Marine insurance refers to the insurance of goods that a country dispatches to reach another country’s destination. Traditionally, the goods that were intended for international trade were transported through the sea. Although the name implies only a water-based mode of transport it is not completely true. If you send a package by air and the items are insured then the insurance is called marine cargo insurance.
It provides protection against transport-related losses. So the shipping companies and couriers get protection against the potential loss that occurs while transportation. Despite following all the rules and regulations, one cannot control natural calamities. If while transportation you encounter a pirate who steals all the stuff then you can look up to the insurance company. Similarly, weather hazards, cross border conflicts can cause damage that requires significant financial support. That’s the reason you need a marine insurance policy.
How Does Marine Insurance Work?
Marine insurance transfers the liability of your goods to the insurance company. The exporters don’t want to bear the sole responsibility of the goods so they apply for marine insurance. It gives coverage for the goods you export against any sort of damage or loss.
Also read: What is Property Insurance and benefits of Property Insurance?
The airline and shipping companies can bear the cost of damage and loss on their own. However, the compensation is mostly on per consignment or per-package basis. So the coverage sums up to a huge amount that is fairly difficult to pay. That’s why the exporters go for the insurance of their goods before exporting them. And there are many companies that provide marine insurance like, AIG, and Global Marine Insurance, etc.
Types of Marine Insurance
#1: Cargo Insurance:
Cargo insurance provides coverage for the physical damage to cargo that is part of the shipment during transportation. Depending on the type of policy you choose, it includes theft protection or other coverage too. Land cargo insurance is the one that provides coverage for all land transportations. It covers trucks and other smaller vehicles too. On the other hand, marine cargo insurance covers transportation through sea or by air. It covers the damage due to cargo loading and unloading, contingencies, and more.
#2: Hull Insurance:
Hull insurance is a policy that covers ship damage expenses. The word hull refers to the main body of the ship. It is similar to car insurance, the difference lies in the medium of transport. It also includes the fixtures attached to the hull of the ship too. And it covers all types of vessels that operate into the lakes, rivers, and oceans. For example, fishing boats, tankers, cruises, and yachts.
#3: Liability Insurance:
It is a type of marine insurance that is also called protection and indemnity. It covers protection for third-part liabilities that are encountered by owners and corporations during water operations. If you apply for this policy, it will cover injuries, illness, and in some cases loss of life due to vessel malfunction.
Benefits of Marine Insurance
#1: Protection against physical damage
Purchasing a ship or yacht is already a huge investment, so we are sure you don’t want to spend money on physical damage that is not under your control. The insurance policy covers damage resulting from a wide range of perils. If you go for the best policy then it will offer all-risk coverage.
Some people don’t prefer going for marine insurance because they think homeowners’ policy is sufficient. However, the homeowner’s policy doesn’t cover all the areas at risk. With this insurance, you get protection for large ships covering all the major areas at risk.
If your boat meets with an accident in an area where there is no qualified boat smith then what are you going to do? You will have to transport the boat to another area that will add up to the cost of repair. With insurance, you can save money as it includes all the charges. In fact, there are some insurers that offer emergency assistance. So if you need immediate fuel delivery then they will even help you with that.
#2: Is applicable globally
Marine insurance is applicable globally. So you don’t have to visit different countries for applying for the insurance policy. With one single policy, it covers multiple destinations.
#3: It covers natural calamities too
It provides protection against natural calamities too. Due to global warming, the weather is unpredictable. One day you will experience heavy rain and the other day you will experience a bright sunny day. So you must prepare for financial loss due to natural calamities. Marine insurance is a must in such scenarios.
#4: You get benefits of life insurance too!
If people die on your ship, the owners need to provide compensation to help them survive. This insurance even covers the life of all the members of the ship. So the owners get life insurance benefits in the marine insurance policy.
Final Words
Marine insurance policy is a contract that has strict policy requirements. You must follow the insurer’s terms and conditions otherwise even a minor discrepancy can lead to rejection in claims. This insurance provides expansive coverage against the different types of damage or loss. It protects the value of your merchandise. In fact, if you own a business that has different requirements then there is a solution for you too. The companies provide customization in this insurance policy. You can choose your policy coverage limit that is useful for you.
The policy provides comprehensive protection but there are a few exceptions. It won’t cover your claim if you are at fault. For example, the packages are poorly packaged and that’s the reason for damage then they won’t provide coverage. Another reason could be a strike, civil commotion, or riot. You must read the terms and conditions to know the various exceptions.
Marine insurance is the safest haven for shipping corporations. It helps in the reduction of financial loss. From the owner of the ship or cargo to creditors, anyone can apply for marine insurance.
The article covers the various aspects of marine insurance so you get a clear idea of how it works. If you find the article informative and there is anything else you want to know about it then contact us. We will try to resolve your queries related to insurance in the shortest time possible.
