NATIONWIDE INLAND MARINE DEFINITION

(August 2018)

INTRODUCTION

It is fairly easy to identify and explain certain coverages, like commercial property, commercial automobile, and commercial general liability. The same cannot be said about inland marine. Inland marine coverages have things in common with all these lines of insurance and others but are still different. Inland marine insurance began as an extension of ocean marine insurance. Many customers needed coverage for property that moved on land between the dock at the seaport and the final inland destination. Ocean marine coverage forms did not insure these exposures because the property was no longer on or around water or under an ocean marine shipping document. On the other hand, the property had not yet become a traditional property exposure because it was not at a specific or described location. Inland marine insurance coverage was developed to meet the need for insurance coverage on property in transit on or over land and at other than fixed locations.

Related Article: Who Needs Inland Marine Coverage?

Despite this obvious need, the insurance industry struggled to clearly understand the meaning of inland marine. In 1933, the National Association of Insurance Commissioners (NAIC) attempted to resolve the dilemma and ambiguity by publishing the Nationwide Inland Marine Definition It was revised in 1953, 1976, and most recently 1996. The 1996 edition is the latest version and remains in effect. While it has not been approved by all states, most states refer to it to establish standards for various regulations. As a result, it indirectly serves as a guide for all insurance companies that write inland marine coverage.

PURPOSE

The Nationwide Inland Marine Definition identifies the types of coverages and risks eligible, classified, or referred to as marine, inland marine, or transportation by the separate and different state laws. However, it does not list or schedule the specific types of risks or coverages that may be written or classified under the insuring powers of these lines of insurance. In addition, the definition is not intended to mean that the risks and coverages described are strictly marine, inland marine, or transportation lines of insurance in every case or situation.

Note: The NAIC registered a copyright to this definition and is the only party authorized to change it.

APPLICATION

Marine or transportation insurance coverage forms, floaters, and policies fall into six distinct categories of property that are considered inland marine and then a short listing of property that is never inland marine.

The first three categories consist of imports, exports, and domestic shipments and are similar because they primarily cover property in transit.

A. IMPORTS

Imports can be covered as inland marine wherever they are and without a time limitation, if they are not merged or co-mingled with the purchaser's general stock or merchandise. The insurance that covers the import must include transit coverage. Coverage ends when any of the following occurs:

The imported product is sold but coverage ends only after it has been delivered by or on behalf of the importer.
The imported product is merged with the importer’s other merchandise as ready for sale or distribution.
The imported product is delivered to the importer’s location for manufacturing, processing, or other types of changes to the products form or appearance. This applies even if the product is delivered to a premises of another.

Example: Phil’s Liquors imports a fine wine directly from a small winery in France. He can insure the wine under a marine policy once it leaves the American dock, while it is being transported to his warehouse and while it is in special storage awaiting import and tax stamps. Once the bottles are marked, Phil moves them from the special area and adds them to the rest of his merchandise and inventory placed for sale. At that point, the wine becomes part of the general merchandise and is no longer insurable as inland marine.

B. EXPORTS

Exports can be covered as inland marine wherever they are located and without a time limitation, if they are not merged or co-mingled with the purchaser's general stock or merchandise and are subject to transportation. An item becomes an export when it is identified as such or when it is prepared for export. The export retains that identity until the item becomes part of the domestic trade. Once classified as domestic, the inland marine coverage specific to the type of product then takes over. There are certain types of product, such as cotton, that have exemptions.

Example: Jerald Products manufactures microscopes and exports 80% of the products it manufactures. Its storage warehouse has a specific area designated for export shipments physically separated from the area it uses for domestic shipments. The product to be exported is insured under an inland marine coverage form from the time manufacturing is complete to the time the product is taken to the shipping dock. At that point, the product is no longer covered as inland marine but instead must be covered as ocean marine. The commercial property coverage form or policy insures the products designated for domestic shipment until they are placed on a vehicle for transport.

C. DOMESTIC SHIPMENTS

Domestic shipments can be covered as inland marine while they are in transit. They cannot be covered as inland marine if the same policy also covers the premises.

