14.3 Inland Marine and Nationwide Marine Definition

Origins and the Nationwide Marine Definition

Inland marine insurance is the land-based cousin of ocean marine. Originally ocean marine policies covered cargo only while on the water; as goods moved inland by rail and truck, marine underwriters extended coverage over land — hence inland marine. To define the boundary between marine and fire/property writers, the industry adopted the Nationwide Marine Definition (last major revision 1976), which lists the classes insurers may write as marine.

The Definition permits marine coverage for:

• Imports and exports — goods in foreign trade.
• Domestic shipments — property in transit within the country.
• Instrumentalities of transportation and communication — bridges, tunnels, piers, pipelines, power transmission lines, radio/TV towers.
• Personal property floater risks — movable personal property.
• Commercial property floater risks — specified movable business property such as contractors equipment and bailee property.

Filed vs. Non-Filed Classes

Inland marine classes split into two groups, a frequent exam point:

• Filed (controlled) classes — high-volume, fairly standard exposures for which ISO files standard forms and rates with the state. Examples: accounts receivable, valuable papers and records, signs, contractors equipment, equipment dealers, film, camera, and physicians/surgeons equipment.
• Non-filed (uncontrolled) classes — unusual or high-value risks where insurers use manuscript (custom) forms and judgment rating. Examples: jewelers block, fine arts collections, cargo, bailee customers, and difference-in-conditions style covers.

Most inland marine forms are written on an open-perils (all-risk) basis with no coinsurance clause. Many use agreed value or actual cash value rather than replacement cost.

This flexibility is exactly why specialized, mobile, or high-value property is steered to inland marine instead of a standard commercial property form. ISO supports the program with the Commercial Inland Marine Conditions (CM 00 01) plus a coverage form for each class, so on the exam an inland marine answer usually signals movable, in-transit, or bailee property.

Common Inland Marine Floaters

Key concept - bailee: a bailee holds another's property for a purpose (cleaning, repair, storage). A bailee floater covers the bailee's legal liability for that customer property, even though the bailee does not own it. Two further forms round out the program: the Builders Risk inland marine form covers structures during construction, while the Jewelers Block and Furriers Block policies blanket a dealer's stock, customers' goods left for repair, and property in transit on an open-perils basis.

Transit Forms and How Floaters Settle

Three transit-oriented forms confuse students, so separate them carefully:

• Transportation / Trip Transit floater — covers the shipper's own goods moving by common carrier, parcel service, or the insured's own vehicle. It protects the owner of the goods.
• Motor Truck Cargo - Owners — narrower; covers the trucker's own cargo on the trucker's vehicles.
• Motor Truck Cargo - Carriers — covers a carrier's legal liability for other people's goods it hauls for hire.

Floaters are named because coverage floats with the property wherever it travels rather than being tied to a fixed location.

Valuation worked example: a contractors equipment floater settles a stolen 5-year-old loader at actual cash value. If replacement cost is $80,000 and the useful life is 10 years (straight-line), depreciation is 5/10 x $80,000 = $40,000, so ACV = $80,000 - $40,000 = $40,000, minus the deductible. A floater written on an agreed value basis would instead pay the scheduled amount with no depreciation.

Bailee Floaters and the Common Carrier Distinction

Inland marine grew from ocean marine to cover goods over land and instrumentalities of transportation and communication (bridges, tunnels, radio towers, pipelines). A heavily tested subset is the bailee floater: a business holding customers' property for service — a dry cleaner, a repair shop, a fur storer — insures that property on a bailee form regardless of the bailee's legal liability, paralleling garagekeepers in the auto world.

Distinguish carrier liability levels: a common carrier is liable for cargo as a near-insurer (with limited exceptions like acts of God, public enemy, inherent vice, public authority, and shipper's fault), while a contract or private carrier is liable only for negligence. Motor-truck cargo and transit floaters insure these exposures, and the exam tests which carrier classification carries the broader liability.

Personal Inland Marine — The Personal Articles Floater

On the personal side, the Personal Articles Floater (PAF) schedules high-value items the homeowners Coverage C sublimits cannot fully protect — jewelry, furs, fine art, silverware, cameras, musical instruments, stamp and coin collections. The PAF provides open-peril, worldwide coverage on an agreed-value basis (no coinsurance) and usually waives the deductible, which is why the exam recommends it for a client whose jewelry exceeds the $1,500 theft sublimit. Newly acquired items receive limited automatic coverage (often 25–30 days) until reported.