The transportation of goods has various risks as it passes from one nation to another. Marine Cargo Insurance deals with the perils associated with transportation of goods. These assets can be protected using marine cargo insurance while they are in transit from one place to another.
There are three primary hazards of shipping through the sea. These include:
- Weather hazards, which form one of the major reasons behind maritime
- Geographic hazards which include icebergs, sandbars and other spots which are risky to navigate.
- Technological risks which 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 which are covered by marine insurance. These include total loss and partial loss.
Total Loss: This occurs when the subject matter is entirely damaged. There are two variants of the same.
- Actual total loss: The actual total loss covers the goods that are completely destroyed. The insured is deprived of the subject matter, and the goods cease to be a thing of the kind when they were insured. The actual total loss occurs when the ship is sunk or destroyed by fire.
- Constructive loss: Constructive loss occurs when the ship is abandoned 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 is when the subject matter is only partially damaged. It is of two types:
- General average loss: A general average loss is caused voluntarily to avoid danger. If the ship is sinking because of some overload, the cargo might have to be thrown 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 is not caused voluntarily. The insured 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 insurance company and the insurer for the reimbursement of the damages caused to the cargo due to a variety of perils.
What it covers?
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 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:
- Premium is charged based on the sales turnover.
- All movement of goods is
- Periodical declaration of movement of shipments to the insurer is not needed. Submitting monthly/quarterly sales figures is sufficient.
- Premium can be paid on the half-yearly/quarterly
This type of marine cargo policy is most useful for bulk exporter/importer of goods throughout the year, and to and from multiple locations.
- Specific Voyage: This type of cargo policy covers a specific single transit. This is useful for a one-off import or export activity, especially of capital goods.
- Open Policy: Open policy is an annual cargo insurance contract which is affected for an approximate sum insured. The insured can send multiple consignments in a year until the sum insured of the policy is exhausted. This type of policy is usually available for shipments within India. Since it is an annual policy, it is advisable that the sum insured is based on the annual turnover/raw material need of the firm.
- Annual Policy: Annual policy is usually issued 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 the insurance compensation, regardless of the party possessing the goods.
Businesses involved in clearing and forwarding operations can also avail this policy.
- Open Cover: 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). Stamped certificates are issued as per the declarations made by the insured.
This type of cargo insurance is most useful for exporters/importers involved in the regular business to/from few known places (or ports).
How to buy?
Buying marine cargo or inland transit policies has become easier and more time efficient with the online services offered by insurance advisors. Online insurance advisors like the award-winning insurance advisory portal SecureNow, offer multiple quotes and a simple process to avail the policy with just a few clicks. Further, they can assist your claim processing and management of the policy too.
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