Inland marine insurance is an essential, yet often misunderstood type of commercial coverage. Whether you’re shipping equipment, transporting goods, or protecting high-priced items like art or jewelry, inland marine insurance protects your assets against theft, damage, or accidents. This guide will walk you through what type of assets inland marine insurance covers, why it’s critical for your business, and how to determine if it’s the right choice for your operations.
What is Inland Marine Insurance?
Inland marine insurance is a specialized form of commercial property insurance that protects high-value goods, materials, and equipment, while they are in storage or transit. Unlike traditional commercial property insurance, which primarily covers buildings and their contents, inland marine insurance focuses on movable assets, such as:
- Cargo: Goods being transported by truck, train, or other land vehicles. Example: Supplier shipping furniture to a retail store.
- Equipment: Machinery, tools, and other construction equipment. Example: Construction company hauling an excavator to a job site.
- Valuable Papers: Documents such as contracts, financial records, and intellectual property. Example: Law firm delivering sensitive client documents to court.
- Fine Arts: Paintings, sculptures, and other valuable works of art. Example: An art gallery transporting paintings for an exhibition.
- Jewelry and Furs: Precious stones, metals, and fur garments. Example: Jewelry store transporting diamonds or precious metals.
- Antiques: Items of historical or cultural significance. Example: A collector insuring a vintage car while in transit.
- Musical Instruments: Expensive or valuable violin, guitar, and pianos. Example: A band insuring their instruments while on tour.
Whether you’re a transportation company or a moving company, inland marine insurance can protect your business from the top causes of losses: theft and accidental damage. If your business relies on the safe movement or storage of equipment, documents, or valuable items, this insurance offers essential protection.
Why Is It Called Inland “Marine” Insurance?
The term “Inland Marine Insurance” might sound like there’s a connection to the ocean, but its name actually dates back to when goods were primarily transported by sea. Centuries ago, insurance companies originally offered “Ocean Marine Insurance” to protect owners from losses of goods shipped by water if the ship sank or was captured by pirates. As transportation shifted from water to land, the coverage followed, but the traditional name remained. Today, inland marine insurance covers movable goods on land.
Why Your Business Needs Inland Marine Insurance
In today’s fast-paced business environment, where logistics and transportation are crucial, valuable assets are constantly at risk. Standard business owners policies (BOP) or commercial package policies (CPP) may not fully protect property in transit, especially high-value items. If you transport property away from your business premises, whether locally or across states, you should consider purchasing inland marine insurance as it protects you against:
- Theft and Pilferage: Protects against stolen or damaged items during transit or storage.
- Accidents and Disasters: Provides coverage caused by collisions, fires, and/or wind.
- Damage in Transit: Covers goods damaged during transportation due to rough handling, extreme temperatures, or other factors.
Determining the Right Coverage
Your business’s specific needs will depend on its operations and the types of assets you handle. Here’s how you can assess the appropriate coverage:
- Value of Assets: Calculate the value of the items you’re insuring. For high-value items, such as art or specialized machinery, ensure that your policy covers their full replacement cost.
- Frequency of Transportation: If your business frequently transports goods, opt for higher coverage limits to account for the increased exposure.
- Storage Locations: The security and environmental conditions of your storage facilities can affect risk. Assets stored in secure, climate-controlled environments may face fewer risks.
- Legal Requirements: Some industries or contracts, such as government projects, may require higher coverage levels to meet compliance.
- Insurance Gaps: Review your existing insurance policies to identify any gaps in coverage for your movable assets. Inland marine insurance should complement your existing commercial policies.
- Specialized Coverage: For particularly valuable or unique items, consider specialized endorsements or riders to provide tailored protection.
Understanding Inland Marine Deductibles and Limits
Like most insurance policies, inland marine insurance includes a deductible, which is the amount you pay out-of-pocket before the insurance kicks in. You’ll also need to consider the coverage limit, the maximum amount your insurer will pay for a covered claim. If damage exceeds this limit, you’ll be responsible for the difference. Policies typically offer two reimbursement options:
- Actual Cash Value (ACV): This means you’ll receive compensation based on the depreciated value of the damaged item.
- Replacement Cost: Under this option, you’ll be reimbursed for the cost to replace the damaged property at today’s prices.
Review your policy to understand how it handles reimbursements and ensure your coverage limits accurately reflect the value of your business’s moveable property. Some policies also include a coinsurance clause, meaning you could face penalties if your coverage limits are too low relative to the total property value.
Get an Insurance Quote from AIS
Inland marine insurance is crucial for businesses that rely on transporting and storing valuable assets. By understanding the key coverage areas and customizing your policy, you can reduce risks and protect your business’s bottom line. AIS Insurance is here to help with tailored coverage options. Contact us at (888) 772-4247 or visit our website to get started today!
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may differ from those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
