What Is Inland Marine Insurance? What Does It Cover?

Inland marine insurance covers business property that moves: equipment traveling between job sites, goods in transit, materials waiting to be installed and customers' property in your care. Despite the name, it has nothing to do with boats. You need it because a commercial property policy mostly stops at your building, and most businesses have property that leaves it.

Why would a construction company need "marine" coverage? The word is a leftover from history, not a sign that you work near water. The coverage solves a very current problem, and Menlo quotes inland marine insurance for California businesses.

Why is it called inland marine insurance?

The name comes from ocean cargo insurance. Marine policies insured cargo crossing the ocean, while early property (fire) policies insured a building in one place against fire and little else. When cargo left the ships and kept moving by barge, rail and wagon, marine insurers followed it onto land, and the policies they wrote were called inland marine. The name stuck long after the coverage grew beyond goods in transit. The Insurance Information Institute still describes the original split: marine insurance covers goods moved over water, and inland marine covers goods moved over land.^[1]

Regulators later wrote this history into rules. The Nationwide Marine Definition was first adopted at the national convention of insurance commissioners in 1922 and last revised by the NAIC in 1976, and it still decides what states let insurers write as marine business.^[2] It covers property in transit, property in the care of a bailee, and "instrumentalities of transportation and communication," such as bridges and radio towers. That is how bridges, radio towers and the inventory in a plumber's van ended up in the same line. Inland marine is also largely a non-filed line, so insurers write their own policy wording and two contractors equipment policies can read differently. Many standard forms come from the American Association of Insurance Services (AAIS), which is why their numbers look like IM 7000 instead of the CP and CG numbers used elsewhere in your policy.

What does inland marine insurance cover?

Inland marine is a category of insurance, not a single policy: it covers business property that moves or travels. It is sold as separate floaters, each covering one exposure, and nearly every business has at least one:

• Property in transit: a transportation floater covers your goods while they travel, and motor truck cargo coverage protects a trucker hauling other people's freight.
• Contractors equipment: contractors equipment insurance, written on the AAIS Contractors' Equipment Coverage form (IM 7000 04 04), covers cranes, backhoes, generators, forklifts and tools on your premises, at the job site and on the truck.
• Installation floaters: the AAIS Installation Floater Coverage form (IM 7100 08 10) covers a contractor's materials from the moment they leave the supplier, through transit and job site storage, until they are installed and accepted.
• Builders risk: covers a structure under construction and can extend to materials in transit to the site or stored off-site. Our builders risk guide covers it in depth.
• Bailee coverage: protects customers' property in your care, such as the clothes on a dry cleaner's racks or the item on a repair shop's bench. Once a customer's insurer pays for property you damaged, it can seek reimbursement from you, and your liability policy probably won't respond.
• Electronic data processing (EDP) floaters: cover computer hardware and electronic data on broader terms than the property policy.

A contractor who hauls and installs usually carries a few floaters: an equipment floater for machines and tools, an installation floater for materials headed to job sites, and, for the building itself, often the general contractor's builders risk policy. The coverage is often not optional either: rental companies ask for a certificate of insurance before they lease equipment, and the equipment floater has a separate limit for rented equipment. Newly bought machines are covered automatically for 60 days under IM 7000 04 04, and coverage ends if you don't report them within that time.

How is inland marine different from commercial property insurance?

The main difference is location. A commercial property policy written on the Building and Personal Property Coverage Form (CP 00 10) covers business personal property inside the described building or in the open within 100 feet of the building or premises.

Beyond that, coverage drops sharply. The off-premises and in-transit extensions are small, and contractors' machinery and tools away from your premises are covered only for specified causes of loss, which do not include theft. Inland marine policies follow your property wherever it goes, usually on an open perils basis with limits you choose.

According to Verisk CargoNet, the average cargo theft in the United States and Canada was $273,990 in 2025, and total losses that year were an estimated $725 million.^[3] Organized theft rings target loaded trailers, not buildings, and the property policy's $5,000 transit extension would cover less than 2% of the average theft.

Here is how the two compare once property leaves the building:

Inland marine forms are usually broader than property forms for the same risk. Contractors equipment floaters often cover flood and earthquake, which the standard property policy excludes outright. The trade-off is that many inland marine forms carry higher theft deductibles and limit theft coverage for equipment left in unattended vehicles.

How is property valued under an inland marine policy?

Valuation matters as much as the limit. Contractors equipment is often insured at actual cash value, which is replacement cost minus depreciation, and many insurers offer replacement cost only for equipment about five years old or newer. Installation floaters usually pay the actual cost to repair or replace with materials of like kind and quality, plus labor, overhead and delivery. An agreed amount option locks in a value when you buy the policy, which helps with equipment that is hard to value or has been modified. Ask which method applies to each piece of equipment before you sign, not after a claim.

Coinsurance can cut a claim on floating equipment. Many floaters have an 80%, 90% or 100% coinsurance clause, which reduces what a partial loss pays if you insure the equipment for less than the required share of its value.

For example, a contractor with $30,000 of job site materials insures them for $20,000 under an 80% coinsurance clause, when the clause required a $24,000 limit. A $10,000 partial loss then pays about $8,333 before the deductible. Values move with the used-equipment market, so review your schedules every year, and remember that book value and original purchase price are the two most common wrong answers.

This guide is for educational purposes and summarizes standard ISO and AAIS policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.

How to find the gaps in your moving property

List every tool, machine, material and customer item that leaves your building, then ask your broker which floater covers each one and read the valuation basis on the schedule before you sign. Inland marine covers business property in transit or on the move, and it fills the gap your commercial property policy leaves once property is more than 100 feet from the building. The property policy's $5,000 and $10,000 extensions were never meant for mobile tools, equipment, materials or customer goods.