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written by | August 1, 2022

What Is Marine Insurance? Learn Everything About It

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A marine insurance policy is a must for all ships and carrier owners who use them for commercial and transportation services. It offers insurance coverage for both marine and land transportation. Cargo transported via marine route or land, the carriers transporting goods, and the third person liability too, are covered by it. The policy covers the time from origin to the destination of the cargo. Loss/damage to carriers or ships, cargo, terminals, and any transportation used for transporting or storing goods before carrying them further are included in the insurance coverage

Additionally, marine insurance companies offer coverage for vulnerable on-shore and offshore properties such as ports, oil platforms, container terminals, pipelines, hulls, marine liabilities, and casualties. Cargo insurance is counted as a sub-branch of marine insurance. If cargo is being mailed or sent by courier, it is insured under the shipping insurance. Insurance against any loss or damage to cargo vessels, terminals, and ships that transport the cargo, and the cargo-laden ships, while grounded, are also covered. Natural or man-made calamities like collision, sinking, burning, bad weather conditions, navigational error, thefts, wars, strikes, riots, natural perils, and others also come under marine insurance.

Did you know? An open marine insurance policy covers multiple shipments for a period of 12 months. 

What are the Types of Marine Insurance?

The two branches of Marine insurance are:

  • Ocean Marine Insurance (Water-based exposures)
  • Inland Marine Insurance (Land-based exposures)

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There are different marine insurance policies to cater to the needs of customers. Different insurance companies provide different plans, and we have covered some insurance plans which are available with most insurance companies.

Common Plans from Marine Insurance Companies

  • Marine Cargo Insurance

This plan covers loss or damage to marine cargo while in transit and also covers third-party liabilities caused due to damage to the ship, port, or other transport vehicles for the insured cargo. 

  • Liability Insurance 

This insurance protects the ship in case of heavy loss or damage, compensating the policyholder for liabilities that are beyond their capacity. 

  • Hull Insurance 

Marine insurance companies cover the furniture and articles on the ship, besides the vessel itself. The shipowners can’t avoid this policy, and it is a must for them to purchase.

  • Freight Insurance 

This policy compensates the shipping company for any loss or damage to the freight. 

Some other policies are open marine insurance policy, time plan policy, voyage plan policy, mixed plan, valued plan, port risk plan, wager plan, and floating plan. 

Importance of Marine Insurance

A marine insurance policy stands you in good stead in case of a loss/damage to goods or assets during transit. Due to the increase in trade, the shipping lanes are getting congested. An untoward incident may cause the expenses to go beyond your means. In such times, marine insurance can help you in managing and maintaining your business. 

A comprehensive marine insurance plan is reassuring because it gives you the confidence to operate on the high seas with optimism. Investing in marine insurance policies is essential as it decreases the risks involved and ensures that the company continues to sail high or, if caught in bad weather, still manages to sail through. 

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What is Covered in Marine Insurance Plans?

These policies cover any loss or damage during transit by land or sea route. The cover is from the point of origin to the destination of the cargo. The insurance provides compensation for accidents or derailment of land conveyance and expenses incurred in safely removing the cargo from a disturbed port. Such plans offer protection against natural calamities and emergencies like jettisons, washing overboard, and total package loss.

What Is Not Covered In Marine Insurance Plans?

The marine insurance companies do not cover the situations given below:

  • Intentional loss/damage caused
  • Packaging is not up to the standard
  • In situations of bankruptcy, liquidation, or failure in finances
  • Wear and tear of goods in transit
  • Loss due to delay in cargo
  • Unfortunate and unexpected situations like war, riots, strikes, and civil strife
  • Insolvency

Institute Cargo Clauses

The Institute Cargo clauses govern Marine Insurance. Hence, the coverage available also includes:

  • Actual total loss
  • Constructive total loss
  • Partial loss due to an insured peril
  • General Average 
  • Collision liability
  • Expenses include forwarding expenses, reconditioning costs, survey fees, sue, labour, etc. 

