Ever placed an order for your favourite basketball club’s merchandise? Those Jordans (Yup, the cool pair of kicks that have the silhouette of the legendary Michael Jordan embossed) may give you the diehard fan in you a cause for celebration. But have you ever thought about what goes on behind the scenes when you order one?
Your order starts a complex chain of events involving a complex network of manufacturers, logistics companies, and insurance providers. You might be wondering what insurance has to do with e-commerce. This is where marine insurance as we know it comes into the picture. Marine Insurance insures items worth billions of dollars from the time they leave the production to when they arrive at the buyer’s warehouse.
International piracy is on the rise, as are road accidents, collisions between commercial tankers caused by human error, and even stock damage during cargo loading and unloading.
A slight hiccup in the procedure might cause delays, accidents, or even damage to the goods. Such risks can spread across the system, causing financial hardship for otherwise unrelated enterprises. A marine insurance policy might save you the trouble of not knowing what the future holds and how it will affect your shipment.
Marine insurance companies provide their clients with more confidence to establish and achieve new growth targets by protecting them from various dangers at sea.
So, without further ado, let’s take s deep dive into what is marine insurance, the types of marine insurance and everything you need to know before setting sail.
Key Takeaways
- Ships, cargo, terminals, and any transport by which property is transferred, acquired, or held between the places of origin and the final destination are all covered by marine insurance.
- Cargo insurance is a subset of marine insurance, which also covers onshore and offshore exposed property (container terminals, ports, oil platforms, and pipelines), as well as hull, marine casualty, and marine liability.
- The core concepts of Marine Insurance are Indemnity, Insurable Interest, Utmost Good Faith, Proximate Cause, Subrogation, and Contribution.
Unexpected Events at Sea? Know What is Meant by Marine Insurance to Protect Yourself
Before you sit back and relax and let your marine insurance take care of any damaged or lost goods that you ship, let us fully understand what is meant by marine insurance.
Marine insurance is a kind of insurance policy that is aimed at providing adequate coverage against any damage/loss inflicted to cargo vessels, ships, terminals, etc., in which the goods are transported from their point of origin to their final destination. Marine insurance coverage also includes loss or damage caused to the shipment/cargo/ship while it is grounded and also from untoward perils such as sinking, collision, burning, weather conditions, navigation errors, theft, jettison, stowage by the carrier, hook damages, strikes, wars, and natural perils.
| MARINE INSURANCE |
| Provides adequate coverage against damage to ship due to any mishap such as crashes, collisions, or piracy attacks. |
| Provides indemnity and coverage to cargo against damages, losses, or misplacement. |
| Provides coverage for the loss of freight. |
| Provides the necessary cover for the life of crew members and others on the ship. |
Before You Set Sail, Read the Features and Benefits of Marine Insurance
Given that India is bordered by water on three sides, shipping is a significant industry. Because these ports handle a large volume of cargo, marine insurance is something that you should not skip. And to prepare you for anything before you head out on the mighty waters, here are some benefits and features that we thought you should know about!
| Features and benefits of marine insurance |
| Comprehensive coverage – When you buy a marine insurance policy, you get comprehensive coverage against all the potential marine-related perils that your goods get exposed to during transit. |
| Easy Customisation – The marine insurance plans are generally effortlessly customisable and can be adjusted as per your specific needs and conditions. |
| Flexibility – The marine insurance plans usually provide enough flexibility and have an array of options to cater to your requirements as an insured, considering your budget. |
| Claim survey and settlement assistance – Marine insurance policies free you from the hassles of the claim. Usually, marine insurance policies offer global claim settlement support alongside a claim survey. |
| Extension of coverage – Under a marine insurance policy, you get the liberty to amplify the coverage with several add-on benefits or riders to provide adequate coverage from risks arising due to strikes, riots, etc. |
Usually, the top marine insurance companies feature policies suited to your individual needs, user-friendly websites, and low prices. They’re also respectable businesses with solid financial positions and industry experience who understand the nuances of the marine sector.
Get Ready to Know About the Different Types of Marine Insurance
Understanding the different types of marine insurance can be a risk management lesson for business owners who regularly deal with freight, transit, and maritime transportation businesses.
The different types of marine insurance are determined by how the insurance cover is conceptualised, the risk characteristics, and the underlying assets. So, to help you make the best decision, here we are with some common types of marine insurance. However, always remember that the types of marine insurance can vary according to the insurer, if you come back and say that we’ve missed out on something.
