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6 Things You May Not Know About Marine Cargo Insurance

6 Things You May Not Know About Marine Cargo Insurance

Marine Cargo

If your business is expanding to overseas markets, marine cargo insurance can offer you important protection for your ocean and air shipments.

Marine cargo insurance policies are unique compared to other insurance policies. This is because international ocean and air shipments are subject to a unique set of laws that limit the liability of carriers. So how do you better protect your freight in transit? Here are six things you may not have known about marine cargo insurance and why it’s a good idea to add a policy.

1. Accidents happen. Shipping goods internationally is safer and more efficient than ever, but there are still numerous reasons freight could be damaged in transit. Investing in marine cargo insurance can protect you in the event there is damage.

2. Damaged goods are the shipper or consignee’s responsibility. International shipping laws favor the carrier, not the shipper or consignee. Limiting carrier liability helps promote trade between nations. When you prepare to ship, make sure your goods are packed as securely as possible to minimize your risk.

3. The underwriting process is fluid. Many insurance policies are subject to strict underwriting procedures but marine cargo insurance lacks rigid guidelines on what’s required. Most marine cargo insurance policies are offered as all-risk and can be tailored to your particular exposures.

4. Make sure you understand your policy. A common mistake when reading an all-risk insurance policy is to assume that the policy will automatically cover any accident involving your goods. This is not necessarily the case. Instead, most all-risk policies lay out a specific set of situations they do not cover. Occurrences not listed there can then be assumed to be covered under an all-risk policy.

5. You must disclose the nature of your goods. Honesty is the best policy when it comes to marine cargo insurance. If you are seeking coverage, you must disclose, to the insurance company, the type of item, dollar value, mode, and any other material facts that could influence the underwriter in their assessment of the risk. After you disclose this information, it is the insurance company’s right to accept or decline coverage. The insurance company may also agree to provide coverage but at a higher rate.

6. Controlling the insurance purchase is a good idea. Controlling the insurance purchase gives you greater peace of mind because you know the answer to these and other questions:
• If you are subject to the other party’s insurance coverage in an international shipment, what has been procured on your behalf?
• If there was a claim, would it be filed overseas or in your location?
• Will a claim be paid in your currency or that of another country?
• Are you needlessly paying duty on insurance because it is included in the price of the goods you are buying?

Understanding the ins and outs of marine cargo insurance can be complex. What comments or questions do you have? You can learn more by posting your questions here or by downloading a copy of our white paper Global Shipping: Protecting the Value of Goods.

Comments

Ken Sine

Paul, I enjoyed your article.

1.28.14

Reply

cecil Maragh

Hi.
I manage a bonded warehouse in Kingston whre imported items are examined by customs before delivered to the local market/customer. Recently 2 containers from China which were said to contain tomato paste were found to contain bags of sand.What kind of recourse does the consignee have?

1.28.14

Reply

cecil Maragh

The article is greatly appreciated.

1.28.14

Reply

Stephane

Paul - Great article. I look forward to our Marine Insurance department giving our importing and exporting community peace of mind.

1.28.14

Reply

Paul Smart

With regards to coverage for this type of loss, most marine cargo insurance policies include coverage for theft as well as damage caused by government officials. If coverage was purchased for this shipment, the consignee should file a claim.

1.29.14

Reply

Jennifer

Paul, this was a great write up. What insurance should shippers require their ocean carriers to have if they need to get their own cargo policies?

Thanks for the help!

1.29.14

Reply

Dan Feeney

#7. General Average, this also protects you from General Average. Very little money for a lot of peace of mind...

http://en.wikipedia.org/wiki/General_average

If you don't know anything about General Average, you should read up on it! $$$

2.21.14

Reply

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