Shipments of consigned goods are treated slightly different. They are eligible as inland marine while in transit, while in the custody of others, and while being returned. They are also eligible while at a fixed location but only, if the property’s owner does not own, lease, or operate the fixed location.

Example: Karen’s Handiwork Creations are sold on consignment to Waldo’s Specialties. Waldo picks up the items and delivers them to his stores, where they are held for sale for six weeks. He returns to Karen any merchandise not sold in that time period. When Waldo has Karen's merchandise in his possession, it is considered inland marine. When Waldo returns the consigned goods to Karen, they are no longer inland marine and she must cover them under her commercial property coverage.

AAIS Transportation Coverage Forms

ISO Annual Transit Coverage Form

ISO Motor Truck Cargo Carriers Coverage Form

ISO Motor Truck Cargo Owners Coverage Form

The last three categories are specific to the type of property covered. In other words, the property description determines the coverage, not the locations and type of movement involved.

D. BRIDGES, TUNNELS, AND OTHER INSTRUMENTALITIES OF TRANSPORTATION AND COMMUNICATION (excluding buildings, their improvements and betterments, furniture and furnishings, fixed contents, and supplies held in storage)

The property this category includes is not itself mobile in nature. However, it qualifies for treatment as inland marine because it is necessary to or instrumental in moving other property. This category applies to any property that helps move cargo or information.

This classification's title has an important exclusion. Inland marine coverage forms and policies must not cover buildings and other property listed as excluded in the title. For example, a bridge is covered but adjacent buildings or other structures that provide services to it are not. Also, a radio tower and all its radio equipment are covered but the building that contains the equipment is not.

This definition includes the following specific kinds of property:

1. Bridges, tunnels, and similar property that assists in transporting cargo

Auxiliary equipment and service property are included but buildings, furnishings, improvements, betterments, or storage facilities are not.

2. Piers, wharves, docks, slips, dry docks, and marine railways

An inland marine coverage form may insure a pier, but it cannot be used to cover a restaurant or other permanent structure that is built on the pier.

3. Pipelines

Pipelines transport oil, gas, and other petroleum products from one point to another. They are treated as part of the transportation process, even though they are not themselves mobile in nature. Only the pipeline itself and equipment that supports it is inland marine. This definition excludes property at manufacturing, producing, refining, converting, treating, and conditioning plants. Commercial property coverage forms and policies must be used to insure that property.

4. Power transmission, telephone, and telegraph lines

These lines transport power or information and are eligible. The buildings that generate, convert, or transform power or information are not eligible for coverage. The stations, substations, and exchanges are also not eligible.

5. Radio and television communication equipment

This equipment transmits information and is considered inland marine. In addition, transmission towers, antennas, and equipment necessary to operate and control the use of the towers and antennas are also inland marine. The buildings that are adjacent to towers are not inland marine even though the equipment to transmit the communication is in the building.

AAIS Broadcasting Equipment and Tower Coverage Forms

ISO Radio and Television Towers and Equipment Coverage Form

6. Equipment used to load, unload, and assist in transporting goods

This property is inland marine. Outdoor cranes, loading bridges, and similar or related equipment are part of this definition.

AAIS Contractors Equipment Coverage Forms

ISO Contractors Equipment Coverage Form

E. PERSONAL PROPERTY FLOATER RISKS

Floater policies cover property that is mainly personal in nature and is subject to being moved from one place to another. Covered property may be situated primarily in a residence but it may travel with the insured. The following floaters are considered inland marine:

1. Personal Effects Floaters

These insure articles that usually accompany travelers while away from home. Coverage is on an "all risk" type perils or special causes of loss basis.

Related Article: Personal Articles Floater

2. Personal Property Floaters

These are usually issued to households and insure all furniture and household effects wherever they are located. Coverage is on an "all risk" type perils or special causes of loss basis.

Related Article: Personal Articles Floater

3. Government Service Floaters

These insure personal articles (including furniture) that accompany persons in government service while they are away from home. Coverage is on an "all risk" type perils or special causes of loss basis. They are similar to Personal Effects Floaters, but coverage is usually broader and territorial limits can be adjusted to match assignments or circumstances.

4. Personal Fur Floaters

These cover fur coats and other garments trimmed with fur. Coverage is on an "all risk" type perils or special causes of loss basis.