| Types of marine insurance policies |
| Marine cargo insurance – Marine cargo insurance is a policy that is designed to cover loss/damages to marine cargo during transit. It also covers third-party liabilities. It is primarily advantageous for tankers and other heavy cargo shipments. |
| Liability insurance- This type of marine insurance protects in the event of a crash, collision or anything that causes a huge loss or damage. Liability marine insurance compensates the policyholder for liabilities beyond control. |
| Hull insurance – This type of marine insurance policy covers vessels, including furniture and other stuff against unpredictable mishaps. |
| Freight insurance – It is a type of marine insurance that provides compensation to the shipping company in case any freight is damaged/lost. |
| Open marine insurance policy – This type of marine insurance is issued for a specific time and provides coverage for all shipments during that period. |
| Time plan – This type of marine insurance is generally valid for a year or a predetermined specific period. |
| Voyage plan – Under this type of marine insurance, the plan expires as soon as a particular insured voyage ends. |
| Mixed plan – If marine insurance provides both time plan and voyage plan benefits, it is referred to as a mixed plan. |
| Port risk plan – When a ship is stationed at a port, this type of marine insurance protects it against the risks. |
| Valued plan – Within this type of marine insurance, the cargo’s or consignment’s value is determined, and it helps if it gets lost. |
| Floating plan – Under this type of marine insurance, the claim amount is specified beforehand. Under this, the other details cannot be disclosed before the ship starts the voyage. It is best suited for people who undertake cargo transportation trips regularly. |
| Wager plan – Under this type of marine insurance, there are no predefined fixed repayment terms. Nevertheless, if the coverage amount falls short in deserving cases, reimbursement is given. |
Did You Know?
Marine insurance, which has its roots in Greek and Roman maritime loans, was the first well-developed type of insurance. In the fourteenth century, separate marine insurance contracts were formed in Genoa and other Italian ports, and they expanded throughout northern Europe. Premiums varied according to intuitive estimations of seasonal and pirate risk.
With the formation of a specialist chamber of assurance apart from the other Courts in England in 1601, the contemporary origins of maritime insurance law in English law were in the law merchant.
Inclusions and Exclusions of Marine Insurance to Know Before Riding the Wave
For each customer, the cargo movement is not the same. Insurance is also required in different ways by different clients and at different times. As there is no one size fits all when talking about marine insurance, here are some inclusions and exclusions you should be aware of.
| Inclusions | Exclusions |
| Sinking, stranding, fire, explosion | Willful, planned or intentional misconduct |
| Loss in loading and unloading cargo | Strike, rioting, war |
| Total loss coverage | Poor packaging of the cargo |
| Earthquake and lightning | Delays |
| Unforeseeable administrative expenses | General leakage and wear and tear of the cargo |
| Jettison and washing overboard | Financial distress or insolvency of the shipping line |
| Collision, overturning, derailment, accident | Removal of wreck |
| General average |
Who is This Relevant for? – Who Takes Marine Insurance?
Marine insurance is always a good option as it protects your expensive possessions and gives you peace of mind when out on the water. But, if we talk on specific terms, who exactly is marine insurance meant for? We are here to help you navigate through these deep waters of marine insurance.
A marine insurance policy can be purchased by buyers and sellers, import/export merchants, contractors, banks or anyone engaged in the import and export or transportation of goods within the country. Different types of marine insurance policies like hull insurance can also benefit ship owners. Also, a business engaged in transferring goods can use cargo insurance. Generally, the contract of sales would decide who can purchase a marine policy.
Word to Remember
Contract of sales
The contract of sales acts as a deciding factor in who can purchase a marine insurance policy. Some of the most common contracts include:
- FOB (Free on Board)
- C&F (Cost & Freight)
- CIF (Cost, Insurance & Freight)
In the case of FOB and C&F contracts, the buyer is responsible for insurance, whereas the seller is responsible in the case of CIF contracts.
You’ve Reached the Shore!
Marine insurance provides a safe haven for shipping companies and transporters by reducing the risk of financial loss due to the loss of valuable cargo. It also aids in instilling in shipping firms and receiving parties the insurance companies’ responsibility, dedication, and transparency.
But before we leave you at the shore and get ready for another journey, we’d like to share some general advice on how you can go about choosing marine insurance.
In India, it becomes a difficult task to select amongst the plethora of available marine insurance options. Therefore, the best way to buy marine insurance is to compare policies online and then select a customised plan according to your specific needs. The correct approach is to compare, analyse coverage and use the internet to find the best marine insurance.
Now that you know the basics get ready for a happy journey at sea!
FAQs
The ship’s owner
The cargo’s owner
The ship’s master and crew
The creator who has advanced money on the security of the ship
The mortgagor, if the insurable subject is mortgaged
A trustee with property in trust
The person advancing the freight
The claims process for marine insurance is simple. Below are the steps you’ll need to follow:
Inform the insurer by approaching the claim representative or visiting their nearest branch immediately
In the event of damages caused to goods that are on the ship, a port or joint ship must be arranged by you
Submission of policy documents and other relevant documents required for claim testimony
Though it is advisable to do your research before selecting a company when purchasing marine insurance, here are some popular options you can look at:
Bharti AXA
New India Assurance Co. Ltd.
Tata AIG
HDFC Ergo
Royal Sundaram
United India Assurance Co. Ltd
Cholamandalam Insurance Company
Duly filled in claim form
Original insurance certificate with the policy number
Copy of Billing Lading
Survey report or missing certificate
Original invoice, packing list, shipping specification
Copies of correspondence exchanged
Also Read: Types of Marine Insurances in India
