What is inland marine insurance? Key questions to ask your agent

Despite the name, inland marine insurance does not cover ocean cargo. Instead, it is designed to protect property that may be away from your premises or in transit. While a commercial property policy typically covers items located on your premises, inland marine coverage is often used for equipment and property that move between job sites, travel on trucks, or are otherwise exposed off-site.

Coverage can vary significantly by carrier, so it is important to review the policy carefully before changing insurers or assuming your current coverage applies in the same way with another carrier.

Inland marine insurance may cover mobile equipment, stock in transit, tools, and other large equipment transported on trucks. For this article, we will focus on mobile equipment.

Why do I need an inland marine policy if I already have a property policy?

A property policy generally covers items on your premises, but coverage for equipment off-site may be limited or excluded. Inland marine coverage is intended to protect equipment while it is off-premises and, in some cases, may also provide coverage on the premises with a different deductible than the property policy.

In many cases, inland marine policies may have lower deductibles and, depending on the industry and carrier, potentially more favorable rates. Some property policies also exclude mobile equipment altogether.

What qualifies as mobile equipment?

Mobile equipment typically refers to items that are self-propelled or otherwise capable of moving away from the property. Common examples include:

• Forklifts
• Loaders
• Skidders
• Feller bunchers and harvesters
• Golf carts
• Floor sweepers
• Man lifts

Some policies may also include items such as snowplows or generators, particularly when they are transported on trucks or used off premises.

Can I list my business personal property under inland marine coverage?

Possibly, but this should be approached with caution. Some inland marine policies define very specific types of property that qualify for coverage. If business personal property is placed on the wrong policy form, it can create unexpected gaps at the time of a property loss and may even lead to a coinsurance penalty.

Can I self-insure this exposure?

In some cases, yes. However, lenders may require coverage if there is an outstanding loan on the equipment. Do not assume an item is covered under your property policy simply because your lender accepts a certificate of insurance.

It is also important to compare the equipment’s value to the deductible. If your deductible is $5,000, it may not be cost-effective to insure equipment valued below that threshold, or even below $10,000, depending on the situation.

Can I get replacement-cost coverage for inland marine property?

With some carriers, yes. Replacement cost coverage is often available for newer equipment, typically units five years old or newer.

Is my equipment covered in the woods?

That depends on the policy language. Some carriers use forms that include specific checkboxes or endorsements for exposures such as use in the woods, leased equipment, or other special conditions. If these features are not specifically included, coverage may not apply.

How do I determine the actual cash value of my equipment?

The best approach is to obtain an insurance appraisal. An appraiser can help determine replacement cost and actual cash value for buildings, contents, and inland marine equipment.

You can also consult a local equipment supplier. Actual cash value is like a totaled vehicle settlement: it reflects the market value of a comparable unit at the time of loss.

Will the carrier pay the value I list on the policy?

Not necessarily. In many cases, clients are surprised to learn that the carrier determines actual cash value based on market conditions, depreciation, and the unit’s condition at the time of loss. If the scheduled value is significantly higher than the carrier’s valuation, the claim payment may be lower than expected.

What else should I ask my agent?

One important question is whether your state requires liability coverage for equipment that travels on public roads. In some states, once a loader or golf cart enters a public road, it may be treated as an automobile for liability purposes.

Ask your agent whether your policy includes the appropriate auto symbols or endorsements for your exposure, and confirm how your state defines these requirements.

We never take our units on the road – are we safe?

If that is truly the case, your exposure may be limited. However, equipment sometimes crosses public roads unexpectedly, such as when a unit is used to clear snow, move between job sites, or travel across a nearby road to reach a work area.

Final thoughts

Understanding the details of inland marine coverage can help avoid surprises at claim time. A thoughtful conversation with your agent can ensure that your equipment and unique exposures are appropriately covered.

Kevin Mershimer, CIC, CRM

Marsh Forest products practice