Key factors affecting Marine Cargo Insurance Premiums Rate

Marine cargo insurance being one of the oldest forms of insurance specifically deals with providing insurance coverage against losses or damages to goods in transit from the place of shipping to the destination. In recent years, marine insurance premium rates have seen a substantial increase due to a rise in demand and other factors. In the article below, we shall look at the prime factors that determine marine cargo insurance premiums rate.

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Major Factors Affecting Premium Rates

The premium rates are mostly fixed by the insurer depending on the risk estimates the insured shares with him. Let us look at some of the main factors that affect marine cargo insurance premium rates.

  1. Type of goods

    Every day, different types of goods are in transit through various modes of transportation. The type of goods that are in transit impacts the marine insurance premium rates. A vessel containing goods like chemicals, fuel, perishable items etc. may inherent higher premium amounts as they hold more value compared to toys or other plastic items. Also, recovery of such goods is highly difficult in case of damage or loss.

  2. Type of coverage

    If the shipper is involved in the shipment of goods that do not take place on regular basis, he may opt for shipment-by-shipment coverage. This is when the insurance contract is made for a particular shipment, and the coverage ends once the goods reach the final destination. 

    Similarly, for shippers involved in frequent transit, annual coverage or an open cover can be beneficial. In an open cover, the insured gets coverage for a large number of shipments over a period of 12 months. This policy usually attracts discounted premium rates.

  3. Shipping route

    Certain shipping routes are highly prone to natural calamities, and pirate attacks or have to follow additional stringent policies. Predicting the intensity of these perils (or calamities) is difficult, which may lead to huge financial losses. Insurance companies consider these routes as high-risk zones, thus charging higher marine insurance premium.

  4. Loss history

    Previous losses are an important factor that affects the premium rates. Many insurance companies attach questionnaires that ask the shipper to provide details on their previous losses. The main aim of the insurer is to understand the riskiness of the business. If the shipper has a history of frequent claims, there are chances that the premium charged would be high. 

    Sometimes, the shipper is also expected to prove that adequate measures are taken to avoid losses. These measures may include adhering to protocols, providing proper training to the staff, following disaster management techniques etc. All these measures can prove that the probability of a claim arising may be less. It may also impact the cost of insurance.

  5. Terms and conditions of the policy

    The terms and conditions of the policy are a crucial part of any insurance document. It includes the inclusions and the exclusions of the policy which must be read carefully. In marine insurance, policies which cover total losses generally have higher premium rates compared to those which cover partial losses. Such conditions and coverage determine the premium rates.

Case

H.M Electronics received a contract of supplying various electronic items to Malaysia for a period of 12 months. The company opted for an open cover policy for 12 months that helps them undertake multiple shipments under one insurance policy. Also, the route that the shipper was to undertake (Malaysia) comes under the region which is prone to pirate attacks. So, in a nutshell, these three factors, namely, type of goods, type of coverage and shipping route become the major factors in determining marine cargo insurance premiums rate.

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Conclusion:

For businesses involved in import and export, it is important to know the key factors affecting insurance premiums rate to get adequate insurance at a competitive price.

Written By: PolicyBazaar - Updated: 17 November 2023

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Policybazaar for Business - Marine Insurance - Customer Reviews
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4.3/5
Based on 114 reviews
4.3
out of 5
Based on 114 reviews
14 users
87 users
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3.8 April 20, 2023
Anas
Great Experience
I recently purchased Marine insurance from Policybazaar for my shipping business and I must say I am thoroughly impressed with their service and coverage. From start to finish, the experience has been smooth and hassle-free.Thankyou.
Mizoram
4.3 April 03, 2023
Vaishnav
Provides Comprehensive Protection
When it comes to coverage, Marine insurance that i bought from PolicyBazaar has exceeded my expectations. It provides comprehensive protection for my cargo and vessels during transit, ensuring I can focus on my business operations with peace of mind. Thankyou.
Assam
4.3 March 17, 2023
Umang
Excellent Services
I highly recommend Marine insurance from PolicyBazaar website to anyone in the shipping or logistics industry. Their user-friendly website, comprehensive coverage, and excellent customer service make them stand out from the competition. With Policybazaar, I feel confident in navigating the high seas, knowing that my business is well-protected. Thank you, Policybazaar.
Chennai
4.3 February 28, 2023
Vishal
User Friendly Interface
The website's user-friendly interface made it easy to compare different plans and find the perfect fit for my business needs.Thanks
Gurugram
4.3 February 11, 2023
Parth
Prompt Services
I appreciate the transparency and honesty with which Policybazaar handled my claims. They were prompt in processing my claim and their claim settlement process was hassle-free.Thanks PolicyBazaar.
Noida
3.8 February 10, 2023
Rishabh
Exceeds Expectations
I recently had the pleasure of purchsing marine insurance from Policy bazaar website and I must say it has been an outstnding experience from start to finish. I am thrilled to share my positive customer review, as this truly exceeded my expectations. Thanks PB.
Jamshedpur
3.8 January 31, 2023
Arvind
Easy Navigation
The ease of navigating the Policy bazaar website and finding the right marine insurance policy was impressive. The website's user-friendly interface and intuitive design made it incredibly simple to compare various options, understand the coverage details and make an informed decision. I appreciated the transparency provided throughout the process. Thanks.
Ajmer
3.8 January 21, 2023
Vishal
Excellent Support
The customer service provided by Policy bazaar was decent. Their team was responsive, knowledgeable and went above and beyond to assist me at every step. Their professionalism and commitment to customer satisfaction were truly commendable.Thankyou.
Mumbai
4.3 January 11, 2023
Sanjeev Rathor
Efficient Process
When it came to claims processing, Policy bazaar demonstrated remarkable eficiency and effectivenes. I had an unfortunate incident during the coverage period and filing a claim was a breeze. The entire process was streamlined and their team guided me throuugh every necssary step, making it hassle-free. The promptness with which my claim was setled reflected their commitment to their customers' well-being and peace of mind. Thankyou.
Pune
3.8 January 01, 2023
Kunal
Comprehensive Coverage
I must mention the comprehensive coverage provided by the marine insurance policy I purchasd through Policy bazaar. It offered me the necesary protection and peace of mind. Thankyou PolicyBazaar.
Indore