Marine insurance is a crucial way to protect against risk in the shipping industry. It provides financial protection for ships, cargo, and related parties. This protection is divided into different types of insurance, with precise details about what is covered. The application process for insurance is also standardized. Shipowners, cargo owners, and carriers need to understand the basics of marine insurance and choose the right insurance program for their situation. This helps to reduce the risk of loss in shipping and protect their finances and the continued success of their business.

What is Marine Insurance?

Marine insurance covers things like ships, cargo, and the people transporting goods by sea. It protects against unexpected losses and expenses that might happen during a journey by sea. Because maritime transportation is unique and complex, many risks are involved, such as bad weather, pirate attacks, ship collisions, fires, sinkings, and other natural disasters and accidents. These can lead to ship damage, loss of or damage to cargoes, transportation delays, and various costs and expenses.

At the same time, marine insurance transfers these potential losses to insurance companies through the risk diversification mechanism to protect. This means that if something goes wrong, the insurance company pays out to protect the interests of everyone involved.

Types of marine insurance

Ship insurance: It mainly covers the loss or damage caused by natural disasters, accidents, collisions, groundings, fires, explosions, and other reasons during the voyage, berthing, and operation.

Cargo insurance compensates for cargo loss or damage due to various risks during sea transportation, such as loss, shortage, deterioration, and pollution due to ship sinking, fire, theft, seawater immersion, collision, and so on.

Freight Insurance protects against freight loss suffered by the ship owner or carrier due to failure to complete the transportation of goods. If the ship cannot complete the scheduled voyage due to an accident, resulting in the freight not being collected, freight insurance will compensate for this part of the loss.

Liability Insurance: This insurance mainly covers the insured person’s financial responsibility to third parties due to negligence or fault in maritime transportation activities as defined by law. This includes liability for damage caused by a ship hitting another ship, cargo, or people and for oil pollution. This consists of the costs of cleaning up oil spills and any fines for polluting the sea. It also includes other liabilities for injury, death, or property damage to third parties caused by maritime transportation operations.

What does marine insurance cover?

Natural disasters: damages caused by storms, tsunamis, lightning strikes, etc.

Accidents: ship grounding, collision, capsizing, fire, and other accidents.

Artificial risks: including theft, vandalism, war risks, etc.

Extra costs: e.g., salvage costs and common sea loss sharing costs.

Special Extension: Coverage for specific risks (e.g., temperature control failure for refrigerated cargo) can be added as needed.

What is the difference between marine insurance and ocean insurance?

While the two terms are often confused, they do have a difference. The concept of “marine insurance” is broader and can cover all risks associated with ocean shipping. In contrast, “marine insurance” focuses more on cargo safety during ocean voyages. All marine insurance is marine insurance, but not all is directly related to cargo.

How to apply for marine insurance?

To apply for marine insurance, you generally need to follow the following steps:

Evaluate your needs: Determine the specific type of protection you need based on your business characteristics.

Choose an insurance company: Choose an insurance company with a good reputation and high service quality.

Fill in the application form: Provide necessary information, such as details of the insured object, expected sailing route, etc.

Submit documents: Prepare and submit relevant supporting materials as required.

Sign a contract: Sign a formal agreement after reaching an agreement with the selected insurance company.

Pay the premium: Complete the payment procedures to make the insurance effective.

Summary

Marine insurance protects goods and ships from various risks during sea transportation. Companies and individuals can more specifically choose an insurance plan that suits them by understanding the types of marine insurance, coverage, and differences from other types of insurance. Marine insurance is essential for international trade, whether to reduce trade risks or ensure goods’ safety.