Marine Cargo Insurance is essential for protecting against losses associated with goods transported by sea and other waterborne methods.
Just like any form of insurance, the loss of goods during transit can lead to significant costs for your business. Securing comprehensive marine cargo insurance ensures that your shipments arrive safely and punctually at their destination.
Protect your cargo and vessels from unforeseen losses and damages by investing in the right coverage.
Protect your cargo and vessels from unforeseen losses and damages by investing in the right coverage.
What Is Marin Insurance?
Marine insurance provides protection against risks involved in maritime transport, covering both cargo and vessels. It isn't limited to sea transport; it also applies to goods shipped by air, rail, and road.
This type of insurance can be broadly categorized into two types: cargo insurance and hull insurance. Cargo insurance covers goods while they are in transit, whether by sea, air, or land. On the other hand, hull insurance protects against physical damage to the ship itself, including its machinery and equipment.
The coverage offered under marine insurance in India typically includes various risks such as fire, theft, piracy, collisions, and adverse weather events like storms and hurricanes. Additionally, many policies offer liability protection for damage to third-party property or injuries to crew members.
Most general insurance companies in India provide marine insurance, offering a range of policies designed to meet the needs of different businesses and individuals. The cost of these policies, or premiums, is usually based on factors like the value and nature of the cargo or vessel, the type of coverage chosen, and the level of risk involved.
For businesses involved in both international and domestic shipping, having marine insurance is essential. It helps protect against unexpected financial losses during transportation, providing reassurance and financial security In India, the framework for marine insurance is outlined in the Marine Insurance Act of 1963, which is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
Types of Marine Insurance Policies
Marine Cargo Insurance
Marine cargo insurance provides protection for goods in transit by sea. It safeguards cargo owners from losses incurred during loading and unloading, as well as risks like theft, piracy, and natural disasters.
Inland Marine Insurance
This form of insurance safeguards property being transported within a country. It includes coverage for goods moved by land, air, or inland waterways, protecting against losses or damages resulting from accidents, theft, or natural disasters.
Import Insurance
It provides protection for loss or damage to goods shipped from another country to the policyholder's location. The policy covers risks like damage during transit, theft, and non-delivery.
Export Insurance
It protects against loss or damage to goods shipped from the policyholder's country to a foreign destination. This policy offers coverage for risks such as damage during transit, theft, and non-delivery.
Hull Insurance
This insurance policy provides coverage for the vessel, including its machinery, equipment, and fittings. It safeguards the owner from loss or damage to the vessel due to accidents, collisions, fires, or other risks.
Freight Insurance
This policy offers protection for the freight charges paid by the policyholder in the event of loss or damage to the transported cargo. It includes coverage for freight charges lost due to either non-delivery of the cargo or damage that occurs during transit. This type of insurance is commonly purchased by shippers, carriers, and freight forwarders
How Does Marine Cargo Insurance Function?
Marine cargo insurance serves as a safeguard for cargo owners or shippers against risks tied to transporting
goods by sea, air, or land. It offers protection against physical loss or damage to the cargo while it is in
transit, covering the journey from the origin port to the destination port.
1
Policy Acquisition:
The cargo owner or shipper can obtain marine cargo insurance from an insurance provider prior to
shipping their goods. This policy can be customized to meet the individual requirements of the cargo
owner, taking into account factors such as the type of cargo, the mode of transport, the value of the
items, and the destination.
2
Risk Coverage:
The policy usually protects against loss or damage to the cargo caused by a range of risks. This
includes natural disasters such as storms, lightning, and earthquakes, as well as man-made threats like
theft, fire, and piracy. Additionally, the coverage may extend to losses resulting from inadequate
handling or packaging of the cargo, as well as mistakes or oversights by the carrier.
3
Premium Calculation:
The premium for the policy is calculated based on several factors, including the value of the cargo,
the associated level of risk, the mode of transportation, and other considerations. The cargo owner or
shipper is responsible for paying this premium to the insurance provider.
4
Claim Submission:
If there is loss or damage to the cargo during transit, the cargo owner or shipper can submit a claim
to the insurance company. This claim must be supported by evidence of the loss or damage, which can
include bills of lading, cargo receipts, or other relevant documentation.
