What is Inland Marine Insurance and What Does It Cover?

What is Inland Marine Insurance?

Inland Marine Insurance is a type of insurance coverage that is designed to protect businesses from loss or damage to movable property, equipment, machinery, products, or valuable items that are transported over land or used at various job sites. It serves as an extension or offshoot of ocean marine insurance, which primarily covers property transported by sea.

This insurance coverage is highly specialized and tailored to cover specific types of property. It includes property like construction machinery, computer equipment, tools, and other assets used at job sites, stored in warehouses, or transported from place to place via trains or trucks. It is particularly useful for businesses that have valuable items not adequately covered by their standard property policies.

Inland Marine Insurance can provide coverage for damage caused by covered perils, which can be either "all-risks" or named perils. An all-risk policy provides broader coverage, protecting against any peril not explicitly excluded, while a named perils policy only covers the specific perils listed in the policy.

What Does Inland Marine Insurance Cover?

Inland Marine Insurance provides coverage for various scenarios involving movable property, tools, equipment, and high-value items, especially when they are transported over land or used at job sites. It extends protection to valuable assets that might not be adequately insured by standard commercial property or business owner's policies. Here are the key aspects of what Inland Marine Insurance covers:

• Damage by Covered Perils: Inland Marine Insurance covers damage caused by perils that are explicitly covered by the policy. This includes damage to tools, equipment, and building materials used at job sites, as well as valuable items like machinery.
• High-Value Items: It extends coverage to high-value items that may not be adequately insured or covered at all under standard commercial property policies. For example, it can protect assets like a bulldozer valued at $150,000 used for construction purposes.
• Coverage Types: Inland Marine Insurance policies can be categorized into "all-risk" or named perils. "All-risk" policies provide broader coverage, protecting against any peril not specifically excluded. Named perils policies, on the other hand, only cover the perils explicitly listed in the policy.
• Valuation Methods: The valuation of damaged or destroyed property can vary based on the specific policy. Some policies pay losses based on the replacement value of the property at current market prices without considering depreciation, while others base payments on the property's actual cash value, which includes a deduction for depreciation.

How Much Does Inland Marine Insurance Cost?

The price of an Inland Marine Insurance policy can vary significantly between insurance providers. Several factors influence the cost, including the size of your business, the level of coverage you require, and any state-specific requirements or limitations.

In terms of pricing, some policies may be quite affordable, costing less than $500, while others, especially for larger businesses with extensive coverage needs, can exceed $10,000 annually. On average, businesses can expect to pay around $2,500 per year for Inland Marine Insurance.

To obtain an accurate estimate for your specific needs, the best approach is to request a customized insurance quote. Carefully review the quote to ensure that all aspects of your business, including the items you ship and any unique variables, are adequately covered.

What Inland Marine Insurance Doesn't Cover?

Inland Marine Insurance provides valuable coverage for a range of scenarios involving movable property, equipment, and high-value items. However, there are certain limitations and exclusions to be aware of. Here is an overview of what Inland Marine Insurance typically does not cover:

• Damage by Insects: Inland Marine policies often exclude coverage for damage caused by insects. This means that if your property is damaged by pests like termites or other insects, the policy may not provide coverage.
• Wear and Tear: Normal wear and tear on your property is typically not covered by Inland Marine Insurance. This includes the gradual deterioration or aging of your equipment or items.
• Mold Damage: Many policies do not cover damage caused by mold. If your property sustains damage due to mold growth, it may not be eligible for coverage under your Inland Marine Insurance.
• Floods: Inland Marine policies often exclude coverage for damage caused by floods. If your property is damaged by flooding, you may need a separate flood insurance policy to provide coverage.
• Earthquake Damage: Earthquake damage is frequently excluded from Inland Marine Insurance policies. If your property is in an earthquake-prone area, you may need to obtain specialized earthquake insurance.
• Vehicles: Inland Marine Insurance is designed to cover movable property, but it typically does not cover damage to vehicles. If you need coverage for your business vehicles, you'll need a separate commercial auto insurance policy.
• Stationary Property: Property that remains stationary at your business premises, such as desks and cabinets, is generally not covered by Inland Marine Insurance. This type of property is typically covered under commercial property insurance.
• Property Shipped by Sea or Air: Inland Marine Insurance is focused on property transported over land, so it typically does not cover property shipped by sea or air. For such coverage, you would need specialized marine or cargo insurance.
• Pre-Shipment Damage: Damage that occurs to your property before it is shipped or transported is usually excluded. Inland Marine Insurance typically applies to property during transit or while in use at various job sites.

What Are the Special Types of Inland Marine Insurance?

