What is Marine Insurance?
Marine insurance is the type of insurance coverage that protects goods and cargo in the process of shipping from point of origin to destination.
The protection provided guards one against losses or damage throughout the entire shipping process.
In addition to the cargo, this insurance also covers the vessels that are used in transit as well as the various terminals or other points at which the goods could be stored during the journey. This ensures coverage for all phases of the shipment.
TRANSPORTATION COVERED IN MARINE INSURANCE
1. Sea Transport
Marine cargo insurance traditionally covers goods shipped by sea, including cargo ships, container vessels, and bulk carriers.
2. Air Transport
Marine cargo also encompasses air freight. The cargo moving by airplanes is air freight cargo insurance. It is crucial for high-value or time-sensitive cargo, such as electronics, pharmaceuticals, or perishable goods that must arrive at the destination within a particular timeframe.
3. Land Transport
Comprises trucking or rail transit, which is part of the supply chain of logistics. The transportation covers goods carried by road or rail from a warehouse to a port and any journey on land that is taken in between.
4.Inland Water Routes
Marine cargo also includes any transportation along any inland waters such as rivers, canals, and lakes. Such transportation is often common in areas where various locations of need have to move shipments, but these locations are not connected by road or rail.
TYPES OF MARINE INSURANCE POLICIES
1. Cargo/Transit Insurance
This type of marine insurance covers goods or cargo while being transported by sea, air, or land. Most types of cargo insurance can be arranged for the particular shipping requirements;
these may include single-trip coverage, annual coverage for regular shippers, or open policies for ongoing shipments.
2. Hull Insurance
Hull insurance covers a vessel and machinery along with equipment, which protects against risks resulting from collision, stranding, fire, and storms. It helps create financial security for the repair costs or complete loss of the vessel to the shipowners.
3. Freight Insurance
It covers freight charges, which a shipping company might incur losses due to the loss or damage of cargo during transit. It covers the loss potential earnings of the car shipping company. This is where the freight payment depends on the delivery of safe freight.
4. Liability Insurance
Liability insurance specifically covers shipowners and operators for third-party claims for damage or loss arising from the vessel that results from activities carried out through and/or with the vessel, such as collision damage to another ship, injury or loss suffered by crew members or passengers.
LOSS COVERED UNDER MARINE INSURANCE
1. Theft/Theft by Pilfering
The insurance covers loss through theft or pilfering of goods during transit. For instance, the cargo could be stolen from the ship while in the port, or even in warehouses while being transported.
2. Total loss of any package during loading/unloading
Insurance covers total damage on individual packages of goods in the case of dropping or mishandling during their loading into or unloading from the vessel of transport, respectively.
3. Malicious Damage
It covers intentional damage to the cargo arising from acts of vandalism or other malicious actions while in transit.
This includes intentional third-party actions to cause disruption to shipping companies’ operations.
4. Collision of Goods-Carrying Vessel
This covers damage or loss resulting from the ship carrying the goods colliding with another vessel or object causing damage to the cargo.
5. Fire, Lightning, and Explosion
Damage to the goods due to fire, lightning strokes, or explosion while in transit or storage is also covered by insurance.
6. Breakage of Land Conveyance or of any Other Goods (Collision, Overturning, or Derailment of Land Conveyance)
In case of overturning, derailing, and collision with other land conveyances like trucks and trains carrying the goods, the insurance will cover the damage caused to the goods due to the same.
7. Breakage of Bridge
Loss is covered in case a bridge the goods transport vehicle in use by, breaks or collapses and causes damages to or loss of cargo.
8. Overturning of Goods-Carrying Vehicle
This is coverage for damages resulting from overturning goods-carrying vehicles during land transport. Thus, loss will be compensated.
9. Stranding, Grounding or Sinking
Insurance coverage is payable in case of stranding or wreck of the carrying vessel, loss or damage to goods at sea or inland.
10. Earthquake or Volcanic Eruption
In the case of damage to cargo while on transit caused by an earthquake or volcanic eruptions, losses are covered.
11. Seawater or Freshwater Entering the Vessel While in Transit
It safeguards against damage resultant from the entry of seawater or freshwater into the vessel which eventually affects the goods while in transit.
12. General Average Sacrifice and Salvage Charges
This coverage compensates for goods abandoned deliberately to save the vessel and other cargo (general average) and salvage charges incurred in saving the ship and its cargo.
13. Natural Disaster Coverage
Insurance covers losses by other natural disasters, including storms, floods, and tsunamis, which means compensation for damages on the goods.
15. Jettison
Jettison refers to the intentional act of discarding cargo or equipment from a ship in order to lighten the vessel during a crisis, such as severe weather or potential sinking.
16. Washing Overboard
Washing overboard refers to the loss of cargo due to it being swept off a vessel by waves or adverse weather conditions.
17. Delivering of Goods or Cargo at Different Locations
This involves the distribution of cargo to multiple destinations rather than a single endpoint, often seen in multimodal shipping.
18. Contact of Goods Carrying Vehicle with Structure/Animal
This term refers to incidents where a cargo vessel, truck, or other transportation vehicle collides with a fixed structure (like a dock) or an animal, which can result in damage to the vehicle or cargo.
CONCLUSION
Marine insurance is the heart of international shipping, wherein protection would be offered to cargo owners and shipping companies against the multitude of risks involved in transporting goods on water.
Not only does it act as a safety net for cargo owners and shipping companies, but it also instills confidence in international trade.
While global trade continues to expand, the wide-ranging marine insurance policy will only assume greater importance.
For the insurer, a whole range of knowledge on current changes in regulations, market trends, and developed risks needs to be built up in order to answer for custom-designed solutions that meet client needs.
In doing so, by effectively managing such risks, marine insurance does much to help maintain the free flow of commerce in contributing toward economic stability and growth worldwide.