Insuring shipments for your business can be tricky. Most companies ship goods across the country by rail, truck, or surface mail. Sadly, many businesses fail to realize that these shipments are not covered by their current insurance policies.
Some think the shipper covers the losses, but this is rarely the case, especially with high-value items. In situations like these, Inland Marine Insurance is useful. If your business does not have this important insurance coverage, it’s time to reevaluate how to protect your goods when going from point A to point B.
What is Inland Marine Insurance?
Surprisingly, many business owners forget about Inland Marine Insurance coverage. It's an easy mistake to make. You have many insurance options as a business owner, and maybe you don't do much international business or shipping. So, why would you need a "marine" policy?
Inland Marine Insurance is different. This policy has nothing to do with the ocean or marine-based activities. Inland Marine Insurance is a policy designed to cover products, equipment, and materials as they are transported over land, which often occurs by truck or train. The policies typically cover your products when temporarily stored in a third-party warehouse. Common issues when shipping by land include: crashes, lost products, damaged goods, and cargo theft.
Let's look at this example:
Your order was supposed to be delivered three days ago. Instead of receiving your cargo, you receive an email filled with bad news. You shipped the product to your warehouse, but it never arrived. One thousand servers were stolen, but no one knows where they went. Cargo theft isn't common, but your products are gone, and your customers will not be happy. Refunds will have to be issued.
You reached out to your insurance company. You told them what happened and needed coverage to kick in as soon as possible. They informed you that you didn't have coverage on the products. You had a gap in insurance coverage that is going cost you a lot of money. What was your gap? Where did you miss out on coverage? You didn't have Inland Marine Insurance coverage.
Who Needs Inland Marine Insurance?
For some businesses, their owner's coverage or commercial package policy should offer sufficient coverage. However, companies that typically ship a lot of equipment and products will require Inland Marine Insurance. Often, these products are high value, which excludes them from most basic property policies. The nature of your business will determine whether you need this coverage. For owners who ship frequently, Inland Marine Insurance coverage may provide peace of mind when shipping a large investment. Here are some of the business types that require inland marine:
- Photography businesses
- Food Vendors
- Networking and communications vendors
- High-tech companies
- Construction equipment vendors
- Medical equipment vendors
- Online retailers of high-priced items
This list is not exhaustive and depends on how a company operates.
What Does Inland Marine Insurance Cover?
This coverage is used to fill a gap between when you have possession of a product and when it is in transit. Other types of policies often cover small shipments and products. Inland marine is usually required to cover high-priced items like:
- Networking and communications equipment
- Medical equipment
- Photography equipment
- Scientific devices
- Construction equipment
Special Inland Marine Insurance coverage can be purchased, too. While optional, these ensure additional protection with goods in transit:
- Bailee’s Customer Coverage: This add-on policy is used to protect property that is in the care of your business but not under your ownership. Warehouses and repair shops often require these policies.
- Builder’s Risk: When undergoing new construction projects and renovations, the materials and property need this protection to ensure the business is fully covered.
- Installation Floater: This coverage ensures materials and property are insured from the time they are loaded onto a truck until they are properly installed.
- Exhibition and Fine Art Coverage: If you have valuable items on display or in an exhibit, then this coverage ensures the items are protected, even when in transit.
- Motor Truck Cargo Coverage: Ensures a client’s products are protected as your company is transporting and delivering them.
How Much Does Inland Marine Insurance Cost?
The cost of an Inland Marine Insurance policy varies from company to company. This depends on the size of your business, how much protection you want, and if your state has requirements or limits that must be met.
Some policies cost under $500, while others easily surpass $10,000. This depends on your business, what you ship, and other variables. However, the average cost of Inland Marine Insurance is $2,500 per year.
The best way to estimate the cost of Inland Marine Insurance is to get a quote. Review the quote carefully and make sure every aspect of your business is covered.
Inland Marine Insurance Exclusions
Inland Marine Insurance is especially valuable for business owners who work with large, expensive shipments. If your company does not have this coverage, speak with an agent about getting an inland marine policy before it's too late.
These policies offer a lot of protection, but they do not cover:
- Items that have not been shipped
- Items that are damaged after they ship
- Items that are intentionally damaged
- The vehicle used to transport the items
- Cargo stolen on the ocean – Ocean Marine Insurance is needed
If your business transports a lot of items, look at inland marine and other associated special coverages. Don’t leave large gaps in your insurance any longer.