Why Do You Need Marine Insurance in the Business of Import and Export?
An individual has no limit to expanding his business in the era of globalization. The domestic borders permit the business to conduct international trade. It also boosts the economy of respective countries. International trade or import/export business is one of the keys to growing the economy.
However, a business must consider its profit and loss while operating international trade. It must comprehend the measures to evade losses in such businesses. Marine insurance products are significant ways to avoid losses and damages to goods. Such an insurance policy states the reasons, why you need marine insurance in the business of import and export.
Let us discuss why you need marine insurance in the business of import and export.
The goods loaded or unloaded from the ship for import or export may encounter an unforeseeable event. Such events include sinking, robbery, piracy, storms, etc. It may cause financial injury to the business. In addition, the business, in the absence of active marine transit insurance, may end up losing the goods. No compensation shall be provided in the absence of an insurance policy. Such a scenario must be avoided by the individuals.
In order to circumvent such events, the business must invest in insurance policies dedicated to import and export business. It is a wise initiative in order to protect the business from incurring losses. Such insurance policies shall lower the risk of a firm. In addition, it shall provide appropriate compensation as a benefit to the business in case of loss or damages caused to the goods.
However, the insured may expect a higher claim than what the insurance company intends to pay. It may happen on the basis of an assessment of risk conducted by the insurance company. The parameters determined by the insurance company in order to estimate the loss or damage may end up allocating a low claim.
Therefore, the insured must approach a renowned insurance company that follows internationally recognized principles. Such defined principles are known as Institute Cargo Clauses (ICC). The ICC has three categories to estimate the value of the loss. These are:
The insured does not need to worry about the estimation of loss if he opts for the right institute clause as per the requirement of business.
There may be instances where the policyholder may feel the requirement of extra coverage in order to cover the loss and damages to the goods. The marine insurance policy allows the policyholder in order to extend the coverage by allocating some extra premium.
Running an import/export business in India is challenging. It includes a variety of risks. The business must avoid such risk in order to lower the losses. Therefore, the business must purchase a marine insurance policy to avoid losses.