Related Article: Personal Jewelry and Furs Insurance

5. Personal Jewelry Floaters

These cover jewelry and precious stones. Coverage is on an "all risk" type perils or special causes of loss basis.

Related Article: Personal Jewelry and Furs Insurance

6. Wedding Present Floaters

These cover wedding presents received before the wedding ceremony and for a limited period of time afterward. Coverage ends 90 days after the wedding date because they are no longer inland marine. At that point, a homeowners or renters policy is needed to cover the property.

Related Article: Overview of Wedding Insurance Coverage

7. Silverware Floaters

These are designed to insure silverware and related property. Coverage is on an "all risk" type perils or special causes of loss basis. Coverage is usually written as an endorsement to a homeowner's policy.

8. Fine Arts Floaters

These cover works of art on a "valued" basis. Coverage is on an "all risk" type perils or special causes of loss basis.

9. Stamp and Coin Floaters

These cover stamp and/or coin collections. Coverage is on an "all risk" type perils or special causes of loss basis.

Related Article: Stamp and Coin Insurance

10. Musical Instruments Floaters

Coverage applies to only the actual instruments themselves. Electrical equipment used to listen to music and equipment used to watch performers is not eligible.

Related Article: Musical Instruments Insurance

11. Mobile Articles, Machinery, and Equipment Floaters

These cover described property of a mobile or floating nature that is usual and customary to a household. Motor vehicles used on highways and other similar vehicles are not covered. However, when a trailer, semi-trailer or motorhome is hauled by a tractor that is not designed for highway use, it is covered. Furniture and fixtures not normally used away from the location where such property is usually kept is not inland marine.

12. Installment Sales and Leased Property Policies

These cover property that is usual and incidental to a household and has been sold under a conditional contract of sale, partial payment contract, or installment sales contract or lease. Motor vehicles designed for highway use sold under these or similar terms or conditions are not eligible. Policies must cover the transit exposure and may not extend past the time when the seller’s interest in the property ends.

AAIS Installment Sales Coverage Form

ISO Installment Sales and Leased Property Coverage Form

13. Live Animal Floaters

Related Article: ISO Animal Mortality Coverage Form

F. COMMERCIAL PROPERTY FLOATER RISKS

Business is not always conducted at fixed locations. Business owners and/or their employees regularly go out to find customers, deliver merchandise, or obtain goods and supplies. These exposures create the need to cover property that also goes with the insured or its employees. The following coverage forms, policies, and floaters provide such coverage and are considered Inland Marine.

1. Radium Floaters

These insure against loss or damage due to radioactive contamination. They are usually referred to as radioactive contamination insurance.

2. Physicians and Surgeons Instrument Floaters

These cover medical instruments that move from place to place. They may be extended to include property usual and incidental to a medical or dental office.

ISO Physician and Surgeons Equipment Coverage Form

AAIS Physicians and Dentists Equipment Coverage

3. Patterns and Dies Floaters

These cover patterns and dies that move between different machine shops (and similar and related facilities) for processing and repair.

AAIS Patterns and Dies Floater Coverage Form

ISO Patterns and Dies Coverage Form

4. Theatrical Floaters

These cover only property that usually moves and is transported with a traveling troupe. It does not cover buildings, improvements, or betterments to a leased building or any furniture and fixtures that do not accompany the troupe.

ISO Theatrical Property Coverage Form

AAIS Theatrical Property Coverage

5. Film Floaters

These cover the completed film, sound records, completed negatives and positives, and the necessary re-shooting of the film if it is destroyed. The builders risk exposure during the production necessary to rebuild sets can also be covered.

ISO Film Coverage Form

AAIS Negative Film Coverage

6. Salesmen’s Samples Floaters

These cover product samples kept by salespersons while traveling.

AAIS Sales Representatives Floater Coverage Form

ISO Salespersons Samples Coverage Form

7. Exhibition Floaters

These cover property while on exhibition and during transit to or from such exhibitions.

