7.3 Commercial Inland Marine: Nationwide Marine Definition, Filed and Nonfiled Forms & Transportation Coverages
Key Takeaways
- The Nationwide Marine Definition classifies inland marine risks into imports, exports, domestic shipments, instrumentalities of transportation and communication, and personal and commercial property floaters.
- Commercial inland marine policies are built from the Commercial Inland Marine Conditions form plus a coverage form such as accounts receivable, commercial articles, equipment dealers, jewelers block, signs, or valuable papers and records.
- Nonfiled inland marine forms, such as contractors equipment, installation floaters, electronic data processing, and motor truck cargo, are written on insurer-specific wording.
- A common carrier is liable for goods in its custody except for losses caused by acts of God, acts of a public enemy, acts of public authority, fault of the shipper, or inherent vice.
- Motor truck cargo coverage protects either the trucker's legal liability for customers' goods (carrier form) or the owner's goods carried on its own trucks (owner's form).
What Makes a Risk "Inland Marine"?
Inland marine grew out of ocean cargo insurance. It protects property that moves, property in transit, and instrumentalities of transportation and communication. To keep insurers from labeling ordinary fixed-location property as "marine" to avoid rate regulation, the NAIC adopted the Nationwide Marine Definition (1953, revised 1976). It recognizes these classes:
| Class | Examples |
|---|---|
| Imports | Goods in transit to the U.S., including while at the port or in storage awaiting forwarding |
| Exports | Goods being prepared for or in transit to export |
| Domestic shipments | Goods in transit within the U.S. by truck, rail, air, or mail, including temporary storage |
| Instrumentalities of transportation and communication | Bridges, tunnels, piers, wharves, docks, pipelines, power transmission lines, radio and TV towers |
| Personal property floater risks | Jewelry, furs, fine arts, cameras, musical instruments, silverware (the personal floaters behind HO 04 61) |
| Commercial property floater risks | Contractors equipment, installation risks, dealers' stock of certain goods, accounts receivable, valuable papers, signs |
Commercial Inland Marine Coverage Part
A commercial inland marine coverage part includes the Commercial Inland Marine Conditions form and one or more coverage forms. The conditions resemble commercial property conditions: duties after loss, appraisal, valuation (commonly the least of actual cash value, cost to repair, or cost to replace), recovered property, pair or set, and other insurance.
Filed (ISO) Coverage Forms
| Form | What it covers |
|---|---|
| Accounts receivable | Sums due from customers that cannot be collected because records were destroyed, plus collection expense, interest on loans needed to offset impaired collections, and cost to reconstruct records |
| Commercial articles | Cameras, projection equipment, and musical instruments used commercially (photographers, bands) |
| Equipment dealers | Dealers' stock of mobile agricultural and construction equipment |
| Jewelers block | A jeweler's stock plus customers' property in the jeweler's care; strict protective warranties (safes, alarms, window displays) |
| Signs | Neon, fluorescent, automatic, and mechanical signs |
| Valuable papers and records | Cost to research, replace, or restore information on lost or damaged documents such as architectural drawings or abstracts |
| Others | Camera and musical instrument dealers, film, floor plan, mail, physicians' and surgeons' equipment, theatrical property |
Nonfiled (Insurer-Specific) Forms
- Contractors equipment floater: mobile equipment and tools wherever located, such as excavators, compressors, and scaffolding.
- Installation floater: materials and equipment being installed (HVAC units, elevators) until the installation is accepted.
- Electronic data processing (EDP): computer hardware, media, and data, often including mechanical breakdown and electrical surge that the commercial property form excludes.
- Builders risk is sometimes written as inland marine rather than on the CP form (Section 7.2).
Transportation Coverages
Common Carrier Legal Liability
A common carrier (a trucker, railroad, or airline offering transportation to the public) is held to near-strict liability for goods in its custody. It is liable for loss except when caused by:
- Acts of God (such as an extraordinary flood);
- Acts of a public enemy (war);
- Acts of public authority (lawful seizure);
- Fault or neglect of the shipper (improper packing or labeling);
- Inherent vice of the goods (natural spoilage).
Carriers often limit their dollar liability through a released bill of lading. That leaves the shipper with a gap, filled by the shipper's own transit coverage.
Motor Truck Cargo
- Carrier's (legal liability) form: covers the trucker's legal liability for customers' goods. It pays only when the carrier is legally liable.
- Owner's form: covers a business's own goods while carried on its own trucks, whether or not anyone is liable.
Transit Coverage
Protects a shipper's goods while in the custody of carriers, including exposures the carrier is not liable for (such as an act of God) or where the carrier's liability is limited.
Adjusting Scenario
A contractor's leased excavator is stolen from a Staten Island job site, a delivery truck carrying a restaurant's new kitchen equipment overturns, and the restaurant's blueprints are destroyed in the same week. Three different inland marine coverages may respond: a contractors equipment floater for the excavator (subject to its theft provisions and any lease obligations), transit or the carrier's motor truck cargo liability for the kitchen equipment, and valuable papers and records for the cost of reproducing the blueprints. The commercial property form alone would not answer these losses. Its business personal property coverage is limited to property at or near the described premises, and it excludes or limits property in transit.
A common carrier is transporting a shipper's goods when an unprecedented flash flood (an act of God) destroys the truck and cargo. Under common carrier legal liability principles, who bears the loss?
Which class of property falls within the Nationwide Marine Definition as an instrumentality of transportation or communication?
A business owns delivery trucks that carry its own merchandise to customers. Which motor truck cargo form covers the merchandise regardless of anyone's legal liability?