Alyssa Lane
Inland marine insurance is a type of insurance policy that protects businesses from losses related to damaged accounts receivable records or customers' failure to pay invoices. It covers movable property, including tools, equipment, and goods in transit that cannot be protected under regular insurance. It is derived from ocean marine insurance, which covers goods transported by sea, whereas inland marine insurance covers goods transported by truck or train. It is often used to protect workers who travel frequently, especially in fields such as science, electrical work, photography, communications, and construction.
| Characteristics | Values |
|---|---|
| Scope | Covers goods transported by truck, train, or other vehicles over land |
| Coverage | Protects against loss or damage to property, including accounts receivable records, equipment, materials, and supplies |
| Items Covered | Tools, equipment, machinery, electronic devices, valuable papers, signs, and goods in transit or stored off-site |
| Industries | Construction, scientific, electrical, photographic, communications, and automotive |
| Policy Limits | Varies depending on the item insured, e.g., fine art vs. solar panels |
| Deductibles | High deductibles are typical |
| Exclusions | May not cover goods damaged by natural disasters, depending on location |
| Claims | Damage, theft, or loss of property during transit or at job sites |
| Purpose | Financial protection for businesses dealing with movable or high-value assets |
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What You'll Learn
Coverage for financial losses
Inland marine insurance covers financial losses in a variety of ways. It protects businesses from financial losses caused by physical damage to equipment, tools, and other movable property. It also covers materials, products, and other property in transit over land, including high-priced goods, products, or equipment. This type of insurance is especially important for businesses that frequently ship products, equipment, or high-value items, which may be excluded from basic property coverage.
Inland marine insurance also covers accounts receivable, protecting businesses from financial losses caused by damage or destruction of accounts receivable records or a customer's failure to pay invoices. This can include interest charges on loans required to offset amounts that the insured is unable to collect, as well as collection expenses and other reasonable expenses incurred to re-establish lost records.
Another way inland marine insurance provides financial protection is through bailee coverage, which offers legal and financial protection for businesses when a client's property in their care is damaged. This is particularly relevant for businesses that provide services such as storage, repair, or warehousing.
Cargo insurance is another aspect of inland marine insurance that provides financial protection for freight, logistics, shipping, and moving companies. It covers financial losses due to damage or theft of cargo while it is in transit.
Finally, inland marine insurance can include exhibition and fine art coverage, which protects valuable items while on exhibit, in transit, or on loan. This type of coverage is designed for museums and galleries, recognising the unique challenges of transporting and replacing artworks in the event of damage or loss.
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Protection against customer non-payment
Accounts receivable insurance is designed to protect your business from non-payment of commercial debt. This means that if a customer does not pay you because they go bankrupt or insolvent, or if they simply do not pay on time, your business will still receive the payment for the unpaid invoices that are insured.
There are four types of accounts receivable coverage: Whole Turnover, Key Accounts, Single Buyer, and Transactional. Whole Turnover protects your business against non-payment of commercial debt from all customers, and you can choose to have this coverage apply to all domestic sales, international sales, or both. With Key Accounts, you choose to insure your largest customers whose non-payment would pose the greatest risk to your business. Single Buyer insurance is for businesses whose most transactions are with one customer, and it insures against potential default from just that customer. Transactional coverage protects against non-payment on a transaction-by-transaction basis and is best for companies with few sales or only one customer.
In addition to accounts receivable insurance, there are other steps you can take to protect your business from customer non-payment. Firstly, it is important to make it easy for your customers to pay you. You can do this by learning all the ways to accept online payments and asking customers about their payment cycle. Having recorded conversations with your customers can also help you monitor customer satisfaction and prevent non-payment due to unhappiness with your product or service.
If you are dealing with late payments, you can follow up with any stated means for payment, such as sending a final invoice. You can also take legal action, such as going through small claims court or seeking the help of a professional debt collector. However, it is important to stick to the guidelines you set to ensure that your customers take them seriously. If you have gone through these steps and still haven't received payment, you need to decide if it's costing you more to pursue the debt than the amount you're owed.
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Coverage for damaged records
Inland marine insurance is a type of commercial property coverage that protects businesses from financial losses caused by physical damage to equipment, tools, and other movable property. It covers materials, equipment, products, and other property transported over land by truck or train. It also covers high-value items that are not adequately insured under commercial property or business owners' policies.