Features and Importance of Marine Insurance

A marine cargo policy protects the insured goods against any material damage. Below are mentioned the features and importance of marine insurance.

  • A Cargo insurance plan provides comprehensive coverage against potential risks to goods during transportation.
  • The insurance plans are adjustable according to the needs of the customer. 
  • The plans offer various options according to the insured's needs and budget. 

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  • The policy provides easy claim survey and settlement assistance. It offers worldwide claims settlement assistance and claim survey.
  • This policy also extends the coverage to include risk due to strikes, riots, and other man-made unfortunate situations. 

Advantages of Marine Insurance 

When operating a business that involves risk factors and unpredictable routes, opting for marine insurance is a convenient and important step. Advantages of purchasing and relying on such schemes are:

  • The insurance provides mental reassurance and financial security to the business.
  • The insured can rely on it to manage risks and continue the business.
  • Any financial loss incurred during transit is compensated by the insurer. So, you can continue your business without much disturbance. 

Process To Select The Best Marine Policy 

Several insurance companies provide marine insurance. Therefore, you must compare different marine insurance online before deciding on a policy that suits you best. You must do the following before purchasing a policy:

  • Compare and analyse the coverage provided
  • See if the policy is meeting all your requirements
  • Set your budget

The Premium of Marine Insurance Policy

The premium of a marine insurance policy is determined, keeping the following factors in mind:

  • Type of the ship
  • Age and condition of the ship
  • Valuation of the ship
  • Trading and tonnage limits
  • Terms of Management and Ownership
  • Insurance Cover needed

Also read: List Of Import-Export Business Ideas To Carry Out In India

Marine Insurance Companies in India

Companies providing marine insurance in India are:

  • HDFC Ergo
  • TATA AIG
  • United India Insurance Company
  • Royal Sundaram
  • New India Assurance Company Limited
  • Bharti AXA
  • All major banks and financial institutions

Conclusion

We hope this article has been of help in providing information about marine insurance. According to Indian laws, it is mandatory for every individual engaged in commercial transport to buy an insurance policy according to their business and needs. Marine insurance, like its peers, offers several practical and convenient policies to its customers. These policies cater even to the needs of the smallest intermediary. But like other sectors, the marine insurance sector also has its drawbacks and limitations. So, it is advised that one must compare and analyse before deciding on an insurance policy.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What are the advantages of marine insurance?

Ans:

Marine insurance has the following advantages:

  • The insurance provides mental reassurance and financial security to the business.
  • The insured can rely on it to manage risks and continue the business.
  • Any financial loss incurred during transit is compensated by the insurer. So, you can continue your business without much disturbance.

Q: I wish to purchase a marine insurance policy for a year. Which policy should I get?

Ans:

The marine insurance open policy covers several shipments for a continuous period of 12 months. Under this policy, a substantial sum is insured, which is adjusted against the value of each cargo in a reducing balance method.

Q: Which are the companies that provide marine insurance in India?

Ans:

A few companies that provide marine insurance in India are: 

  • HDFC Ergo
  • TATA AIG
  • United India Insurance Company
  • Royal Sundaram
  • New India Assurance Company Limited
  • Bharti AXA
  • All major banks and financial institutions.

Q: What are the different types of Marine Insurance?

Ans:

Different marine insurance types are mentioned below:

Two branches of marine insurance are:

  • Ocean Marine (water-based exposure)
  • Inland Marine (land-based exposure)

Some insurance plans that are available with most insurance companies are: 

  • Marine cargo insurance 
  • Liability insurance 
  • Hull insurance 
  • Freight insurance 

Some other policies are open marine insurance policy, time plan policy, voyage plan policy, mixed plan, valued plan, port risk plan, wager plan, and floating plan.

Q: What is Marine Insurance?

Ans:

Under marine insurance, the cargo, ships, transportation vehicles, on and offshore exposed properties, and similar other liabilities are insured. In case of any loss/ damage, the insurer compensates the insured.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.