Here is the Special Types of Inland Marine Insurance:

• Contractor's Equipment Floater: This type of inland marine insurance is designed to cover the loss, damage, or theft of a contractor's equipment or tools. It provides coverage regardless of where the loss occurs, whether it's at the contractor's business premises, a job site, or during transit. It is crucial for businesses in the construction and contracting industry.
• Electronic Data Processing (EDP) Insurance: EDP insurance protects businesses from losses related to damage or destruction of electronic data processing equipment, including desktop computers, mainframes, laptops, tablets, and similar devices used to process or store data. This coverage extends to a range of perils, such as fire, floods, theft, and electrical disturbances, making it essential for organizations heavily reliant on digital technology.
• Bailee Insurance: Bailee insurance covers a business's liability for damage to customers' property while it is in the care of the business for services, repair, or storage. The term "bailee" refers to the custodian or party temporarily holding someone else's property. Businesses that benefit from this coverage include dry cleaners, computer repair services, pet boarding operators, and others responsible for safeguarding customers' possessions.
• Accounts Receivable Insurance: This type of inland marine insurance safeguards businesses from financial losses resulting from the damage or destruction of accounts receivable records due to covered perils or the failure of customers to pay their invoices. It is particularly valuable for businesses heavily reliant on maintaining accurate financial records.
• Installation Floater: Installation floater insurance is crucial for contractors and businesses involved in installation work. It provides protection against theft, damage, or destruction, caused by covered perils, of equipment, materials, or supplies while they are in transit or awaiting installation at a job site. This coverage ensures that valuable assets are safeguarded during the various stages of a project's execution.

These specialized types of inland marine insurance policies cater to specific industries and risks, offering businesses tailored protection for their unique needs. It's essential for businesses to assess their operations and consider the appropriate type of inland marine insurance to mitigate potential financial losses associated with property damage or loss.

How to Get Inland Marine Insurance?

Inland marine insurance is available through numerous insurance companies; however, securing this type of coverage often involves collaborating with an insurance agent. This is because online business insurance providers typically do not offer inland marine insurance policies directly through their digital platforms.

If you are already a policyholder of commercial property insurance, general liability insurance, or possess a Business Owner's Policy (BOP), you can initiate the process of obtaining inland marine insurance by reaching out to your existing insurance carrier. In doing so, you can explore the possibility of incorporating inland marine coverage into your current insurance portfolio.

Why is It Called Inland Marine Insurance?

The term "Inland Marine" insurance may seem somewhat perplexing, given that it contains the word "marine," which is commonly associated with the sea and ocean-related matters. However, the name "Inland Marine" insurance finds its origins in the broader realm of insurance, particularly its historical connection to ocean marine insurance. Here's why it's called "Inland Marine" insurance:

• Historical Context: Inland marine insurance has its roots in ocean marine insurance, which primarily focuses on insuring goods and cargo transported by sea. Ocean marine insurance was crucial during the maritime trade boom when ships carried goods across vast oceans, and the risks associated with sea voyages were substantial.
• Expanding Coverage: As commerce evolved and goods began to move not only by sea but also over land via trains and trucks, the need for insurance coverage extended beyond maritime transportation. To address this shift and accommodate the changing transportation landscape, insurers developed a specialized form of insurance known as "Inland Marine" insurance.
• Land-Based Property Protection: Inland Marine insurance was created to protect businesses from the loss or damage to property as it traveled over land from its origin to its final destination. This insurance category covers a wide range of movable property, including equipment, machinery, products, and other items that are transported or stored away from a business's primary locations.
• Continuation of Terminology: Despite its terrestrial focus, the name "Inland Marine" insurance was retained to acknowledge its historical connection to ocean marine insurance. This nomenclature serves as a testament to the insurance industry's adaptability and ability to evolve with changing business practices and transportation methods.

Who Needs Inland Marine Insurance?

Here is a breakdown of who needs Inland Marine Insurance:

1. Businesses with Frequent Product Shipments: Companies that regularly transport equipment, products, or materials over land should strongly consider Inland Marine Insurance. This coverage fills a critical gap in protection during transit and storage. The nature of the business often dictates the need for this coverage.
2. High-Value Products: Inland Marine Insurance is particularly important for businesses dealing with high-value products. These valuable items are typically excluded from basic property policies, making Inland Marine coverage essential for safeguarding substantial investments.
3. Various Business Types: While not limited to specific industries, certain businesses are more likely to require Inland Marine Insurance due to their operational needs. These include:
   1. Photography businesses
   2. Food vendors
   3. Supermarkets
   4. Networking and communications vendors
   5. High-tech companies
   6. Construction equipment vendors
   7. Medical equipment vendors
   8. Online retailers of high-priced items