Accounts receivable insurance is a type of inland marine insurance that covers losses resulting from a business's inability to collect from customers who owe money. This is typically due to the loss or damage of the company's accounts receivable records. If physical or digital records are damaged by a covered peril, such as fire or theft, making it impossible to collect from a customer, the insurer will reimburse the business based on past receivables.
Inland marine insurance policies may include scheduled limits, which apply to a single item, or blanket limits, which apply to a group of items. Businesses can choose specific limits for their most valuable items and a blanket limit for their remaining property. Interest charges on loans required to offset amounts pending the insurer's payment of a loss are also covered, as are collection expenses and other reasonable expenses incurred to reestablish lost records.
In addition to covering physical property, inland marine insurance has expanded to cover hardware and software networks. Policies may pay for damages to data, hardware, or other information systems. This type of coverage is especially important as standard property policies may exclude computer networks, leaving businesses vulnerable to data losses.
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Coverage for movable property
Inland marine insurance is a type of commercial property coverage that emerged to fill the gaps in standard property insurance policies. It covers movable property that may not remain at a fixed location, as well as fixed properties that are instrumental in transportation and communication. This includes tools, equipment, machinery, building materials, and cargo. It also covers high-value items that are not adequately insured under a commercial property or business owners policy, such as a bulldozer valued at $150,000.
Inland marine insurance is often used to protect workers who travel frequently, especially in fields such as science, electrical work, photography, communications, and construction. It is also suitable for businesses that frequently ship or transport products, equipment, or specialty goods. This is because most commercial property policies provide little to no coverage for movable property.
Inland marine insurance can be added to an existing business insurance package or commercial property policy to ensure comprehensive coverage for movable assets. It is important to note that inland marine insurance does not cover stationary equipment, and many policies also exclude damage caused by insects, wear and tear, mould, floods, and earthquakes. Additionally, inland marine insurance does not cover goods damaged by certain natural disasters, depending on the business's location.
Inland marine insurance policies are often specialised to an industry-specific standard. For example, a contractor's equipment floater policy covers loss, damage, or theft of a contractor's equipment or tools, while electronic data processing insurance protects businesses against loss or damage to computers and other electronic equipment. Warehouse coverage is another example of a specialised inland marine insurance policy, providing liability protection to warehouse operators for property stored in their warehouses.
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Coverage for goods in transit
Inland marine insurance covers goods in transit over land. It is derived from ocean marine insurance, which covers goods transported by sea. While ocean marine insurance is one of the oldest forms of insurance, dating back to when goods were frequently shipped overseas, inland marine insurance was created during the Industrial Revolution to account for the difference in risks between water and land transportation.
Inland marine insurance covers materials, equipment, products, and other property transported over land. It is often used to protect workers who travel frequently, particularly in the scientific, electrical, photographic, communications, and construction fields.
Inland marine insurance policies can be specialised and tailored to an industry-specific standard. Depending on the business's needs, the policy may cover electronics, technical equipment, or even the client's materials or items if they are damaged or stolen on the business's property.
There are two main types of inland marine insurance policies: ITC A (All Risk) and ITC B (Basic Risk). ITC A provides comprehensive protection, covering many risks during inland transit, including accidents, theft, natural disasters, and more. ITC B offers more limited coverage, focusing on essential risks like fire, lightning, and collision damage.
Inland marine insurance is essential for businesses that frequently ship or transport products or equipment, especially specialty or high-value goods. It provides protection against risks such as damage, theft, and other losses that may occur while the goods are in transit, ensuring that businesses are not left paying the costs to repair or replace property.
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Frequently asked questions
Inland marine insurance is a type of insurance that covers goods in transit over land, from their origin to their final destination. It also covers goods that are stored off-site.
Inland marine insurance covers many types of property, including tools, equipment, products, and other valuable items. It can also cover electronic data processing equipment, mobile equipment, and property of others.
While ocean marine insurance covers goods transported by sea, inland marine insurance covers goods transported over land, by truck or train. Inland marine insurance is also less regulated than other types of insurance due to the uniqueness of the items covered.
Any business that frequently moves assets between locations or stores someone else's property should consider inland marine insurance. Businesses in the scientific, electrical, photographic, communications, and construction fields often have inland marine insurance to protect their workers who travel frequently.
Yes, inland marine insurance can cover accounts receivable. This coverage protects businesses from financial losses caused by damage or destruction of accounts receivable records or a customer's failure to pay invoices. It may also cover the loss of electronic data and valuable papers.
