Inland Marine and Commercial Property Coverages
Inland marine grew out of the nationwide marine definition, which permits marine-style (floater) coverage on property that is in transit, held by bailees, or of a mobile nature. This is the conceptual hinge exam questions test: inland marine covers movable property and instrumentalities of transportation/communication, whereas commercial property forms cover real property and business personal property at fixed locations.
Key inland marine forms include motor truck cargo, bailee's customer and bailee's own coverage, accounts receivable, valuable papers and records, fine arts, jewelry floaters, and contractors' equipment. Commercial property forms (building and personal property, business income, blanket vs. specific) respond to named perils or special (all-risk) forms, with coinsurance, agreed value, and replacement cost vs. actual cash value valuation options.
Traps: (1) Confusing coinsurance (a valuation penalty for underinsurance) with deductibles; (2) miscalculating the coinsurance requirement - the formula is (limit carried ÷ limit required) × loss, capped at the policy limit; (3) assuming a bailee has coverage for customers' goods - the bailee's own policy covers only the bailee's interest, not the customer's; (4) overlooking business income exclusions for utility service interruption unless endorsed.
Rule of thumb: if the property moves or is held by another for the account of the owner, think inland marine; if it stays put at a scheduled location, think commercial property.
Worked example: A building valued at $1,000,000 is insured for $600,000 under an 80% coinsurance clause. A $200,000 loss occurs. Required insurance = $800,000. Recovery = (600,000 ÷ 800,000) × 200,000 = $150,000, subject to the policy limit.