Reasons Why Your Business Will Do Better
with Inland Marine Insurance

TLTR: This blog explores what inland marine insurance covers, its exclusions, prices and how applicable it may be for your small business. 

There’s an undeniable element of risk when your business transports goods, inventory, and equipment on land, because accidents are always a possibility. Commercial auto insurance will cover the vehicle you use to transport these goods, but it will not cover the goods themselves. And uninsured inventory and equipment can result in your business losing money.  

According to Packaging Digest, an estimated 11% of transported goods arrive damaged at distribution centers. In such cases your business would have to bear the loss and provide replacements for the damaged products… unless you have inland marine insurance. 

In this blog

What Is Inland Marine Insurance?

Inland marine insurance protects whatever you’re shipping while it’s in transit on land via vans, trucks, trains, etc. It covers damage or loss due to external factors. 

While the inclusion of the word “marine” in its name can be confusing, inland marine insurance has nothing to do with water-related locations and activities. Its name is an offshoot of ocean marine insurance. In most of human history, shipping on rivers, waterways and the ocean were the primary means of transporting goods. Because long distance travel held common risks of theft, loss, or damage to the cargo, shippers were held liable if goods arrived damaged, or didn’t arrive at all. To protect against such risks, ocean marine insurance was developed.  

With the advent of roads and railways, a similar type of protection was necessary for businesses that transported cargo inland. Thus, inland marine insurance was introduced. 

Fun Fact: According to Statista, inland marine insurance made up around 2.4% of net premiums written in the U.S. in 2019.

What Does Inland Marine Insurance Cover?

 Inland marine insurance protects against damage and losses of the following: 

Personal belongings in temporary care

Inland marine policy insurance can cover individuals and businesses from loss or damage of a property that has been temporarily left under their care by a client. This coverage is also known as Bailees customer coverage. 

Let’s say someone left their laptop for repair at your shop. Due to an unfortunate accident—perhaps flooding or a fire, there’s significant damage to your shop, and the client’s device is ruined. In this case, inland marine insurance will cover loss of the client’s device. 

    Inventory frequently utilized in different locations

    Inland marine insurance will provide the necessary coverage if you have tools and equipment that are frequently moved from one location to another and put to use in those places. A construction company moving items such as toolboxes and heavy equipment from site-to-site would be a good example.

    Goods and equipment in transport

    Your business property is protected while in transit from one location to another. Typically, commercial property insurance excludes this coverage.  

    For example, if a photography studio pulls up stakes and moves to a new location, they’ll have to transport their cameras, lights, stands, and other equipment. If these items are damaged on the way, commercial property insurance won’t provide coverage. Instead, inland marine insurance will cover the cost of equipment repair or replacement. 

    Priceless and unique valuables

    Your art gallery or museum needs to transport valuable artwork or antiques. Inland marine coverage will provide appropriate coverage should these items be subject to damage or theft. (You can also add this coverage to your existing commercial property insurance since it typically doesn’t cover priceless valuables.) 

    Moveable property and equipment

    Inland marine policy covers business property such as heavy machinery or equipment that’s installed in a vehicle. Food trucks with kitchen equipment and television vans with broadcast equipment are some examples. Additionally, if you own a moving or storage business, this coverage will be beneficial to you if your customer’s property is damaged or incurs loss while you’re transporting or storing it. 

    Fun Fact: According to the Bureau of Transportation, more than 11 million tons of shipments were moved domestically via trucks in 2020. It’s also estimated that the tonnage will increase at about 1.2% per year from 2018 to 2045. 

     

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    Additional Coverage

    Besides these, inland marine insurance also offers coverage against certain named perils and risks that could damage your property while in transit. These include: 

    • Fire 
    • Lightning 
    • Windstorms 
    • Hail 
    • Sinkholes 
    • Civil riots 
    • Theft and vandalism 
    • Smoke damage 
    • Water damage (burst pipes, sprinkler leakage, etc.) 

    Note: You can easily bundle this coverage with a business owners policy (BOP). A standard BOP includes general liability insurance and commercial property insurance. Having these policies in a bundle will cover your business from common as well as unique risks. 

    Exclusions For Inland Marine Insurance

    Inland marine insurance may provide coverage for any transport-related loss, but it doesn’t cover absolutely everything. Here are some common exclusions for this policy. 

    • Items that have not been shipped or transported 
    • Vehicles that are used to transport the insured property 
    • Items that are not listed in the policy 
    • Wear and tear of property due to normal usage, rust, climate, hidden defects, natural causes and so forth 
    • War and associated actions declared by any government or any military body which results in damage of insured property 
    • Nuclear hazard due to war or nuclear sites which causes loss of insured’s property 
    • Government actions such as seizure for public use or destruction of a covered property 
    • Immoral actions such as dishonesty, negligence, fraud, or recklessness that result in loss, damage or theft of insured property 
    • Marine transport or shipping of goods over bodies of water 

    In addition to these, there are also miscellaneous exclusions that involve inland marine insurance. These exclusions are: 

    • Flood related damages 
    • Loss due to unknown disappearance of property 
    • Properties with special insurance policies such as motorcycles, classic cars, snowmobiles, aircraft, and more 
    • Damage and loss due to use of faulty materials to repair, replace, construct or remodel the insured property 
    • Loss due to inadequate planning, surveying and development of insured property 

    Such exclusions for inland marine insurance can change depending on the insurer and your location. Talk to your insurance provider or a local agent to get the details. 

