Inland Marine Insurance - FL Adjuster Exam Prep

Fast Facts

Inland Marine Insurance: Covers property not confined to a fixed location (floaters).
Floaters: Issued as freestanding policies or endorsements to homeowners/commercial package policies; typically open perils (“all risks” except specified exclusions).
Personal Articles Floater: Covers jewelry, furs, fine arts, cameras, golf equipment, stamps, coins, etc.
Commercial Property Floater: Covers accounts receivables, commercial articles, contractors’ equipment, jewelers block, bailees’ customers’ property, etc.
Transportation Insurance Forms:
- Motor Truck Cargo: Covers goods transported by trucking firms for a fee.
- Transit Insurance: Covers goods in transit owned by the insured.

Marine Insurance Basics

Marine insurance, one of the oldest forms, originally covered oceangoing ships and cargo. Inland marine insurance, developed in the 1920s, covers land-based transportation and property not fixed to a location.

Nationwide Marine Definition (1933): Property must be in transit or related to transportation/communication. Expanded in 1976 to include electronic data processing (EDP) coverage.

Key Point: Inland marine policies, called “floaters,” cover property wherever it goes, typically on an open perils basis (excludes gradual deterioration, moths, vermin, inherent vice).

Personal Inland Marine Insurance

Personal Articles Floater: Provides broader coverage than homeowners policies, often with no deductible, covering property worldwide.

Covered Items: Jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp/coin collections.
Forms:
- Agreed Value (PM 00 10): Pays scheduled value.
- Standard Loss (PM 00 09): Pays lowest of repair cost, ACV, replacement cost, or policy limit.

Jewelry, Furs, Silverware

Homeowners policies limit theft coverage ($1,500–$2,500). Floaters schedule items with specific coverage amounts.

Cameras, Musical Instruments

Floaters cover breakage (not covered by homeowners’ named perils) on scheduled or blanket basis.

Special Musical Instrument Coverage: Named perils option (fire, lightning, windstorm, flood, theft, accident). Excludes play-for-pay unless added by endorsement.

Golf Equipment

Covers clubs, clothing worldwide; golf balls covered only for fire/burglary.

Fine Arts, Stamps, Coins

Covered worldwide on open perils basis. Blanket coverage limited ($250/item, $1,000/collection); scheduled advised for high-value items.

Commercial Inland Marine Insurance

Commercial Property Floater: Covers non-fixed commercial property, standalone or part of a package policy.

Commercial Inland Marine Conditions (CM 00 01)

Loss Conditions:

Abandonment: Insured cannot abandon damaged property.
Appraisal: If disagreement on loss value, each party selects an appraiser; appraisers choose an umpire.
Pairs, Sets, Parts: Pays to restore set value or difference before/after loss.
Loss Payment: Insurer notifies insured within 30 days of sworn proof of loss.
Recovered Property: Insured can return payment to reclaim recovered property.

General Conditions: Include fraud, legal action (within 2 years), no benefit to bailee, policy period/territory.

Valuation: Smallest of ACV, repair cost, or replacement cost.

Commercial Coverage Forms

Accounts Receivable: Covers collection costs, record reestablishment, uncollectible amounts (open perils, 80% coinsurance).
Bailees’ Customers: Covers customers’ property in bailee’s custody (open/named perils, no coinsurance).
Commercial Articles: Covers cameras/musical instruments for commercial use (open perils).
Contractors’ Equipment: Covers tools/equipment (open/named perils, ACV, 80–100% coinsurance).
EDP: Covers computers, software, data (open perils, includes electrical damage, virus).
Equipment Dealers: Covers inventory of mobile equipment (open perils, ACV).
Installation: Covers property during transit/installation (open perils).
Jewelers Block: Covers jewels, watches, excludes employee dishonesty, mysterious disappearance.
Signs: Covers lighted signs (open perils, scheduled).
Valuable Papers/Records: Covers reconstruction costs, irreplaceable documents (open perils, no coinsurance).

Example: A museum’s marble statue pair ($25,000) loses one statue (remaining value $7,500). Insurer pays $17,500 per pairs/sets provision.

Transportation Coverages

Motor Truck Cargo

Covers trucking firms’ legal liability for goods transported for a fee (open/named perils). Excludes jewelry, live animals, dishonesty.

Limits: Per vehicle, catastrophe limit, terminal coverage (if included).

Valuation: Lesser of legal liability, invoice amount, or ACV.

Transit Insurance

Covers goods owned by insured during transit (annual or trip policies).

Annual Transit: Covers all shipments in a year, excludes postal shipments, dishonesty (except carrier employees).
Trip Transit: Covers specific shipments, includes loading/unloading.

Valuation: Agreed value (annual), ACV or invoice (trip).

Key Point: Transit policies cover property owned or for which the insured is liable; motor truck cargo covers truckers’ liability.

Test Your Knowledge!

Question 1: Why are inland marine policies called “floaters”?

Question 2: A transit insurance policy is purchased by property owners to cover their goods while being shipped, and a motor truck cargo insurance policy is purchased by trucking firms to cover property they are transporting for a fee. True or False?

For Your Review

“Floater,” “form,” and “policy” are interchangeable terms for inland marine insurance.
Nationwide Inland Marine Definition: Property must be in transit or related to transportation/communication; includes EDP coverage (1976).
Floaters cover property worldwide on open perils basis, excluding gradual deterioration, moths, vermin, inherent vice.
Personal articles floater: Standalone or homeowners endorsement, covers jewelry, furs, etc.
Commercial floaters: Standalone or package policy, cover accounts receivable, contractors’ equipment, etc.
Insurer notifies insured within 30 days of sworn proof of loss.
Legal action against insurer requires policy compliance and must be filed within 2 years of loss knowledge.