Marine Insurance: Everything You Need to Know

Transporting goods from one place to another can be risky especially when long distances are to be covered. The goods need to be packaged properly by keeping all the safety precautions in mind. Also, the possibility of damages due to improper handling, poor road conditions, thefts, natural disasters, and other reasons cannot be ignored. Instead of bearing all the risks by themselves, the exporters can get comprehensive marine insurance. A marine insurance policy transfers these risks to the insurance company and allows the exporters to focus on their business. The name marine insurance may imply that it is only restricted to sea voyages. Yet, it is also applicable to cargo shipments carried out via air and land routes. 

What is marine insurance?

A marine insurance policy is a comprehensive insurance policy that protects the goods/cargo from various types of risks. The damages or financial losses caused due to fire, collisions, overturning of the transport vehicles, thefts, mishandling of goods, etc. are covered in this policy. It also covers the losses caused due to non-delivery of goods. Different types of marine insurance policies are available for imports, exports, and inland transits. Marine insurance is also known as transit insurance because it typically insures the goods being transported from the origin to the destination. The different types of cargo that can be covered in marine cargo insurance include:

  • Plastic items, leather goods, and metals like iron and steel
  • Liquids like edible oil, crude oil, etc. 
  • Coal, grain, mineral ores, and other forms of dry bulk cargo
  • Industrial equipment or machinery 
  • General items like footwear, clothes, electronic appliances, spare parts, furniture, and more. 

Why is marine insurance necessary?

Carrying tons of goods in a single shipment can be risky. The sea voyages can get unpredictable due to occurrences of hurricanes, floods, and other natural disasters while the cargo is in transit. The goods carried through land routes are also prone to risks like collisions, accidents, thefts, fire, riots, etc. Cargo sent via air is also prone to multiple natural and man-made disasters. To get coverage for all types of risks, you can get a marine insurance policy. The importance of marine insurance can be gauged by the simple fact that the cargo damage cost can sometimes cost millions for the importer or the exporter of goods. 

Key Features of Marine Insurance 

  1. Wide coverage: Marine insurance policies are meant for all types of transportation. Therefore, they cover the transportation via road, air, rail, and post/courier. You can get a wide range of coverage to get protection from natural calamities, collisions, accidents, and other perils. It is also possible to get coverage for either domestic or international trade or both. 
  1. Economical: The marine insurance plans are generally more economical depending upon the type of goods you are importing or exporting. Also, you can opt for the partial or total coverage as per your budget and shipping requirements. 
  1. Coverage for duties and taxes: A comprehensive cargo marine insurance policy provides compensation as much as the invoice value of the goods. Apart from that, it also covers the duties and taxes that are a part of the cargo shipment delivery process. 
  1. Total loss protection: Despite taking all the precautions, the unpredictable nature of the sea can lead to the total loss of the shipment or the entire container can get damaged by water or any other disaster. To prevent these severe losses, get a marine insurance policy online that comes with total loss protection. 

Characteristics of Marine Insurance 

  1. Indemnity Principle: The principle of indemnity states that the insurance company needs to compensate only for the actual losses suffered by the policyholder. Suppose that you have taken a marine cargo insurance policy with a sum insured of Rs. 15 lakhs but your actual losses for claim only amounts till Rs. 10 lakhs. In this case, the insurance company will provide you with a compensation of only Rs. 10 lakhs. 
  1. Coverage period: The marine insurance coverage starts from the date of policy issuance. It means that the losses or damages that occurred prior to taking the policy will not be covered by the insurer. 
  1. Right of subrogation: The insurance company can sue a third-party to settle a claim in the favour of the insured. However, the right of subrogation can only be exercised after they compensate for the losses of the insured. The principle of subrogation allows the insurer to not compensate over the actual losses incurred to the insured. 
  1. Law for multiple policies: In case you have multiple marine insurance policies, the losses will be partly or proportionately divided between the insurers. 

Types of Marine Insurance Policy 

  1. Hull & Machinery Insurance: A hull insurance policy is taken to cover the losses for the damages sustained by the hull and torso of the vessel. It also covers the machinery, furniture, and fixtures that are part of the vessel. Hull insurance protects the financial losses due to accidents and other mishaps that may be sustained by a ship during a voyage. 
  1. Freight Insurance: Freight operators or carriers would compensate for the losses only if the cargo/goods are damaged due to their faults. The events caused due to weather conditions and natural disasters are beyond the scope of the freight liability. Getting freight insurance policy would help to recover the losses that are incurred due to accidents, thefts, and other incidents caused due to natural events or disasters. The goods should be packed properly and safely to get the benefits of freight insurance. 
  1. Cargo Insurance: A cargo insurance policy helps the owner of the goods to recover the losses caused due to damage of the goods/cargo. It also covers the losses incurred due to delay in the shipment of goods due to accidents, slow loading or unloading, and similar events. 
  1. Marine Cargo Insurance: Marine cargo insurance is a comprehensive policy that includes all the benefits of the cargo insurance along with third-party liability cover. It means that the damages to the ship/other transport means, port, etc. caused while carrying the cargo are covered by this insurance policy. 

