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A block policy is a form of inland marine insurance that provides coverage on an all risks basis for property and goods that are held in bailment or on a business merchandise and while on the premises of others, against most perils.
It covers loss to property of a merchant wholesaler or manufacturer including:
(1)property of others in an insured's care, control, or custody;
(2)property under consignment; and
(3)property sold but not yet delivered.
The most common examples of block policies are furrier's block policies and jeweler's block.
In Woods Patchogue Corp. v. Franklin Nat'l Ins. Co., 5 N.Y.2d 479 (N.Y. 1959), the court observed that “under a jewelers' block policy, all risks of loss or damage to jewelry may be insured. Insurance against loss by fire is one of the risks that may be covered by this type of marine policy”. Further it was held that, although the fire coverage feature of the block policy is optional, in that the insured may exclude the coverage and as a practical matter, the jewelers' block policy includes the risk of loss by fire. The option is given to an insured to exclude it. The block policy coverage is more extensive, providing for both direct and indirect loss by fire, and is not confined to loss in a particular location.