Understanding marine insurance
Marine insurance is an important investment to keep your goods secure when you transport them. A comprehensive plan offers wide coverage and protects your cargo against various natural and manmade risks from the time it leaves the port until it reaches its final destination. The policy may also cover your cargo when it is in storage, ensuring additional protection and peace of mind.
Suppose you are shipping a container with expensive cargo across the ocean. Leaving it unprotected can lead to huge financial losses in case of an unforeseen event. This is when marine insurance comes in. It acts like a safety net for your goods while they are being transported by sea, land or air.
Marine insurance inclusions and exclusions
The following outlines the inclusions and exclusions of a marine insurance policy:
Inclusions
Marine insurance covers losses arising from:
- Fire, explosion and lightning
- Earthquakes or volcanic eruptions
- Cargo washed overboard (due to natural forces)
- Theft or intentional damage
- Damage occurring during loading and unloading
- Hijack of cargo
- Jettisoning of cargo (throwing cargo overboard to protect the vessel)
- Vessel stranding, grounding or sinking
- Water entering the vessel
- Accidents and collisions
- Overturning of land vehicles or derailment of trains
- Unloading cargo in an emergency
Exclusions
Most marine insurance policies do not cover losses arising from the following reasons:
- Inadequate or improper packing
- Inherent defects in goods
- Delay
- Wilful misconduct by the insured
- Normal leakage or routine loss of weight or volume
- Ordinary wear and tear of the insured goods
- Insolvency of the vessel’s owner, manager, charterers or operators
- Unfitness or unsuitability of the transport vehicle
- Other risks excluded by the policy
Reasons to cover inventory during transit or storage with marine insurance
The following are some reasons to cover inventory during transit or storage with marine insurance:
- Protection against loss, damage and theft: Inventory in transit or storage is vulnerable to various risks, such as theft, accidental damage or destruction. A marine insurance policy offers protection against these risks by covering the cost of goods that cannot be recovered.
- Financial protection for replacement and recovery: Replacing lost or damaged can be costly and cause operational disruptions. Marine insurance compensates for the cost of replacement goods, easing your financial concerns and allowing your business to continue running smoothly.
- Compliance and legal obligations: Many countries require goods to be insured while they are being shipped. Additionally, suppliers and buyers may also mandate marine insurance to ensure that both parties are protected in case of unforeseen losses.
- Peace of mind for business owners: Running a business can be stressful with so many things to keep track of, and worrying about the safety of your inventory only adds to that. However, if you have marine insurance, you can stop stressing over your covered goods and focus on your day-to-day operations.
- International trade: Marine insurance is crucial in global trade, as it covers goods moving across oceans through different countries. International shipments face additional risks, such as delays, cross-border transportation issues and piracy. Marine insurance can help your business navigate these challenges by offering worldwide coverage.
Conclusion
Covering inventory during transit or storage with marine insurance protects your business from a broad range of potential risks. This policy also ensures that you recover quickly from setbacks, comply with legal requirements and maintain smooth, uninterrupted operations. Therefore, a marine insurance policy is undoubtedly an important safety net in this fast-paced world of logistics and trade.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.