Export and import businesses are perhaps the basis of globalization in the contemporary world. These are a way to take your business global and target more consumers. Go back to the past, and you can see that international trade is not new. Think of Vasco Da Gama, the Portuguese explorer who came to India to explore trade opportunities. The Silk Route, the age-old network of trade routes connecting the East with the West for trade. Think even before that when primeval man used to trade with shells and barter goods with tribes from distant regions.
The simplest definition of export or import trade is that it is the process in which one country has an adequate supply of a commodity or product sells it to another which has demand for it. In the modern world where technology empowers trade, export and import businesses have become more rewarding. However, there is always a risk of losing your cargo when in transit. That’s why you need marine cargo insurance when exporting or importing goods as a part of your business.
Marine cargo insurance covers losses or damages to goods transported, especially through ships, to distant destinations. It acts as a security for goods in transit. Since business shipments are considerably high in value, any damage to goods can have a significant impact on your business. Along with knowing what a marine cargo insurance policy covers, it is crucial to understand what it doesn’t. Policy exclusions are one aspect that many people forget to consider while buying a marine insurance policy.
General Exclusions of Marine Cargo Insurance
1. Ordinary Leakage or Loss in Goods’ Weight
Liquid products, when exported from one country to the other, are at high risk of leakage. In other instances, the goods exported or imported undergo a loss of weight during the journey.
You can understand it through this example:
An international soft drink brand exported large cargoes of bottled drinks via the sea route. When unloaded at the destination, found unexpected leakage from the bottles, which could be the result of treacherous weather conditions during the journey.
Though the marine cargo insurance policy covers damages to losses, it excludes possible leakages that may occur. It is crucial for you to check the leakage-related clauses while buying the policy in the first place.
2. Packaging Faults
Proper packaging of goods is essential to ensure their safety on the high seas. But if they are not packaged with quality material, the chances are high that wear and tear will happen in transit. It is a bit like packing perishable goods in paper cartons which are vulnerable to damage due to rain during their transit.
Your marine cargo insurance policy won’t cover the damages that happen because of improper packaging of goods. It is your responsibility to get the goods packaged in the best way possible to ensure the recipient receives them in the form you exported them.
3. Willful Misconduct
The way you export goods from your warehouse can sometimes cause harm to them. If you continue to follow the same method despite knowing the consequences, your action will be treated as intentional disregard by the marine cargo insurance companies. You won’t get the insurance benefits for filing claims under the policy in such situations.
Any intentional wrongdoing can have a significant impact on your export-import business. Therefore, it does not make sense to create reasons for your own problems.
4. Excessive Delays
Delays often happen while delivering cargoes on time, and they are acceptable but only to some extent. You won’t get the payment for the losses, in case delivering the goods delays beyond the expected delivery date.
The type of product in transit also determines the acceptable delays. For instance, perishable items may deteriorate in case of excess delays due to storm or vessel damage. In financial terms, they may lose their value over time, which implies a direct loss. Claims for damages resulting from excess delays are excluded unless your marine cargo insurance has some specific terms related to them.
Just like any other insurance product, marine cargo insurance also comes with a set of terms for benefits as well as exclusions. Talk to your insurer or insurance broker to first understand these policy terms. If you want to buy a new policy, connect with us. At SecureNow, we make sure you get all your doubts cleared before purchasing the right policy for your export-import business.