People are often surprised to hear inland marine insurance has nothing to do with the ocean, Gulf of Mexico or boats. Instead, this special type of coverage protects products, materials and equipment transported on land by truck or train--or while in temporary storage by a third party. According to the Insurance Information Institute, collisions and cargo theft are the two of the most frequent causes of inland marine losses.
Let’s say for example, a contractor normally installs a $5,000 HVAC system, but has an RFP to install a $50,000 commercial chiller. Just after the equipment arrives at the job site, an uninsured motorist collides into the chiller and damages the unit beyond repair. While the contractor had a commercial auto policy and a commercial general liability policy, neither policy would cover damage to equipment about to be installed. Instead, an inland marine insurance policy is needed to provide coverage for the $50,000 chiller. If the contractor purchased an annual policy with a $1,000 deductible, other equipment in transit or at the job site could also be covered. Premiums are generally based on annual receipts.
Inland marine insurance may be purchased as an add-on to an existing business insurance policy or may be available as a separate policy. For many small businesses, it’s a wise move to add inland marine coverage to an existing policy rather than purchase a standalone policy because it’s less expensive and coverage is easy and fast to secure. Most inland marine endorsements cover the losses incurred in the normal course of business.
However, if your business is handling a special job, then a separate policy may be a better fit. For example, a contractor that normally installs roofing on 1 - 2 story commercial buildings, received a job to install roofing on a 20-story building in a busy downtown. A crane is needed to get the materials to the roof, which carries a unique and high risk. In this scenario, a separate policy would be the best option for coverage.
Inland marine insurance can also be secured to repair or replace portable business property damaged by a covered peril. Covered perils generally include: wind, hail, water damage, theft, and fire. Sometimes flood is covered as well. A policy may even help cover things like a "mysterious disappearance" or accidentally dropping and damaging property. Most policies are also written to cover mobile equipment such as forklifts, bulldozers, scissor lifts, and expensive tools. However, as in all insurance policies, it’s important to understand any potential exclusions.
One of the most unusual exclusions we’ve seen is one that actually excluded fire! Yes, fire is the most basic of mother nature’s perils, yet some policies exclude damage to the covered equipment if being used to fight a fire. Given the number of wildfires sweeping across the country every summer, this exclusion could be problematic. If owners understood exclusions, it would have stopped many from using their bulldozers to set up fire breaks.
When deciding whether inland marine insurance is right for you, consider the nature of your business and operations. Inland marine insurance isn’t just for companies that specialize in transporting products, materials, or equipment. For example, if you own an expensive trade show booth and frequently ship it around the country for various company events or store it offsite with a vendor, you may want inland marine coverage. Or if you temporarily store someone else’s property, inland marine insurance can provide coverage against loss or damage.
Inland Marine insurance has a wide variety of uses and it can fill many potential gaps in your insurance plan. Since every business and situation is unique, it’s best to speak with an independent insurance agent. Give us a call today and we’ll be happy to answer your questions and help secure appropriate coverage to protect your business.