What is Marine Insurance in Export and Import?
People have been exchanging goods since prehistoric times, with long-route trades dating back to 2000 BCE. Today, international trading has become an unavoidable part of our lives and the sea remains one of the primary mediums of trading. Import and export involve worldwide shipping where the slightest damage can cause financial distress to several parties. To ensure that the stakeholders don't suffer drastically in case of cargo damage, marine insurance in export and import is extremely important.Read more
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Importance of Marine Insurance in Export-Import Business
Trading is among the earliest form of human communication. From the ancient Silk Road to the English Channel, a lot of precious commodities have been carried to the furthest parts of the world through land and sea. While air travel has become very convenient, carrying goods through the sea is usually preferred thanks to its humongous capacity. This makes carrying large quantities of goods convenient, with goods are often valued at millions of dollars.
Traders in olden times did not have much of a choice if their goods were damaged or lost due to reasons beyond their control. However, most stakeholders can insure their cargo against such risks so that they don’t face overwhelming losses.
Marine cargo insurance is one such way to protect any stock. Manufacturers and importers need to protect their stocks from their end as their goods form the most important part of their trade. Accidents don't come with notice, especially the harsh conditions that always threaten sea routes.
There is always a major possibility that the ship may get caught up in natural disasters like hurricanes or storms. Even human negligence may cause considerable damage to the goods, which is ultimately a huge loss for all the involved parties.
There have been many cases when cargo worth millions have been lost to the sea, such as ONE Apus which lost 1,816 containers of their cargo to the Pacific. It was estimated that goods worth 200 million USD were damaged because of their stack collapse. Thus, to prevent such damages from causing irreparable loss, marine cargo insurance is among the surest ways.
How does Marine Insurance Work?
To keep your goods safe from unexpected circumstances, every trader should get insurance coverage for their goods. Contrary to what the name suggests, marine insurance also offers coverage for cargo during land, rail and air transport. What’s more, marine cargo is not restricted by borders. Therefore, the goods are subject to risk throughout the transit.
Thus, vessel owners including ship-owners must buy marine cargo insurance for their goods. It keeps them safe from many perils like collapsing, sinking, navigation errors, collision, burning, theft, improper stowage, bad weather conditions and many more.
Most insurers offer a number of benefits to the insured, however, they can vary from insurer to insurer. Take a look at some of the best reasons to buy marine insurance for your cargo:
- Extensive Coverage: Your insurer will offer comprehensive coverage against a number of perils that may damage your items when they are in transit.
- Protection from Natural and Manmade Perils: This includes several calamities such as earthquakes, lightning, storms, fire, sinking, derailment, malicious damage, explosions, theft, piracy etc.
- Can be Customized: You can buy the plan according to your needs and get it customised.
- Extended Coverage: Most insurers offer an option to extend the coverage of your plan through an add-on so that your cargo is safe in case it gets stuck due to riots, strikes, lockdowns etc.
Considering these benefits, you can easily pick the correct marine insurance online to ensure the safety of your goods. You can easily pick the plan suiting your budget and needs so that the import/export goes smoothly.
Types of Marine Cargo Insurance
Since all goods aren't the same, their requirements will vary too. Let's take a look at the different types of cargo insurance policies below:
- Open Cover Cargo Insurance Policy: This kind of policy is issued for up to 12 months and is suitable for both exported and imported goods.
- Specific Voyage Policy: Usually issued before the transit begins, this cover is suitable for single transit.
- Annual Policy: These provide coverage to goods transferred through the sea, rail, and road through depots hired or owned by the policyholder. This marine cargo insurance can't be transferred.
- Open Policy Cargo Insurance Policy: This is issued for 12 months and only covers the goods in transit within India.
Depending on your cargo, the number of times the cargo needs to be shipped, and the duration your items need to be protected, you can buy marine insurance online according to your needs without any hassle.<./p>
Things to Remember before Buying Marine Cargo Insurance
Before securing your goods with marine insurance, keep in mind the following:
- Keep in mind various contractual requirements that you may be obliged to follow, such as protecting the buyer's or banker's interest.
- Don't forget to read about the different levels of risks that are universally recognized under ICC. This will save you a lot of time and misunderstanding.
- You can usually customise your cargo insurance according to your goods; for example, if your goods can be easily damaged by heating, leakage or breakage then you can opt for a policy that offers coverage for these benefits.
- Some insurers may refuse to provide coverage under circumstances like war, theft, etc. You can always include add-ons to avail of this benefit.
- Don't forget to compare the available marine insurance online before finalizing one.
Wrapping it Up,
Marine insurance has a wide scope of coverage so that the varying needs of the involved parties can be met. Make sure to pick an appropriate plan that covers all the liabilities and threats that may affect your operations.