First, Learn These Key Terms
What is a "Floater"?
A floater is a policy that covers property that "floats" (moves around) from place to place. It's called a floater because the coverage follows the item wherever it goes!
Examples: Jewelry floater covers your ring whether it's at home, at work, or on vacation. A camera floater covers your camera anywhere in the world.
What Does "Scheduled" Mean?
Scheduled means each item is individually listed on the policy with its own description and value.
Example: "Scheduled Personal Property Endorsement" lists each item:
- Diamond ring, 2 carats, $8,000
- Rolex watch, $12,000
- Fur coat, $5,000
Unlike "blanket" coverage that covers everything up to a total limit.
Personal vs Commercial Floaters
Personal Floaters
For individuals - jewelry, cameras, musical instruments, fine arts you own personally
Commercial Floaters
For businesses - contractor's equipment, goods in transit, bailee's customer property
Why "Inland" Marine?
Originally, "marine insurance" covered ships at sea. As commerce moved INLAND (on land), a new category was created for goods transported on land - Inland Marine.
Today it covers anything that moves or is moveable - even if water isn't involved!
Start Here: 5 Things You MUST Know
$250,000 = Maximum NFIP dwelling coverage for single-family homes.
FIA sets flood rates - Federal Insurance Administration, not private insurers.
Community must participate in NFIP for residents to be eligible.
Fine arts floater = 90 days automatic coverage for newly acquired art.
NFIP does NOT cover wharves, piers, docks, sewer backup, or seepage.
Inland Marine Insurance
What is Inland Marine?
Inland marine insurance covers property in transit and moveable property that travels from place to place. Despite the name, it's not just about water - it covers things that MOVE!
Nationwide Definition
A list of risks eligible for inland marine insurance published by the NAIC (National Association of Insurance Commissioners).
Think of it as the "rulebook" that defines what qualifies as inland marine coverage vs. regular property coverage.
Equipment Breakdown
The insurer MAY inspect the insured's equipment, but they are NOT required to.
Just because they CAN inspect doesn't mean they MUST. The insured is still responsible for maintenance.
Pair or Set Loss
If one item from a pair or set is damaged/lost, the insurer may:
- Option 1: Repair or replace the set to its value BEFORE the loss
- Option 2: Pay the difference in value before and after the loss
Calculation:
Value of Full Set - Value of Remaining = Payment
Example: $5,000 earring set, one earring lost, remaining earring worth $1,000. Payment = $5,000 - $1,000 = $4,000
Types of Floaters
Scheduled Personal Property
Used to insure high-value personal property:
- Furs
- Antiques
- Jewelry
Provides coverage on an ACV basis
Fine Arts Floater
For valuable artwork and collectibles.
90
Days automatic coverage for newly acquired fine art
Data Processing Floater
To properly insure computer equipment, an individual would buy a data processing floater.
Standard policies often have low limits or exclusions for electronic equipment. This floater provides proper coverage.
Why Use Floaters?
Regular homeowners/property policies have limits on certain items. Floaters provide:
- Higher coverage limits
- Broader coverage (often all-risk)
- Coverage while items are traveling
National Flood Insurance Program (NFIP)
Definition of Flood
Flood = The temporary inundation of normally dry land.
Key word is "normally dry" - areas that are usually dry but get covered by water temporarily.
$250,000
Maximum Dwelling Coverage
Regular NFIP program for single-family homes
Who Sets the Rates?
The FIA (Federal Insurance Administration) sets flood insurance rates.
Not private insurers - the federal government controls flood rates.
Who Sells It?
Sold by the government AND participating private insurers.
But claims are paid by the FEDERAL GOVERNMENT!
Eligibility Requirements
To be eligible for federal flood insurance:
The COMMUNITY must participate in the NFIP
The community must cooperate with the FIA and adopt flood control measures
NFIP Does NOT Cover
Structures
- Wharves
- Piers
- Docks
Water Issues
- Sewer backup
- Seepage through walls
Remember: Sewer backup is NOT flood - it comes FROM the building, not from outside!
Key Numbers to Memorize
$250K
Max NFIP dwelling
90
Days - fine arts auto coverage
FIA
Sets flood rates
NAIC
Nationwide Definition
Chapter 6 Cheat Sheet
Print for quick referenceNationwide Definition
NAIC list of inland marine risks
Equipment Inspection
MAY inspect, not REQUIRED
Scheduled Personal
Furs, antiques, jewelry
Data Processing
For computer equipment
Fine Arts
90 days auto for new art
Pair/Set Loss
Full value - remaining = payment
Flood Definition
Temporary inundation of dry land
$250K Max
NFIP dwelling coverage
FIA
Sets flood rates
Community Requirement
Must participate in NFIP
Claims Paid By
Federal government
Not Covered
Wharves, piers, docks, sewer
Exam Trap Alerts
1. FIA Sets Rates, Not Insurers
The Federal Insurance Administration sets flood rates. Private insurers just sell the policies - they don't set the rates.
2. Community Must Participate
Individual eligibility depends on the COMMUNITY participating in NFIP. If your city doesn't participate, you can't get coverage.
3. Sewer Backup is NOT Flood
NFIP does NOT cover sewer backup or seepage. Flood must be water coming IN from outside, not backing up from drains.
4. Federal Government Pays Claims
Even though private insurers can SELL flood policies, the FEDERAL GOVERNMENT pays the claims. The insurers are just agents.
5. Scheduled Personal Property = ACV
Despite covering high-value items, the scheduled personal property endorsement provides coverage on an ACV basis, not replacement cost.