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TITLE 28INSURANCE
PART 1TEXAS DEPARTMENT OF INSURANCE
CHAPTER 5PROPERTY AND CASUALTY INSURANCE
SUBCHAPTER FINLAND MARINE INSURANCE AND MULTI-PERIL INSURANCE
RULE §5.5002Texas Definition of Inland Marine Insurance

Inland marine insurance is defined and classified as follows.

  (1) Imports (non-regulated). Imports may be insured under inland marine policies, when such property is not subject to import risk under marine (ocean) policies, as follows.

    (A) Imports on consignment may be covered wherever the property may be and without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation. A shipment on consignment means property consigned and entrusted to a factor or agent to be held in his or her care, or under his or her control for sale, for account of another, or for exhibit or trial or approval or auction, and if not disposed of, to be returned.

    (B) Imports not on consignment in such places of storage as are usually employed by importers, provided the coverage of the issuing companies includes hazards of transportation. Such policies may also include the same coverage in respect to property purchased on cost-insurance-freight terms or spot purchases for inclusion with or in substitution for bona fide importations. An import, as a proper subject for inland marine insurance, is deemed to maintain its character as such so long as the property remains segregated in the original form or package in such a way that it can be identified and has not become incorporated and mixed with the general mass of property in the United States, and will be deemed to have been completed when such property has been:

      (i) sold and delivered by the importer, factor, or consignee; or

      (ii) removed from place of storage as described in this subparagraph and placed on sale as part of importer's stock in trade at a point of sales distribution; or

      (iii) delivered and accepted for manufacture, processing, or change in form to premises of the importer or of another used for any such purposes.

  (2) Exports (non-regulated). Inland marine policies may cover property for export, when such property is not subject to export risk under marine (ocean) policies, as follows.

    (A) Export property may be covered wherever the property may be without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.

    (B) Export property is deemed to acquire its character as such when designated as such or while being prepared for export and retains that character unless diverted for domestic trade, and when so diverted, the provisions of these sections respecting domestic shipment apply; provided, however, these provisions do not apply to long-established methods of insuring certain commodities, e.g., cotton.

  (3) Domestic shipments (non-regulated).

    (A) Domestic shipments on consignment for consignor and/or consignee may be written as follows, provided that in all events the policy covers while in transit:

      (i) on consignment for sale or distribution for account of consignor, with no restriction as to time in storage or deposit, while in the custody of others and including return shipments, provided that in no event will the policy cover on premises owned, leased, or controlled by the consignor;

      (ii) on consignment for sale or distribution for account of consignee while in the custody of others and including return shipments, provided that in no event may coverage be granted in excess of 120 days at premises owned, leased, or controlled by consignee; further provided that if coverage be issued jointly to consignee and consignor the same limitation of 120 days for coverage at premises owned, leased, or controlled by consignee will be applicable only with respect to the interest of the consignee; and

      (iii) on consignment for account of consignor and/or consignee for exhibition, trial, approval, or auction, without restriction as to time in storage or deposit or on exhibition and while in the custody of others and including return shipments.

    (B) Domestic shipments not on consignment may be written as follows, provided that in all events the policy covers while in transit:

      (i) at premises of transportation companies or freight forwarders pending transportation without restriction as to time in storage or deposit. For purposes of insurance under this clause, a "freight forwarder" is defined as a warehouse or transportation concern who takes custody of the property of others for storage and transport either by schedule or upon call;

      (ii) furniture shipment policies without restriction as to time in storage or deposit to cover only used household furniture and used furniture and fixtures in course of transit while awaiting determination or availability of final destination. Such policies may not cover after delivery to final destination and may not include merchandise held for sale; and

      (iii) in all other situations provided the coverage may not exceed 120 days at any place of storage or deposit operated by the assured except coverage at points of sales distribution or at manufacturing premises of the assured which may be written without regard to such restriction of time in storage; provided, however, that in no event will any policy cover the perils of fire and extended coverage at such points of sales distribution or such manufacturing premises.

  (4) Bridges, tunnels and other instrumentalities of transportation and communication (non-regulated). No policy may be issued under this paragraph where the perils of fire and extended coverage are the only hazards to be covered; provided further that in all cases policies must exclude buildings, office furniture, and supplies held in storage therein. Policies covering piers, wharves, docks, and slips must exclude the hazards of fire and extended coverage. Other aids to navigation and transportation, including dry docks and marine railways, may be covered against any risks. Property insured under this paragraph may include, but is not limited to:

    (A) pipelines, including on-line propulsion, regulating, and other equipment appurtenant to such pipelines, but excluding all property at manufacturing, producing, refining, converting, treating, or conditioning plants;

    (B) power transmission and telephone and telegraph lines, excluding all property at generating, converting, or transforming stations, substations, and exchanges;

    (C) radio and television communication equipment in commercial use as such, including towers and antennae, auxiliary equipment, electrical operating and control apparatus, and other property directly used for transmitting and/or receiving; and

    (D) outdoor cranes, loading bridges, and similar equipment used to load, unload, and transport.

  (5) Other inland marine risks.

    (A) Accounts receivable (filed).

