Importing products into the US? Up to your neck with ISF filing, Entry summary (Entry 7501), and all CBP regulations to clear customs asap? Great, but what if they arrive damaged and not fit for your customers? What happens to your supply chain? Make sure you have marine insurance!
What is Marine Insurance?
What is Marine Insurance
Marine insurance covers the transportation of goods by land or sea. Coverage encompasses damage or loss of vessels, freight, terminals, and any means of transport by which goods are acquired, transferred, or held between the points of origin and final destination. Coverage also includes legal responsibility for 3rd parties deriving from all processes.
Cargo insurance is a subdivision of marine insurance. However, the latter also includes offshore (water-based) and onshore (land-based) exposed property (e.g., ports, container terminals, pipelines, oil platforms), hull, and marine liability and casualty. When goods are transported by courier or mail, shipping insurance is used in its place.
Why is Marine Insurance Important?
By protecting against transport-related losses, this travel policy provides a sanctuary for couriers and shipping companies to protect them from expensive potential losses while transporting goods by water.
Despite transporters following laws and safety regulations, no one can control all events that might disrupt the vessel or cargo during transportation. These events include fire, weather hazards (e.g., rough seas can damage items tossed inside containers), pirate/enemy encounters, cross-border conflicts, collisions with rocks, and the actions of a ship’s captain and crew.
The associated damages of such events can cause financial hardships for ship owners and importers. For small to medium-sized companies, damage to and loss of goods can ruin a bottom line.
Another immense benefit of marine insurance is that transporters can select coverage options relevant to their particular trade. Coverage conditions may differ so shipping companies can choose a customized insurance plan. There are also different policies according to ship size and the routes taken.
Marine Insurance Features & Contract
Common Marine Insurances are ship or hull insurance, cargo insurance, and freight insurance. Knowing a policy’s features is essential when choosing an insurer. Read the fine print.
- Policy requirements: Minor discrepancies, deviations, or violations can lead to rejected claims.
- Open Policy: Continuous coverage during the active policy period for inland movement of a consignment for a specific time – usually up to one year. Primarily for regular importers.
- Comprehensive Protection: More expansive coverage protecting merchandise’ value against total loss, partial loss, and related expenses while cargo is in transit.
- Customization: Various options for policy coverage according to a specific business’s needs.
- Mark up Value: A portion of your profit will be included in the insured value.
- No coverage for a claim if the damage is caused by:
- Willful negligence
- Improper packaging
- Contamination due to radioactive rays
- Riot, strike, civil disturbance
Before shipping your valuable goods by the ocean, understand your freight provider’s complete terms and conditions. Ask simple questions about their primary coverage, claims process, and whether or not your items will be covered if any damage or loss occurs. An excellent provider will tell you honestly if they think you need additional Marine Cargo Insurance.