Marine Insurance is a type of insurance that covers cargo losses or damage caused to ships, cargo vessels, terminals, and any transport in which goods are transferred or acquired between different points of origin and their final destination. Providing protection against transport-related losses, this voyage policy provides a haven for shipping companies and couriers because it protects them from costly potential losses while transporting goods by water.
Despite following laws and safety regulations, transporters can’t control natural occurrences that might disrupt the cargo or vessel. Things like weather hazards, encounters with pirates, and cross border conflicts are very common in water transportation and the damages associated with these situations can cause a significant financial hardship for ship owners. This is where a marine insurance policy comes to the rescue, protecting the interests of shipping corporations and transporters by providing them with insurance coverage needed to defend against possible losses.
Another great feature of marine insurance is that transporters can choose coverage options applicable to their specific trade. Coverage requirements can differ, so shipping businesses can choose an insurance plan that is customized. Different policies are available to provide coverage according to the size of the ship and routes taken.
What are the different features of a Marine Insurance Policy?
Insurance policies are well-defined contracts and marine insurance has strict policy requirements. Insurer requirements should always be followed because minor discrepancies or any violations can lead to rejected claims. Policy providers follow narrow guidelines when reimbursing claims, and a simple deviation to the route might result in a loss of coverage for an expensive claim. With this in mind, it’s important to understand the features and requirements of your policy to ensure you have coverage.
Open Policy – an inland marine insurance policy provides coverage for inland movement of a consignment for a specific duration of time, usually up to one year. This policy is applicable for shipping companies with numerous transactions per year as it offers continuous coverage during the active policy period. Inland marine insurance, in the context of extended coverage for marine insurance, covers goods shipped by land, such as after the goods have arrived ashore and are being shipped to a storage facility.
Comprehensive Protection – provides more expansive coverage against different types of loss or damage, protecting the value of your merchandise against total loss of goods, partial loss of goods, and other related expenses while your cargo is still in transit.
Customization – for businesses with varying needs, obtaining customized marine insurance is generally recommended. You can choose your policy coverage limits as well as policy options that would be useful to your business and your specific needs.
Mark up Value – known as markup in the marine industry, this type of policy allows a portion of your profit to be included in the insured value.
A marine insurance policy provides comprehensive protection, though keep in mind that there are coverage exclusions that need to be considered. Insurance companies will not cover your claim if:
- It is caused by willful negligence
- It is caused by improper packaging
- There is contamination as a result of radioactive rays
- It is caused by strike, riot, or civil commotion
- Other exclusions may apply, another reason to review your coverage closely
What types of Marine Insurance Exist?
Ocean marine insurance is such a broad term that it is usually applied to a group of coverages to provide protection against certain losses or damages. Generally, there are three common types of marine insurance that provide different protections.
Hull Insurance – offers protection for physical damages to the boat or vessel along with its operating equipment, including machinery. This policy is applicable for all water vessels and limited to commercial-based ocean crafts. Barges, tugboats, oil rigs located offshore, floating equipment, and other similar installations can benefit from this type of insurance.
Cargo Insurance – provides coverage for physical damage to cargo that is conveyed or travelled as part of the shipment process. Depending on the chosen coverage, some policies offer theft protection or coverage for other forms of losses besides physical damage.
Marine Liability Insurance – also called P&I or protection and indemnity, this coverage offers protection for third-party liabilities that owners and corporations are exposed to during water operations. It includes coverage for injuries, illnesses, or even loss of life caused by vessel operation. Medical expenditures, damage to other vessels and cargo, collision incidents, and related expenses as a result of quarantine may also be covered.