What is Marine Insurance?

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?
What are the types of Marine Insurance
How much does Marine (Cargo) Insurance cost?
What is not covered by Marine (Cargo) Insurance?

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 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?

Marine cargo insurance typically covers a wide range of risks associated with the transportation of goods by sea. However, there are certain exclusions that are commonly found in most marine cargo insurance policies. Here are some typical exclusions:

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.

  • Insufficient Packing:
    Cargo that is improperly packed or inadequately secured may not be covered. It's essential for the cargo to be pacakaged according to industry standards and best practices
  • Unseaworthiness of the Vessel:
    If the vessel transporting the cargo is deemed unseaworthy due to factors such as poor maintenance, improper loading, or failure to meet regulatory standards, resulting losses may not be covered.
  • Delay in Transit:
    Marine cargo insurance typically covers physical loss or damage to the cargo but may not cover financial losses incurred due to delays in transit, unless specified otherwise in the policy.
  • Consequential Losses:
    Marine cargo insurance typically covers direct physical loss or damage to the cargo but may not cover consequential losses such as loss of profits, loss of market, or other economic losses resulting from the damage or loss of the cargo.
  • Trade Sanctions and Embargoes:
    Losses arising from shipments to countries under trade sanctions or embargoes may not be covered, as these transactions may be deemed illegal or uninsurable under the policy terms.

It's essential for businesses to carefully review the terms and conditions of their marine cargo insurance policies to understand the specific coverage and exclusions applicable to their shipments. Additionally, businesses may consider purchasing additional coverage or specialized policies to address specific risks not covered under standard marine cargo insurance, such as War risk, which is typically not covered by default.

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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