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Form PM 00 10: Personal Articles Agreed Value Loss Settlement Form

1. What the form is

The PM 00 10, Personal Articles Agreed Value Loss Settlement Form, is a Personal Inland Marine insurance form designed to provide scheduled coverage for valuable personal articles. Its primary function is to establish a predetermined, or "agreed," value for each insured item at the time the policy is written. In the event of a covered total loss, the insurer will pay this agreed-upon amount, rather than the actual cash value or replacement cost at the time of loss. This offers the policyholder certainty regarding the amount they will receive for a lost or destroyed item. This form is typically used as an endorsement to a Personal Inland Marine policy or as part of a standalone Personal Articles Floater policy, often supplementing a standard homeowners or renters policy which may have limitations on the coverage for high-value items.

2. Classes of business it applies to

This form is specifically for individuals who own valuable personal property where the "agreed value" loss settlement is preferred. It is not for commercial entities. Real-world examples of scenarios and property types where this form would be used include:

• Jewelry: Engagement rings, expensive watches, necklaces, and other valuable pieces where market fluctuations or sentimental value make an agreed value desirable.
• Fine Arts: Paintings, sculptures, antiques, and other unique art pieces where establishing value after a loss can be contentious. Appraisals are typically key here.
• Collectibles: Stamp or coin collections, rare books, sports memorabilia, valuable wine or whiskey collections.
• Furs: High-value fur coats and garments.
• Cameras: Expensive photographic equipment, including lenses and accessories, especially for serious hobbyists or professionals using their personal equipment.
• Musical Instruments: Valuable instruments owned by musicians, whether amateur or professional.
• Silverware/Goldware: Sterling silver sets, gold flatware, and similar valuable household items.

3. Special considerations

Several important factors must be considered when using the PM 00 10:

• Agreed Value Determination: The value for each item must be agreed upon by both the insurer and the insured before the policy is issued. This typically requires a current, professional appraisal or a recent bill of sale for newer items. This value is then listed on the schedule.
• Scheduling Requirement: Each article to be insured must be individually described and listed (scheduled) on the policy with its specific agreed value. Blanket coverage for unscheduled items is generally not the primary intent of this specific agreed value form.
• Premium Impact: Opting for an agreed value settlement may result in a higher premium compared to standard loss settlement options (like actual cash value or replacement cost) because it provides a guaranteed payout amount.
• No Pair or Set Broad Coverage: It's important to note that the PM 00 10 form, when compared to a form like the PM 00 09 (Personal Articles Standard Loss Settlement Form), eliminates the "Jewelry Pair or Set Broad Coverage" option. Loss settlement for items in a pair or set would be based on the agreed value of the lost or damaged item(s) as scheduled.
• Worldwide Coverage: Policies using this form often provide coverage for the scheduled articles anywhere in the world, which is a hallmark of inland marine "floater" policies.
• "All Risks" Basis: Coverage is typically provided on an "all risks" or "open perils" basis, meaning the policy covers losses from any cause unless specifically excluded. Common exclusions include wear and tear, gradual deterioration, inherent vice, insects, or vermin.
• Relationship to PM 00 01: This form is used in conjunction with the PM 00 01, Common Policy Provisions Form, which contains general policy conditions. The PM 00 10 modifies the loss settlement provisions within the PM 00 01 to reflect the agreed value basis for scheduled items.

4. Key information for agents and underwriters

Agents and underwriters should focus on the following when dealing with the PM 00 10:

• Valuation Documentation: Scrutinize appraisals for recency (often within 3-5 years), detail, and the appraiser's qualifications. The agreed value should be well-supported. For example, an appraisal for a diamond ring should detail the 4 Cs (cut, color, clarity, carat).
• Risk Assessment:
  • Assess the storage and security measures for high-value items, especially jewelry (e.g., home safes, bank vaults). Premium credits may apply for items kept in a vault.
  • Consider the nature of the items. For instance, fine art might be susceptible to damage from environmental factors, while jewelry is a high-theft item.
  • For collections, understand if the value is concentrated in a few key pieces or spread across many.
• Moral Hazard: Given that this form provides a guaranteed payout, underwriters should be diligent in assessing potential moral hazard. This includes reviewing the applicant's financial stability and prior loss history.
• Coverage Scope and Exclusions: Agents must clearly explain that while coverage is broad ("all risks"), exclusions still apply (e.g., intentional damage, war, nuclear events, wear and tear). Ensure clients understand what is not covered.
• Pricing: Premiums will be influenced by the type of property (e.g., jewelry rates are typically higher than rates for silverware due to theft risk), the total agreed values, the insured's location and loss history, and any protective safeguards in place.
• Newly Acquired Property: While policies often include limited automatic coverage for newly acquired items (e.g., 25% of the class limit up to $10,000, reportable within 30 days), agents should stress the importance of promptly notifying the insurer to schedule new acquisitions and pay any additional premium to ensure proper agreed value coverage.
• Distinction from PM 00 09: Clearly differentiate this form from the PM 00 09. The key difference is the "agreed value" loss settlement in PM 00 10 versus the "standard" loss settlement (which could be actual cash value or replacement cost, potentially limited to the lesser of repair, replacement, ACV, or policy limit) in PM 00 09. While PM 00 09 might allow agreed value for fine arts, PM 00 10 extends this agreed value concept more broadly to other scheduled classes as indicated.