Inland Marine Insurance: Protecting Property in Transit

Inland Marine insurance is one of the most versatile and essential components of the complete Property exam guide. Historically, marine insurance covered goods being transported across oceans. However, as trade expanded over land via rivers, canals, and eventually railroads and trucks, the need for coverage that "followed" the property across land became apparent. This led to the development of Inland Marine insurance.

Unlike standard commercial property or homeowners policies, which typically restrict coverage to a specific premises (the "residence premises" or "described location"), Inland Marine insurance is designed to protect property that is mobile, in transit, or unique in nature. It is often referred to as floater coverage because the protection "floats" with the property wherever it goes within the policy territory.

To prevent Inland Marine from overlapping too heavily with other lines of insurance, the National Association of Insurance Commissioners (NAIC) developed the Nation-Wide Marine Definition. This definition classifies the types of risks that may be written under Marine insurance contracts. For the practice Property questions on your exam, you must recognize these six categories:

• Imports: Property being brought into the country (covered until it reaches its destination or is sold).
• Exports: Property destined for foreign countries.
• Domestic Shipments: Goods in transit within the country via truck, rail, or air.
• Instrumentalities of Transportation and Communication: This includes bridges, tunnels, transmission towers, and piers. These are considered "marine" because they facilitate the movement of goods or information.
• Personal Property Floaters: Coverage for individuals (e.g., jewelry, furs, fine arts).
• Commercial Property Floaters: Coverage for businesses (e.g., contractors' equipment, medical diagnostic tools).

Commercial Inland Marine provides broad coverage for business property that is not easily insured under a standard Commercial Package Policy (CPP). Common forms include:

• Accounts Receivable: Covers losses resulting from the inability to collect money due from customers because records were destroyed by a covered peril.
• Bailee's Customers Policy: A bailee is someone who has temporary possession of another's property (e.g., a dry cleaner or repair shop). This policy covers the customer's property while in the bailee's care, regardless of fault.
• Contractors Equipment Floater: The most common commercial floater. It covers mobile tools and heavy machinery (bulldozers, cranes) used by contractors.
• Installation Floater: Covers property (like HVAC units or elevators) while it is being transported to a job site and during the installation process before it becomes a permanent part of the building.
• Jewelers Block: A comprehensive policy for jewelry retailers that covers stock on premises, in transit, and even items being worn by employees.

For individual policyholders, Inland Marine coverage is usually provided through a Personal Articles Floater (PAF) or a Scheduled Personal Property Endorsement on a homeowners policy. This is necessary because standard homeowners forms have "special limits of liability" for certain categories of property like jewelry, silverware, and firearms (often limited to a specific dollar amount for the peril of theft).

The Personal Articles Floater provides Open Peril coverage and usually has no deductible. It requires items to be specifically listed (scheduled) with a detailed description and a specific limit of insurance. Because these items are often high-value, insurers frequently require a professional appraisal to establish the Agreed Value at the time the policy is written.