    (B) Agricultural machinery and equipment (excluding dealers) (filed).

    (C) Bailee customers policies (non-regulated). Covering property in the custody of bleacheries, throwsters, fumigatories, dyers, cleaners, laundries, needle workers, and other bailees for the purpose of storage or performing work thereon. Such policies may include coverage while in transit but may not cover bailee's property at his or her premises.

    (D) Block policies. Block policies presently approved under this section are:

      (i) camera dealers (filed);

      (ii) equipment dealers (filed);

      (iii) furrier's block (non-regulated);

      (iv) jeweler's block:

        (I) retailers with average inventories of less than $250,000 (filed); and

        (II) all other classes (non-regulated);

      (v) musical instrument dealers (filed).

    (E) Cold storage locker plant policies (non-regulated). Covering merchandise of customers such as meats, game, fish, poultry, fruit, vegetables, and property of a similar nature.

    (F) Cotton buyers transit policies (filed).

    (G) Domestic bulk liquids policies (non-regulated). Covering domestic bulk liquids stored in tanks, provided the risks of fire and extended coverage are excluded therefrom.

    (H) Exhibition policies covering property while on exhibition and in transit to or from such exhibition (non-regulated).

    (I) Film floaters, including builders' risk during the production and coverage on completed negatives and positives and sound records (filed).

    (J) Fine arts policies covering objects of art such as pictures, bronzes, and antiques, rare manuscripts and books, articles of virtu, etc.:

      (i) private collections (filed);

      (ii) dealers (non-regulated); and

      (iii) all other commercial risks (filed).

    (K) Floor plan policies (filed). Covering property for sale while in possession of dealers under a floor plan or any similar plan under which the dealer borrows money from a bank or lending institution with which to pay the manufacturer, provided:

      (i) such merchandise is specifically identifiable as encumbered to the bank or lending institution;

      (ii) the dealer's right to sell or otherwise dispose of such merchandise is conditioned upon its being released from encumbrance by the bank or lending institution; and

      (iii) that such policies cover the merchandise in transit and do not extend beyond the termination of the dealer's interest and may not cover merchandise for which the dealer's collateral is the stock or inventory as distinguished from merchandise specifically identifiable as encumbered to the lending institution.

    (L) Furriers' customers policies (non-regulated). Policies under which certificates or receipts are issued by furriers or fur storers covering specified articles, the property of customers.

    (M) Garment contractors floaters (non-regulated).

    (N) Government service floaters (non-regulated).

    (O) Home freezers and contents against loss resulting from power failure and/or mechanical breakdown (non-regulated).

    (P) Installation risks or builders' risks (non-regulated). Covering loss to owner, seller, or contractor on account of physical damage to machinery, equipment, building materials, or building supplies being used with and during the course of installation, testing, building, renovating, or repairing of dwelling, commercial, or industrial construction. Such policies may cover at points or places where work is being performed, while in transit, and during temporary storage or deposit of property designated for and awaiting specific installation, building renovating, or repairing. In no event may any policy cover such properties while contained in stock of merchandise held for sale to the public by dealers and such coverage must be limited to installation risks or builders' risks where perils in addition to fire and extended coverage are to be insured. If written for account of owner, the coverage must cease upon completion and acceptance thereof or if written for account of a seller or contractor, the coverage must terminate when the interest of the seller or contractor ceases.

    (Q) Inland marine insurance classes of coverage, commonly referred to as consumer credit property insurance and commercial credit property insurance, set out in clauses (i) and (ii), respectively, as follows:

      (i) Coverage resulting from an open- or closed-end consumer credit transaction that is a retail installment transaction (filed). For purposes of this subparagraph, "retail installment transaction" has the meaning assigned in Finance Code, §345.001. The credit property insurance addressed in this clause must comply with provisions in subclauses (I) through (VIII) of this clause.

        (I) Policies offering coverage addressed in this clause must include coverage while in transit and may be extended to include the interest of a vendee, mortgagor, or lessee, but in no event may the policy cover the vendor's, mortgagee's, or lessor's interest beyond the termination of that interest.

        (II) All policies or certificates issued under this clause must include a clear statement to the insured about the method of payment allocation to all outstanding purchase obligations by reference to the applicable lending documents to determine how the coverage will be applied.

        (III) Premium calculations for coverage addressed in this clause involving a closed-end consumer transaction may not be based on amounts paid for services, meals, entertainment, finance or service fees, loan interest, delivery charges, or other insurance premiums (e.g., credit life, credit disability, credit property, or credit involuntary unemployment insurance coverage).

        (IV) An offer to extend coverage for a closed-end consumer transaction addressed in this clause must include, at the time of the invitation to contract, the following prominent written disclosure in no smaller than 10-point boldface type: "This coverage might duplicate existing coverage if you have a residential property insurance policy. This coverage ceases when you have fully paid the debt. This coverage is primary, so it is the first source to be used in the event of a loss on property it covers. You may cancel this coverage at any time by calling the insurer at the toll-free telephone number provided to you, or by writing to the insurer. This coverage costs (set out the total identifiable credit property insurance charge)."

Cont'd...

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