What are common exclusions in inland marine policies?

Complete Guide to Common Exclusions in Inland Marine Policies

Why This Question Matters for Colorado and Utah Residents

Inland marine insurance is essential for businesses with valuable equipment, tools, or goods that move between job sites or locations—something that's especially common in Colorado and Utah's construction, tech, and agricultural sectors. But not all risks are covered automatically, and misunderstandings about policy exclusions have caused real financial pain for local businesses after recent severe weather and theft incidents.

• High weather risk, but not always covered: Northern Colorado averages 40+ hailstorms per year, and recent storm events have resulted in millions in losses. Yet, many policies exclude or limit hail, flood, or snowmelt damage unless you add endorsements.
• Policy language and regulations are changing: With the introduction of Senate Bill 23-078, insurers must be more transparent about what is (and isn’t) covered. Policy forms now clearly outline exclusions, but you still need to look for region-specific gaps—especially if you operate near mountain snowmelt zones or in agricultural transit.
• Equipment and business lifelines are at stake: The cost of not understanding exclusions can be catastrophic. In 2024, uninsured losses led to the closure of 12 local businesses after a major Weld County hailstorm.

What Most People Get Wrong

Many business owners assume their inland marine coverage is “all risk” and will pay for nearly any damage. But policies have well-defined exclusions, from everyday wear to extraordinary events like war or nuclear hazards. Another common error is missing the fine print about where and when coverage applies; some policies only cover property at designated locations, not while in transit or stored off-site.

Others overlook the importance of endorsements for local perils—such as hail and flood—resulting in denied claims after major Colorado and Utah weather events. Claims data shows 68% of local inland marine claims are tied to these perils, yet only 40% of carriers automatically include full coverage for them.

The Complete Picture

Most inland marine policies have these standard exclusions:

• Wear and tear, gradual deterioration
• Inherent vice or latent defects (e.g., electronics that fail due to their own qualities, not outside damage)
• Intentional acts or dishonest/illegal behavior
• War, terrorism, or nuclear incidents
• Government action, confiscation, or seizure
• Mechanical/electrical breakdown unless specifically endorsed
• Unendorsed weather perils: hail, flood, and snowmelt often require added coverage

For instance, a Fort Collins contractor experienced $12,000 in hail damage to a backhoe—covered only because they'd added the hail endorsement. A neighbor with a standard policy and no hail extension received only a partial payout, facing $9,000 in out-of-pocket repairs. Always request itemized exclusions and check for local weather, theft, or transit extensions.

Finally, new rules in both Colorado and Utah (as of 2024) require insurers to present detailed lists of policy exclusions, so use this information to review and update your coverage during policy renewal or after any substantial business change.

Making the Right Decision for Colorado and Utah Residents

Question 1: Does your policy exclude key local risks like hail, flood, or snowmelt?

Colorado and Utah face frequent and severe weather events that account for the majority of inland marine claims. Ask your agent or broker:

• Do I have specific endorsements for hail, flood, windstorm, or snowmelt?
• What is the deductible and payout process for these events?

Question 2: Are items covered in all transit and storage scenarios?

Some policies only insure property while stored at designated locations, not while moving or temporarily stored elsewhere (like a job site or loading dock). For businesses on the move, ask:

• Am I covered while equipment is in transit, at job sites, or with subcontractors?
• Are temporary storage or rental locations included?

Question 3: How do exclusions impact business continuity and claim recovery?

Denied claims can cause cash flow crises—especially if you depend on mobile equipment or inventory. Plan ahead by:

• Reviewing your business interruption coverage in case a claim is denied or delayed
• Scheduling an annual coverage review (especially after regulatory changes) with a local, independent agent to ensure all gaps are addressed