If you are an entrepreneur dealing with marine goods, you might notice that during transportation of these goods by ship, road, rail, cargo or other means, you might encounter a loss or damage of the same, hence to overcome that financial loss or any potential loss or damage encountered to the goods it is best to get coverage from marine insurance.
Marine Insurance Types
Marine insurance is of two types; Cargo insurance and Hull insurance.
Marine business is a contract which involves a seller, buyer as well as carrier, clearing agent and the bank. The insurance of goods in transit and its responsibility for the buyer or seller depends upon the sale contract; hence forth there are different types of marine insurance:
- Free On Board (F.O.B), the seller is responsible for the loss or damage of goods until they are placed on board for carriage, after which is the buyer’s responsibility, hence he opts for insurance.
- Cost, Insurance & Freight (C.I.F), the seller gains responsibility of the insurance and is charged likewise in the invoice.
- Cost & Freight (C.F), the buyer gains responsibility of goods after they are placed on the vessel and has to take insurance.
- Free On Rail (F.O.R), it is same as F.O.B but mainly deals with internal trade transactions.
Marine Cargo Insurance
Marine Cargo Insurance covers goods and freight against any physical loss or damage while being transported by rail, road, sea or air. There are various policies available depending on types of cover like all risk to fire risk only. The transportation of goods is limited to inland, import and export. While inland transport policies are extended to cover strike, riot, terrorism, civil commotion and F.O.B by paying additional premium. Import and export policies cover war, strike, riot, terrorism etc by paying add-ons.
The sum insured for policy depends upon the type of contract, 10-15% is added to the value of contract to cover for incidental cost.
Marine Hull Insurance
Marine Hull Insurance policy covers all types of ocean-going vessels, ship breaking, jetties with or without crane, port crafts, yard and pleasure crafts, construction of vessel, voyage cover or breaches of warranties, dredgers, fishing vessels or trawlers, sailing vessels, freight-at-risks insurance for voyages, charterers liabilities, ship repairer’s liabilities, all types of coastal and inland vessels, wharves etc.
The policy also covers perils of the sea, lake, river or other navigable water where damage to goods is caused by fire, explosion, piracy, collision, sinking, overturning, theft, earthquake, crew negligence, breakdown or accident by nuclear reactors, aircraft damages, lightning etc.
The policy does not cover deliberate damage or destruction to vessel by any wrongful act of person, use of any war weapon, nuclear fission/fusion, radioactive contamination, chemical or electromagnetic weapons, financial crisis of vessel owner, strike, war, riot, civil commotion, terrorism or political motive etc.