The transportation of goods has various risks as it passes from one nation to another. A Cargo Insurance Policy deals with the sea perils associated with the transportation of goods. Hence it is important to protect the assets using a cargo insurance policy while they are in transit from one place to another.
There are three primary hazards of shipping through the sea. These include:
- Weather hazards, form one of the major reasons behind maritime
- Geographic hazards include icebergs, sandbars, and other spots which are risky to navigate.
- Technological risks include technical glitches in the equipment, engine issues, and navigational failures.
Research shows that human error has been responsible for almost 80% of marine accidents.
Types of cargo losses
There are two main types of cargo losses that are covered by a marine insurance policy. These include total loss and partial loss.
Total Loss: This occurs when damaged the subject matter entirely. There are two variants of the same.
- Actual total loss: The actual total loss covers the goods, completely destroyed. The insured may deprive of the subject matter, and the goods cease to be a thing of the kind when insured. The actual total loss occurs when the ship sinks or destroy by fire.
- Constructive loss: Constructive loss occurs when abandoning the ship for some particular reason. This happens when it is not commercially viable to retrieve the ship or the cargo in it. In the case of a constructive loss, the insured can give a notice of abandonment and surrender the interest to the insurer.
Partial Loss: Partial loss occurs if the subject matter is damaged partially. It is of two types:
- General average loss: A general average loss may cause voluntarily avoid danger. If the ship is sinking because of some overload, throw the cargo out of the ship to save the crew and the ship. This happens when there is an extraordinary situation, the peril must be real, and the loss must be voluntary.
- Particular average loss: Particular average loss is the partial loss of the subject-matter insured and is caused by A particular average loss that is not caused voluntarily. The insured sub
- subject matter should be damaged, and this damage should be caused by the marine peril which is insured.
The Marine Cargo Insurance Cover:
Marine cargo insurance is a class of property insurance that insures property while in transit against loss or damage arising from perils associated with the navigation of the sea. It is a contract between the marine insurance company and the insured for the reimbursement of the damages caused to the cargo due to a variety of perils.
What does it cover?
The policy aims to provide you with financial protection for the loss or damage to your goods in transit over sea, land, and air on import and export shipments.
Which Type of Marine Cargo Insurance Policy is Better for You?
Various types of marine cargo insurance are available for you to choose from. These include:
Annual Turn Over Policy (ATOP):
ATOP covers transit goods under Export, Import, Inter-Depot movement, or incidental storage from originating point to destination point. In this type of cargo insurance:
- The premium charged is based on the sales turnover.
- All movement of goods is
- Periodical declaration of movement of shipments to the insurer does not need. Submitting monthly/quarterly sales figures is sufficient.
- Can pay Premium on the half-yearly/quarterly
Therefore, this type of marine cargo policy is most useful for bulk exporters/importers of goods throughout the year, and to and from multiple locations.
Specific Voyage:
This type of policy is used to cover a specific single transit. This is useful for a one-off import or export activity, especially for capital goods.
Open Policy:
An open policy is an annual cargo insurance contract, affected for an approximate sum insured. The insured can send multiple consignments in a year until exhausted the sum insured of the policy is. This type of policy is usually available for shipments within India. Since it’s an annual policy, the sum insured may base on the annual turnover/raw material need of the firm.
Annual Policy:
Issuing Annual policy usually to the owners of goods, who are actually the consumers and not traders. The policy is nontransferable, and in the case of loss, only the insured is entitled to insurance compensation, regardless of the party possessing the goods.
Businesses involved in clearing and forwarding operations can also avail of this policy.
Open Cover:
The open cover is a simple agreement, where the insurer agrees to cover all future shipments made by the insured within a limited period (generally a year). Insured stamped certificates as per the declarations made by the insured.
This type of cargo insurance is most useful for exporters/importers involved in regular business to/from a few known places (or ports).
How to buy it?
Buying marine cargo or inland transit policies has become easier and more time-efficient with the online services offered by insurance advisors. Therefore, online insurance advisors like the award-winning insurance advisory portal SecureNow, offer multiple quotes and a simple process to avail of the policy with just a few clicks. Further, they can assist your claim processing and management of the policy too.