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    Do Businesses Need Inland Marine Insurance?

    Inland marine insurance is essential to any business that frequently transports its goods and inventory. This policy is also applicable for businesses that primarily move or store client property. It’s called a floater policy, which means that the coverage it provides is in effect wherever the insured property is transported.  

    You might think that your business owner’s policy or commercial property insurance will be more than enough to protect your goods. That’s not necessarily true. 

    To make it clear, commercial property insurance might exclude your business property that is not fixed on your business premises. The insurance policy might also limit or exclude coverage for any damage to your property if it is in transit and outside your business premises. 

    For example, you run a hardware store that frequently supplies equipment to different establishments. You utilize the company-owned truck to deliver machinery to your clients. When the goods reach them, you find out that your equipment sustained some damage, causing you significant loss. Without proper coverage, you would have to pay for their repair or replacement out of your own pocket. But, with inland marine insurance, the insurer pays for the loss. 

    how-does-inland-marine-insurance-work

    How Much Does Inland Marine Insurance Cost?

    As per Insureon, The average cost of inland marine insurance for small businesses is $169 per year or $14 per month. These rates are based on factors such as:

    Business size

    A smaller scale business will likely have a low insurance cost in comparison to a larger business given its operation size, costs and risks.

    Type of business

    Each business has its own specific set of risks. And depending on these risks, the insurance rates will differ. For example, a food truck business will have a higher chance of dangerous risks compared to a business that delivers packages. 

    Chosen coverage limits

    The coverage limits you choose affects the level of protection your business needs. If you have a greater coverage limit, the higher your premium and the more protection you get.

    Property Value

    If the property you are planning to insure is rare and unique, the premium rates will be high. The more valuable a property is, the higher the potential loss. 

    At the end of the day, you can take every little detail into consideration while deciding how much you will have to pay for your insurance coverage. But the biggest factor in determining the cost of your inland marine insurance is the total value of the assets you wish to protect. 

    Best Insurance Companies for Inland Marine Insurance

    If you’re looking for inland marine insurance relevant to your business, here are some of the top industry specific insurance providers.

    Carrier Relevant For Pros Cons
    The Hartford Overall value Variety of policies 24/7 service Comprehensive policy No online quotes Only purchasable through an agent
    Chubb Contractor’s choice Coverage for firms as well as individuals Covers owned and leased equipment Includes special risk management coverage Not tech friendly Only purchasable through an agent
    Jewlers Mutual Perfect for jewelry

    Adjustable deductibles Applicable for individuals and businesses

    Instant online quotes

    Caters to jewelry insurance Lacks proper online services
    All state Best choice for photographers

    Purchasable online

    Includes full-service package

    Must be purchased as a bundle

    Limited policy customization

    Food Liablity Great for food truck businesses

    Policies start from $299 per year

    Easy to use online features

    No refund policy Limited coverage limits

    Note that these features and services can be subject to change. Reach out to your local insurance agent for any additional information. 

    In Conclusion

    While shopping for inland marine insurance, it’s important for you as a business owner to look into the scope of the coverage, which industries it’s suited for, and what specific items or risks are included or excluded. Along with these you need to consider the available policy rates and your financial standing as well. Covering those questions will help you make an informed decision in your policy purchase. 

    Of course, you can always consult with an industry expert to make sure you get the right insurance coverage for the safety of your business assets. 

     

    Did you find this blog useful? If you’re looking for more information regarding inland marine insurance you can find an agent near you. 

    Frequently Asked Questions (FAQs)

    In what situations does inland marine insurance come in handy?

    Instances include: 

    • Transporting cargo and goods across land 
    • Owning property that requires constant relocation for business purposes 
    • Shipping and delivering high value items or a large number of low value items 

    In addition to these, if you wish to protect your business assets from potential loss, damage, theft and liabilities during transport, then inland marine insurance is a must. 

    2. Does a customized BOP provide the same level of coverage as inland marine insurance?

    A customized BOP is very likely to provide coverage for any inventory that you have stored off-site. But the coverage amounts for transporting high value goods or equipment will be limited in that policy. Therefore, inland marine insurance is a better option to provide sufficient coverage for your assets. 

    3. Is it possible to add an endorsement to my existing inland marine coverage?

    Yes. You can choose an endorsement to add to, remove, or modify your insurance coverage as per your needs. Some of the common endorsements for inland marine are floater installation, builder’s risk, and moto-truck cargo liability. 

    Consult with your insurance agent for all the available information regarding the endorsements suitable for your business.

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