Inland Marine Insurance: Critical To Us All, But..

By Marianne Bonner

If there is one business cover so central to us all and yet not so appreciated, it is inland marine insurance. Perhaps, an expatiation here would bring this reality to the fore.

That expatiation should begin with the point that inland marine insurance is that insurance type that protects your business from loss or damage to equipment, machinery, products, or other property transported over land. It covers property you use at a job site, store at a warehouse, or move from place to place by train or truck. Inland marine is an offshoot of ocean marine insurance, which covers property transported by sea.

Inland marine insurance covers equipment, tools, and other property you use at a job site, store at a warehouse, or move over land.

Inland marine insurance is an offshoot of ocean marine insurance, which covers property transported by sea.

Each type of inland marine insurance is designed to cover a specific type of property. Which are those types that we refer to here?

Property inland marine insurance is one. This can include property such as construction machinery or computer equipment.

You should consider buying inland marine insurance if you ship or use property away from your premises or own valuable items that aren’t adequately covered by your property policy.

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What Does Inland Marine Insurance Cover?

Inland marine insurance covers damage by a covered peril to movable property like tools, equipment, and building materials. It also covers high-value items that aren’t adequately insured (or aren’t covered at all) under your commercial property or business owners policy. An example is a bulldozer valued at $150,000 that your business uses at construction sites.

Inland marine insurance may cover “all-risks” or named perils. An all-risk policy covers damage caused by any peril not specifically excluded. It’s broader than a named perils policy, which covers only the perils listed in the policy.

Inland marine policies also vary in how they value damaged or destroyed property. Some policies pay losses based on the replacement value of the property at current prices without considering depreciation. Others base the payment on the property’s actual cash value, which includes a deduction for depreciation.

Note however that:

Commercial property policies mainly cover property at your business premises. Most provide little or no coverage for property at other locations, such as job sites.

What Inland Marine Insurance Doesn’t Cover

While inland marine policies vary, many exclude damage caused by insects, wear and tear, mold, floods, and earthquake. Many also exclude vehicles, stationary property that remains at your business premises (like desks and cabinets), property shipped by sea or air, and property damage that occurs before an item is shipped.

Special Types of Inland Marine Insurance

There are many kinds of inland marine insurance, each designed to cover a specific type of property. Here are some examples.

1. Contractor’s equipment floater: Covers loss, damage, or theft of a contractor’s equipment or tools wherever the loss occurs, including at the contractor’s business premises, at a job site, or while in transit.
2. Electronic data processing (EDP) insurance: Protects businesses against loss or damage to desktop computers, mainframes, laptops, tablets, and other equipment used to process or store data. Policies cover damage caused by a range of perils, including fire, floods, theft, and electrical disturbances.
3. Bailee insurance: Covers your business’ liability for damage to customers’ property in your care for service, repair, storage. The term “bailee” means custodian. Businesses that need this coverage include dry cleaners, computer repair services, and pet boarding operators.
4. Accounts receivable insurance: Protects your business from financial losses caused by damage or destruction of your accounts receivable records by a covered peril or your customers’ failure to pay invoices.
5. Installation floater: Protects contractors against theft, damage, or destruction by a covered peril of equipment, materials, or supplies while in transit or awaiting installation at a job site.

Because this insurance covers property that moves from place to place, it’s often called a floater policy. Coverage goes wherever the insured property is.

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Limits and Deductible

An inland marine policy may include scheduled limits, blanket limits, or a combination of the two. A scheduled limit applies to a single item while a blanket limit applies to a group of items. When you buy inland marine insurance, you might choose specific limits for your most valuable items and a blanket limit for your remaining property.

For instance, you might select a $150,000 specific limit for your new bulldozer and a $35,000 blanket limit for your tools and other property. When a loss occurs, the most your insurer will pay is the limit (scheduled or blanket) that applies to the damaged property.