AAIS Exhibition Floater Coverage Form

ISO Exhibition Coverage Form

8. Live Animal Floaters

Related Article: ISO Animal Mortality Coverage Form

9. Builders Risk and Installation Floaters

These can cover the interest of the owner, seller, or contractor. Machinery, equipment, or building materials and supplies used in (or during the course of) installation, testing, construction, renovation, or repair are considered inland marine. Coverage applies where the described work takes place, in transit, and during temporary storage of property intended to be part of the construction project. It is no longer inland marine for the owner when it accepts the building as complete or for the contractor/seller when it no longer has an interest in the property.

The coverage provided must be for perils or causes of loss in addition to the fire and extended coverages perils or causes of loss.

Note: Extended Coverage is an old insurance term that essentially includes basic perils or causes of loss.

AAIS Builders Risk Coverage Forms

AAIS Installation Floater Coverage Forms

ISO Builders Risk Coverage Form

ISO Installation Coverage Form

10. Mobile Articles, Machinery, and Equipment Floaters

These cover described property of a mobile or floating nature but only when the party or parties that control it plans to use it for its intended purpose.

This property is not inland marine during the manufacturing process, while held for sale, or while on consignment.

These floaters cannot cover motor vehicles used on highways and other similar vehicles. However, there are two exceptions.

It is inland marine if a tractor not designed for highway use hauls that motor vehicle.
A snow plow built to plow highways is inland marine if it is designed to only plow highways.

Furniture and fixtures not normally used away from the location where it is usually kept is not inland marine.

AAIS Contractors Equipment Coverage Forms

AAIS Mobile Equipment Floater Coverage Form

ISO Contractors Equipment Coverage Form

ISO Machinery and Equipment Coverage Form

11. Property Left with a Business for Storage, Repair, or Processing

This property is considered to be with a bailee. Bailees have responsibility and legal liability for property left in their care. This exposure is considered inland marine and can be covered by a bailees coverage form or policy that includes the customer’s property when on the bailee’s premises and when in transit. The property the bailee owns is not inland marine.

AAIS Bailee Customers Floater Coverage–Dry Cleaners and Laundry Coverage Form

AAIS Miscellaneous Bailee–Processor Floater Coverage Form

ISO Bailees Customers Coverage Form

12. Installment Sales and Leased Property

These insure property sold under conditional sale contracts, partial payment contracts, installment sales contracts, and leased property. They do not cover motor vehicles designed and licensed for highway use. Regardless of the property or contract involved, it is inland marine only if it covers such property while in transit and the interest of the seller or lessor up to the date its interest ends. However, machinery and equipment sold under certain contracts that involve "lease back" arrangements or terms is not inland marine.

AAIS Installment Sales Coverage Form

ISO Installment Sales and Leased Property Coverage Form

13. Garment Contractors Floaters

These cover garments transported during the manufacturing process. They cover the garments wherever they are as well as in transit between locations.

14. Furriers or Fur Storage Customers Policies

These cover customers’ furs brought to a bailee for storage, cleaning, or repair. They cover the fur owners’ interests, subject to each customer receiving a certificate or receipt for the article that the furrier or fur storage business issues.

Furriers Customers Custody Policy

ISO Furriers Customers Coverage Form

15. Accounts Receivable and Valuable Papers and Records Policies

These protect the insured if important records and documents are destroyed.

ISO Accounts Receivable Coverage Form

AAIS Accounts Receivable Coverage

ISO Valuable Papers and Records Coverage Form

AAIS Valuable Papers and Records Coverage

16. Floor Plan Policies

These cover property for sale while in the possession of dealers under a specialized financing agreement with a particular bank or lending institution. The covered property must be identified as encumbered to the financial institution and the dealer must not be able to sell it unless the financial institution releases the encumbrance. Property must be covered when in transit and coverage for the dealer ends when its financial interest ends. Automobiles and motor vehicles are not eligible. In addition, merchandise that is not encumbered property is not inland marine.

ISO Floor Plan Coverage Form

AAIS Floor Plan Merchandise Coverage

17. Sign and Street Clock Policies

Neon signs, automatic, or mechanical signs, and street clocks are covered but only while being used in the way intended.

