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Inland Marine Insurance

October 23, 2012

The most confusing thing about Inland Marine Insurance is its name. Those unfamiliar with the insurance industry might reasonably assume that Inland Marine insurance has something to do with boats. What’s worse: you might suspect that “Inland Marine” is some kind of useless oxymoron meant to confuse you. Though you would be half right about boats and the somewhat archaic name, it would be wrong to assume that Inland Marine Insurance is a useless tool. Indeed, an Inland Marine policy is an essential solution for contractors, construction firms and other types of businesses transporting valuable tools or highly mobile goods on land.

According to IRMI’s online glossary of insurance terms, Inland Marine Insurance offers coverage for property “that cannot be conveniently or reasonably confined to a fixed location” [1].  Its purpose is to cover moving or moveable property owned by the insured on land. Covered property typically includes property that is:

•  Actually in transit.

•  Held by a Bailee (the person or company who temporarily holds someone else’s personal property).

•  At a fixed location that is also an instrument of transit (e.g. a shipping container or trailer).

•  Of a moveable type of goods often at different locations (e.g. contractor’s tools, computer equipment or valuable papers).

The name “Inland Marine” Insurance likely grew out of “Ocean Marine” Insurance. Historically, insurance houses insured the cargo of ships providing indemnification for goods lost at sea. However, once insured goods were loaded onto non-ocean-bound vessels or onto land, they were no longer covered and policyholders became responsible for whatever happened to the goods until they reached their destination. Inland Marine Insurance developed as a way to offer more complete protection. Today, most Inland Marine coverages address property on land while Ocean Marine Insurance covers property transported by water [2].

Inland Marine Policies are sometimes referred to as “floater” policies because the coverage they offer essentially “floats around” with the insured property regardless of its location. This distinguishes Inland Marine policies from Commercial Property Insurance and other offerings that only cover specific premises. In fact, the “floating” nature of Inland Marine policies is what makes them a powerful tool for filling gaps in coverage. Inland Marine policies must be purchased separately from BOP, Commercial Property or Commercial Liability policies and provide protections these three offerings don’t.  If your business requires you to regularly transport valuable tools or merchandise, you should strongly consider purchasing a separate Inland Marine policy to supplement your existing coverages.

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Sources

1. International Risk Management Institute. (2012) Inland Marine Coverage – Insurance Glossary. Glossary of Insurance and Risk Management Terms

2. Harrington JS. (2004) INLAND MARINE INSURANCE: What are the “nonfiled” classes, and why are they being filed?. Rough Notes

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