About 90% of the world’s cargo moves by sea freight for economic reasons. The container shipping industry provides a safe and cost-effective way of transporting goods. In most cases, the cargo will arrive on schedule and in the condition you expect. However, there can be associated risks that arise within the shipping industry.
This blog will outline the importance of Marine Cargo Insurance and explain why it is worth considering implementing.
What is Marine Cargo Insurance?
Marine Cargo Insurance is designed to cover your goods in transit against damages or loss that may arise from external causes. There are several forms of cargo insurance for all types of transportation, including goods sent by sea, air, land, or rail.
Who Needs Marine Cargo Insurance?
If your company relies on the transit of goods by sea, air, land, or rail, you could face significant financial loss if your goods are damaged or lost whilst in transit. If your business regularly sends or receives goods, then you should seriously consider an Annual Marine Cargo Insurance policy.
What Does Marine Cargo Insurance cover?
Marine Insurance covers the damage or loss caused by any transport vessels (ships, terminals) or cargo by which goods are acquired, transferred, or held between the points of origin and final destination. Cargo Insurance is the sub-branch of marine insurance; Marine Insurance also includes Offshore and Onshore exposed property (ports, container terminals, oil platforms, pipelines), Marine Casualty, Hull, and Marine Liability.
Furthermore, Marine Cargo Insurance Policies have been implemented to minimise the financial loss incurred in a natural disaster, accident, or other mishaps.
What does Marine Cargo Insurance NOT cover?
The Marine Insurance Policy does not cover the following:
- Wear and Tear, Corrosion, and Deterioration
- Equipment breakdown
- Claims arising from intentional acts
- Incidents or claims that are known prior to the policy commencing
- Your business becoming insolvent
- Claims arising from digital network/data breach.
Potential Risk Associated when Shipping Cargo:
There are two forms of risk associated when shipping cargo via Sea Freight. These include risks specific to your vessel and risks specific to your goods.
Risks that may occur to your vessel:
- Fire – that may occur onboard
- Stack Collapse – on board a container ship
- Collision – between another vessel
- Natural Disasters and Weather Events – could result in containers being lost or falling overboard in heavy seas and high winds.
- Piracy – with the goal of stealing cargo and valuable goods.
Risks that may occur to your goods:
- Theft – Cargo can be suspectable to theft during transportation
- Poorly packed goods – Poorly designed or inadequate packaging is another factor that can result in goods being damaged when exposed to the rigours of shipping.
- Improper handling – Equipment such as forklifts and cranes can cause damage to the cargo when loading and unloading the containers.
Why aren’t these Losses Covered by the Transportation Company?
Admiralty Law dictates a process called General Average, which shares financial liability across all parties involved. So, for instance, if a vessel is lost at sea whilst your container is on board, you will not be reimbursed for your cargo if you don’t have Marine Insurance.
Additionally, the severity and frequency of extreme weather are becoming more common, placing more vessels at risk. Allianz Insurance reported that 94 vessels were declared a total loss in 2017. Unfortunately, there is no chance for compensation for damage or loss relating to weather occurrences. This is another reason why Marine Insurance is exceptionally vital.
Is Marine Cargo Insurance Worth it?
When shipping, an incident at sea is always possible, and Marine Insurance is the best way to protect yourself and mitigate these risks while shipping your cargo.
If you have Marine Insurance, it means that if the cargo is lost or damaged during transit, it will be refunded to whichever party held the ‘technical’ ownership. Therefore, insurance will cover the cost of the goods but not the missed revenue. Additionally, the right policy can also protect you against General Average costs.
When organising your next shipment, consider Marine Insurance and ask for a quote! This will allow you to weigh the costs and potential risks to make the best decision for your business. For instance, you would not risk your vehicle by not insuring it, and you should apply the same principle to your vessel and cargo when sending them via ocean.
Still need information on Marine Cargo Insurance? Then, you’ve come to the right place. Book a Free Consultation with our Gava Australia Team.
We will explain what is left unsaid about Marine Cargo Insurance to help you avoid surprises or disappointment and answer any additional questions.
Further Marine Cargo Insurance information we will provide you with will include:
- Types of Marine Cargo Insurance
- What is General Average? And who is Liable?
- How is Marine Cargo Insurance Charged?
- When is Marine Insurance Mandatory?
- How is the Premium Calculated?
For additional updates and information on the Latest News in the industry, please visit our new Gava Website https://www.gava.com.au/blog
