Marine insurance is an important requirement for businesses when shipping their goods. By having adequate marine insurance cover, businesses can protect themselves from the possible financial losses that may arise due to an unexpected event or marine perils. But what is the right price to pay for a Specific Marine Insurance Policy?
While availing marine insurance policy, it is important to have the right sum assured and the right type of coverage. Along with the benefits it is also important for businesses to consider the cost of insurance. Let’s take a look at the cost of marine insurance, factors to consider while determining the marine insurance premium, and also tips to get a cost-efficient marine policy.
Factors that decide marine insurance premium
Several factors determine the marine insurance premium. When it comes to a specific marine policy, the following are the factors that go towards deciding the cost:
The nature and value of the cargo
The type of transported cargo determines the premium of the marine insurance policy. The nature of cargo may vary from industrial materials to consumer goods. The potential loss during the contamination or damage is calculated based on the nature of the goods. The price is also determined based on the value of the cargo. The cost of insurance will be higher if the value of goods is higher.
The inherent risk in the goods
Insurers first assess the inherent risks associated with the transported goods. For example, any delay in transport of perishable goods can cause its total loss. The premium of marine insurance is also calculated based on the inherent risks associated with the shipped goods.
Type of coverage
Under a specific marine insurance policy, coverage is offered based on the Institute Cargo Clauses (ICC). The Institute Cargo Clause (ICC)-A offers the most comprehensive coverage followed by the Institute Cargo Clause (ICC) –B and the last one being Institute Cargo Clause (ICC) –C, which is most restrictive. Hence, the marine insurance premium also varies depending on the Institute Cargo Clause (ICC).
Coverage as per Institute Cargo Clause (ICC)-A would cost more in comparison to the coverage other two clauses.
Type of vessel
The type of vessel is an important consideration while underwriting a marine insurance policy. Construction, type of vessel, nationality, and route are also the key considerations to assess the risk and price of insurance. Depending on the fitness, quality and structural strength of the vessel helps understand its ability to carry different types of cargo and the potential risk involved. The risks involved determine the cost of the premium on the policy.
Apart from this, there are various other factors such as natural forces and political risks, etc. that can influence marine insurance premium rates.
Tips to reduce the cost of marine insurance premium
Here are few tips to reduce the cost and get better pricing for your marine insurance policy.
The right type of coverage
Choosing the right type of coverage can help you reduce the cost. If you are a frequent exporter, your business/trade may need an annual policy. If you ship occasionally, you can avail of per-shipment cover or specific marine policy. Eliminating the coverage lines that you may not require will reduce the cost.
Reduce your premium by choosing higher deductibles as this will increases your share of claims.
Risk management programs
Some of the insurers consider risk management protocols of the business while pricing.
Comparison of shopping
With the multiple options available, comparing the policies offered by various insurers can help you get the benefit of a better price.
Secure now provides you with a platform to compare policies from various insurers side by side easily. So, we need to understand these factors and then buy a suitable policy. The financial impact of not choosing the right marine insurance can be severe. That’s why you must take expert advice and decide accordingly what is the right price to pay for a Specific Marine Policy.