Marine Insurance Policies Available In India

These are the best plans from some of the top marine insurance companies in India:

Policy NameSum InsuredPolicy Tenure Key Features 
Marine Cargo Insurance by United India Insurance Company As per the coverage and policy requirements Varies as per policy type and requirements Covers goods during water, air, road, rail, courier, and other transits. 
Different types of marine insurance policy such as specific voyage policy, open policy, and open cover policy are available. 
Quick claim settlement and renewal process through online means. 
Marine Cargo Insurance Policy by HDFC ERGOAs per the coverage and policy requirements Varies as per policy type and requirements Customisable policies as per the requirements of the policyholder 
Duty insurance policy, e-marine, specific voyage policy, open cover, and other types of marine insurance are available. 
Customs duty cover, removal of debris, and other add-on cover can be availed with the policy. 
Marine Transit Insurance (Inland) by ICICI LombardAs per the coverage and policy requirements Varies as per policy type and requirements All types of marine insurance policies are available. 
A wide range of natural calamities and perils are covered by this marine insurance policy
Marine insurance coverage includes coverage for inland transits via air, sea, postal service, railway, road, and courier. 
Marine Cargo Insurance Policy by Reliance General As per the coverage and policy requirements Varies as per policy type and requirements Extension covers for riots, strikes, multi-transits, etc. are available.
The insurance policy can be customised as per the requirements of the policyholder. 
Wide coverage against natural disasters, thefts, collisions, and more. 
Marine Insurance Policy by Bajaj AllianzAs per the coverage and policy requirements Varies as per policy type and requirements Addresses specific business needs and manages multiple risk areas effectively. 
Easy and quick claim settlement process. 
Protection against a wide range of man-made and natural disasters. 

Inclusions & Exclusions of Marine Insurance 

What’s covered?

  • Emergency situations like explosion, fire, sinking or stranding of ships in transit, etc. are covered under marine insurance
  • Marine insurance coverage provides protection for the damages caused due to overturning of the vehicles, landslides, collision, and such other events. 
  • Protection from the damages caused due to natural disasters like lightning, earthquakes, floods, etc. is included in the policy coverage. 
  • Total losses incurred during mishaps and accidents occurred while loading and unloading of the goods from the vessel are covered by this policy. 
  • The losses incurred due to discharge of the cargo at a distress point or damages inflicted due to jettison are also covered by this policy. 

What’s not covered?

  • The losses caused due to intentional or wilful acts are not included in the marine insurance coverage
  • Damages caused due to riots, strikes, wars, terrorism activities, and related events are usually not covered under this policy. 
  • The damages caused because of the usage of poor-quality packaging materials are not covered under this policy. 
  • Marine insurance coverage does not include the damages or losses incurred due to gradual wear and tear of the goods. 
  • The losses incurred due to shipping line insolvency or financial issues are not included in the policy coverage. 
  • The expenses related to wreckage removal are not included in the marine insurance policy coverage. 
  • The losses incurred due to delay in the shipment delivery are not covered by this policy. 

Who needs marine insurance? 

The responsibility of the goods in transit is mainly taken by the exporter. However, the marine risk insurance can be taken by any of these parties:

  • Importer
  • Exporter
  • Clearing & Forwarding agent

Marine insurance is typically designed for logistics companies and transport services that indulge in movement of goods from one point to another. The responsibility of the financial losses due to damages can be shifted from the exporters and other intermediaries to the insurance company. The heavy losses can be prevented by subscribing to a comprehensive marine insurance policy that provides coverage for all types of transits. Therefore, getting marine insurance meaning transit insurance makes sense for shippers, logistics service providers, and all types of transport companies. 

Things to consider before getting marine insurance 

  1. Check all the categories: Different types of marine insurance policies are available in the market. You should choose the one that is suitable according to your requirements. For example, if you are a ship owner, you will be more interested in getting the hull insurance that covers the damages to the vessel. On the other hand, if you are a buyer of the goods, you might be interested in getting extensive cargo insurance for the goods. The policies may also differ as per the goods and voyage types. As a result, you should consider all these things before getting a marine insurance policy
  1. Consider the exclusions: Before getting marine insurance, you must consider all the exclusions and then buy it. For example, a carrier is not responsible if the goods get damaged due to bad weather. In this case, you would consider getting a comprehensive policy. 
  1. Premium: The policy premium will differ as per the nature of the goods and type of insurance you opt for. For example, if you want to cover both international and domestic consignments, the policy premium will be naturally on the higher side. The sum insured and other types of coverage you expect from marine insurance also determine the policy premium. Use the marine insurance policy premium calculator to calculate the premium accurately. 
  1. Claim settlement process: Ensure that the insurer provides a fast and smooth claim settlement process. Check the claim settlement ratio, reputation of the insurer, and other technical things before applying for a policy. 

How to claim the marine insurance policy?

The following steps are to be followed while claiming for the marine insurance policy:

Step 1: Inform the losses or damages to the insurer 

You must inform the insurer immediately about the losses or damages caused during the cargo transportation. If you are not in the state of informing the insurer, someone must do it on your behalf. The nature of the damages or losses should be explained in detail to the customer support team of the insurance provider. 

Step 2: Get the losses surveyed 

After informing the loss or damage, the insurer will appoint a surveyor to inspect and evaluate the losses. You should also raise a claim with the shipping company in case the goods were damaged while taking the delivery. 

Step 3: Provide the necessary documents 

All the documents that verify your claim should be provided to the insurer along with the insurance claim form. For instance, if there is any package missing in the consignment, you can file an FIR and provide the copy of the FIR report to the insurer. 

Step 4: Wait for the claim settlement process to be finished 

It may take a few days for the insurer to complete all the formalities related to the claim. You should wait patiently till the claim request is processed and cooperate fully with the insurer during this period. 

Note: Once the claim process is initiated, the insurer will provide you with a registration number. You should save this number as it will help you while tracking the claim status in the future. 

Documents required to support the claim 

The following documents may be needed to support your marine insurance claim:

  • A copy of the marine insurance policy documents 
  • A detailed survey report 
  • Claim bill
  • A copy of FIR report (in case of thefts)
  • Original invoice of the goods with specifications
  • Copies of the receipts provided by the carriers
  • Billing lading copy

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