Most small business owners have all their property where their company is located. For example, the inventory that you store at your shop, the supplies at your back office, and the equipment at your warehouse. All of this is 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.
If you regularly transport property or store it away from your business location, inland marine coverage should be part of your small business insurance package. Here, we’ll cover what inland marine insurance covers, what it typically costs, and which providers offer it.
What is inland marine insurance?
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.
Do you need inland marine insurance?
Most business owners with tangible assets should already have a commercial property insurance policy. Commercial property insurance covers assets that are stored at a stationary business location. For example, if someone vandalizes your shop window, or if 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 different business locations. If the truck bed malfunctions and your inventory falls out and gets damaged, standard commercial property insurance won’t 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 need inland marine insurance.
Inland marine coverage is important for the following types of businesses:
Contractors and freelancers who travel between job sites
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
Quinten Lovejoy, an insurance risk advisor at Crane Agency, says, “Most property insurance policies cover property that is at the ‘described business premises’ and outward to around 1,000 feet. When the property goes beyond that boundary, inland marine policies kick in. [For example,] if property were to be damaged or stolen while at a trade show, that property likely is not located within 1,000 feet of your property policy’s ‘described premises’ and thus, you would need inland marine coverage to compensate you for such a loss.”
The name “inland marine insurance” can be confusing for small business owners. 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.
What inland marine insurance covers
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 (BOP). The specific coverages can vary based on your insurer and the type of business you have.
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.
In addition to the above, 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.
Inland marine insurance covers losses resulting from the same events that trigger standard property insurance. For example, most inland marine policies cover fires, certain types of weather damage, vandalism, and theft.
What inland marine insurance doesn’t 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 that 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. According to Brett A. Dempsey, a property and casualty risk advisor with CBIZ Insurance Services, “Some policies cost as little as $500 annually, while the higher end of the spectrum can go beyond $10,000. The average annual cost of an inland marine policy is around $2,500. The policy premiums vary widely depending on the type of business operations and what exactly is being insured.”
These are factors that can affect the cost of inland marine insurance:
Type of business and property being insured
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.
Crane Agency’s Lovejoy says, “Insurance carriers will price inland marine insurance on either a replacement cost basis, meaning in the event of a loss you receive compensation in line with the amount of money it would cost to replace that property of the same ‘like, kind and quality’—or they will price the coverage on an actual cash value basis, which means they will compensate you for the replacement cost minus depreciation.” That could significantly affect your decision on coverage limits, depending on how quickly a piece of property declines in value.
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 through a good carrier, then we suggest asking the carrier if they offer inland marine coverage as an endorsement or separate policy. We recommend always going with an insurance company that has an A.M. Best financial strength rating of A or higher.
Here are some of the best insurance providers for buying inland marine insurance:
1. The Hartford
The Hartford is a popular, A+ rated insurance company to buy inland marine coverage. They’ve been providing insurance to businesses for over 200 years and are regularly among the top 10 insurers for customer service ratings. Available in 45 states, The Hartford can underwrite inland marine insurance for businesses in construction, technology, and transportation. They also have coverage for businesses that sell collectibles, art, musical instruments, and other specialized items.
One of the only downsides to The Hartford is that they only sell insurance through local independent agents. You can request a quote online, but many business types will see an error message at the end of the form, asking them to call a local agent.
If you’re hoping to get inland marine insurance but want to be able to compare your options better, consider using a marketplace like Insureon. Insureon lets you put your business information into an online questionnaire, and then you can compare business insurance rates and coverage options from multiple A-rated insurance companies. There’s no extra charge to use the service, and Insureon employs licensed reps who can help you figure out the best options for your business. This type of marketplace can save you time by showing all your options in one place.
3. State Farm
State Farm is another contender for buying inland marine insurance. Best known for their personal auto, home, and life insurance policies, State Farm is also active in the business insurance space in all 50 states. 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 owners policy, or they 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.
4. 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. They’re a good choice for inland marine insurance because they have a deep understanding of the risks applicable to different industries. For example, in the fine arts category, they insure cultural institutions, corporate collectors, and independent dealers and galleries. They even have 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.
5. Liberty Mutual
A final recommendation for inland marine insurance is A-rated insurer Liberty Mutual, which operates through a network of independent agents. They can ensure that your property is protected on the road, in temporary storage, or while in off-site storage. They have an especially strong 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. Liberty Mutual’s certified in-house engineers will work with you to proactively identify risk areas and solutions. That helps you reduce your incidence of claims and save money.
Bottom line on inland marine insurance
Regular property insurance is designed to protect property that’s stored at your business premises. But business owners often have to move property from one place to another or temporarily store property off-site. In those cases, inland marine insurance is essential. Fortunately, many leading insurers offer inland marine coverage. This makes it easy to shop around and find the broadest coverage at the best value.
This article originally appeared on Fundera, a subsidiary of NerdWallet.