ISO Signs Coverage Form

AAIS Sign Coverage

18. Fine Arts Policies

A variety of legitimate works of art of rarity, historical value, or artistic merit are covered. Coverage applies to such property held by museums, galleries, universities, businesses, municipalities, and other interests.

AAIS Fine Arts Coverage Forms

AAIS Museum Collection Coverage

ISO Commercial Fine Arts Coverage Form

ISO Fine Arts Dealers and Galleries Coverage Form

ISO Fine Arts Museums Coverage Form

19. Policies Issued to Dealers of Personal Property

Personal property considered eligible for personal property floaters when owned is also considered inland marine for dealers that sell such property as follows:

a. Musical Instrument Dealers Policies

Property consisting primarily of musical instruments and their accessories are covered. Sound reproduction equipment such as radios, televisions, and music players are not musical instruments.

ISO Camera and Musical Instruments Dealers Coverage Form

AAIS Camera and Musical Instrument Dealers Coverage

b. Camera Dealers Policies

Cameras and their accessories are covered.

ISO Camera and Musical Instruments Dealers Coverage Form

AAIS Camera and Musical Instrument Dealers Coverage

c. Furriers Dealers Policies

Furs and fur-trimmed garments are covered.

Furriers Block Policy

ISO Furriers Block Coverage Form

d. Equipment Dealers Policies

All types of mobile construction and agricultural equipment are covered but only if they are not licensed and are not designed to be used on roads.

ISO Equipment Dealers Coverage Form

AAIS Mobile Equipment Dealers Coverage

e. Stamp and Coin Dealers Policies

Philatelic and numismatic property are covered.

f. Jewelers Block Policies

Owned and non-owned stock in trade are covered at owned and other premises and while in transit between such locations. Most other property coverage forms and policies exclude this property.

ISO Jewelers Block Coverage Form

Jewelers Block Policy

AAIS Jewelry Dealers Coverage

ISO Jewelers Block Coverage Form

g. Fine Arts Dealers Policies

These cover all types of fine arts.

AAIS Fine Arts Coverage Forms

AAIS Museum Collection Coverage

ISO Commercial Fine Arts Coverage Form

ISO Fine Arts Dealers and Galleries Coverage Form

ISO Fine Arts Museums Coverage Form

Note: These dealer coverage forms can also cover money kept in safes or vaults on the premises. They can also be extended to include furniture, fixtures, tools, machinery, patterns, molds, dies, improvements, and betterments of an insured tenant in a building usually considered part of business personal property.

20. Wool Growers Floaters

These provide coverage to sheep owners and to warehouse operations that store wool. They also cover wool while in transit.

21. Domestic Bulk Liquids Policies

These cover both the storage tanks and the domestic bulk liquids that are stored in them.

Related Article: ISO Tank Storage Coverage Form

22. Difference in Conditions (DIC) Coverage

The coverage provided is the difference between the exclusions in the underlying policy and those in the difference in conditions coverage form or policy. The DIC cannot provide fire or extended perils coverage.

AAIS Difference in Conditions Form–Property Coverage Part

ISO Difference in Conditions Coverage Form

23. Electronic Data Processing (EDP) Policies

These provide "all risk" or special causes of loss type coverage on equipment, software, and extra expense as a result of or failure of such equipment caused by a covered peril or cause of loss.

AAIS Electronic Data Processing Equipment and Business Computer Coverage Forms

ISO Computer Systems Coverage Form

Note: Items 22 and 23 above are authorized and treated as inland marine to meet market demand for the coverage. Not all states recognize DIC or EDP as inland marine. Those states require that filings be made, and coverage provided for that property on commercial property coverage forms and policies.

PROPERTY/ITEMS NOT CONSIDERED INLAND MARINE

The following items are not considered or treated as inland marine, unless specifically described and provided for in a specific category listed above:

A. Storage of the insured’s merchandise. An exception within a definition above may be provided.

B. Any property that is being manufactured. This applies only when it is the manufacturer’s property and is on the manufacturer’s premises

C. Furniture and fixtures are not inland marine. Improvements and betterments to buildings are also not inland marine.

D. Monies and/or securities that are in safes, vaults, safety deposit vaults, banks, or on the insured’s premises are not inland marine. The only exception that may be considered is when it is in transit.