Premium Calculation for Marine Insurance for Cargo

Marine transport is the oldest form of transportation, making marine insurance one of the oldest forms of insurance. This specific type of insurance provides coverage against damages or losses to goods during transit from one location to another. Marine insurance typically includes covers for the hull, machinery, cargo, third-party liability, etc. Cargo insurance only covers the goods that are carried in the vessel. In the below article, we shall understand how is the premium for marine insurance for cargo calculated.

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What is Cargo Insurance?

Cargo insurance, also known as freight insurance, provides coverage to goods (cargo/ freight) in transit against loss or damage. Usually unforeseen, this loss or damage can be caused while the goods are in transit, whether by sea, land, or air. As 90% of the total international cargo transportation is conducted by sea route, marine insurance for cargo also known as cargo insurance is very important in international trade.

Parameters Involved to Determine the Marine Insurance Premium

Cargo insurance rates or the premium amount are usually determined by the insurer based on risk estimates shared by the insured. Below are some parameters taken into consideration while calculating marine insurance premium:

Value and Nature of the Goods

Different types of goods, like consumer goods, heavy industrial materials, raw materials, etc., are in transit daily. The value and nature of the goods play an essential role in determining the premium amount. 

For instance, goods having high value would have a higher premium. Likewise, perishable goods or goods that are fragile also carry high premium amounts. The main reason is that recovery of such damaged goods is very difficult.

Construction and Type of Vessel

The construction quality, age, adaptability, and fitness of the vessel, play a crucial role in defining the premium for marine insurance for cargo. The risk of cargo getting damaged is higher if the goods are placed in an older and not well-maintained vessel.

Natural Calamities

Natural calamities or disasters like hurricanes, floods, earthquakes, tsunamis, cyclones etc., can have a huge impact on the goods in transit and damage them. Forecasting the intensity of these perils is not always possible, which may lead to huge financial losses. Some parts of the world are highly prone to natural calamities, thus, transporting goods to those parts may attract a high premium.

Terms and conditions of the policy

Understanding the terms and conditions of any policy is very important before making a purchase decision. The inclusions and exclusions in the policy should be read carefully. Usually, policies that cover total losses have a higher premium vis-à-vis those that cover partial losses.

Loss history

Insurance companies attach questionnaires regarding previous losses to understand the riskiness of the business. If the insured has a history of frequent claims, chances are he will be charged a higher premium. However, the shipper is sometimes expected to prove that adequate measures were taken to avoid losses. Also, he might have to ensure that similar claims would not occur again.

Risk management strategy

Continuing the above point, if the shipper proves that specific risk management techniques are undertaken the insurance company may offer cargo insurance at a lower premium. A few of the risk management techniques include proper packaging, disaster management programs, special programs for theft prevention, etc.


If you are in the business of import-export, you might know how essential is marine insurance for cargo. Premium calculation for marine cargo insurance isn’t difficult, but it is vital to get the right valuation on the goods to be insured.

Written By: PolicyBazaar - Updated: 03 May 2023
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Policybazaar for Business - Marine Insurance - Customer Reviews
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Based on 114 reviews
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Based on 114 reviews
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3.8 April 20, 2023
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.
4.3 April 03, 2023
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.
4.3 March 17, 2023
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.
4.3 February 28, 2023
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
4.3 February 11, 2023
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.
3.8 February 10, 2023
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.
3.8 January 31, 2023
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.
3.8 January 21, 2023
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.
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.
3.8 January 01, 2023
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.