14.3 Inland Marine and Nationwide Marine Definition

Origins and the Nationwide Marine Definition

Marine insurance is the oldest property line. Ocean marine covered ships and cargo; as goods moved overland, coverage extended to inland marine. To define the boundary between inland marine and ordinary property/fire insurance, the industry adopted the Nationwide Marine Definition (originally 1933, revised 1953 and 1976). It lists the classes of risk that may be written as inland (and ocean) marine.

The six broad categories eligible for inland marine treatment:

• Imports and exports (goods in foreign trade)
• Domestic shipments (property in transit)
• Instrumentalities of transportation and communication (bridges, tunnels, pipelines, radio/TV towers, power transmission lines)
• Personal property floaters (jewelry, fur, fine arts, camera)
• Commercial property floaters (equipment, signs, accounts receivable)
• Certain other movable property

The practical reason the definition matters is regulatory and competitive. Property eligible as marine can be written on flexible, often non-filed forms, whereas fixed-location real property must be written under filed fire/property forms. Underwriters cannot simply label any risk "marine" to escape regulation - the property must genuinely fall within a listed class. The exam tests this boundary by describing a stationary building or a routine homeowners exposure and asking whether inland marine is appropriate; if the property is fixed and not in transit or instrumentality-related, the answer is no.

Key Inland Marine Concepts

The unifying theme is mobility - property that moves or is held away from a fixed location, or that involves transportation/communication. Two doctrines underpin inland marine:

• Floater policy - a form that covers property wherever it is located or while in transit, rather than at a fixed address. Examples: Personal Articles Floater (PAF), Jewelry/Fur floaters, Camera floater, Fine Arts floater.
• Coverage is typically open-peril (all-risk) and often written on an agreed value or scheduled basis for high-value items, eliminating depreciation and coinsurance disputes.

Inland marine is largely non-filed (a "non-filed" class) for commercial floaters, giving underwriters flexibility in forms and rates - a frequently tested distinction from heavily regulated fire/property lines.

Common Inland Marine Forms

The Commercial Inland Marine Conditions (CM 00 01) plus a coverage form (e.g., CM 00 17 Commercial Articles) make up a typical commercial filing.

Three forms generate the most questions. Accounts Receivable pays when destroyed records prevent the insured from collecting balances due - it covers the lost collections, collection expense, and interest on loans needed to offset the cash gap. Valuable Papers and Records restores or pays for documents, drawings, and manuscripts that have intrinsic value but are costly to reproduce.

Bailee forms (dry cleaners, repair shops) protect customers' goods in the insured's care, custody, or control even though the insured does not own them - a key point because the standard property policy excludes property of others held by the insured beyond a small limit.

Worked Example: Scheduled PAF

A homeowner schedules a diamond ring on a Personal Articles Floater for an agreed value of $12,000. The ring is lost. Because the PAF is written on an agreed-value, open-peril basis with no deductible (typical for scheduled jewelry), the insured collects:

$12,000 - the agreed value, with no depreciation and no coinsurance.

Contrast this with the same ring covered only under a homeowners policy, which would apply a theft sublimit on jewelry (often $1,500) and ACV/RC subject to the policy deductible. The PAF's broader peril coverage and agreed value are why high-value items are scheduled. This sublimit-versus-floater comparison is a classic exam question.

The Nationwide Marine Definition

Inland marine insurance evolved from ocean marine to cover property that moves, is held by a bailee, or is instrumental to transportation/communication. The Nationwide Marine Definition sets out the classes insurers may write as inland marine: domestic goods in transit, bridges/tunnels/pipelines, property of certain dealers, and movable equipment. The hallmark is mobility or a transit/communication nexus — fixed buildings belong on property forms.

Filed vs. Non-Filed Forms and Common Floaters

Inland marine forms are either filed (standardized, rates filed with the state — e.g., the Commercial Inland Marine conditions and many controlled forms) or non-filed (custom-rated, flexible — used for unusual risks). Common floaters include:

Floaters typically provide broad, often open-peril, coverage that follows the property wherever it goes — the key advantage over a fixed-location property form.

Bailee Coverage and the Care-Custody-Control Gap

A recurring inland-marine theme is property in a bailee's care — a dry cleaner, jeweler, or repair shop holding customers' goods. The CGL excludes property in the insured's care, custody, or control, so a Bailee's Customer floater is the cure: it pays for damage to customers' property while in the insured's possession, often regardless of the bailee's fault, to preserve goodwill. This parallels garagekeepers for autos. The exam tests that the right tool for a business holding others' movable property is an inland-marine bailee floater, not the general liability policy, because of the care-custody-control exclusion.