14.3 Inland Marine and Nationwide Marine Definition
Key Takeaways
- Inland marine insurance covers movable property, property in transit, and instrumentalities of transportation and communication; the line's scope is set by the Nationwide Marine Definition (NMD), last revised in 1976.
- The NMD lists six eligible classes: imports, exports, domestic shipments, instrumentalities of transportation/communication, personal property floaters, and commercial property floaters.
- Inland marine forms are typically open-peril, written on a valued or agreed-amount basis with little or no coinsurance and broad territory, distinguishing them from coinsured commercial property.
- Filed (controlled) forms are ISO-standardized, while non-filed (manuscript) forms let underwriters tailor coverage; contractors equipment floaters, builders risk, EDP, and bailee forms are common.
- On the exam, inland marine is distinguished from commercial property by the trigger of mobility/transit and from ocean marine by the over-water boundary.
Why “Marine” Lives on Land
Inland marine is a historical name. Ocean marine insurers originally covered cargo on the sea; when railroads and trucks began carrying that cargo inland from the docks, marine underwriters followed the goods ashore. Today inland marine covers property that moves, property in transit, and the instrumentalities of transportation and communication — bridges, tunnels, pipelines, radio towers, and the like.
The line's eligibility is governed by the Nationwide Marine Definition (NMD), a model adopted by states and last materially revised in 1976. The NMD exists to keep the historically lightly regulated marine line from absorbing ordinary fixed-location property risks that belong in commercial property.
The Six NMD Classes
The NMD authorizes inland marine to insure six classes of property:
- Imports — goods arriving from abroad, while in the country.
- Exports — goods being prepared and shipped out of the country.
- Domestic shipments — goods in transit within the country (rail, truck, mail, parcel).
- Instrumentalities of transportation and communication — bridges, tunnels, piers, pipelines, power and phone lines, radio/TV towers.
- Personal property floaters — mobile personal property (jewelry, fine arts, cameras) that follows the owner.
- Commercial property floaters — mobile business property (contractors equipment, signs, accounts-receivable records).
Common Inland Marine Forms
| Form | Insures |
|---|---|
| Contractors Equipment Floater | Mobile tools and heavy equipment |
| Builders Risk | Buildings under construction (often inland marine or CP) |
| EDP / Computer Coverage | Hardware, software, and data |
| Bailee forms (e.g., dry cleaners) | Customers' property in the insured's care |
| Transit / Motor Truck Cargo | Goods being shipped |
| Accounts Receivable / Valuable Papers | Hard-to-replace business records |
| Jewelers / Furriers Block | Stock plus customers' goods |
Coverage Mechanics and Boundaries
Inland marine policies tend to be:
- Open-peril (“all-risk”): covered unless specifically excluded, broader than named-peril commercial property.
- Valued or agreed-amount: fine arts and similar items are scheduled at an agreed value, paid in full at total loss without proving ACV at claim time.
- Low- or no-coinsurance: unlike CP forms with 80%–100% coinsurance, inland marine usually omits the penalty or uses an agreed-amount waiver.
- Broad territory: coverage moves with the property, not a fixed location.
Filed vs. Non-Filed Forms
- Filed (controlled) forms are standardized and rate-filed with the state — e.g., the ISO commercial inland marine program. They behave like other rate-regulated lines.
- Non-filed (manuscript) forms are uncontrolled classes where underwriters may manuscript custom wording and set their own rates — a freedom that traces to the marine line's lightly regulated history.
Exam Boundary Tests
| If the property is… | The line is… |
|---|---|
| Fixed at one location (a building, stock at a store) | Commercial property |
| Mobile, in transit, or an instrumentality of transportation | Inland marine |
| On a vessel over water (hull/cargo at sea) | Ocean marine |
The split between inland and ocean marine is the over-water boundary; the split between inland marine and commercial property is mobility/transit.
Worked Example — Agreed Value vs. ACV
A contractor schedules an excavator on a Contractors Equipment Floater at an agreed value of $90,000. Two years later the machine is destroyed; its depreciated actual cash value is only $70,000.
- Inland marine, agreed value: the insurer pays the scheduled $90,000 (less deductible). The agreed-value provision waives any ACV or coinsurance argument at the time of loss.
- Had the same machine been on an ACV commercial property form: recovery would be limited to the $70,000 depreciated value.
This $20,000 swing illustrates why mobile, hard-to-value equipment is placed on valued inland marine forms rather than ACV property forms.
Which of the following is NOT one of the six classes of property eligible for inland marine coverage under the Nationwide Marine Definition?
An item of scheduled jewelry is insured on an inland marine personal articles floater at an agreed value of $12,000. At total loss, its depreciated actual cash value is $8,000. How much does the agreed-value inland marine policy pay (before deductible)?
Common Inland Marine Floaters and the Bailee Forms
Inland marine policies often take the form of floaters — coverage that follows property wherever it moves, usually on an open-peril, often agreed-value basis with no coinsurance:
| Floater / form | Covers |
|---|---|
| Personal Articles Floater (PAF) | Scheduled valuables — jewelry, furs, fine art, cameras, silverware |
| Personal Property Floater | Broad personal property worldwide |
| Commercial Property Floater / Equipment | Contractors equipment, mobile tools |
| Bailee form (e.g., Bailees Customers) | A business's liability for customers' property in its care (dry cleaner, repair shop) |
| Accounts Receivable / Valuable Papers | Reconstruction costs and uncollectible amounts |
The Personal Articles Floater covers valuables on an open-peril, worldwide, no-deductible, often agreed-value basis — superior to the homeowners special limits. Trap: inland marine floaters typically have no coinsurance and often pay agreed value, contrasting with standard property forms that apply coinsurance and ACV.
A jeweler wants worldwide, open-peril, no-deductible coverage on a $40,000 ring collection, free of homeowners sublimits and coinsurance. Which form best fits?
Transportation, Instrumentalities, and Why NMD Limits Eligibility
The Nationwide Marine Definition (NMD) sets the boundaries of what inland marine can insure, preventing carriers from writing ordinary fixed-property risks as "marine." Eligible classes share a theme of movement, transportation, or communication:
| NMD class | Examples |
|---|---|
| Imports/exports | Goods in international transit |
| Domestic shipments | Goods moving by truck/rail (transit floaters) |
| Instrumentalities of transportation/communication | Bridges, tunnels, pipelines, radio/TV towers, power transmission lines |
| Personal property floaters | Jewelry, fine art, cameras (PAF) |
| Commercial property floaters | Contractors equipment, dealers stock |
| Bailee property | Customers goods in a business's care |
Fixed real property at a single location (a store building) is not eligible — that is standard commercial property. Instrumentalities are a tested exception: a bridge or pipeline is fixed but eligible because it is an instrumentality of transportation/communication.
Exam tip: if property moves, is held by a bailee, or is an instrumentality of transportation/communication, it can be inland marine; an ordinary building at one address cannot. Floaters under the NMD typically use open-peril, agreed-value, no-coinsurance terms.