Study guide
11.1 Inland Marine Insurance
Property & Casualty Insurance Exam
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1 Introduction
0.1 About the Property & Casualty Exam 0.2 How to Use This Course
2 Chapter 1: Insurance Fundamentals
1.1 Risk and Risk Management 1.2 Types of Risk 1.3 Principles of Insurance 1.4 The Insurance Contract 1.5 Policy Structure and Components
3 Chapter 2: Property Insurance Concepts
2.1 Property Coverage Basics 2.2 Perils, Hazards, and Exclusions 2.3 Valuation Methods 2.4 Coinsurance and Insurance to Value 2.5 Deductibles and Policy Limits
4 Chapter 3: Dwelling Policies
3.1 Dwelling Policy Overview 3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3) 3.3 Dwelling Property Coverages 3.4 Dwelling Exclusions and Conditions
5 Chapter 4: Homeowners Policies
4.1 Homeowners Policy Overview 4.2 Homeowners Policy Forms (HO-2 through HO-8) 4.3 Section I: Property Coverages 4.4 Section II: Liability Coverages 4.5 Homeowners Exclusions 4.6 Homeowners Conditions 4.7 Common Homeowners Endorsements
6 Chapter 5: Personal Auto Policy
5.1 Personal Auto Policy Overview 5.2 Part A: Liability Coverage 5.3 Part B: Medical Payments Coverage 5.4 Part C: Uninsured/Underinsured Motorists 5.5 Part D: Physical Damage Coverage 5.6 PAP Exclusions 5.7 No-Fault Insurance and PIP
7 Chapter 6: Liability Insurance Concepts
6.1 Liability Insurance Basics 6.2 Negligence and Tort Law 6.3 Types of Legal Liability 6.4 Personal Umbrella Policies
8 Chapter 7: Commercial Property Insurance
7.1 Commercial Package Policy (CPP) 7.2 Building and Personal Property Coverage Form 7.3 Causes of Loss Forms 7.4 Business Income Coverage 7.5 Businessowners Policy (BOP)
9 Chapter 8: Commercial General Liability
8.1 CGL Policy Overview 8.2 Coverage A: Bodily Injury and Property Damage 8.3 Coverage B: Personal and Advertising Injury 8.4 Coverage C: Medical Payments 8.5 CGL Exclusions 8.6 CGL Limits and Conditions
10 Chapter 9: Commercial Auto Insurance
9.1 Business Auto Policy Overview 9.2 Covered Auto Designation Symbols 9.3 BAP Liability Coverage 9.4 BAP Physical Damage Coverage 9.5 Garage and Truckers Coverage Forms
11 Chapter 10: Workers Compensation
10.1 Workers Compensation Overview 10.2 Part One: Workers Compensation Insurance 10.3 Part Two: Employers Liability 10.4 Workers Compensation Exclusions 10.5 Other States and USL&H Coverage
12 Chapter 11: Other Commercial Lines
11.1 Inland Marine Insurance 11.2 Ocean Marine Insurance 11.3 Commercial Crime Insurance 11.4 Surety Bonds 11.5 National Flood Insurance Program 11.6 Professional Liability Insurance 11.7 Commercial Umbrella and Excess Liability 11.8 Boatowners and Personal Watercraft Insurance 11.9 Farm and Ranch Insurance 11.10 Mobile Home and Manufactured Housing Insurance 11.11 Title Insurance
13 Chapter 12: Insurance Regulations and Ethics
12.1 Producer Licensing 12.2 Producer Authority and Responsibilities 12.3 Unfair Trade Practices 12.4 Claims Settlement Practices 12.5 State Insurance Department 12.6 Penalties and Disciplinary Actions
11.1 Inland Marine Insurance
Key Takeaways Explain This Topic AI
Inland marine covers property in transit and mobile/floating-value property; the name is historical, tracing back to ocean cargo insurance that followed goods inland after they left the ship
The Nationwide Marine Definition (NMD), last revised 1976, defines the six classes inland marine may insure: imports, exports, domestic shipments, instrumentalities of transportation/communication, personal property floaters, and commercial property floaters
Inland marine is typically open-peril (all-risk), written on valued or agreed-amount terms, with little or no coinsurance and broad territory
Common forms include contractors equipment floaters, builders risk, EDP/computer coverage, bailee forms, and transit policies; filed vs. non-filed (manuscript) forms give underwriters rating freedom
On the P&C licensing exam, expect to distinguish inland marine from commercial property by trigger of mobility/transit and from ocean marine by the over-water boundary
Last updated: June 2026
What Inland Marine Actually Insures
Inland marine insurance covers property that moves, property in transit, and the instrumentalities of transportation and communication (bridges, tunnels, piers, radio/TV towers). Despite the word "marine," most inland marine risks never touch water. The line grew out of ocean marine cargo coverage: 17th- and 18th-century cargo policies ended when goods left the vessel, so a new "inland" extension was built to follow shipments overland to their final destination.
