14.3 Inland Marine and Nationwide Marine Definition
Key Takeaways
- Inland marine grew out of ocean marine; the Nationwide Marine Definition lists the eligible classes - transit, instrumentalities of transportation/communication, and floater risks.
- Forms are filed (controlled, e.g., Accounts Receivable, Contractors Equipment, Motor Truck Cargo) or non-filed (free-rated floaters like jewelers block and fine arts).
- Floaters are typically open-perils, no coinsurance, often agreed/scheduled value, and follow mobile property anywhere - unlike fixed-location commercial property.
- Bailee floaters cover customers' property in the insured's care, custody, or control - a gap left by CGL and property forms.
From ocean marine to inland marine
Marine insurance is the oldest line. Ocean marine covered ships and cargo at sea; as goods moved inland by rail and truck, insurers extended coverage and created inland marine - property in transit, instrumentalities of transportation/communication, and certain mobile or hard-to-value property. To define the boundary between marine and fire/property insurers, the industry adopted the Nationwide Marine Definition (originally 1933, revised 1953 and 1976), which lists the classes of property eligible for inland marine treatment.
The Nationwide Marine Definition's six broad eligible categories are tested directly:
- Imports and exports
- Domestic shipments (goods in transit)
- Instrumentalities of transportation and communication (bridges, tunnels, pipelines, power transmission lines, radio/TV towers)
- Personal property floater risks (movable personal property)
- Commercial property floater risks
- Specified scheduled/'crime-related' floaters by custom
Filed vs. non-filed forms and key inland marine policies
Inland marine splits into:
- Filed (controlled) forms: standardized ISO commercial inland marine forms requiring rate/form filing - e.g., Accounts Receivable, Valuable Papers and Records, Commercial Articles, Signs, Equipment Dealers, Contractors Equipment, and the Motor Truck Cargo forms.
- Non-filed (uncontrolled) forms: free-rated, hand-tailored floaters where the insurer has broad flexibility - e.g., jewelers block, builders risk variations, fine arts, and many transit floaters.
The ISO Commercial Inland Marine Conditions Form (CM 00 01) plus a coverage form make up a typical contract. Common personal inland marine is the Personal Articles Floater (PAF) or scheduled endorsement covering jewelry, furs, cameras, fine arts, silverware, and musical instruments - usually open-perils, no coinsurance, often no deductible, and agreed/itemized values.
A transit example
A Transportation/Motor Truck Cargo floater can be written named-perils (covering perils such as fire, collision, overturn, theft, flood) or broad/all-risk. Coverage follows the goods 'door to door' rather than a fixed location, which is the defining inland marine feature.
Bailee, equipment, and valuation traps
Key distinctions the exam loves:
- Bailee coverage (e.g., a dry cleaner's, a jeweler's customer goods) protects customers' property in the insured's care, custody, or control - a gap left by most property and CGL forms (CCC exclusion).
- Contractors Equipment Floater covers mobile tools/machinery (loaders, compressors) wherever they go, including off-site jobs.
- A Builders Risk policy (often inland marine or commercial property) covers a structure under construction; coverage typically ends at occupancy/acceptance.
| Feature | Inland Marine Floater | Commercial Property (CP 00 10) |
|---|---|---|
| Location | Mobile / in transit, anywhere | Fixed scheduled premises |
| Coinsurance | Usually none | Typically 80%-100% |
| Valuation | Often agreed/scheduled value | ACV or RC, subject to limit |
| Perils | Frequently open-perils | Named or special form |
Worked valuation
A scheduled diamond ring is insured under a Personal Articles Floater for an agreed value of $12,000. It is lost. Because the PAF is a valued/agreed-value floater with no coinsurance and usually no deductible, the insurer pays the full $12,000 without depreciation or a coinsurance test.
Common inland marine forms tested by name
The exam expects you to match a described exposure to the correct inland marine form. Memorize these:
- Accounts Receivable - pays for sums uncollectible because records were destroyed, plus reconstruction cost and extra collection expense.
- Valuable Papers and Records - covers cost to research, replace, or restore lost documents (deeds, manuscripts, films) on an open-perils basis.
- Equipment Dealers (EDP) - covers mobile equipment and machinery held for sale by a dealer.
- Contractors Equipment Floater - the contractor's own tools and mobile machinery, on or off the job site.
- Motor Truck Cargo - Owners Form vs. Carriers Form - the owners form covers the shipper's goods; the carriers form covers a for-hire trucker's legal liability for customers' freight.
- Jewelers Block - a dealer's stock plus customers' goods in care, custody, or control (a bailee exposure).
A frequent trap distinguishes the owner's transportation floater (covers the goods themselves, regardless of fault) from the carrier's legal liability form (responds only when the trucker is legally liable). When a question stresses 'legal liability' or 'for-hire,' choose the carriers form. Likewise, a question that names destroyed ledgers preventing collection points to Accounts Receivable, while one about reconstructing destroyed documents points to Valuable Papers and Records - distinct forms covering distinct exposures.
The Nationwide Marine Definition
Inland marine grew out of ocean marine and is defined by the Nationwide Marine Definition, which lists the classes insurers may write as marine: goods in transit, bailee coverage, instrumentalities of transportation/communication (bridges, tunnels, pipelines, radio/TV towers), personal property floaters, and commercial property floaters. The unifying theme is mobile or "floating" property and property that crosses jurisdictions.
Filed vs. Non-Filed and Common Forms
A tested distinction: filed (controlled) inland marine classes use standardized ISO forms and filed rates (e.g., Commercial Articles, Accounts Receivable, Valuable Papers, Contractors Equipment), while non-filed (uncontrolled) classes are individually rated and broadly worded.
Know the headline forms: the Personal Articles Floater (PAF) schedules jewelry/furs/fine art on an open-peril, worldwide basis; the Builders Risk form covers structures under construction; Motor Truck Cargo covers a carrier's liability for others' goods; and Bailees Customers covers customers' property (a dry cleaner's clothing). Inland marine typically provides broad/open-peril coverage with no coinsurance on many forms.
Which property is eligible for inland marine coverage under the Nationwide Marine Definition?
A jewelry store carries an inland marine floater on customers' watches left for repair. This bailee coverage primarily fills which gap left by the store's other policies?