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Marine insurance is a very important aspect that ship owners should consider. In the absence of marine insurance, if the ship is used commercially as a carrier of cargo, ship owners can not only suffer losses in their ships, but also financial losses.
Marine And Cargo Insurance
That is why the concept of cargo insurance or marine cargo insurance exists to ensure the protection of the cargo being transported. The difference between marine insurance and marine cargo insurance can be explained below:
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Marine Insurance: Marine insurance policies are based on the Marine Insurance Act 1906. While marine insurance covers potential losses in depth, it does not cover losses that occur while the vessel is on the water. This becomes problematic in the case of areas of water that are at greater risk of loss due to piracy and other causes. To overcome this problem, the concept of marine cargo insurance emerged.
Marine Cargo Insurance: Cargo insurance or marine cargo insurance covers and protects the cargo while the ship is effectively moving on the ocean waters. This type of insurance mainly benefits oil tankers and other heavy cargo vessels. Technically, cargo insurance covers damages that occur during a ship’s transit.
There are many companies around the world that offer marine insurance policies and marine transportation insurance policies. Depending on the customer’s convenience and needs, the insurance company may recommend a suitable marine insurance policy and then the customer chooses it.
Some companies that offer marine insurance policies (including cargo insurance) include Saucon Mutual Insurance Company, founded in 1832, and American Insurance Network, founded in 1949.
Marine Insurance Covers The Loss Or Damage Of Ships, Cargo, Terminals
However, there are many minor points that a customer should be aware of when taking out a marine insurance policy. If these points are ignored, the customer may lose money as compensation even after paying the relevant premium.
If the goods are not properly packed or the goods sent are second hand, the cargo insurance policy is not applied. Similarly, if the cargo loss is due to the negligence of the ship’s workers or if the workers on the ship are dishonest, the marine cargo policy will not apply. Even weather conditions affect the coverage or non-coverage of a marine insurance policy.
A marine insurance policy also depends heavily on the size of the vessel. Another important aspect to consider when choosing cargo insurance is whether to choose an insurance policy that is covered based on the voyages made by the ship or based on a predefined schedule determined by the ship owner. has been
Therefore, it can be concluded that the marine cargo insurance contract depends not only on the customer but also on other factors. By taking care of all the necessary factors, the boat owner can ensure that all losses can be successfully avoided. Both the seller and the carriers have limited financial liability. Insurance is the real savior of goods in case of damage.
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If you read our previous article on Incoterms®, you probably still remember that who provides and pays for insurance is defined by the three-letter abbreviations used in commercial contracts. Now we want to talk about what insurance is and what risks it covers.
Example 1: The insurer has then concluded water stain insurance for the goods. During shipping, the outer packaging got soaked with sea water and caused the goods to mold. Since the mold was a direct result of the water stains, the insurance company should cover the damage. Example 2: In time of war, the insurer places the insured goods in a warehouse. The warehouse is set on fire by enemy shelling and all the goods are burnt. When asking for compensation, the insurance refused because the proximate cause was the bombing and the bombing was not covered by the insurance. Marine freight insurance
International shipping insurance can be divided into ocean cargo insurance, land cargo insurance, air cargo insurance and postal insurance. Among them, marine cargo insurance is the oldest and most widely used. All other transport insurances have borrowed their principles and are built upon them.
Perils of the sea or shipwreck is the danger that occurs when a ship moves at sea, which includes the following:
International Union Of Marine Insurance
There are two types of damages and costs depending on whether the goods are completely damaged or lost.
In the case of a total loss, all property is damaged or destroyed. It can also be divided into two types:
When the entire property is lost or severely damaged, it is a true case of total loss. For example, the cargo container fell into the ocean in bad weather. This is a real loss.
When the goods are damaged en route and total loss is unavoidable, or to avoid actual total loss and keep the total cost of shipping it to the destination above the insured amount, it is called a builder’s total loss case.
Marine Cargo Insurance Ebook
When a constructive total loss occurs, you can request full compensation and waive all rights to the remaining property. Or you can just claim compensation for the lost or damaged property and keep the rest of the property.
Imagine a situation where a ship faces danger in the ocean. In order to keep as many goods as possible, the crew must abandon some of them. When this happens, the delivered goods are jointly at fault. If the ship’s engine breaks down in the ocean and needs to be repaired to move forward. The cost of repairing it is also general.
The general average cost is shared by the owner of the remaining salvaged goods on the same vessel.
If the ship is in danger and some goods are partially damaged. This is a case of certain averages. Unlike a common breakdown, the insurance company is paying for the damage
Types Of Marine Insurance Part 1
WPA covers everything in FPA. It also covers minor damages caused by natural disasters such as bad weather, lightning, tsunami, earthquake and flood.
In addition to anything contained in the FPA and WA/WPA, All Risks also cover any loss arising from the extraneous perils listed above.
The start and end time of marine freight insurance follows the international warehouse-to-warehouse convention. Insurance starts when the goods leave the warehouse of origin and ends when it reaches the warehouse of destination.
To cover more risks, you can buy one or more of the following insurances together with the basic insurance.
Types Of Marine Cargo Insurance Coverage
If you have purchased an FPA or WA/WPA, you can choose one of the basic supplementary insurances above. But if you have already taken comprehensive insurance, there is no need for this as everything is covered.
There are three types of specialized marine freight insurance. All of them are basic insurance. These are the risks covered:
The Hazards Clause for frozen products covers all hazards in the WA/WPA. It also covers the risk of failure in refrigeration equipment failure that lasts more than 24 hours.
The All Hazards Clause for Frozen Products covers everything in the Hazards Clause for Frozen Products. It also covers spoilage of goods due to perils other than those mentioned above.
Marine Insurance: Everything You Need To Know (2022)
The insured amount is the amount that the insurance company will pay in case of a covered loss. It is determined by the insurable value, which includes the value of the goods, shipping costs, insurance premiums and expected income.
According to the Maritime Law of China, the sum insured should not exceed the insured value and the excess value is void.
When operating under CIF or CIP, the buyer is required to purchase insurance. The amount of the insurance policy must be at least 110% of the price of the goods.
There are two types of insurance rates: general rates and rates for specific goods. If the product is included in the table of special products with additional fee, the insurance rate will be the general fee + additional fee.
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Many goods are exported from country A to country B at a CIF price of $30,000. All risk insurance is purchased at a rate of 0.6% and war insurance at a rate of 0.03%. The insured value is 110% of the CIF price. Total premium = 30000 x 110% x (0.6% + 0.03%) = 307.9
Insurance policy is the most widely used insurance document. Contains the most information. The rights and obligations of the insurer and the applicant (policy holder) are listed on the back of the policy.
A certificate of insurance is a simplified version of an insurance policy without rights and obligations printed on the back.
The open policy is often used by companies with frequent shipments. Coverage is automatically provided during the specified open period
