Key Takeaways
- Block policies provide all-risk coverage for goods in transit or storage by third parties.
- Inland marine insurance covers transportation risks by land, water, and storage perils.
- Specialized block policies exist for high-value items like jewelry and furs, with strict security requirements.
- Block policies complement property insurance by protecting goods in third-party possession.
- Due to their extensive coverage, block policies may have higher premiums compared to specific hazard policies.
What Is Bank Policy Insurance?
A block policy is an all-risk insurance policy that covers goods while they’re in transit or being stored, often while under the care of third parties. It’s commonly used by businesses such as manufacturers and wholesalers, or any company shipping products to customers, to protect against theft, property damage, and other perils. Specialized versions include jewelers’ block and furriers’ block policies.
Comprehensive Guide to Block Policies: Coverage Details and Business Benefits
Most companies will purchase property insurance. This type of insurance provides protection for buildings, equipment, and inventory. However, once stock leaves the premises, property coverage no longer insures it. To further protect goods shipped from business to customer, there is a need for inland marine insurance, also known as a block policy.
While it seems that inland marine insurance would only apply to boats and other watercraft, this type of policy is useful whenever goods are transported, including by rail, river, or road. It also covers property in storage and the equipment required to make the transportation and storage of goods possible. Companies wanting their products covered against a wide variety of perils during transport and storage may buy a type of inland marine insurance or block coverage.
A block policy provides coverage against risks businesses face when they contract out transportation and storage of stock goods. Block coverage is bought most often by manufacturers, wholesalers, and companies that ship products to their customers because goods are out of the direct company’s control during shipment.
Types of Block Policies: Tailored Coverage for Specific Industries
Two of the most common kinds of block policies are furriers’ block policies and jewelers’ block policies. These two block policies were developed in the 19th century to protect businesses from theft, since both furs and jewels were high-value commodities and likely targets for burglars. Jewelers’ policy covers companies that sell jewelry. Furriers’ policies cover those businesses selling furs.
Because the insured items are more expensive, block policies are more likely to require that the items be stored in secure buildings and transported via protected vehicles. Insurers are less likely to underwrite furriers’ block policies, since furs are expensive and more susceptible to damage.
Block policies complement coverage provided by commercial property insurance. Property insurance will cover against inventory loss while goods are in the possession of the policyholder. Block policies cover against loss when goods are in the possession of a third party.
Block policy coverage is considered an all-risks policy, meaning it covers the policyholder against all risks unless the insurer creates exclusions.
Because a block policy is an all-risks policy, it may cover perils that do not directly concern a business. As a result, the insured may pay a higher premium than if they had purchased a more specific hazard policy. Companies that transport cargo may also buy freight insurance, which makes manufacturers’ block policy unnecessary.
The Bottom Line
A block policy is an all-risk form of inland marine insurance that covers goods while they’re transported or temporarily stored by third parties, including property damage. Versions like jewelers’ and furriers’ block polices protect high-value items, and premiums can be higher because coverage is broad. It complements property insurance by covering goods outside the policyholder’s direct control.
