INTRODUCTION
Probably the first form of insurance was the protection that was offered on a Captain=s Cargo that was traveling on the high seas. Since losses through shipwrecks and the activities of foreign governments, the need for Ocean Marine Policies became evident. The cargo on the ships was protected from one port to the next.
As civilization developed, the growth of towns along the water led to the implementation of extended coverage for important cargo. The cargo was insured as it was being transported from the decks to its final destination, and it didn=t matter how far the cargo was to travel inland, it was protected from loss.
Some enterprising merchants showed a desire for protection for their goods as it traveled over land, thus, the creation of Inland Marine Insurance that covered goods being transported inland.
INLAND MARINE INSURANCE EXPANSION
Today, Inland Marine Insurance covers a wide array of merchandise and also property that is considered to be movable or Afloats@.
Our reason for the expansion of Inland Marine Insurance is the flexibility that many insurers have used in developing property protection. Since there was no state intervention, many insurers simply instituted their own policy forms and rates, thus being able to streamline coverage according to each individual situation.
Another reason for the popularity of Inland Marine Insurance was the all‑inclusive nature of the coverage. Inland Marine contracts were frequently written on an AAll‑Risk@ basis which favored the insured greatly. This led to conflict with the Casualty Insurers as insureds favored the AAll‑ Risk@ Coverage as opposed to the Limiting Named Peril Basis.
Finally, in 1933, the National Association of Insurance Commissioners (NAIC) developed the ANationwide definition and interpretation of the insuring powers of Marine and Transportation Underwriters@ ‑ better known as the ANationwide Definition@. The NAIC was intent on resolving the differences between the Casualty and Marine Underwriters. Basically, the document itemized the risks and coverages, which were allowed to be written as Marine Insurance. Through two revisions (1953 & 1976), a majority of states now adhere to the NAIC model definition. The major changes introduced by the 1976 revision separated Personal from Commercial Risks and listed the following classes as eligible for Marine Underwriting:
1. shipments of domestic commerce
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2. property in the custody of bailiffs
3. installation risks
4. electronics processing policies
5. bridges and piers
6. policies covering difference in conditions
In summary, the 1933 definitions were the initial effort by the NAIC to control what could be written as Inland Marine Insurance. The 1953 and 1976 revisions basically identified and classified the various marine risks.
THE ROLE OF THE HOMEOWNER POLICY
Because of the various exclusions and limitations of coverage under a Homeowners Policy, owners of valuable Personal Property often demand broader and more Comprehensive Coverage than that provided by their Homeowners Policy.
Example: Homeowners Policies provide only Unscheduled Coverage and specific items are not listed. Also, some of the Homeowners Policies insure only against specific named perils which could be quite limiting to the insured. Homeowners policies also place total, aggregate limits on certain classes of the insured=s Personal Property. So, if the insured=s personal property, such as a mink coat, jewelry, stamp collection and silverware, were all destroyed by a fire, he/she would only receive the aggregate amount of coverage and not specific dollar amounts for each particular item. Because of these coverage limitations, the insured would probably desire extended Comprehensive Coverage on his/her valuable Personal Property.
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CHAPTER 1 ‑ QUESTIONS
1. Inland Marine Insurance covers a wide array of merchandise that is considered to be:
a. movable
b. stationary
c. permanent
d. temporary
2. One reason for the expansion of Inland Marine Insurance was its
a. permanence
b. flexibility
c. standard rates
d. standard forms
3. The NAIC developed the nationwide definition of Marine Insurance by
a. itemizing risks
b. itemizing coverages
c. both a & b
d. neither a or B
4. Homeowners Policies usually provide only:
a. Scheduled Coverage
b. All‑Risk Coverage
c. unlimited limits on certain classes
d. Unscheduled Coverage
5. In reality, the Inland Marine Policy will
a. limit Homeowners Coverages
b. broaden Homeowners 9
c. restrict Homeowners Coverage
d. none of the above
answers
1. a
2. b
3. c
4. d
5. b