Inland marine insurance covers losses to movable or specialized types of property. It is an outgrowth of ocean marine insurance, which covers goods in shipment while on an ocean or water vessel. Once offloaded, the goods still need insurance coverage as they are shipped inland to a final destination.
As the transport of items becomes more regulated and automated, many insurance carriers are offering commercial clients enhanced risk management techniques designed to protect items in transit at all stages of the delivery system. Inland marine protection can now extend to transported items during order processing, packaging, consolidation, inventory control, transportation, warehousing and data management.
The FDA’s Food Safety Modernization Act (FSMA) is one example of how increased regulations impact the trucking, logistics and inland marine insurance industries. Stricter transport and storage requirements are contained in the FSMA, including guidelines that require supply chain participants to identify when food may be adulterated without being physically damaged, such as when food is exposed to unsanitary conditions.
Compliance dates for some businesses that are subject to the FSMA Preventive Controls for Human Food rule began to take effect in September 2016. Many inland marine insurance carriers are responding with specialized coverage to minimize risks associated with FSMA requirements.
In addition to increased regulatory oversight, there are numerous other risks to items in transit. Common risks that may be covered by inland marine insurance include the following:
- According to the Federal Motor Carrier Safety Association, there were approximately 411,000 police-reported crashes involving large trucks in 2014.
- Theft of cargo or an entire trailer. More than 1,500 incidents of cargo theft, heavy commercial vehicle theft, and identity theft of trucking companies occurred in the U.S. and Canada in 2015, according to the CargoNet unit of Verisk Analytics. The theft of cargo was reported in 881 of these incidents, with food and beverage items stolen most often. Ten of the cargo thefts were reportedly valued in excess of $1 million.
- Computer failures within a logistics system. As the transport of items becomes more data-driven, a failure in logistics software can have an immediate adverse effect on goods in transit.
Background on Inland Marine Insurance Coverage
Many inland marine policies/forms provide coverage without regard to the location of the covered property and are sometimes called “floater” policies.” Inland marine coverage is available to those who need to transport goods, whether the need is to get valuable items from point A to point B one time, or in instances where the insured runs a business in the supply chain industry.
Inland marine insurance is designed for businesses that frequently ship products or equipment via truck or train, including the storage of items that may be temporarily warehoused by a third party. It may cover a wide range of items in transit, including but not limited to:
- Athletic team equipment
- Bailee’s customer coverage, for business property left in the care of another
- Commercial computer coverage, for servers, PCs and laptops in transit
- Contractors equipment, whether on a construction job site, storage yard or in transit
- Equipment of any kind that is mostly used off-site
- Fine arts, antiques and exhibition materials, whether on display or in transit
- Fire or police department equipment
- Mobile medical equipment
- Motor truck cargo being delivered to a client
- Private shipments from one party to another
- Property deemed to be an instrumentality of transportation or communication, such as bridges and radio towers
- Property in transit
- Sales persons’ samples
- Shipments from a main warehouse to a retail outlet
- Shipments from a supplier to a user
Basically, any piece of property that is being moved from one location to another may be eligible for an inland marine policy. Specialized types of inland marine insurance can include builder’s risk, installation floaters, and other forms of transit coverage. Many insurance carriers offer inland marine coverage.
Bill Hager’s Experience as an Inland Marine Insurance Expert
Inland marine cases call on expertise as to: (i) inland marine insurance and related policies and the regulations of such policies, (ii) coverages under such policies, and (iii) an insurance agent’s obligations and responsibilities in connection with the sale and service of inland marine policies to the agent’s insureds.
Inland Marine Regulatory Experience. From a regulatory perspective, Mr. Hager’s expertise is based on a number of past career positions:
- Commissioner of Insurance (Iowa)
- First Deputy Commissioner of Insurance
- Member of the National Association of Insurance Commissioners (NAIC)
- Administrative Law Judge at the Department of Insurance (IA) and
- Assistant Attorney General assigned on a full time basis to the Department of Insurance.
In those capacities, on a daily basis, he had full regulatory oversight and responsibility for and dealt directly with (i) inland marine insurance and related policies and the regulations of such policies, (ii) coverages under such policies, and (iii) an insurance agent’s obligations and responsibilities in connection with the sale and service of insurance products, including inland marine policies, as to the agent’s insureds.
Inland Marine Expertise: Legislative. In addition to his regulatory background, Mr. Hager served or is serving in the following capacities, each of which included daily knowledge of and interaction (i) inland marine insurance and related policies and the regulations of such policies, (ii) coverages under such policies, and (iii) an insurance agent’s obligations and responsibilities in connection with the sale and service of insurance products, including inland marine policies, as to the agent’s insureds.
- Legal Counsel to the Iowa House of Representatives
- Chief of Staff at the U.S. House of Representatives
- Elected Member of the Florida House of Representatives (currently) where he serves as a Member and Vice Chairman of the Insurance Committee (among other committees), which has legislative oversight over all insurance operations in the state (as administered by the Florida Office of Insurance Regulation) including those relating to inland marine insurance and related insurer and agent obligations
- In addition, Mr. Hager sat on and served as Vice Chairman of the Civil Justice Subcommittee of the Florida House, which has responsibilities as to Florida laws that establish (among other things) liability
Click on the link to read more about Mr. Hager’s experience as an inland marine insurance expert.
The above general discussion of inland marine insurance is not intended to address the specifics of what is and is not covered by an inland marine policy that may be in dispute.
Material for this article was taken from a collection of industry sources relating to the subject.
In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.