NAIC Document

Summary: The Nationwide Inland Marine Definition, a document published by the National Association of Insurance Commissioners (NAIC) and subscribed to in many states, dates back to June 1953. It replaced the older Nationwide Definition and Interpretation of the Insuring Powers of Marine and Transportation Underwriters, adopted in June 1933. A few details of the 1953 definition were changed in 1954, 1956 and 1959.

In 1977, the 1953 version was supplanted by a new definition, the text of which is partially reproduced in this article.

A special organization, known as the Committee on Interpretation of Nationwide Marine Definition, issues interpretive bulletins from time to time, indicating whether a given type of proposed coverage falls within the definition.

Topics covered:

Format
Applicability
Adoption of definition

Format

Following the NAIC resolution and statement of purpose, the document sets out the forms of protection that may be classified or identified as marine, inland marine, or transportation insurance. It is expressly stated that the definition does not list all of the kinds of risks that may be written, classified, or identified under marine, inland marine, or transportation insuring powers nor shall it be construed to mean that the kinds of risks and coverages listed are solely marine, inland marine, or transportation in all instances.

The text of the definition, as to coverages that may be written, follows.

Applicability

Marine or transportation policies may cover under the following conditions:

A.Imports

Imports may be covered wherever the property may be and without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.

An import, as a proper subject of marine or transportation insurance, shall be deemed to maintain its character as such, so long as the property remains segregated in such a way that it can be identified and has not become incorporated and mixed with the general mass of property in the United States, and shall be deemed to have been completed when such property has been:

(1)Sold and delivered by the importer, factor or consignee; or

(2)Removed from place of storage and placed on sale as part of its importer's stock in trade of sale-distribution; or

(3)Delivered for manufacture, processing or change in form to premises of the importer or of another used for any such purposes.

B.Exports

Exports may be covered wherever the property may be without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.

An export, as a proper subject of marine or transportation insurance, shall be deemed to acquire its character as such when designated or while being prepared for export and retain that character unless diverted for domestic trade, and when so diverted, the provisions of this ruling respecting domestic shipments shall apply. However, this provision shall not apply to long established methods of insuring certain commodities (e.g., cotton).

C.Domestic Shipments

(1)Domestic shipments on consignment, for sale or distribution, exhibit, trial, approval or auction, while in transit, while in custody of others and while being returned, provided that in no event shall the policy cover on premises owned, leased or operated by the consignor.

(2)Domestic shipments not on consignment, provided the coverage of the issuing companies includes hazards of transportation, beginning and ending within the United States, provided that such shipments shall not be covered at manufacturing premises nor after arrival at premises owned, leased or operated by insured or purchaser.

D.Bridges, Tunnels and Other Instrumentalities of Transportation and Communication (excluding buildings, their improvements and betterments, furniture and furnishings, fixed contents and supplies held in storage).

The foregoing includes:

(1)Bridges, tunnels, other similar instrumentalities, including auxiliary facilities and equipment attendant thereto;

(2)Piers, wharves, docks, slips, dry docks and marine railways;

(3)Pipelines, including on-line propulsion, regulating and other equipment appurtenant to such pipelines, but excluding all property at manufacturing, producing, refining, converting, treating or conditioning plants;

(4)Power transmission and telephone and telegraph lines, excluding all property at generating, converting or transforming stations, substations and exchanges;

(5)Radio and television communication equipment in use as such including towers and antennae with auxiliary equipment, and appurtenant electrical operating and control apparatus;

(6)Outdoor cranes, loading bridges and similar equipment used to load, unload and transport.

E.Personal Property Floater Risk covering individuals and/or generally

(1)Personal Effects Floater Policies;

(2)The Personal Property Floater;

(3)Government Service Floaters;

(4)Personal Fur Floaters;

(5)Personal Jewelry Floaters;

(6)Wedding Present Floaters for not exceeding ninety (90) days after the date of the wedding;

(7)Silverware Floaters;

(8)Fine Arts Floaters covering paintings, etchings, pictures, tapestries, art glass windows, and other bonafide works of art of rarity, historical value or artistic merit;

(9)Stamp and Coin Floaters;

(10) Musical Instrument Floaters (Radios, televisions, record players and combinations thereof are not deemed musical instruments);

(11) Mobile Articles, Machinery and Equipment Floaters (excluding motor vehicles designed for highway use and auto homes, trailers and semi-trailers except when hauled by tractors not designed for highway use) covering identified property of a mobile or floating nature pertaining to or usual to a household. The policies shall not cover furniture and fixtures not customarily used away from premises where such property is usually kept;

(12) Installment Sales and Leased Property Policies covering property pertaining to a household and sold under conditional contract of sale, partial payment contract or installment sales contract or lease, but excluding motor vehicles designed for highway use. The policies must cover in transit but shall not extend beyond the termination of the seller's or lessor's interest; and

(13) Live Animal Floaters.

F.Commercial Property Floater Risks covering property pertaining to a business, profession or occupation

(1)Radium Floaters;

(2)Physicians' and Surgeons' Instrument Floaters. The policies may include coverage of such furniture, fixtures and tenant Assured's interest in improvements and betterments of buildings located in that portion of the premises occupied by the assured in the practice of his or her profession.

