2.6 Inland Marine: Personal Floaters, Commercial Floaters & the Nationwide Marine Definition
Key Takeaways
The Nationwide Marine Definition, last revised by the NAIC in 1976, lists six classes that may be written as marine: imports, exports, domestic shipments, instrumentalities of transportation and communication, personal property floater risks, and commercial property floater risks.
Floaters follow property wherever it goes and are usually written on an open-perils basis, which avoids the homeowners theft sublimits on jewelry, furs, firearms and silverware.
Scheduled floaters list each item with its own limit; blanket floaters cover a class of property under one limit, often with a per-item maximum.
Bailee's customers coverage pays for customers' goods in a bailee's care regardless of the bailee's legal liability, unlike a legal liability form.
Instrumentalities of transportation and communication include bridges, tunnels, piers, wharves, pipelines, power and phone lines, and radio or television towers.
2.6 Inland Marine: Personal Floaters, Commercial Floaters & the Nationwide Marine Definition
The Hawaii adjuster outline lists three inland marine topics: personal floaters, commercial floaters, and the Nationwide Definition. Inland marine grew out of ocean marine cargo insurance. When goods moved inland by rail and truck, owners wanted the same flexible transit coverage, and marine underwriters developed forms for property in transit and property that moves from place to place. Hawaii's statutory definition of marine and transportation insurance (HRS § 431:1-207, see 7.1) expressly includes personal property floater risks, jewelry and precious metals, and bridges, tunnels and other instrumentalities of transportation and communication.
The Nationwide Marine Definition
Because inland marine forms are often broader and less regulated than fire forms, insurers once used "marine" labels to avoid fire rate regulation. In response, the National Association of Insurance Commissioners (NAIC) adopted the Nationwide Marine Definition, last revised in 1976. It lists the types of property that may be written as marine insurance:
| Class | What it covers | Examples |
|---|---|---|
| Imports | Goods in transit from a foreign country until they reach the final destination | Furniture shipped from Asia to a Honolulu retailer |
| Exports | Goods prepared for or in the course of export | Coffee packed for shipment to Japan |
| Domestic shipments | Goods in transit within the United States, including storage incidental to transit | Inter-island barge or truck shipments |
| Instrumentalities of transportation and communication | Fixed property used in transportation or communication | Bridges, tunnels, piers, wharves, docks, pipelines, power and telephone lines, radio and TV towers |
| Personal property floater risks | Individuals' movable property | Jewelry, furs, cameras, musical instruments, fine art, stamp and coin collections |
| Commercial property floater risks | Business property that moves or is in the hands of others | Contractors' equipment, installation risks, property of bailees, accounts receivable, signs |
If the property does not fit one of these classes, it must be written as property (fire) insurance, not inland marine.
Personal Floaters
A floater "floats" with the property: coverage applies wherever the property is located, usually worldwide.
Personal Articles Floater (PAF)
The personal articles floater (or the scheduled personal property endorsement attached to a homeowners policy) covers listed classes of valuable personal property:
- jewelry, watches and furs;
- cameras and musical instruments;
- silverware, goldware and pewterware;
- fine arts, postage stamps and rare coins;
- golfer's equipment.
Key features an adjuster applies:
- Open perils — the form covers risks of direct physical loss except listed exclusions such as wear and tear, insects or vermin, war, and nuclear hazard. Fine arts are typically excluded from breakage unless caused by specified perils such as fire or theft.
- No homeowners sublimits — scheduling a $9,000 ring removes it from the $1,500 homeowners theft limit on jewelry (see 2.2).
- Scheduled vs. blanket — scheduled items each carry an agreed limit, often supported by an appraisal or bill of sale. Blanket coverage covers a class (for example, "all jewelry") under one amount and caps any single item.
- Valuation — most scheduled items are paid at the least of the actual cash value, the cost to repair or replace, or the scheduled amount. Fine arts are usually written on an agreed value basis and pay the scheduled amount for a total loss.
- Mysterious disappearance is generally covered because the form is open perils, which makes the PAF the right answer for a ring lost on the beach at Waikīkī.
Personal Property Floater (PPF)
A personal property floater covers an individual's unscheduled household personal property on an open-perils basis worldwide. It is less common today because homeowners Coverage C provides similar protection, but the class remains part of the Nationwide Marine Definition.
