What is Marine Insurance?
Marine insurance is a specialised form of insurance designed to protect goods and assets involved in transportation and shipping. It plays a part in global trade by offering financial security against the risks associated with moving cargo across sea, air, or land.
Marine insurance covers the loss and damage of ships, cargo, terminals, during transport or transfer from the points of origin until they arrive at their final destination. This insurance typically covers various risks associated with maritime transportation, such as damage to the ship, loss of cargo, liability for injuries or damage to third parties, and other perils like piracy, storms, collisions, and more.
Despite what the name implies, marine insurance applies to all modes of transportation of goods. Even when cargo is through air freight, the insurance is still termed as marine cargo insurance.
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Is Marine Insurance mandatory?
Whilst marine insurance is not mandatory to run a vessel, or to ship cargo, it is often a practical necessity to purchase it to mitigate risks associated with shipping. Depending on specific circumstances, and type of maritime activity, and the jurisdiction, marine insurance might be mandatory. For example, a seller of goods is required under contract to provide marine insurance for the buyer under a cost, insurance and freight (CIF) contract.
What You Need to Know About Marine Insurance Products
Marine insurance offers comprehensive protection for goods and vessels in transit, helping businesses mitigate risks associated with transportation. While the exact coverage may vary depending on the policy type and provider, here are the common areas typically included in a marine insurance policy:
- Cargo loss or damage
- Vessel damage
- Theft and piracy
- Freight and liability
- General average
What are the types of Marine Insurance
Cargo insurance:
Hull insurance:
Liability insurance:
How much does Marine (Cargo) Insurance cost?
There are a number of factors that go into the cost of a marine cargo policy. These include, but are not limited to:
- Value of the cargo
- Condition of the cargo
- The route of the shipping vessel
- Method of packing
- Companies' claim history
There are two main types of policies, Single, or Annual Open cover. When looking at a policy for a single transit, the premium focuses on the types of goods, including how they're packed, the ports of origin and destination, and the total value of the goods.
When calculating the premium for an Annual open cover, additional factors are taken into consideration. These include an estimate of how many transits will take place and the total value of goods being shipped. At the end of the year, the insurers require a declaration statement to compare the estimates with the actual numbers. This can cause an adjustment to the price.
What is not covered by Marine (Cargo) Insurance?
We understand choosing the right marine insurance policy can be complex, especially with the wide range of coverage options and risk considerations involved. With a deep understanding of the logistics and shipping landscape, eazy guides businesses through the process:
Inherent Vice: This refers to the natural characteristics of the cargo that may cause deterioration or damage over time, such as perishable goods, inherent vice in certain materials, or gradual deterioration.
- Comparing policies from top insurers.
- Explaining the fine print.
- Ensuring you get coverage that truly fits your operations.
Frequently Asked Questions
About Marine Insurance In Singapore
There are 4 main kinds of marine insurance policies, they are :
- Freight Insurance
- Liability Insurance
- Hull Insurance
- Marine Cargo Insurance
Each protects your business from different risks.
- Single Voyage Marine Cargo. This policy insures cargo for a voyage that could be between two or more places.
- Marine Cargo Open Cover. This policy covers all shipments that a client may have on terms and conditions that are pre-agreed with the insurer. All their shipments that fall within the cover are insured subject to declaration of such shipments being made in a manner as agreed with insurer.
- Goods In Transit. This policy insures goods that are moved on road conveyances such as trucks, vans or low loaders. Such transits can be within Singapore and/or between Singapore and West Malaysia.
- Exporters, importers, buyers, sellers and other parties with an insurable interest in the cargo.
There are 11 Incoterms in total, and they are divided into two categories: Incoterms for Any Mode of Transport: These include EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid To), DAP (Delivered at Place), DPU (Delivered at Place Unloaded), and DDP (Delivered Duty Paid).
The commonly used Incoterms are FOB, C&F and CIF.
The three main types are known as ICCC(A), ICC(B), ICC(C) Clauses which each have different levels of covers.
A Clauses provides the maximum coverage with the least restrictions. While they may be quoted as being all-risks, this can be misleading as there may be some applicable restrictions. A Clauses are usually used on finished goods that have been professionally pacakaged for carriage.
B Clauses is a bit more restricted. They do not cover theft, contamination or damage by freshwater.
C Clauses are the most restrictive. The same exclusions apply as to B, but losses arising from cargo going overboard, any kind of wet damage (sea or fresh), earthquake, volcanic eruption and lightning are all excluded.
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