What is Marine Insurance?
Crossing seas and oceans is no mean feat, even if the vessel boasts the latest technology. A small mistake can cost lives and lead to massive financial losses. Goods get imported and exported; there’s inland transportation that carries cargo from one port to another in the same country. While longer routes pose more significant risks, inland transportation can have its fair share of accidents. Marine Insurance is a type of insurance product that is specially designed to cover financial losses owing to theft, piracy attacks, or loss of cargo transported on ships. A policy with adequate coverage can ensure your deliverables reach their destination securely and on time.
Benefits of Marine Insurance
Here are some key reasons why the importance of marine insurance can’t be understated —
- Protection against loss: A lot can go wrong during a voyage. For instance, the machines can fail in the middle of nowhere. There can be attempts to steal the ship or its valuable contents. The policy can protect you financially from such unforeseen events.
- Compliance: Since the ships would be crossing multiple maritime boundaries (equivalent to international borders), they must be compliant with the laws of those countries. Some nations require vessels to have a marine insurance policy, so you should have one to comply with the rules and regulations.
- Nature’s fury: The most common risk is the unpredictable character of Mother Nature. Inclement weather can lead to heavy losses, both of lives and property. Marine insurance allows ship and cargo owners to protect themselves against financial losses.
- Good for international trade: Any kind of guarantee helps calm the nerves of the various stakeholders. Once they feel relieved by the layer of protection insurance provides, they are more likely to increase their business volume. In short, it promotes investment in the shipping industry. The icing on the cake is it gives your company a competitive edge.
How Marine Insurance Covers Piracy, Theft, and Loss
- Piracy Coverage: If a piracy attack leads to structural damage to the ship or causes injury to its crew, marine insurance will help cover the loss.
- Theft coverage: Marine cargo insurance covers theft or pilferage of goods whether the ship is in port, in transit, or during loading or unloading of cargo. A comprehensive policy will provide full compensation to the cargo owner based on the policy limits and deductibles. However, a standard policy may have limitations for high-value goods.
- Loss of goods: In case of total or partial loss of cargo due to fire, sabotage, or natural perils like storms, inclement weather, or tsunamis, marine insurance will provide compensation.
What is Covered in Marine Insurance?
The inclusions may vary from insurer to insurer, but these are some common risks covered by a marine insurance policy —
- Loss/damage of goods due to fire, explosion, sinking, or natural calamities
- Loss/damage during loading or unloading of cargo
- Total loss of cargo in case of mishandling while loading or unloading
- In case of piracy attacks, collisions, or accidents, insurance will cover damage or non-delivery of the shipment
What is Not Covered in Marine Insurance?
Insurance will not cover loss due to the following reasons –
- Wear and tear of the cargo
- Loss caused by wars, riots, or strikes
- Damage to cargo due to improper packaging
- Loss due to intentional damage or misconduct by the insured
- Perishable items are usually not covered
What kind of insurance should you buy?
Marine insurance is of different types, so you should first decide your coverage needs. Hull insurance covers the physical damage to the ship itself. Cargo Insurance protects the value of goods being transported. Freight Insurance covers the loss of revenue due to the ship not completing its journey, while Protection and Indemnity (P&I) Insurance provides coverage for legal liabilities arising from maritime accidents, such as oil spills and personal injury.
Next, look at the risks involved, given the length and duration of the voyage. Pick a policy that takes into account the ship’s size and condition as well as the value of the cargo being transported.
Conclusion:
Marine insurance offers financial protection against piracy, theft, and loss during sea voyages. There are many insurers in the market, so pick an insurer with a satisfactory market reputation, easy claims process, and good claim settlement ratio.