Inland Marine Insurance
Businesses transport their crucial properties and goods not just over water, but also overland through trains, trucks, or buses. Thus, inland marine insurance is essential for the protection of such properties. These properties like construction equipment, medical equipment, fine arts, solar panels, cameras, and musical instruments are prone to risks of getting stolen, damaged, or lost. It can happen during the transportation process or outside the place of business. Thus, companies that deal with frequent move of such property to different locations need to protect their valuable property.
According to the Insurance Information Institute, inland marine insurance helps cover high-value items or those excluded by the property coverage in a standard business owners policy. It provides coverage for property that needs broader protection than what is usually provided by the typical commercial property insurance. Businesses must consider inland marine insurance if they deal with shipment or transportation of products or equipment on a usual basis.
What does inland marine insurance cover?
The inland marine policy provides coverage for the following types of properties:
Property in domestic transit
Inland marine insurance protects goods that are transferred domestically from one place to another.
Here are a few examples of such goods:
- Valuable cameras, lighting, and other equipment that are moved from one place to another in the firm’s van: Photography or videography companies own and travel with expensive cameras, harnesses, and other sensitive equipment.
- Shipment of property from a supplier to a customer: Suppliers usually deliver goods that a customer orders, and there are chances of damage to goods in this process.
- Private transfers of property from one party to another: Goods are in risk while in transit from theft or damage in the process of transferring.
- Shipment of property from a warehouse to a retail outlet: A firm’s property might get stolen or damaged during the shipment from their warehouse to their outlet.
- Sales person’s samples: Sales people usually carry valuable samples with them. Such samples have chances of getting lost, damaged, or stolen.
- Athletic team equipment: Damage or loss of athletic equipment such as helmets, balls, racquets, shoes, bats, or protective and safety gear can be expensive.
- Contractor’s job site equipment: Equipment such as paving equipment, and generators also need protection from theft, damage, and loss while they are in transit from one site to another.
- Off-site equipment: Contractors often use their equipment at a place other than their main place of business.
- Fine arts and antiques in transit: Art galleries and church transport valuable artifacts to and from another church or a museum. Artworks are the most vulnerable to damage when they are in transit. According to an interview of Financial Times with an art underwriter, sixty percent of art claims arise from transit-related cases.
- Equipment of the fire or police department
- Property that is in transit to a fair, exhibition or convention
Property in a bailee’s custody
A bailee usually holds, cares, controls, or has custody of other person’s property for any specific purpose. Marine inland insurance covers such property for a bailee. Here are a few examples of bailees that hold other person’s property:
- Dry cleaners: There are chances of damage to the clothes your customers dropped off for dry cleaning.
- Jewelry repairers: Jewelry repairers hold expensive items such as diamond rings, bracelets, or necklaces of their customers.
- Computer repair shops: These stores usually have expensive computer items such as laptops, desktops, or other electronic hardware.
- Warehouses: Warehouse service providers store all sorts of expensive as well as non-expensive property for a supplier.
- Delivery services: Delivery services are liable for the property they hold until it reaches the receiver.
- Exhibit companies: These companies exhibit expensive artworks, antiques, and similar items.
- Furniture or appliance repair shops: These shops usually hold their customer’s furniture and other appliances.
- Bars and cafes that exhibit artworks: Many bars and cafes display artwork from local or other famous artists.
- Marine inland insurance provides coverage for property that is moveable in a fixed location as well as the property that moves around. The policy covers property in a moveable location such as equipment in a truck, but it does not cover the vehicle. As per a 2019 report by Business Insider, the trucking business transports 71% of shipment in America. It also covers property that moves from one location to another, such as a contractor’s equipment. Here are a few examples of the moveable property:
- Contractor’s equipment: Equipment such as tools and machinery that are usually moved from the storage to a job site.
- Medical equipment: Medical equipment such as X-ray or MRI machine are expensive and should be transported with care.
- Handyman’s tools or equipment: Handyman usually carry their electrical, plumbing, and other tools with them wherever they go for their work.
- Musical instruments: Musicians usually travel along with their instruments such as guitar, piano, or violin.
- Photography equipment: Photographers travel with heavy equipment for their job. According to Improve Photography, a professional camera usually costs around $3000, excluding lenses.
- Pet grooming equipment: Equipment used for pet grooming such as clippers, shears, slicker brush, blades, and greyhound comb can cost up to $1000.
- Vending machines: Vending machines are kept in locations outside the company’s location. These machines are expensive and need to be protected from vandalism and other perils.
- Cooking equipment in a food truck: According to Qsrmagazine, constant motion and jarring of food trucks can affect the structural integrity of equipment such as fryers or refrigerators.
