I had a conversation with a local Dallas home builder recently. We were discussing an upcoming project he was about to start and the builders risk insurance he needed for it. We’d already covered the project’s scope, the current value of the home, and its increased value when the renovations are completed. I then asked him about the value of materials he’d be purchasing and the delivery schedule.
I explained the policy could include optional coverage for materials in transit he’d purchase, but that without it, they would not be covered if something happened to them even though he owned them from the time the order was submitted, while it was being loaded, and even throughout the delivery process. After seeing how affordable it was to have this coverage, he chose to add it.
This type of coverage is typically referred to as inland marine insurance or coverage. Historically, this type of coverage evolved from marine insurance (later referred to as ocean marine insurance) which was started by a group of insurance professionals who met at a London coffee house called Lloyds in the late 1600’s. Marine insurance was designed to cover the cargo, as well as, the ships carrying the cargo across the ocean.
Over time, there was a need to extend coverage to the cargo when it was in transit from port to its final destination. Since many of those deliveries occurred on inland waterways, a new policy evolved and was referred to as inland marine insurance. With the advent of rail delivery, and more recently truck and air delivery, the coverage offered by an inland marine policy, floater, or endorsement continues to broaden and evolve.
Inland marine insurance provides coverage for items on both personal and commercial policies. On the personal insurance side, some companies use an inland marine form or refer to coverage for jewelry, fine arts, or other scheduled items as inland marine insurance. On the commercial insurance side, inland marine coverage may be endorsed (added to a policy as an option) or written on a separate inland marine policy for many different applications including:
- Builders risk (new construction or remodel)
- Installation coverage (plumbing fixtures, HVAC, electrical, appliance, etc.)
- Contractors equipment (backhoes, graders, etc. used at a job site)
- Accounts receivables (both the records and lost receivables)
- Valuable papers (contracts, order paperwork, blueprints, etc.)
- Electronic data processing (computer hardware, software, and in some cases the data)
- Transit insurance
It may also be used to cover items that are owned but don’t reside on the company or organization’s property. This can include mobile medical equipment and instruments, radio, television, and communications towers, trade booths, and other items that may not have a permanent home.
This list does not list everyone who may need inland marine insurance, but it does provide examples of those who should consider this coverage. Individuals with scheduled items needs, companies shipping and receiving goods, residential and commercial builders, and maybe even companies with utilizing third party cloud based computing and storage.
Let me know if you have a question, comment, or experience you’d like to share. You can email me or post them on my Google +, LinkedIn, and Facebook pages. I’d love to hear from you!