The Unattended Auto Exclusion in Jewelers Block Policies

How What Was a Clear and Unmbiguous Exclusion is Made Ambiguous

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Jewelers Block Insurance is a specialized for of insurance designed to protect people in the jewelry business with highly valuable small items. When traveling with jewlrey the risk of loss by theft or robbery is high and the experience of insurers found that the risk is greater when the product is left unattended in vehicles.

The purpose of the unattended auto exclusions is twofold:

1. to curb what is called “moral hazard” and

2. to limit coverage in high-risk settings even when there is no moral hazard.

WHAT IS A MORAL HAZARD?

Moral hazard refers to the effect of insurance in causing the insured to relax the care he takes to safeguard his property because the loss will be borne in whole or part by the insurance company. Even if there were no moral hazard, an insurer might want to exclude coverage in especially risky situations. More precisely, the insured might agree to accept less coverage in exchange for a reduced premium.

Jewelers, and their counsel, must be aware that the jewelers block policy, although it still insures against almost all risks of physical loss, insurers will not take certain specified risks. Because of the risks attendant on high value property, the jewelers block policy contains a strict exclusion concerning theft losses from vehicles.

THE UNATTENDED AUTO EXCLUSION

For example, a jeweler traveling with a case full of diamonds stops at a self-service gas station to fill his car with gasoline. He locks his car, leaves his case in the car, and walks fifty feet to the attendant to hand in his credit card. As he turns to return to his car, he sees a thief break the window of his car, snatch the case, and run away. The jeweler confidently reports the theft to his jewelers block insurer. He is surprised to learn that the loss is not insured.

The exclusionary clause comes in various guises, including the following examples:

Unattended Auto — We do not cover theft of property in or on a vehicle that is not attended. An attended vehicle has a person actually in or on the vehicle. This person must be you, your employee or a person whose sole duty is to attend the vehicle. Jewelers Mutual Insurance Company Jewelers’ Block Policy.

and/or:

This Policy does not insure loss of or damage to property:

(i) while in or upon any automobile, motorcycle or any other vehicle unless, at the time the loss or damage occurs, there is actually in or upon such vehicle, the Assured, or a permanent employee of the Assured, or a person whose sole duty it is to attend the vehicle. Lloyd’s for O(L) (U.S.A.) NMA 2612 (9/3/95). Form approved by Lloyd’s Underwriters’ Non-Marine Association Limited.