5
Claim Settlement:
The insurance company will review the claim and assess the compensation owed to the cargo owner or
shipper. The settlement amount is generally determined by the value of the cargo and the degree of loss
or damage incurred. Once the assessment is complete, the insurance company disburses the settlement to
the cargo owner or shipper.
In India, marine cargo insurance offers crucial protection for cargo owners and shippers against risks
involved in transporting goods by sea, air, or land. By acquiring a marine cargo insurance policy, they can
secure financial coverage in the event of loss or damage to their cargo during transit.
Benefits Of Marine Insurance:
Protection Against Financial Losses: Marine insurance safeguards against potential losses during transit, such as theft, damage, or loss of cargo, vessels, or equipment. These losses can lead to significant financial strain on all parties involved, making marine insurance vital for minimizing financial repercussions.
Compliance with Legal Regulations: Many countries mandate that vessels and shippers maintain marine insurance coverage to adhere to legal requirements. In India, for instance, it is compulsory for all cargo-carrying vessels to have valid marine insurance before they set sail.
Effective Risk Management: The shipping industry encounters numerous risks, including natural disasters, piracy, and accidents. Marine insurance enables shipowners and cargo owners to effectively manage these risks, offering protection against potential financial losses.
Support for International Trade: Marine insurance plays a key role in facilitating international trade by providing assurance to buyers and sellers that their cargo is protected during transit. This assurance can boost trade volume and enhance profitability.
Promotion of Investment: Marine insurance fosters investment in the shipping sector by reducing the risks associated with owning, operating, and investing in ships. This protection can attract more investment into the industry, leading to improved efficiency and modernization.
Who should buy Marine Insurance?
Here are some of the individuals and businesses that may require marine insurance:
Ship owners: are a primary group needing marine insurance. They require coverage for their vessels, including protection against damage, loss, and liability claims.
Port authorities and terminal operators: manage the safe handling of cargo and vessels in ports. Marine insurance is essential for protecting against any damage, loss, or liability claims that may arise from their operations.
Marine contractors: particularly those involved in offshore oil and gas exploration, require marine insurance to guard against risks related to their work, such as equipment damage, personnel injuries, or environmental pollution.
Charterers: who lease ships for a specified duration, also need marine insurance to protect against losses or damages while the vessel is under their management.
Freight forwarders: who organize the transportation of goods, also rely on marine insurance. It is crucial for them to ensure that any losses or damages during transit are covered.
For businesses or individuals shipping goods overseas: marine insurance is vital. It provides protection against damage or loss of cargo during transport, including risks like theft, piracy, or natural disasters.
Shipbuilders and repairers: need marine insurance to cover the risks associated with constructing, repairing, or maintaining vessels. This includes potential damage to ships in the yard and liability claims from third parties.
Why should buy Marine Insurance?
Peace of Mind
An appropriate policy can offer reassurance to businesses and individuals engaged in marine activities. With coverage in place, you can concentrate on your business or other pursuits without the stress of potential risks and losses.
Protection against loss or damage
It can provide protection against the loss or damage of vessels, cargo, or other maritime equipment. This coverage is essential in situations involving accidents, natural disasters, or theft.
Liability protection
Marine insurance can also offer coverage for liability claims, such as those involving cargo damage, personal injury, or pollution. This protection is especially crucial for businesses that face significant liability risks.
Competitive advantage
Marine insurance can also provide a competitive edge in the market. For instance, if you are a shipper or freight forwarder, having insurance coverage can help you appeal to clients seeking a dependable and secure transportation partner.
Customised coverage
Marine insurance policies can be customized to address the unique requirements of various businesses and individuals. This allows you to select the appropriate coverage level that aligns with your specific risks and activities.
Legal Requirements
In certain situations, marine insurance may be mandated by law. For instance, if you operate a commercial vessel, carrying liability insurance could be a legal requirement.
What’s Covered in Marine Insurance Policy?
Natural Calamity Damage: Coverage for damage caused by natural events like storms, earthquakes, or floods.
