A marine insurance policy covers not just sea journeys but also air, road and rail transportations. The policy covers the loss or damage of goods and vessels in transit between the point of origin and the final destination. Irrespective of the type of policy, the marine insurance premium amount is calculated based on various factors, including the risk estimates provided by the insured.
Insurance policies are designed to mitigate risk in case of an unprecedented loss. In marine insurance, the risk is high as there are multiple factors (man-made and natural) that can cause financial loss to the owner.
Risks in marine open policy may include damage to the expensive vessel, loss or damage to the cargo or goods, environmental damage risk, and liability risk. A premium on a marine cargo insurance policy may increase or decrease based on a few parameters that help them estimate the risks.
As a trader or shipper, one has to expect frequent changes in the premium amount. The reality is that the premium amount is highly subjective. The risks involved also vary on the change in location, material, vessel and many other factors.
The below key factors are considered for calculating marine insurance premiums:
For example, high-value goods usually have a higher premium. Similarly, goods that include food items or glass (which have a higher chance of getting damaged) also have a high premium. This is because recovering such goods from damage is next to impossible.
Also, cement is one such commodity for which the premium charged is very high. The reason for this is that cement leads to total loss if it gets in contact with water.
Conclusion
For marine insurance premiums, it is never a one-size-fits-all approach. Many other factors determine marine insurance premium amount. The insurance providers use customized calculations to determine premium rates based on the abovementioned risks. Right from guiding how to select the right marine insurance policy to how to pick a hassle-free and quick policy, speedy claims, and everything in between, Policybazaar's expert and dedicated team is at your service round-the-clock.
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