Marine insurance is a specific insurance for ships, boats and cargo carried on either. It is intended to protect owners and transporters against losses from natural events that occur while the boat or ship is in transit.
Coverage of Marine Insurance
There is no basic marine insurance policy and different companies will provide coverage for different risks. Aside from covering expensive damages or losses due to a storm, marine insurance may also cover incidents related to piracy and cross-border armed battles. The open waters can be risky and pose a threat to your vessel and cargo. The financial damages to such threats could be detrimental. Marine insurance is specifically designed to ensure your finances and assets are protected against such threats.
Amount of Marine Insurance Needed
The amount and cost of your marine insurance depends on a variety of factors. Transporters and owners can choose insurance plans based on the size of the vessel, routes taken and value of the cargo. Plans allow you to choose specific coverage, even eliminating cargo coverage, to meet the very precise needs of your business. However, as one of the oldest forms of business insurance, marine insurance can be tricky to navigate, and companies are very strict when it comes to making claims.
A major component of marine insurance is the coverage related to your vessel, also known as hull insurance. It is intended to cover loss or damage to a vessel. There are policies related to yachts, fishing vessels, tugs, barges, large commercial vessels and passenger carrying vessels. Coverage is determined to cover a specific timeframe or a single trip.
The hull coverage of a marine insurance policy is typically offered in two forms. An all-risk insurance policy essentially covers all potential external risks, except a few that should be clearly named in the policy, such as ice or aging conditions. The named perils policy covers specific perils, such as heavy weather, piracy, fire or other additional weather-related storms. Additional non-sea-related insurance can be purchased at an additional cost. Hull insurance usually covers the cost to repair prevent future damages to the vessel. Most will also include liability for damages associated with another vessel while at sea.
The secondary part of marine insurance is cargo insurance, which is intended to do just that – cover the loss or damage to any goods while in transit. Cargo policies are also offered in two plans, all-risk and named perils, as outlined in the hull insurance paragraph above. Cargo can be insured for a single shipment or multiple shipments over a specific timeframe. Most policies will provide coverage for the cargo’s value and other charges, based on the payment that would have been received if the cargo were to reach its destination. Some cargo coverage policies have geographical restrictions; so make sure to read your policy carefully before determining if it fits your needs.