4.7 Inland Marine Floaters & Transportation Coverages

4.7 Inland Marine Floaters & Transportation Coverages

Inland Marine Insurance covers mobile or movable property, goods in transit, and instrumentalities of transportation and communication that do not fit standard property forms. The "nationwide definition of inland marine insurance" establishes the eligible classes of property.

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Nationwide Definition Classes

Inland marine covers: (1) exports and imports; (2) domestic shipments; (3) instrumentalities of transportation and communication (bridges, tunnels, radio/TV towers, pipelines); and (4) personal and commercial property floaters where the property moves or its location varies.

Commercial Floaters (Exam List)

• Accounts Receivable: Covers the insured’s inability to collect outstanding receivables when records are destroyed, plus the cost to reconstruct records.
• Bailee’s Customers: Covers customers’ property in the care, custody, or control of a bailee (dry cleaner, repair shop) — the bailee is liable for damage to customers’ goods.
• Commercial Articles: Scheduled coverage for high-value commercial property (photographic equipment, musical instruments, golf equipment).
• Contractors Equipment Floater: Open-perils coverage for heavy machinery, cranes, scaffolding, and tools moved between job sites.
• Electronic Data Processing (EDP): Covers computers, data, and media; may include business income from equipment breakdown or loss.
• Equipment Dealers: Covers mobile construction or agricultural equipment held for sale, lease, or service by dealers.
• Installation Floater: Covers materials and supplies in transit and at a job site until installed and accepted, often used with builders risk.
• Jewelers Block: Covers jewelry and stock of a jeweler both on and off premises; requires burglar-alarm protective safeguards.
• Signs: Covers illuminated outdoor signs at fixed locations.
• Valuable Papers and Records: Covers the cost to reconstruct research, drawings, manuscripts, and records.

Transportation Coverages

• Common Carrier Cargo Liability: Legal liability of a common carrier for cargo in its custody.
• Motor Truck Cargo: Covers the trucker’s legal liability for cargo being transported (and may cover the shipper’s interest on a primary basis).
• Transit Coverage Forms: Cover goods in transit across multiple modes (truck, rail, air) on an open-perils or named-perils basis.

Adjuster Notes

• Inland marine is often written on an open-perils (all-risk) basis with broad geographic territory.
• Bailee coverage responds to the bailee’s legal liability; it is not an interest policy in the goods themselves.
• EDP policies frequently include a business income element and require attention to media and data valuation.

Personal Floaters (Personal Articles)

• Personal Articles Floater (PAF): Open-perils, worldwide, agreed-value coverage for scheduled jewelry, furs, fine arts, cameras, musical instruments, golfers' equipment, silverware, and stamps. Loss settlement is agreed value (no depreciation) with a typical zero deductible. Theft of jewelry often carries a sublimit unless the thief leaves visible forced-entry marks.
• Personal Effects Floater: Covers personal baggage and effects of travelers worldwide, on a named-peril or open-peril basis.

Loss Valuation Concepts

• Accounts Receivable pays the amount uncollectible plus the cost to reconstruct records; it does not pay for debts that were uncollectible before the loss.
• Valuable Papers and Records pays the cost to reconstruct information (research, redrawing), not the intrinsic value of the paper.
• EDP values hardware at replacement cost and software/data at the cost to reproduce, with media coverage for physical tapes and drives.

Adjuster Considerations

• Because most inland marine floaters are open-perils, the burden is on the insurer to show an exclusion applies; the adjuster must read the exclusions carefully (often excluding wear and tear, inherent vice, nuclear, war, and delay).
• Territory is usually broad (worldwide for personal articles); verify the loss location is within territory.
• Bailee's Customers coverage is liability-based — the adjuster must establish the bailee's legal negligence or strict liability for the customers' goods before coverage responds.
• Jewelers Block requires protective safeguards; the adjuster verifies the burglar alarm was in service at the time of loss or coverage may be suspended.

Instrumentalities of Transportation and Communication

The nationwide definition's third class covers bridges, tunnels, culverts, roads, piers, wharves, radio and television towers, transmission lines, and pipelines — the fixed structures that move people, goods, or communications. These instrumentalities are insured on an open-perils basis with broad territory. Loss valuation is typically replacement cost or actual cash value depending on the form, and the adjuster must establish whether the damaged instrumentality is in transit, under construction, or in service to apply the correct valuation.

Floater Loss-Adjustment Workflow and Traps

Adjusting an inland marine loss follows a different path from a fixed-location property claim. The adjuster first establishes jurisdiction — confirm the property is a class recognized under the nationwide definition (transit goods, instrumentality, or floater). Next, verify open perils and read the exclusions; because most floaters are all-risk, the insurer bears the burden of proving an exclusion such as wear and tear, inherent vice, delay, or nuclear. For an Accounts Receivable claim, the adjuster quantifies the uncollectible amount using aging schedules and prior collection history, plus reasonable reconstruction costs — but excludes debts already uncollectible before the loss. For a Bailee's Customers loss, the adjuster must establish the bailee's legal liability (negligence or strict liability under a bailment for hire) before coverage responds; mere custody without fault does not trigger payment. For EDP and Equipment Breakdown, separate hardware (replacement cost), data and software (reproduction cost), and media (physical tapes and drives), and confirm whether a business-income element applies. For Contractors Equipment and Installation floaters, confirm the loss occurred within the policy territory and during transit or at the job site before acceptance. Valuation traps are the most-tested point: never pay the intrinsic or sentimental value of valuable papers — pay only reconstruction cost; and for personal articles floaters, apply agreed value with no depreciation and check the theft sublimit and forced-entry condition before settling a jewelry loss.