Small Business Questions & Answers


Filed under Running Your Business

Ask About Inland Marine Insurance

by Landlocked Laborer | May 24, 2012

Subject :Insurance

Dear Toolkit,

I called my agent to have him add some new tools to my business policy and he sent me a strange new document. What in the world is Inland Marine insurance?


Landlocked Laborer

Dear Landlocked Laborer,

"Inland marine" is a rather misleading name for a type of coverage used to protect high risk, mobile items that are not covered by your plain-vanilla commercial property policies. Inland marine coverage for a business can protect your valuable tools, for example, if you're a mechanic or tradesman, artwork if you operate a gallery, or a jeweler's inventory.

It's designed to cover movable property wherever it may be located and may be written on an all-risk, open-perils or named-perils form. Special policy floaters can cover such diverse items as bicycles, cameras, fine art, furs, jewelry, livestock, and equipment of all sorts.

Inland marine personal property floaters can be used to insure, on an unscheduled all-risk basis, 13 classes of residential personal property including:

  1. silverware
  2. clothing
  3. rugs
  4. musical instruments
  5. fine arts
  6. china and glassware
  7. cameras
  8. sporting equipment and supplies
  9. major appliances
  10. bedding
  11. furniture
  12. other personal property such as books and foodstuffs
  13. some structures

The derivation of the name for this kind of coverage has been attributed to Lloyd's of London. Many, many years ago, Lloyd's carried what was known as "marine" insurance on all the cargo of incoming and outgoing ships for British ports. The legend holds that a couple of members of the firm, while sitting in a pub, were discussing how they could continue to insure the cargoes after they reached port and were shipped over land to their ultimate destinations, thus hopefully doubling their business. One of them noted that "marine" insurance wouldn't quite do to describe this new wrinkle, whereupon his drinking buddy suggested "inland marine" as being a more accurate label. And a new class of coverage was born!

But there's also another rendition of how Inland Marine got its name. In the 1800s, the non-ocean portion of the journey grew as cargoes were transferred to barges, and the term "inland marine" was coined. Inland marine policies became known as "floaters" since the property to which coverage was originally extended was essentially "floating" on a barge.

And yet other definitions of Inland Marine coverage can be found in the NILS (formerly the National Insurance Law Service) glossary:

  • Coverage for property that involves an element of transportation. The property must be actually in transit, held by a bailee, at a fixed location that is an instrument of transportation, or be a movable type of goods that is often at different locations.
  • Transportation of goods over land. The term now includes any goods in transit anywhere except on the high seas. Bridges and tunnels are also considered proper subjects for inland marine insurance, because they are instruments of transportation.

But as a practical matter, the most important thing to remember about inland marine insurance is that it covers property in transit or mobile property, whereas standard property insurance normally covers items located within 100 feet of a specific physical address.

Make sure all your property is properly insured...on land, at sea and in the air.