A Cargo insurance policy provides coverage to businesses involved in the shipping of goods across national boundaries on a regular basis. Any unexpected damage to the goods during the transit can also cause an irreparable loss to the businesses. Hence, it is important to get insurance beforehand. Marine insurance policies not only cover the goods being transported through ships but also through air and road. Some marine cargo plans also cover inland transit by road.
Who should take this policy?
This policy is a good choice for logistics companies and freight forwarders. However, also exporters and importers should also buy a marine cargo policy to prepare for any unforeseen damage to their goods in transit. Even manufacturers involved in the transit of their goods in the international market can choose the exclusive coverage of the marine cargo policy.
What’s the need for a marine cargo policy?
One cannot fully control or avoid unexpected damage to goods in transit. However, it is best to buy an insurance policy to avoid unnecessary expenses. Businesses may feel that the transit of their takes place in a safe environment. Nonetheless, there are certain persistent problems and there is marine cargo insurance to deal effectively with them.
Theft and piracy
Cargo thefts and piracy do not only exist in storybooks but are the reality for the businesses involved in the transit of cargos. Most of the cases of pirate attacks have been observed in South East Asia and Africa regions, thereby posing a serious threat to businesses involved in international trade.
Limited liability of the carrier
The carriers on the ship and the ship managers are generally unaware of the nature of the goods in transit. This often leads to the chances of inadvertent damage of goods from their ends also. But, as the carriers don’t hold much liability for the loss of the goods, the clients can’t expect coverage of the financial loss from them. In this case, only marine cargo insurance can be the saviour.
Additional Read: How does Marine Cargo Insurance work?
Types of Marine insurance policies
Different types of marine cargo policies are provided by different insurers as per customized needs. However, there are certain policy types that are usually included in the marine insurance plan.
It also involves all marine transit by the client in export or import during the 12-month period of the policy.
Duty insurance policy
It covers the loss of goods during transit from the port or other import points to the importer’s warehouse. This type of policy is a great help as the CIF (Cost, Insurance, and Freight) value includes only the amount paid by the seller for the shipment of goods to the import point and not beyond that.
Seller’s contingency policy
When sellers allow credits to the buyer, the responsibility for the shipped goods overseas also lies with the buyer only. However, in a case where the buyer refuses to take the responsibility for the goods damaged in transit, the seller can be saved from the financial loss only by this policy.
Specific voyage policy
This policy also provides coverage for only those specific voyages for which the policyholder asks. It is a customized policy as per the occasional need of the client and is issued on the ‘from and to’ and the duration of the voyage basis.
Additional Read: Know about all the clauses in Marine Insurance.
Coverage under the plan
Institute Cargo Clause (C):
It covers damage to the goods due to:
- Derailment of shipping vehicle on the road
- Craft being stranded or sunk
- Discharge of cargo at the distress port
Institute Cargo Clause (B):
Along with the sea perils included in Cargo Clause B, it also includes:
- Volcanic eruption
- Damage due to the entry of sea, river, or lake water
- Washing overboard
- Package lost while loading and unloading or while overboard
Institute Cargo Clause (A):
It includes all sea perils covered under the cargo clause B & C along with:
- Rough handling
Exclusions in Marine Cargo Policy
Besides, some of the most common exclusions under the marine cargo policy are:
- Minor leakage
- Improper packing
- War and riot
- Willful misconduct
- Inherent vice
- Rejection by customs
- Abandonment of cargo
- Failure to collect
Factors determining the premium of Marine Cargo Insurance policy
The marine cargo insurance premium depends upon a number of factors:
- Scope of cover
- Nature of the cargo
- Mode of conveyance
- Past claims
Marine Insurance policies form an important part of the risk management strategy of any business involved in the international shipment of cargo. While taking the insurance policies, a business must know in detail about the coverage provided by different insurers, and should also compare the overall cost.