Understanding Inland Marine Insurance: What It Covers and Why It Matters

 

What is Inland Marine Insurance?

Inland marine insurance covers the loss or damage of goods and equipment while in transit over land or temporarily stored at locations other than your primary business site. Unlike standard commercial property insurance that typically covers items located at your business premises, inland marine insurance provides extended protection for mobile or off-site property.

Originally an extension of ocean marine insurance, which was designed to protect goods being transported by sea, inland marine evolved as trade routes extended inland. Over time, it became necessary to insure goods transported by trucks, trains, and other land-based vehicles, hence the name "inland marine."

 

Key Features of Inland Marine Insurance

Inland marine insurance policies are unique in several ways:

• Covers Mobile Property: This insurance is designed for movable items, unlike standard property insurance.

• Broad Coverage Options: It often includes "all-risks" coverage, meaning it covers any risk not specifically excluded in the policy.

• Customizable Policies: Policies can be tailored to specific industries, types of equipment, or business needs.

• High-Value Items: Especially useful for insuring expensive tools, machinery, and technology.

 

What Does Inland Marine Insurance Cover?

Inland marine insurance typically covers a wide range of items and situations, including:

• Construction Equipment: Bulldozers, backhoes, and other heavy machinery used on job sites.

• Tools and Materials: Equipment used by contractors, electricians, and plumbers.

• Computers and Electronics: Especially those used for data processing or that travel frequently.

• Fine Arts and Exhibits: Valuable pieces being transported or displayed temporarily.

• Installation Projects: Items being installed at job sites before they are fully secured.

• Accounts Receivable Records: Protects businesses from losses due to destroyed or inaccessible client payment records.

This type of insurance is incredibly versatile and can be adapted to meet the needs of various industries, including construction, tech, logistics, and even art galleries.

 

Special Types of Inland Marine Insurance

Several specialized inland marine policies cater to different business needs:

Contractor’s Equipment Floater

This policy covers tools and equipment used by contractors, regardless of whether the equipment is in storage, in transit, or at a job site. It ensures protection against theft, fire, vandalism, and other risks.

Electronic Data Processing (EDP) Insurance

Designed for businesses that rely heavily on technology, this insurance protects computers, servers, and software from damage caused by events like power surges, water damage, or cyber incidents.

Bailee’s Customer Insurance

Ideal for businesses that hold or repair customers' property, such as dry cleaners or repair shops. It covers the property of others while in your custody.

Installation Floater

Covers materials and equipment from the time they leave your premises until they are installed and accepted at the job site. This is particularly useful for contractors and installation service providers.

Accounts Receivable Insurance

Provides coverage when records of amounts owed to you are lost or damaged, ensuring you can still collect from your clients.

 

Common Exclusions in Inland Marine Insurance

While inland marine insurance offers broad protection, it’s important to know what it doesn’t cover. Common exclusions include:

• Normal Wear and Tear

• Insects or Vermin Damage

• Rust or Corrosion

• Earthquake or Flood Damage (unless specifically included)

• Damage Before Shipping

• Stationary Property (like furniture at your main office)

• Vehicles (covered under commercial auto policies)

Knowing the exclusions helps you identify whether you need additional coverage for specific risks.

 

How Inland Marine Insurance Works

Inland marine policies generally come in two forms:

• Scheduled Coverage: Specific high-value items are listed individually with their insured value.

• Blanket Coverage: Groups similar items together under one coverage limit.

Policies also come with deductibles, which are the amounts you pay out-of-pocket before insurance kicks in. For example, if your deductible is $2,500 and your loss is $10,000, the insurer pays $7,500.

Additionally, policies differ in how they calculate the value of lost or damaged items. Some use replacement cost, which reimburses you based on the current market value to replace the item. Others use actual cash value, which subtracts depreciation from the replacement cost.

 

Why Your Business Might Need Inland Marine Insurance

You should consider inland marine insurance if:

• Your business frequently transports tools, equipment, or merchandise.

• You operate in multiple locations, including temporary sites.

• Your property is not fully covered under your commercial property policy.

• You deal with high-value or delicate items that require extra protection.

Let’s say you own a landscaping business. You use expensive machinery like backhoes and mowers at various job sites. Inland marine insurance ensures those tools are covered in transit and on location, not just in storage.

 

Real-World Examples of Inland Marine Claims

• Fire Damage at Job Site: A construction company files a claim after a crane is damaged by fire on-site.

• Stolen Equipment: A contractor's power tools are stolen from a truck while in transit.

• Lost Receivables: A company can’t recover payments after a fire destroys its financial records.

• Electronics Damage: A tech company files a claim after computers are ruined due to a power surge.

These examples illustrate the diverse range of scenarios where inland marine insurance becomes a financial lifesaver.

 

Inland Marine vs. General Liability Insurance

It’s important not to confuse inland marine insurance with general liability insurance. The two cover entirely different risks:

• Inland Marine Insurance: Covers physical loss or damage to movable property.

• General Liability Insurance: Covers third-party claims for bodily injury, property damage, and advertising injuries.

Having both policies can provide comprehensive protection for your business, covering both your property and your legal liability to others.

 

Is Inland Marine Insurance Expensive?

The cost of inland marine insurance can differ depending on a range of variables related to your business and coverage needs.

• Type and Value of Property Insured

• Frequency and Distance of Transport

• Industry Risk Level

• Claims History

• Coverage Limits and Deductibles

For example, insuring construction equipment used at multiple job sites will typically cost more than covering stationary tools that rarely move. However, the cost is often minimal compared to the financial loss from an uninsured incident.

 

Tips for Choosing the Right Inland Marine Insurance

Here are some tips to ensure you select the best inland marine policy for your needs:

• Assess Your Risks: Understand what property is at risk and under what conditions.

• Work With a Broker: A knowledgeable insurance broker can tailor coverage to your specific needs.

• Compare Policies: Look at coverage limits, exclusions, valuation methods, and deductibles.

• Consider Bundling: You may save money by bundling inland marine with other commercial policies.

 

Key Takeaways

• Inland marine insurance protects movable business property transported over land.

• It is essential for industries involving tools, equipment, or high-value items.

• Policies can be customized based on your business needs.

• It's not a replacement for general liability or commercial property insurance but a complement to them.

• Common policy types include contractor's equipment, EDP, bailee, installation, and accounts receivable.

 

Final Thoughts and Call to Action

Inland marine insurance is a vital safety net for businesses that depend on property that travels or operates off-site. It helps you avoid devastating financial losses from theft, accidents, and unforeseen events affecting your valuable assets.

If your business regularly moves tools, machinery, merchandise, or sensitive equipment, it’s time to talk to an insurance professional. Explore inland marine insurance today and safeguard your mobile business assets with the right protection.

Don't wait for a loss to learn the importance of coverage—take the next step now and secure your business’s future.