Explosion: Damage caused by explosions during transport or while at sea.
Fire Accident: Coverage for loss or damage caused by fire during the voyage.
Collision: Damage resulting from a collision with another vessel or object.
Survey Fees: Costs associated with inspecting or surveying the damaged goods.
Jettison: Coverage for goods thrown overboard to save the vessel or other cargo.
Washing Overboard: Loss of goods washed overboard due to rough seas or storms.
Stranding: Damage or loss resulting from the vessel running aground or being stuck in shallow waters.
Sinking: Loss of cargo if the vessel sinks during transit.
Derailment of Land Conveyance: Coverage for goods lost or damaged due to derailment during transport by rail.
General Average Sacrifice & Salvage Charges: Costs related to general average contributions or salvage operations to recover the goods.
Cost of Reconditioning: Expenses for restoring or repairing damaged goods to their original condition.
Cargo Leaving Port of Distress: Coverage for cargo that leaves a distressed port under special circumstances.
Forwarding Expenses: Costs related to forwarding the cargo to its final destination if it’s rerouted or delayed.
Total Loss of Package During Loading or Unloading: Coverage for goods lost or damaged during the loading or unloading process.
Overturning: Coverage for goods lost or damaged if the transport vehicle or vessel overturns.
What Is Not Covered Under Marine Insurance Policy:
Rust, Oxidation, or Discoloration: Damage to unpacked, unprotected, or uncrated goods due to rust, oxidation, or discoloration, regardless of the cause.
Electrical, Electronic, or Mechanical Failure: Losses caused by electrical, electronic, or mechanical failure, unless such failure is the result of a covered peril.
Losses Due to Unexpected Disappearance or Stock-Taking: Losses resulting from the unexpected disappearance of goods, including stock-taking errors, or from exhibition stands during operating hours.
Theft or Attempted Theft: Theft from the policyholder’s own vessels or premises, unless there is forcible or violent entry. Theft from storage locations is excluded unless it involves forcible entry or exit.
Theft Resulting from Collusion Among Employees: Losses caused by theft or fraud that involves collusion among employees.
Losses Due to Climate Conditions or Temperature Changes: Loss or damage caused by fluctuations in temperature or climate conditions.
Damage from Fluctuations in the Water Table: Damage to goods caused by changes in the water table level is not covered.
Exclusions Under the Exhibition/Demonstration Risks Extension Clause:
Hidden Defects or Poor Assembly: Loss or damage resulting from hidden defects or improper assembly of the insured property.
Loss During Demonstration or Use: Any loss or damage occurring while the property is being used for demonstration purposes or other similar activities.
Theft or Pilferage from Unattended Stands: Theft or pilferage from unattended exhibition or demonstration stands or trailers is covered, except when there is no forcible entry or exit.
Hired Goods for Exhibition: The policy does not cover goods hired out for exhibition or demonstration unless prior agreement is made with the underwriters before the coverage begins.
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Marine cargo insurance FAQ
Businesses that own or ship goods, freight forwarders, and logistics providers can apply for Marine Insurance. The insured entity must be the owner or authorized party responsible for the goods being shipped.
Marine Insurance covers a wide range of goods including raw materials, manufactured products, machinery, and even hazardous cargo. However, goods that are illegal or prohibited by law are not eligible for coverage.
Yes, Marine Insurance can cover both domestic and international shipments. Coverage terms may vary depending on the geographical scope and the specific risks involved.
This extension covers goods at exhibitions, but exclusions apply, such as damage from hidden defects or theft from unattended stands.
No, losses due to climate conditions or temperature fluctuations are excluded from coverage.
The policy covers total loss during loading or unloading of goods, as long as it is not due to negligence.
Mechanical failures are not covered unless caused by a peril that is specifically included in the policy.
Yes, with an Open Policy, you can cover multiple shipments over a specified period without needing to notify the insurer for each one.
No, damage resulting from poor packaging or improper handling of goods is excluded.
Yes, in an Open Policy, the value of goods can be declared after shipment, and the premium will be calculated based on the declared value.