Quick Answer: If property is mobile, in transit, or hard to fix to one address, it is usually an inland marine risk — not a commercial property risk.
The defining test on the exam is mobility or transit , not the type of peril. A $400,000 crane sitting on a job site is inland marine (a contractors equipment floater); the same value in a fixed boiler bolted to a building is commercial property.
The Nationwide Marine Definition (NMD)
Filed by the National Association of Insurance Commissioners and last substantially revised in 1976 , the Nationwide Marine Definition lists the classes a company may write as inland (or ocean) marine. Underwriters must keep risks inside these classes; writing fixed-location, non-transit property as "inland marine" to dodge coinsurance is a regulatory violation.
- NMD Class Typical Examples
- Imports / Exports Goods entering or leaving the country
- Domestic shipments Goods in transit between U.S. points
- Instrumentalities of transportation/communication Bridges, tunnels, piers, pipelines, towers
- Personal property floaters Jewelry, fur, fine arts, camera floaters
- Commercial property floaters Contractors equipment, mobile medical gear
- Bailee coverage Property of others in your care (dry cleaners, repair shops)
- Why Inland Marine Looks Different from Commercial Property
Inland marine evolved with very few regulatory constraints, so forms are flexible and often manuscript (custom-written). The result is a coverage style that contrasts sharply with standard property forms.
- Feature Inland Marine Standard Commercial Property
- Coverage basis Usually open-peril (all-risk) Often basic/broad named perils
- Valuation Frequently valued / agreed amount ACV or replacement cost
- Coinsurance Typically none Commonly 80% or 90%
- Territory Broad, sometimes worldwide Described premises only
- Forms Filed or non-filed (manuscript) Standardized ISO forms
Filed vs. non-filed: Some inland marine forms (e.g., personal articles floaters) are filed with the state. Large commercial classes are often non-filed , letting the underwriter craft terms and rates per risk.
- Major Inland Marine Forms You Must Know
- Contractors Equipment Floater
Covers mobile equipment — bulldozers, cranes, compressors, hand tools — at job sites and in transit. Written open-peril, it excludes ordinary wear, mechanical breakdown, and (usually) equipment licensed for road use, which belongs on a commercial auto policy.
Builders Risk
Covers structures under construction . The amount of insurance tracks the rising value of the project (the "completed value" or reporting form approach). Coverage typically ends at the earliest of: the structure being occupied, the policy expiring, or 90 days after construction is complete. It can extend to materials in transit and at temporary storage.
Electronic Data Processing (EDP) / Computer Coverage
Broader than standard property: insures hardware, media, and data/software restoration, plus extra expense to keep operating. Note that pure cyber-breach liability is handled by cyber policies (Section 11.6), not EDP property forms.
Bailee Forms
Cover property of customers in the insured's care, custody, or control — a furrier's storage floater or a processor's bailee form. The bailee is not the owner, but is legally responsible for the goods.
Transit / Motor Truck Cargo
Insures goods in shipment. A motor truck cargo policy covers a carrier's liability for others' freight; a shipper's policy covers the owner's own goods.
Worked Example
A paving contractor insures a $250,000 asphalt roller on a contractors equipment floater. The roller tips into a ditch while being driven between two job sites on a private haul road. Because the floater is open-peril and the loss is not wear or mechanical breakdown, the upset is covered. Had the roller been damaged while licensed and traveling a public highway under its own power, the business auto policy — not the floater — would respond.
Common Exam Traps
Coinsurance reflex. Candidates apply an 80% coinsurance penalty to inland marine; most inland marine carries no coinsurance .
"Marine means water." It does not — the transit/mobility connection is the test.
Builders risk end date. Coverage stops at occupancy/completion, not at the next renewal.
Auto vs. floater. Road-licensed vehicles travel on auto policies; off-road mobile equipment travels on the floater.
Bailee Liability and the Care, Custody, or Control Problem
A bailee is anyone who temporarily holds another person's property for a purpose — a jeweler resetting a stone, a dry cleaner, a furniture refinisher, a parking garage. The bailee is legally responsible for the goods while they are in its care but does not own them, so a standard property policy (which insures the named insured's own property) leaves a gap. Bailee customer floaters fill that gap by insuring the customers' property in the insured's possession, on premises and in transit, usually open-peril. A processor's policy may add coverage while goods are being worked on.
The exam tests the recognition that the bailee insures property it does not own because of the legal duty it owes to the owner.
Reporting Forms and Fluctuating Values
Many inland marine exposures have values that change daily — a warehouse distributor's stock in transit, or a builders risk project rising in value as work proceeds. Reporting forms address this: the insured periodically reports values (monthly is common), and premium is adjusted to actual exposure rather than a flat estimate. The trade-off is the honesty penalty : if the insured under-reports values at the last report before a loss, recovery is limited to the proportion the reported value bears to the actual value.
This mirrors the function coinsurance serves in commercial property, but it operates through reporting accuracy rather than a fixed percentage clause, and it is a favorite exam contrast point.