What is Marine Insurance?
What is the coverage?
In simplified terms, loss of or damage to cargo while in transit is covered. However the final compensation depends on the Insurance policy taken up for your shipment. Similar to automotive insurance policy, what is covered depends greatly on what is the cargo transported. Who is responsible for the marine insurance coverage depends greatly on your agreed Incoterms with your seller or buyer. Similarly, where and when should the marine insurance coverage start or end depends on your agreed Incoterms as well.
Generally, there are 3 types of marine cargo insurance namely, Institute Cargo Clauses (A) [ICC-A], Institute Cargo Clauses (B) [ICC-B] and Institute Cargo Clauses (C) [ICC-C]. ICC-C offers the least coverage amongst the 3 types and ICC-A has the most coverage. Do understand the proposed coverage depends on the insured cargo as well.
As a general guideline, ICC-C marine insurance coverage includes fire or explosion, vessel or craft being stranded, grounded, sunk or capsized, overturning or derailment of land conveyance or collision or contact of vessel, craft or conveyance with external object other than water. ICC-B marine insurance coverage includes the coverage for ICC-C, washing overboard, water seepage into carriage mode or storage location, earthquake, volcanic eruption or lightning and total loss of package lost overboard or dropped whilst loading on to or unloading from vessel or craft. ICC-A covers all covered in ICC-B and ICC-C, theft, pilferage and non-delivery, rough handling and piracy. Ultimately, the insurance companies offer what they can accept for your shipment.
Why is Marine Cargo Insurance necessary?
We recommend Marine Cargo Insurance due to the various risks involved with international trades. Transit time can range from 1 day to months depending on where your shipment is going and by air or sea or land transport modes. Anything can happen during that transit duration from the collection of your shipment to the delivery of the shipment to your buyer. Cargo theft and piracy are major risk to cargoes in international shipping. Disasters like earthquake or storms can cause the damages or misplacement of shipment. Cargo damages of various degrees are very common even with experienced handlers. In event of damages to the vessel or plane or truck or train, a bond or cash deposit is required to get your shipment released even if your shipment suffered no loss or damage. With marine cargo insurance in place, the insurer will take responsibility and expedite the release of your cargo to your buyer or you. We recommend that the ultimate owner of the shipment gets the cargo insurance as the ultimate owner will be able to secure better coverage as required.
How much to cover?
What to do when shipment arrived with issues?
When the shipment arrives with issues, the first thing is to call for survey immediately. It is important that the carrier or your cargo handling agent are all present. The marine cargo insurance cover note often states the recognized appointed insurance survey agent. Make sure that any documents that acknowledges the receipt of the shipment clearly states that shipment damaged prior to receipt. Relevant parties need to be informed accordingly of the damages. Surveying agent will assess the damages and process the claim accordingly with all relevant required documents.
Impact of Covid-19 on Insurance coverage?
In the wake of the COVID-19 pandemic, the disruption in production and delivery is significant. Panic buying and inflated selling is rampant now. As a result, the flow on impact to sea freight and other marine logistics operators has been significant. This has created challenges to the flow of imports, exports and distribution of goods in key Asian markets. Port congestion, delays in clearance and documents and increased storage times at ports and terminals are only some of the common issues now. We strongly recommended taking up marine insurance to minimize losses or damages. It is better to spend slightly to have that peace of mind when you send your shipment to your buyer.
Feel free to contact us for queries on Marine Insurance.