Inland Marine Insurance

Inland marine is a family of forms rather than one policy. The ones a property owner or dealer is most likely to need are these:

• Contractors' equipment floater. Mobile machinery and tools: excavators, skid steers, lifts, compactors, generators, trailers and hand tools. Covered at the yard, on the road and on the job.
• Dealers' equipment form. Inventory held for sale or rent by an equipment dealer, on the dealer's own lot, at a branch, in transit between them and out with customers on demo or rental, as the form allows.
• Installation floater. Equipment and materials a contractor has agreed to install, from the time they leave the supplier until the work is accepted. Common for HVAC units, elevators, wash tunnel equipment and roof units.
• Transit coverage. The owner's goods on the owner's trucks, or shipped by a common carrier, between locations.
• Miscellaneous property floaters. Smaller schedules such as security cameras, maintenance equipment carried between buildings, or survey and diagnostic tools.

Most forms are written on an open perils basis, covering direct physical loss unless excluded, and theft is the claim they pay most often. Equipment can be listed on a schedule, item by item with a serial number and a value, or written on a blanket basis with one limit for everything and a per item maximum. Rented and leased equipment can be added, along with rental reimbursement, which pays to rent a replacement machine while a damaged one is repaired so a job does not stop.

Many carriers write builder's risk on an inland marine form too, but the two policies insure different things. How builder's risk covers the structure under construction is its own subject: the building and the materials that will become part of it. Inland marine covers the machines and goods that leave when the work is done.

The exclusions on an equipment floater look like the property form's at first, with war, nuclear hazard, intentional acts and government seizure, plus a few that are particular to equipment that moves:

• Wear, tear and mechanical breakdown. A hydraulic failure or a seized engine is a maintenance cost, not a loss. Some carriers sell a breakdown extension for scheduled machines. For boilers, chillers and other fixed building systems, the equipment breakdown guide for building systems is the line that responds.
• Unexplained shortage. Inventory missing at a count, with no evidence of theft, is excluded on most forms. A broader form may cover mysterious disappearance, which is worth asking for on a dealer's lot.
• Unattended vehicles. Theft from an open or unattended truck or trailer is often excluded or limited, and some forms require visible signs of forced entry.
• Overload and operator error. Exceeding a machine's rated capacity, or tipping it over while lifting, may be excluded or carry its own deductible.
• Property while airborne or waterborne. A machine on a barge or a crane over water can fall outside a land form.
• Dishonest acts. Equipment taken by an employee or a renter who never returns it is usually excluded, which sends the employee case to the commercial crime insurance guide on employee theft.

Dealer forms often add a further limit on property that has been sold under a conditional sale, or on units held on consignment from a manufacturer, depending on whose name is on the title and who bears the risk of loss under the floor plan or consignment agreement.

The valuation clause decides most claim outcomes. Older equipment is usually written at actual cash value, which deducts depreciation and can leave a gap when a used machine costs more to replace than the book says. Newer equipment can be written at replacement cost, often only for machines under a stated age. Some schedules use an agreed value for each item, set at the start of the term, which removes the argument about value after a total loss but must be updated as the fleet changes.

Scheduled forms usually carry a coinsurance clause, commonly 80 to 100 percent, so the scheduled values have to be kept current. A fleet that grows during the year without updating the schedule is underinsured on every claim, not only on the new machines. Blanket forms avoid the schedule problem but carry a maximum per item, which needs to sit above the most valuable machine on the lot.

For a dealer, the limit tracks inventory, which swings with the season and with manufacturer shipments. A reporting form, where values are reported monthly and premium adjusts at audit, matches that pattern better than a fixed limit sized for the low point. Deductibles are set per occurrence, with separate higher deductibles common for theft, for named storm and for any single item above a value threshold.

An underwriter pricing an equipment floater or a dealer's form reads the following:

• The equipment schedule or inventory report: make, model, year, serial number and value for each item, and the largest single item.
• Where equipment sits overnight: fenced yard, lit lot, open site, and whether the gates are locked and monitored.
• Theft controls such as GPS tracking, engine immobilizers, key control, cameras and whether machines are registered with a national equipment registry.
• Loss history for five years, broken out between theft, collision, fire and weather.
• Rental and demo practices: how long units are out, who may operate them and whether renters must carry their own coverage.
• For transit, the radius of operation, the value of the largest load and whether the owner hauls its own goods or ships by carrier.
• For installation work, the contract values and how long equipment waits on site before installation.

A dealer whose lot backs onto a highway with no fence will see a higher theft deductible than one with a lit, gated yard, and the difference is often worth more than any premium negotiation.

Most inland marine claims start with a missing machine. Report it to the police the same day, give them the serial and product identification numbers, and notify the carrier. Many forms require a police report as a condition of payment, and a late report makes recovery less likely. GPS data, gate logs and camera footage should be saved before they are overwritten.

The adjuster confirms ownership and value from purchase records, the schedule and any floor plan statements. On an actual cash value form, expect a discussion about depreciation; on an agreed value form, the scheduled figure is the answer. Carriers often wait a short period before paying a theft claim in case the machine is recovered, and the policy explains what happens if it turns up after payment.

Transit losses raise a second question: who else is liable. When a common carrier damages or loses a shipment, federal law makes the carrier liable for the actual loss, but 49 U.S.C. 14706 allows a motor carrier to limit its liability to a declared or agreed value written into the shipping terms. A released value on the bill of lading can leave most of an expensive machine unrecovered, which is the reason the owner's own transit coverage exists. The owner's insurer pays the claim, then pursues the trucking company for what the shipping terms allow. Motor truck cargo insurance is the trucker's policy for goods it hauls for others; it is not the owner's coverage and its limit may be low.

Equipment dealers with inventory on open lots rely on inland marine more than any class we place. Their stock sits outside, often near highways, and moves constantly between branches, customer sites, shows and demo days. Floor plan lenders require the inventory to be insured with the lender named as loss payee, and many manufacturers set their own requirements for consigned units. Service bays add a separate question about customer machines left for repair, which belongs on the garagekeepers insurance guide for customer property rather than on the dealer's own inventory form.

Build-to-rent developers running their own site crews own or rent excavators, lifts, trailers and generators, and the rental agreements usually make the renter responsible for loss. Without rented equipment on the floater, a stolen telehandler becomes a direct cost to the project. HVAC units, appliances and other materials staged in finished homes before installation are best covered by an installation floater or the builder's risk, and the two should be checked against each other for overlaps and gaps.

Property management firms with maintenance teams moving tools, floor machines and snow equipment between buildings carry a smaller version of the same exposure. The commercial property policy for each building covers contents at the listed address, and a small floater covers the equipment in the vans and at the next property.

• Rented machines left off the floater. The rental contract makes you responsible, and the policy covers only owned equipment.
• Stale schedules. Machines bought mid-year never added, sold machines still listed, and coinsurance penalties on every claim as a result.
• Actual cash value on a young fleet. A two year old machine insured for its depreciated value cannot be replaced for that amount.
• Released value shipping. Goods shipped at the carrier's limited liability with no transit coverage of your own.
• Demo and rental units outside the form. Inventory out with customers that the dealer's form covers only for a few days, or not at all.
• Equipment staged for installation. Units delivered to a site and not yet installed, falling between the installation floater and the builder's risk.