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12.1 Marine Insurance Foundations

Historically, Ocean Marine insurers provided most of the transportation insurance used in the United States. At that time, many major cities were located along coastlines or major rivers, and goods were commonly transported by ocean or inland waterways. The development of railroads, motor trucks, and airplanes created new methods of transporting property over land and through the air. These changes also created a need for insurance coverage designed to protect goods while in transit by these newer forms of transportation.

Today, Inland Marine insurance generally covers goods and merchandise while they are being transported over land. The coverage applies to the property in transit, but it does not insure the vehicle transporting the property. Ocean Marine insurance covers property transported by vessel over domestic or international waters, including oceans, rivers, and lakes. It may also cover related inland or air transportation that is part of the overall waterborne shipment. Unlike Inland Marine insurance, Ocean Marine insurance may also provide physical damage coverage for the vessel carrying the property.

Nationwide Marine Definition​

The Nationwide Marine Definition provides guidelines for determining which property and transportation exposures may be classified as Inland Marine, Ocean Marine, or transportation insurance. To qualify for Marine insurance, the property must involve an element of transportation. In general, the property must:

  • Be in transit.
  • Be movable.
  • Have a direct relationship to transportation or communication.

The Nationwide Marine Definition identifies the broad classes of property that are eligible for coverage under Marine insurance contracts.

Imports​

Imports may be insured while located anywhere, provided they are kept separate from other property and can be readily identified.

Exports​

Exports may also be insured at any location. Property becomes classified as an export when it is being prepared for shipment to a foreign destination. It retains its export status unless it is redirected for sale or use within the domestic market.

Domestic Shipments and Property in Transit​

This category includes property shipped on consignment for sale, distribution, approval, or auction. Coverage may apply while the property is in transit, in the custody of another party, or being returned to the consignor. Coverage does not apply while the property is located on premises owned, leased, or operated by the consignor, which is the person or business that sends the goods. Property within this category may be insured under various transportation coverage forms.

Instrumentalities of Transportation or Communication​

This category includes property that may remain at a fixed location but serves an essential function in the transportation or communication industries. Because this property is highly specialized, it may be difficult to insure under standard commercial property policies. Examples include:

  • Bridges and tunnels.
  • Transmission towers and attached radio or television transmitting equipment.
  • Piers, wharves, slips, docks, and dry docks.
  • Marine railways.
  • Pipelines.
  • Outdoor cranes and loading bridges.
  • Similar transportation- or communication-related structures and equipment.

Personal and Commercial Floater Risks​

These categories include various types of movable personal property and business personal property that face an increased risk of loss. Coverage is commonly written on an open-perils basis and generally applies while the property is away from the insured premises. Examples include:

  • The Personal Articles Floater, which covers valuable personal property.
  • The Bailees Customers Coverage Form, which covers customers’ property while it is in the care, custody, or control of a bailee.