Commercial Floaters and Transit Forms
Commercial inland marine coverages fall into two groups: filed classes, whose forms and rates are filed with regulators (such as camera and musical instrument dealers, equipment dealers, film, floor plan, jewelers block, mail, physicians' and surgeons' equipment, signs, theatrical property, valuable papers, and accounts receivable), and nonfiled classes, which are individually underwritten (such as contractors' equipment, builders risk/installation, transit, and bailee forms).
| Form | Purpose | Adjuster point |
|---|---|---|
| Contractors equipment floater | Mobile equipment and tools (excavators, compressors) wherever located | Scheduled for large items, blanket for small tools; theft from unattended jobsites is a frequent claim |
| Installation floater | Materials and equipment being installed by a contractor until the work is accepted | Coverage ends at owner acceptance |
| Builders risk | A building under construction (written as property or inland marine) | Collapse, theft of materials and windstorm are common claims |
| Bailee's customers | Customers' property in the care of a bailee (dry cleaner, appliance repair shop, laundromat) | Pays regardless of the bailee's legal liability, unlike a bailee's legal liability form |
| Transit (motor truck cargo, trip transit) | Goods being shipped by the owner's trucks or by carriers | Carrier legal liability is limited; owner's cargo form pays the owner directly |
| Accounts receivable | Sums the insured cannot collect because records were destroyed | Requires comparison of collections before and after the loss |
| Valuable papers and records | Cost to research, replace or restore documents | Irreplaceable items may be valued at a scheduled amount |
| Equipment dealers / jewelers block | Dealers' stock and customers' property, on and off premises | Jewelers block has strict protection and record-keeping conditions |
| Electronic data processing (EDP) | Computers, media and data | Often covers mechanical breakdown and power surge, which commercial property excludes |
| Signs | Neon, electric and other outdoor signs | Fills the low signs limit in property forms |
Bailee Coverage in Practice
A bailment exists when one person (the bailor) leaves property with another (the bailee) for a purpose — repair, cleaning, storage. A bailee's legal liability form pays only if the bailee is legally liable for the loss. A bailee's customers form pays for the customers' goods even when the bailee was not negligent. Example: an electrical fire caused by a utility surge destroys customers' garments at a Kailua dry cleaner. The cleaner was not negligent, so a legal liability form pays nothing. A bailee's customers form pays the customers' losses up to its limit and helps preserve customer goodwill.
Adjusting Inland Marine Claims
- Identify the class. The form, perils and valuation depend on whether the item is a personal article, contractors' equipment, or goods in transit.
- Check the schedule. For scheduled forms, confirm the item description, serial number and amount. An unscheduled item may fall under blanket coverage or not at all.
- Apply the conditions. Transit forms often exclude losses from unattended vehicles unless the vehicle was locked and shows visible signs of forced entry. Jewelers block forms require stock records and protective devices.
- Coordinate with other policies. Homeowners Coverage C excludes articles that are separately described and specifically insured elsewhere, regardless of the limit, so a scheduled ring is paid by the floater alone.
Which of the following is listed as an 'instrumentality of transportation and communication' under the Nationwide Marine Definition?
A manufacturer's raw materials stored in its own warehouse
A homeowner's furniture kept permanently at a primary residence
A radio broadcast tower and the pier where inter-island barges dock
A retail store's inventory held for sale at its only location
An insured lists a $9,000 diamond ring on a personal articles floater. While swimming at the beach, she realizes the ring is gone and cannot say how it was lost. How does the floater respond?
It pays up to the scheduled amount, because the open-perils floater covers mysterious disappearance
It pays nothing, because loss without a known cause is excluded on every property form
It pays $1,500, the homeowners theft limit for jewelry, because the floater follows the homeowners special limits
It pays only if a police report shows the ring was stolen by force
A power surge from the utility starts a fire that destroys customers' clothing at a dry cleaner. The cleaner was not negligent. Which coverage pays the customers' losses even though the cleaner is not legally liable?
The cleaner's commercial general liability policy
Bailee's legal liability coverage
The customers' own personal auto policies
Bailee's customers coverage
Sections you finish are checked off in the contents.