(3)Pattern and Die Floaters.

(4)Theatrical Floaters, excluding buildings and their improvements and betterments, and furniture and fixtures that do not travel about with theatrical troupes;

(5)Film Floaters, including builders' risk during the production and coverage on completed negatives and positives and sound records;

(6)Salesmen's Samples Floaters;

(7)Exhibition Policies on property while on exhibition and in transit to or from exhibitions;

(8)Live Animal Floaters;

(9)Builders Risks or Installation Risks covering interest of owner, seller or contractor, against loss or damage to machinery, equipment, building materials or supplies, being used with and during the course of installation, testing, building, renovating or repairing. The policies may cover at points or places where work is being performed, while in transit and during temporary storage or deposit, of property designated for and awaiting specific installation, building, renovating or repairing.

Coverage shall be limited to Builders Risks or Installation Risks where perils in addition to Fire and Extended Coverage are to be insured.

If written for account of owner, the coverage shall cease upon completion and acceptance thereof; or if written for account of a seller or contractor the coverage shall terminate when the interest of the seller or contractor ceases.

(10) Mobile Articles, Machinery and Equipment Floaters (excluding motor vehicles designed for highway use and auto homes, trailers and semi-trailers except when hauled by tractors not designed for highway use and snow plows constructed exclusively for highway use), covering identified property of a mobile or floating nature, not on sale or consignment, or in course of manufacture, which has come into custody or control of parties who intend to use such property for which it was manufactured or created. Such policies shall not cover furniture and fixtures not customarily used away from premises where such property is usually kept.

(11) Property in transit to or from and in the custody of bailees (not owned, controlled or operated by the bailor). The policies shall not cover bailee's property at his or her premises.

(12) Installment Sales and Leased Property. Policies covering property sold under conditional contract of sale, partial payment contract, installment sales contract, or leased but excluding motor vehicles designed for highway use. The policies must cover in transit but shall not extend beyond the termination of the seller's or lessor's interest. This section is not intended to include machinery and equipment under certain “lease-back” contracts.

(13) Garment Contractors Floaters.

(14) Furriers or Fur Storers Customers Policies (i.e., policies under which certificates or receipts are issued by furriers or fur stores) covering specified articles the property of customers.

(15) Accounts Receivable Policies, Valuable Papers and Records Policies.

(16) Floor Plan Policies, covering property for sale while in possession of dealers under a Floor Plan or any similar plan under which the dealer borrows money from a bank or lending institution with which to pay the manufacturer, provided:

(a)The merchandise is specifically identifiable as encumbered to the bank or lending institution;

(b)The dealer's right to sell or otherwise dispose of such merchandise is conditioned upon its being released from encumbrance by the bank or lending institution;

(c)That the policies cover in transit and do not extend beyond the termination of the dealer's interest.

These policies shall not cover automobiles or motor vehicles; merchandise for which the dealer's collateral is the stock or inventory as distinguished from merchandise specifically identifiable as encumbered to the lending institution.

(17) Sign and Street Clock Policies, including neon signs, automatic or mechanical signs, street clocks, while in use as such.

(18) Fine Arts Policies covering paintings, etchings, pictures, tapestries, art glass windows, and other bona fide works of art of rarity, historical value or artistic merit, for account of museums, galleries, universities, businesses, municipalities and other similar interests.

(19) Policies covering personal property which, when sold to the ultimate purchaser, may be covered specifically by the owner under Inland Marine policies including:

(a)Musical Instrument Dealers Policies, covering property consisting principally of musical instruments and their accessories. Radios, televisions, record players and combinations thereof are not deemed musical instruments.

(b)Camera Dealers Policies, covering property consisting principally of cameras and their accessories.

(c)Furriers Dealers Policies, covering property consisting principally of furs and fur garments.

(d)Equipment Dealers Policies, covering mobile equipment consisting of binders, reapers, tractors, harvesters, harrows, tedders and other similar agricultural equipment and accessories therefore; construction equipment consisting of bulldozers, road scrapers, tractors, compressors, pneumatic tools and similar equipment and accessories therefore; but excluding motor vehicles designed for highway use.

(e)Stamp and Coin Dealers covering property of philatelic and numismatic nature.

(f)Jewelers Block Policies.

(g)Fine Arts Dealers.

Policies may include coverage of money in locked safes or vaults on the assured's premises. The policies also may include coverage of furniture, fixtures, tools, machinery, patterns, molds, dies and tenant insured's interest in improvements of buildings.

(20) Wool Growers Floaters.

(21) Domestic Bulk Liquids Policies, covering tanks and domestic bulk liquids stored therein.

(22) Difference in Conditions Coverage excluding fire and extended coverage perils.

(23) Electronic Data Processing policies.

Section 3. Exceptions

Unless otherwise permitted, nothing in the foregoing shall be construed to permit marine or transportation policies to cover:

A.Storage of assured's merchandise, except as hereinbefore provided.

B.Merchandise in course of manufacture, the property of and on the premises of the manufacturer.

C.Furniture and fixtures and improvements and betterments to buildings.

D.Monies and securities in safes, vaults, safety deposit vaults, bank, or assured's premises, except while in course of transportation.

Adoption of Definition

The following chart indicates which states have adopted the NAIC definition.