What Is Inland Marine Insurance and What Does It Cover?

Inland Marine Insurance protects a company's movable business assets: equipment being transported between job sites, goods in transit on trucks, materials awaiting installation and a customer's property while in your possession. It is called inland marine even though this type of coverage does not cover anything having to do with boats. The reason for inland marine coverage is due to the fact that traditional Commercial Property Insurance generally ceases at the walls of a business owner's premises. However, most businesses have movable property assets.

Why would a land-based construction company need to carry "marine coverage?" The term has nothing to do with being located by the ocean. It's simply a relic from the past. The type of coverage provided will help solve a present day concern for you.

Why is it called inland marine insurance?

The term is based on where the original coverage for the ocean was. Marine Policies were written to insure cargo that crossed the oceans. Property (or Fire) policies originally insured a building located in one place against fire and little else. When cargo landed off of ships and continued to be moved by barges, trains and wagons, marine insurers followed the cargo on to land and the policies that they wrote are called Inland Marine. The name "Inland Marine" has stayed with these policies long after their original purpose went well beyond merely being in transit. To this day, the Insurance Information Institute defines the original difference in terms of coverage: marine insurance insures product(s) which have been moved across water and inland marine insures product(s) which have been moved across land.^[1]

The regulators ultimately put this history into law. The Nationwide Marine Definition was adopted for the first time at the national convention of insurance commissioners in 1922 and has been revised most recently by the NAIC in 1976. This definition still determines what states will allow an insurer to write as marine business.^[2] The definition includes the property while it is being transported, the property while it is in the care of a bailee, and the "instrumentalities of transportation and communication" (e.g., bridges, radio towers) which are used to transport goods or messages. Therefore, how bridges, radio towers and a plumber's van inventory were placed into the same category with inland marine can be understood. In addition, inland marine is largely a non-filed line, therefore insurers create their own policy wordings. Consequently, two contractor's equipment policies may have different wording. Many standard forms contained herein are derived from the American Association of Insurance Services (AAIS). Thus, the number designation appears as IM 7000, rather than CP and/or CG numbering utilized on other areas of your policy.

What does inland marine insurance cover?

Inland Marine is a category of insurance rather than a singular policy. The inland marine category protects a business' movable assets that have some form of movement or transportation associated with them. Coverage is sold as individual floaters, with each covering a specific risk. Nearly every business has at least one of these:

• Property in transit: a transportation floater covers your goods while they travel, and motor truck cargo coverage protects a trucker hauling other people's freight.
• Contractors equipment: contractors equipment insurance, written on the AAIS Contractors' Equipment Coverage form (IM 7000 04 04), covers cranes, backhoes, generators, forklifts, and tools. On your premises. At the jobsite. On the truck.
• Installation floaters: the AAIS Installation Floater Coverage form (IM 7100 08 10) covers a contractor's materials, from the moment they leave the supplier, through transit and jobsite storage, until they are installed and accepted.
• Builders risk: covers a structure under construction, and can extend to materials in transit to the site or stored off-site. Our builders risk guide covers it in depth.
• Bailee coverage: protects customers' property in your care, the dry cleaner's racks, the repair shop's bench. Once a customer's insurer pays for property you damaged, it can come after you for reimbursement, and your liability policy probably won't respond.
• Electronic data processing (EDP) floaters: cover computer hardware and electronic data on broader terms than those found in the property policy.

Generally a contractor who hauls and installs will carry a small stack of floaters, and they will usually have one equipment floater that covers their machines and tools, one installation floater for materials being delivered to job sites, and most contractors rely on the general contractor's builders risk policy for the building. Typically the purchase of this type of insurance is also not voluntary, since rental houses require a Certificate of Insurance prior to leasing a piece of equipment, and the equipment floater provides a separate limit for rented equipment. Once new machines are purchased, they are covered automatically for 60 days under IM 7000 04 04, and if you do not report them within this time frame, the coverage will cease.

How is inland marine different from commercial property insurance?

The major difference between inland marine and commercial property coverage is location. A commercial property policy constructed on the Building and Personal Property Coverage Form (CP 00 10), insures your business personal property inside the described building or in the open within 100 feet of the building or premises.

Beginning at that point, the amount of insurance coverage drops dramatically. Off-premises and in transit extensions are basically token amounts, and if builders' machinery and tools are located outside of your premises then they will be insured for specified causes of loss only (theft is not included). Conversely, inland marine policies follow the location of your property. Most commonly this would be an open perils policy where you select the limits you want.

According to the data from Verisk CargoNet, the average cargo theft for the United States and Canada was $273,990 in 2025, and the estimate for total losses that year was $725 million.^[3] Organized crime groups are targeting a loaded trailer as opposed to a building, so the property policy's transit extension would cover less than 2 percent of the average hit.

This is how both methods differ when it comes to property leaving the building:

The inland marine form is generally going to be broader in scope than the property form which covers the same type of risk. Contractor's Equipment Floater policies often include coverage for flood and earthquake risks. The standard property policy excludes these hazards outright. Broader does come at a cost, as many inland marine forms contain deductibles that are higher for loss by theft, and limit theft coverage for equipment left on unattended vehicles.

How is property valued under an inland marine policy?

The importance of valuation should be no less than that of the Limit. Many contractors' equipment is often insured at actual cash value, which is replacement cost minus depreciation. Replacement cost is reserved by many insurance companies for items around 5 years old or newer. Installation "floaters" will typically pay the actual cost to repair or replace an item with materials of similar type and quality plus the associated costs for labor, overhead and delivery. The Agreed Amount Option establishes a locked-in value for hard-to-value or modified equipment when the contractor purchases the policy. So ask which method is being used for each piece of equipment before you sign...not after a claim occurs.

Coinsurance is a double-edged sword when it comes to floating equipment insurance. Many floater policies have some form of 80, 90, or 100 percent coinsurance provision that will reduce what a partial loss pays based on how much you insure your equipment relative to its actual value, so if you do not maintain the required percentage of your property's value (the "coinsurance" requirement), then the policyholder is subject to the penalty provisions outlined within the contract.

A good example would be a contractor that has $30,000 worth of jobsite material but insures it for $20,000 under an 80 percent coinsurance clause, therefore the contractor needed a $24,000 limit. So before his deductible, a $10,000 partial loss settles at approximately $8,333. Values move with the used-equipment market, so review your schedules yearly, and remember that book value and original purchase price are the two most common wrong answers.

This guide is for educational purposes and summarizes standard ISO and AAIS policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.

The Bottom Line

Business property, whether in transportation mode or otherwise in motion, is covered by inland marine insurance. Therefore, when items move more than 100 feet away from an insured building, inland marine is what fills the gap left by a commercial property policy. The small $5,000 and $10,000 property extensions are not designed for mobile tools, equipment, materials, or customer goods. Ask your broker which floater covers each moving item, and read the valuation basis on the schedule before you sign.