The Importance of Marine Insurance for Your Business: Ensuring Comprehensive Protection

Rate this post

“Marine insurance is required in many import and export trade procedures,” explains Drip Capital, a digital trade finance firm based in Palo Alto, in a guide on its website. “Accepting the terms, both parties are responsible for paying for the goods under the insurance. However, the subject matter of marine insurance goes beyond contractual obligations, and there is some good reason to purchase it before shipping the export cargo. “

How does marine insurance work?

Despite its name, marine insurance applies to all modes of freight. The International Risk Management Institute (IRMI) defines it as “insurance designed to provide cover for the carriage of goods by sea or by land, as well as for damage to and liability to third parties arising out of the process. “

Insurance can be taken by a forwarding agent, exporter, importer or anyone involved in the transport of the goods.

Read more: What remains to be one of the biggest safety issues of the maritime industry?

According to Drip Capital, this type of insurance works by transferring cargo liability from parties and intermediaries to the insurance provider.

“The exporter, instead of being solely responsible for the goods, may purchase an insurance policy and obtain marine insurance for the exported goods against any possible loss or damage.” The company explains and adds that “maritime coverage is necessary to meet the contractual obligations” of the goods transported.

“In order to comply with arrangements such as cost and freight insurance (CIF) or carriage and pay insurance (CIP), the exporter needs to purchase marine insurance to protect the interests of the buyer or the bank. their goods and honor their contractual obligations. Similarly, in the case of Delivery Unpaid (DDU) and Taxed Delivered (DDP), the seller may not be obligated to insure the goods, even though in practice they often do.” Trade finance company noted.

What does marine insurance cover?

Marine insurance has two branches – marine, which covers perils on the water and inland, which protects against perils on land.

Ocean marine insurance

According to the Insurance Information Institute (III), these types of businesses may need marine insurance due to marine perils:

  • Marine service providers, including shipyards, builders and repairers, agents, dock operators and stevedoring workers
  • Shipping supplier
  • Businesses that depend on shipping overseas, including traders, freight forwarders, importers, exporters and manufacturers

Ocean marine insurance generally offers the following main premiums:









Type of insurance

What does it pay for?

Cargo insurance

Damage or loss to products being shipped, or stored in a warehouse before or after shipping

Hull and machinery insurance (H&M)

Damage to hulls, machinery and equipment due to collisions and other ocean hazards

Marine liability insurance

Claims for bodily injury, personal injury and property damage in connection with services provided by a maritime business

Marine pollution insurance

Costs related to pollution from fuel spills and other events


*Some pollution coverage may be added to a marine general liability policy

Protection and indemnity insurance (P&I)

Claims for damage to body and property against ship owners

Some shipyards, docks, and other marine facilities also purchase specialized insurance policies called “bumbershoot” policies, which provide general coverage for a wide range of risks, including liability. , collision and rescue costs.

Read more: The tides are finally turning in US marine insurance

Like other types of insurance, marine insurance has exclusions. Loss due to the following is not normally covered but can be supplemented through special riders or endorsements:

  • General wear and tear
  • Marine life
  • Mold, mildew and dampness
  • Riot or other civil conflict
  • War or military action

Ocean cargo coverage also ends when products continue to be transported overland, usually by train or truck. To be covered for ground transportation, businesses should purchase a separate policy called inland marine insurance, although some providers offer combined coverage for all forms of transportation. transfer.

Inland marine insurance

Inland shipping policies cover products that are shipped overland or while temporarily stored in a third-party warehouse. While a business owner’s policy (BOP) or commercial package policy (CPP) may already cover property located at a particular location or tools and equipment that accompany employees to the location, workplace, these policies do not cover the transportation of products or materials.

III advises companies to consider the nature of their business and operations before undertaking this type of insurance.

“Inland marine insurance is not just for companies that ship products to retailers and customers,” the institute explains. “For example, if you have a valuable exhibition booth that is regularly shipped around the country and stored offsite by a supplier, you may want to be protected by inland marine insurance. In addition, if someone else’s property is temporarily in your possession, inland marine insurance can provide coverage against the loss of this property”.

Under Regulation III, special inland marine insurance includes:









Type of insurance

What does it pay for?

Bailee’s Customer Insurance

The client’s property is left to the business to take care of; suitable for warehouse operators and repair shops

Construction risk insurance

Damage or loss to structures and materials in new construction or renovation projects

Art and exhibition insurance

Damage or loss to items of value while on display, in transit or on loan

Insurance float installed

Materials from the time they are loaded onto the truck until they are used or installed

Motor truck cargo insurance

Customer’s goods while the business transports and delivers

Read more: Marine insurers line up to ‘feel the pain’ from the container crisis

In terms of terms, marine insurance comes in three main categories. These are detailed in the table below:






Clause A

REMOVE clause

C clause

Comprehensive insurance

Widely included

Basic cover

Coverage for losses due to breakage, chipping, denting, bruising, theft, non-delivery and water damage and Clauses B and C

Protect shipments against natural disasters, including earthquakes and volcanic eruptions, as well as damage from rain, sea and river water and all events covered in Clause C

Covers shipments due to events such as fire, and cargo flight due to crises, accidents and mishaps, including sinking, capsizing, collision, derailment and explosion

How much is marine insurance?

The premium price for a marine insurance policy is based on the results of the insurer’s risk assessment, often taking into account a number of factors, including the level of risk, the type of ship and the construction, where origin of the goods and the terms of the program. and conditions.

Drip Capital has provided a formula for how insurance companies calculate insurance costs:




Shipment value & shipping cost

+

10% of total cost

x

Insurance premiums quoted

=

Insurance premiums to be paid

What are the types of marine insurance policies available?

There are also several types of marine insurance policies that businesses can use. Including:
















Policy type

Feature

Itinerary Policy

Provide insurance for a specific trip

Time Policy

Covers a specific period of time, usually a year

Mixed Policy

Combine time and trip policies

Open Policy

The value of the goods is not reserved, only reimbursed after the loss has been examined and assessed

Valuable policy

The value of the goods is clearly stated in the policy document, stating the amount of the refund

Port risk policy

Cover the ship while the ship is being built at the port

Betting Policy

Does not offer fixed terms for returns; Usually payments are made only if the insurance company finds the damage worthwhile

Floating policy

Only the required quantity is specified while other details are omitted until the vessel resumes its voyage

One-vessel policy

Includes only one vessel

Fleet Policy

Covers several ships belonging to a single business on a one-time policy

Blocking Policy

Protect your goods from damage or loss in all modes of transportation

Blanket policy

The enterprise must pay the maximum amount of protection at the time of contract purchase

Last, Bay Bronze sent you details about the topic “How marine insurance can protect your business❤️️”.Hope with useful information that the article “How marine insurance can protect your business” It will help readers to be more interested in “How marine insurance can protect your business [ ❤️️❤️️ ]”.

Posts “How marine insurance can protect your business” posted by on 2022-07-08 05:37:39. Thank you for reading the article at Bay Bronze

Read More:   Navigating the House Selling Process: A Comprehensive Guide for Homeowners
Back to top button