From unpredictable weather to cargo mishaps and vessel damage, the marine industry faces challenges that can sink unprepared businesses. Are you confident your business is protected against such uncertainties? Many entrepreneurs in India underestimate the importance of marine insurance until it’s too late. But safeguarding your assets doesn’t have to be complicated. This guide unravels everything you need to know about marine insurance for your business. Here, we will break down the essentials, simplifying the jargon and ensuring your investment is secure against the unexpected. Ready to chart a safer course for your business? Let’s dive in!
Marine Insurance: A Brief Overview
Marine Insurance is a specialised type of insurance that protects businesses from financial loss related to the transportation of goods. It covers loss or damage occurring during transit, whether by sea, air or land. Marine insurance ensures your cargo’s safe passage and protects your investment against various risks.
Scope of Marine Insurance – Transit Clause
Marine Insurance coverage begins and ends at specific points in the transportation process:
Start of Coverage:
- Begins when goods are moved from their origin (warehouse, factory, or supplier) for immediate loading onto the transport vehicle or vessel.
During Transit:
- Goods are insured while in transit via agreed modes (sea, air, road, or rail).
- Intermittent storage is covered if it is part of the normal transit journey.
End of Coverage:
Coverage stops upon:
- Delivery of the goods to the final destination.
- Storage in a warehouse for purposes other than immediate transit.
- Expiration of a specified time period (as defined by the insurer) after arrival at the destination.
Types of Marine Insurance Policies
1. Marine Open Policy
Marine Open Insurance is ideal for businesses that require consistent protection for goods during frequent shipments. It offers continuous coverage for all transit movements, reducing administrative hassles by covering multiple shipments under a single policy.
2. Single Transit Policy
This policy covers a specific shipment or consignment for a single journey. It is best suited for businesses or individuals that do not require ongoing coverage but need protection for occasional shipments.
3. Sales Turnover Policy
Businesses insure their estimated annual sales turnover, which determines the sum insured. This policy provides comprehensive coverage for all transit movements related to the turnover and often includes purchases within the coverage scope.
What Marine Insurance Covers
Marine Insurance offers three levels of coverage based on Institute Cargo Clauses:
Institute Cargo Clause (A) – All Risks Coverage
- Fire & explosions
- Collision or capsizing
- Stranding or grounding
- Overturning or derailment
- Jettison (cargo thrown overboard to save the vessel)
- Earthquakes, volcanic eruptions, lightning
- Handling damage during loading/unloading
- General Average (shared costs in an emergency)
Institute Cargo Clause (B) – Limited Risks
- Fire & explosions
- Collision or capsizing
- Stranding or grounding
- Overturning or derailment
- Discharge of cargo at a port of distress
- Earthquake, volcanic eruptions, lightning
Institute Cargo Clause (C) – Basic Coverage
- Fire & explosions
- Collision or capsizing
- Stranding or grounding
- Overturning or derailment
Exclusions in Marine Insurance
Marine Insurance does not cover:
- Damage due to inherent defects in goods
- Ordinary wear and tear
- Customs confiscation
- Deliberate damage by the insured
- War and nuclear risks (unless specifically included as an add-on)
Who Needs Marine Insurance?
- D2C businesses
- Export-oriented companies
- Manufacturing firms
- Wholesalers & distributors
- Logistics service providers with contractual liability
- E-commerce platforms
Factors Affecting Marine Insurance Pricing
Premiums are calculated based on:
- Value of goods
- Nature of goods
- Mode of transport
- Route & destination
- Type of coverage selected
- Claims history
Factors to Consider Before Buying Marine Insurance for Your Business
1. Assess Risk Exposure
- Evaluate the nature of your goods (e.g., perishable or high-value items) and their susceptibility to damage or theft.
- Consider the transit routes and modes of transport, as some are riskier than others.
2. Choose a Reputable Insurer
- Look for insurers with a strong financial standing, good claim settlement history, and positive customer reviews.
3. Compare Policies
- Analyse different policies based on premiums, coverage, deductibles, and additional features.
- Avoid choosing a lower premium at the cost of essential coverage.
4. Regulatory Compliance
- Ensure the marine insurance policy aligns with Indian laws and international trade regulations, especially for exports and imports.
5. Consult Experts
- Work with insurance brokers or consultants who can guide you through policy selection and claims processing.
The Process to File a Marine Insurance Claim
Filing a claim correctly ensures a smooth settlement. Here’s a step-by-step guide:
1. Notify the Insurer Immediately
- Inform your insurance company as soon as the incident occurs.
- Provide policy details, date, time, and location of the incident.
2. Minimise Further Loss
- Take reasonable steps to prevent further damage or loss, such as securing the cargo or vessel.
3. Document the Incident
Gather essential evidence, including:
- Photographs or videos of the damage.
- A detailed incident report.
- Witness statements, if applicable.
4. Lodge a Formal Claim
Submit a written claim with the following documents:
- Policy documents
- Bill of lading
- Commercial invoice
- Port authority reports
- Bill of entry (if custom duty is covered).
- Proof of mitigation expenses.
5. Survey and Assessment
- Inform the insurer immediately and arrange for a survey as per the insurer’s terms.
- Delays in reporting may impact claim approval.
6. Claim Evaluation
- The insurer reviews the submitted documents and survey report to assess the claim.
7. Settlement of Claim
- If valid, the insurer processes the settlement based on policy terms.
8. Review the Settlement
- Verify that the settlement amount aligns with your policy coverage.
9. Follow-Up, If Necessary
- If the claim amount is unsatisfactory, raise concerns with the insurer.
- If unresolved, escalate the issue to the Insurance Ombudsman.
By following these steps carefully and promptly, businesses can ensure a smooth claim process and maximize the chances of a fair settlement.
Final Thoughts:
Marine insurance is an invaluable asset for businesses operating in India’s dynamic trade environment. By understanding the various types of policies, evaluating insurers and addressing common challenges, you can secure your business against potential transit risks. Remember, the right marine insurance policy is not just a safety measure but a strategic investment in your business’s growth and stability.
Ready to safeguard your business with marine insurance? Research providers, compare policies and consult experts to find the best fit for your needs. Protect your cargo and secure your financial future today!
