99 18 on their policy to reduce premium, they must be aware that damage to their insured property from a subsequent hurricane-induced storm surge would likely not be covered under that Inland Marine policy.

Key information for agents and underwriters

Practical insights for insurance professionals include:

• Risk Assessment: Underwriters use this endorsement to manage catastrophic exposures in high-risk zones or for specific classes of property. It allows them to offer Inland Marine coverage for other perils while carving out the unacceptably high water damage risk.
• Pricing: The addition of this exclusion should typically result in a premium credit or a lower base rate for the insured, reflecting the reduced coverage.
• Documentation: It is essential for agents to clearly document that the insured was informed about and consented to the Water Exclusion. This can help prevent errors and omissions claims.
• Clarity of Exclusion: Ensure the language of the exclusion is clear and unambiguous to avoid disputes at the time of a claim. The scope of what constitutes "water damage" being excluded should be well-defined.
• Alternative Markets: Agents should be prepared to discuss alternative markets for flood coverage if the client needs or desires this protection after the IH 99 18 is applied to their Inland Marine policy.