Property considered instrumental for transportation and communication
This policy also covers property that is essential for transportation or communication to occur. Here are a few examples of such property:
- Dry docks and marine railways
- Transmission lines, towers and related equipment
- Outdoor cranes and loading equipment
Unique or valuable property
Inland marine insurance protects valuable items such as fine art, special decorations, or any artwork under exhibition and fine art coverage. It protects such items while on display, in transit, or on loan.
Common exclusions of inland marine insurance policy
Here are the most common exclusions found in commercial inland marine policies:
- Wear and tear: This policy does not cover the damages resulting from natural wear and tear. Such wear and tear can be a result of hidden defects, insects, rust, depreciation, gradual deterioration, and heat or cold.
- Nuclear action: Marine inland insurance does not cover the damages resulting from nuclear hazards. According to American Education Systems, nuclear actions usually include acts such as nuclear reaction, nuclear radiation, or radioactive contamination.
- War: This policy does not cover the losses resulting from war-related activities. Such activities include declared war, undeclared war, war with another nation, civil war, warlike action by any government-sponsored military force, insurrection, rebellion, revolution, or usurped power.
- Government action: This policy does not cover the loss resulting from seizure or destruction of covered property as an act of the government.
- Loss of income or market: This policy does not cover the loss in a firm’s income due to an interruption in its business activities.
- Dishonest acts: This policy does not provide coverage for losses resulting from misappropriation, secretion, infidelity, or any dishonest act done by the insured, their employees, or any other trusted party of the insured.
- Inventory shortage: Businesses can face losses resulting from a shortage in their inventory. Such losses result from various reasons such as employee dishonesty, record-keeping mistakes, or inaccurate counting of the inventory. An Inland Marine policy does not cover such losses that a firm has to bear.
- Weather conditions: This policy does not cover the losses resulting from unfavorable weather conditions such as lightning, windstorm, hail, snow, ice, or rain.
- Faulty, inadequate, or defective acts: This policy does not cover losses resulting from the following activities:
- Insufficient planning, zoning, surveying, siting, grading, compacting, land use, or development of property
- Faulty design, blueprint, specification, artistry, construction, renovation, remodeling, or repair of the property
- Use of defective materials to construct, remodel, or repair the property
- Properties transported over water: An inland marine insurance does not provide coverage for goods or property that is transported across bodies of water. You can opt for ocean marine insurance in such cases.
Types of insurance that must include inland marine policy
Factors that determine the cost of inland marine insurance
The cost of inland marine insurance varies from businesses to businesses. But there are a few factors that play a vital role in determining the cost of the policy for your business. Some factors are:
- Size of the business: A large scale business in terms of revenue and property value will definitely have to pay higher premiums as compared to a small-scale business.
- The type of business: The industry that a business falls in determines the risk factors for the business. Thus, the kind of industry the business operates in also has an impact on the premium costs.
- Limits of the coverage: The level of protection a business needs also affects the cost of the policy. Some policies may cover total loss, or some may cover the partial loss. Insureds also add clauses to limit or increase the coverage of the policy. Thus, the premium is based on the coverage.
- State and federal requirements: Some states and federal laws require a few industries like trucking to have inland marine insurance for their businesses.
- Nature of the property: Valuable property such as rare artworks require higher protection limits as compared to other ordinary property. Thus, the nature of the property also affects the cost of the policy.
FAQs about inland marine insurance
Some of the commonly asked questions about inland marine insurance are:
What is the difference between inland marine insurance and ocean marine insurance?
According to the Department of Financial Services, inland marine insurance provides coverage for property, such as products, materials, and equipment that is in transit over land. Whereas, ocean marine insurance provides coverage for the property that is in transit over water.
Why is it called "Inland Marine" Insurance?
Inland marine insurance can sometimes be difficult for people to comprehend. It is because the terms marine and inland are contradicting. The concept of inland marine insurance originated from ocean marine insurance. Ocean marine insurance came first, and it provides coverage for the property in transit over water. Gradually, businesses began transporting their cargo over land and required protection for the same. Thus, this policy covers the property or cargo that is in transit over land.
What businesses need inland marine insurance?
Businesses that own valuable property that is frequently transported from one location to the other need an inland marine policy. For instance, a contractor’s tools and equipment move across various job sites. Similarly, companies that store their property at an off-site location require this policy. In other words, a business whose property is not confined to a specific location needs this policy.
Why do I need a separate inland marine coverage?
Commercial property insurance only provides coverage for the property that is located at the address specified on the policy. Gaps in coverage on such policies highlight the need for a separate inland marine insurance.