a ship on the water leaving an industrial port

A Complete Guide to Marine Insurance

The unfortunate truth is that anything can happen at sea. For instance, the ship carrying your cargo could collide with another vessel or a ship can catch fire. While there isn’t much that you can do to prevent these accidents, marine insurance can help you protect your vessel or cargo.

So, what is marine insurance? And what does it cover? This guide will answer these questions extensively.

What Is Marine Insurance?

Like many other forms of insurance coverage, marine insurance is a unique contract of indemnity. It covers goods transported by sea from one country or region to another. But beyond that, it may also cover loss or damage to terminals, ships, cargo, etc.

Regardless of the term ‘marine,’ which refers to the sea, this insurance applies to different modes of transport.

For example, when you ship a product, the shipping company must transport it by road to the port. And before it arrives at its destination, all modes of transport, including rail and air, may be involved.

If anything happens to your package along the transport chain, marine insurance will cover the resulting damage.

Who Can Buy a Marine Insurance Policy?

Although ship owners are more inclined to buy marine insurance, other parties may purchase it. These include:

  • Sellers
  • Buyers
  • Export/import merchants
  • Contractors
  • Banks

Any person involved in the transportation of exporting and importing goods can buy this policy.

Types of Marine Insurance

There are several types of marine insurance. Hence, you only need to buy the relevant policy for your business. However, this section will focus on coverage relating to cargo.

Total Loss Insurance

Your container may get lost at sea, while in other cases, it may sustain irreversible damages. This insurance covers the total losses emanating from such scenarios, but you only receive the amount you fill in the customs declaration form.

The comprehensive marine policy is cheaper than specific risk insurance. And in case of an incident, you either receive the total amount of your shipment or nothing.

All Risk Cargo Insurance Policy

Sometimes, a portion of your cargo will get damaged during transportation. The all-risk cargo insurance policies cover the amount of loss you will sustain in such instances.

Common Types of Marine Insurance Plans

If it is your first time purchasing marine insurance, you might be unsure what policy to buy. Here is a breakdown of the different plans.

Cargo Insurance

It covers any damage to your cargo during loading, unloading, importing, or exporting. Business owners who rely on marine transport throughout the year can purchase annual or open coverage. The policy will cover a predetermined value of the goods you transport throughout the year.

You may also opt for single cargo insurance. It is ideal for business owners who only ship once in a while. The coverage starts at the point of departure and ends at the shipment’s destination.

Inland Marine Insurance

Inland marine insurance covers your shipment during offshore transportation. For example, this may include when the shipping company moves your cargo from one port to another via train or road.

Liability Insurance

Liability insurance revolves around any damage or losses emanating from unfortunate accidents. These may include attacks, collisions, or crashes.

Voyage Policy

Marine insurance coverage only covers a particular vessel for a specific trip. Once the trip ends, the policy also ends.

Boat Insurance

Boat insurance is a marine insurance plan that protects your vessel or watercraft from various risks. It covers your boat regardless of whether it’s on land or at sea.

For instance, this plan pays for repairing your boat in case of damage. And if someone steals your boat, this policy helps to replace it.

Why Do You Need Marine Insurance?

There are many reasons you may need marine insurance. Here are a few of them.

Shipments are Vulnerable to Theft

In the same way, burglars break into your house and steal your valuables; thieves may target your shipment.

The good news is that marine insurance covers shipments lost through theft. And the best part is that it doesn’t matter where the robbery happens. So long as it is between the point of departure and the destination, you are covered.

Damage or Loss at Sea

Sometimes, ships dump some containers at sea because of bad weather and other unfavorable conditions.

For example, in 2021, Maersk ships lost over 900 container shipments at sea. And if this happens to your shipment, you want to be in a position where you can claim damages or losses.

Expensive Items Lead to Massive Losses

You can even go out of business when you lose costly items at sea, if you opt for limited liability. When you do this, you might have to bear the brunt of the losses.

Instead of taking an unnecessary risk, it would be prudent to insure your shipment to a specific limit. The best approach is to purchase coverage beyond the insurer’s invoice. It is a strategy that will ensure your shipment is well-protected.

Get Your Marine Insurance Coverage From the Best Agency

If you have read this guide carefully, you are aware of some scenarios where you will require marine insurance, and likely have found the benefits of this insurance to be undeniable. At the Soden Agency, we pride ourselves on protecting things that matter to you. This way you can sleep peacefully when your goods are in transit.

Contact us today for all your insurance coverage needs.