Marine cargo policy provides insurance to such businesses which are involved in shipping of goods across the national boundaries on a regular basis. Any unexpected damage to the goods during the transit can cause an irreparable loss to the businesses, and so need to be insured beforehand. Marine insurance policies not only cover the goods being transported through ships, but also through air and road. Inland transit by road is also covered under some marine cargo plans.
Who should take this policy?
Not just the logistics companies and freight forwarders, but also the exporters and importers need to have the marine cargo policy to be prepared for any unforeseen damage to their goods in transit. Even those manufacturers who are involved in the transit of their goods in the international market need the exclusive coverage of the marine cargo policy.
What’s the need of marine cargo insurance?
Any unexpected damage to goods in transit cannot be fully controlled or avoided, but can be insured. Businesses may feel that their goods are being transited in a safe environment, but still there are certain persistent problems that can be dealt with only with the marine cargo insurance.
Theft and piracy
Cargo thefts and piracy are not something that are existent only in story books, 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, posing a serious threat to businesses involved in the international trade.
Limited liability of the carrier
The carriers on the ship and the ship managers are generally unaware about the nature of the goods in transit, leading to the chances of an 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 the coverage of the financial loss from them. In this case, only the marine cargo insurance can be the savior.
Types of Marine insurance policies
Though, different types of marine cargo policies are provided by different insurers as per the customized needs, there are certain policy types that are usually included in the marine insurance plan.
It involves all marine transit by the client in export or import during the 12 month’s period of the policy.
Duty insurance policy
It covers any type of loss to goods while being transited 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 needed to be 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 goods being shipped overseas lies with the buyer only. In a case where the buyer refuses to take the responsibility for the goods damaged in the transit, the seller can be saved from the financial loss only by this policy.
Specific voyage policy
This policy provides coverage for only those specific voyages for which the policy holder asks for. 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.
Coverage under the plan
Institute Cargo Clause (C):
It covers damage to the goods due to:
- Derailment of shipping vehicle on road
- Craft being stranded or sunk
- Discharge of cargo at the distress port
Institute Cargo Clause (B):
Along with the perils included in the 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 perils covered under the cargo clause B & C along with:
- Rough handling
Some of the most common exclusions under the marine cargo policy are:
- Minor leakage
- Improper packing
- War & riot
- Willful misconduct
- Inherent vice
- Rejection by customs
- Abandonment of cargo
- Failure to collect
Factors determining premium
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.
[cta id=”3894″ vid=”1″]