Inland Marine Insurance for Small Businesses: How It Works

Inland marine insurance covers business property that moves over land or that’s stored away from business premises.
Nov 16, 2021

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Inland marine insurance covers business property that moves over land or that’s stored away from business premises. You can also use it to cover certain specialized items that traditional property insurance won’t cover.

The name “inland marine insurance” can be confusing. Despite the word “marine,” this coverage has nothing to do with the ocean or waterways. In fact, if you transport products over water domestically or internationally, you actually need ocean marine insurance. Businesses that transport property by air would need air cargo insurance.

Some insurers offer a comprehensive commercial cargo policy that insures against all three types of transit — land, sea and air. Inland marine insurance only protects property that is transported over land or stored on land away from your ordinary business premises.

Most small-business owners keep their property on their business premises. For example, the inventory that you store at your shop, the supplies in your back office and the equipment at your warehouse are typically protected under traditional commercial property insurance. However, in cases where the property is mobile or more specialized, you still want to ensure that it’s covered.

Here’s where inland marine insurance comes into play.

Do you need inland marine insurance?

If you regularly transport property or store it away from your business location, inland marine coverage probably should be part of your business insurance package.

Most business owners with tangible assets should already have a commercial property insurance policy. Commercial property insurance covers assets stored at a stationary business location. For example, if someone vandalizes your shop window or a fire burns down your back office, commercial property insurance would come to your rescue.

However, let’s say you’re transporting inventory between two business locations. If the truck bed malfunctions and your inventory falls out and gets damaged, standard commercial property insurance may not provide coverage. Similarly, if you have certain highly valuable or unique types of property, traditional property insurance might have an exclusion. That’s where you may need inland marine insurance.

Inland marine coverage is often important for these types of businesses:

  • Contractors and freelancers who travel between job sites.

  • Construction businesses.

  • Food truck vendors and caterers.

  • Business owners who attend trade shows, exhibitions and conventions.

  • Businesses that ship raw materials or finished goods over land.

  • Businesses that have specialized types of property, such as veterinarians who transport animals or art dealers who store artists’ work.

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What is covered under an inland marine insurance policy?

In general, inland marine insurance covers the following:

  • Property in transit: This is property that you transport over land from one location to another.

  • Property stored off-site: This includes property that you keep at a warehouse or storage facility.

  • Property on movable vehicles: For example, an inland marine policy would cover the cooking equipment and raw ingredients that are stored in a food truck.

  • Property that provides the means of transportation: Inland marine insurance can cover businesses that own bridges, roads or communication towers.

Additionally, inland marine policies can provide custom coverage for specialized property. For example, art dealers and galleries need to store art that belongs to other people. Veterinarians might need to transport live animals to a clinic. Vending machine owners store machines long-term on other people’s property. Inland marine insurance can provide coverage in all of these situations.

The name of your inland marine policy might differ based on exactly which risks you’re insuring against and what type of business you have. For example, inland marine insurance is called “bailee’s customer insurance” in instances where you are transporting a customer’s property. A “builder’s risk policy” covers construction tools and machinery kept at job sites and storage yards.

What does inland marine insurance not cover?

It’s important to read your inland marine insurance policy carefully, so you know what’s covered and what’s excluded.

Normally, the following are excluded from inland marine insurance:

  • Stationary property: This is covered by standard commercial property insurance.

  • Vehicles: To cover vehicles you use for business purposes, you need to purchase commercial auto insurance. However, inland marine insurance can protect the contents inside your vehicle.

  • Earthquake and flood damage: Businesses in earthquake or flood zones should purchase separate commercial flood insurance or commercial earthquake insurance.

  • Property transported by sea or air: In these cases, you would need ocean marine insurance or air cargo insurance, respectively.

  • Property damaged before shipment: Inland marine insurance typically only covers damage or loss that occurs in transit (unless you have a specialized policy such as an art dealer policy).

Your inland marine insurance can either be an “all-risk policy” or a “named-peril policy.” In an all-risk policy, all types of losses are covered unless they are specifically excluded. A named-peril policy offers narrower coverage because only the specific types of losses listed are covered.

Cost of inland marine insurance

The cost of inland marine insurance varies significantly based on the type of property that you’re insuring.

These factors can affect the cost of inland marine insurance:

  • Business size.

  • Type of business and property being insured.

  • Coverage limits.

  • All risk vs. named perils policy (all risk is generally more expensive).

  • How often, how far and in what conditions the property is transported.

The best way to estimate the cost of your inland marine insurance is to get a quote from multiple insurance providers. Before committing to a policy, make sure you carefully review it to assure complete coverage, ideally with the help of an insurance broker or other insurance professional.

How much coverage do you need?

Many small-business owners struggle to figure out how much inland marine insurance they need. You can’t necessarily predict the size of a future loss with perfect accuracy. However, you can estimate by evaluating the value of your insured property.

You’ll need to figure out how much property you have at one location at a given time. For instance, if you’re a contractor who leaves 10 pieces of equipment valued at $10,000 each at a storage yard, you would want inland marine coverage to compensate you up to $100,000. However, if a maximum of only five pieces of equipment were stored at any given time, you would only need half as much inland marine coverage.

Best places to buy inland marine coverage

Many insurance companies sell inland marine insurance. If you already have commercial property insurance, general liability insurance or a business owner's policy (BOP) through a good carrier, then we suggest asking the carrier if it offers inland marine coverage as an endorsement or separate policy.

Inland marine insurance can typically be purchased as a stand-alone policy or added as an endorsement to a traditional property policy or business owner's policy. The specific coverages can vary based on your insurer and the type of business you have. We recommend always going with an insurance company that has an A.M. Best financial strength rating of A or higher.

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Answer a few questions and we'll match you with an insurance partner who can help you secure quotes.

Here are some of the best insurance providers for buying inland marine insurance:

The Hartford

The Hartford is an A+ rated insurance company that offers inland marine coverage. It has been providing insurance to businesses for over 200 years. The Hartford can underwrite inland marine insurance for businesses in construction, technology and transportation. It also has coverage for businesses that sell collectibles, art, musical instruments and other specialized items.

One of the only downsides to The Hartford is that it only sells insurance through local independent agents.

State Farm

State Farm is another contender for buying inland marine insurance. Best known for personal auto, home and life insurance policies, State Farm is also active in the business insurance space. For inland marine insurance, State Farm offers a variety of specialized coverage options for businesses that might not be able to rely on standard property insurance.

Some examples include art galleries, veterinarians and vending machine companies. State Farm can either incorporate inland marine coverage into an existing State Farm business owner's policy, or it can issue a separate policy on an annual or short-term basis. This makes State Farm a good choice for seasonal businesses or businesses that are moving property on a one-off basis. You must contact a local State Farm agent to buy State Farm insurance.

Travelers Insurance

Travelers Insurance is an A++ rated insurer (highest possible rating) that’s been around for 160 years, specializing in personal, business and specialty insurance needs. It may be a good choice for inland marine insurance because it insures a variety of different industries. For example, in the fine arts category, it insures cultural institutions, corporate collectors and independent dealers and galleries. It even has a renewable energy category to insure businesses that invest in energy equipment, such as solar panels. You can find a local independent agent to get started.

Liberty Mutual

A final recommendation for inland marine insurance is A- rated insurer Liberty Mutual, which operates through a network of brokers and independent agents. It has an inland marine policy for construction businesses called Premier Protector - Builder’s Risk. It’s more comprehensive than the typical inland marine policy, covering air and land transit, floods and earthquakes.