Generally, you’re covered for any physical loss or damage that occurs during transport. Even though it’s called “marine” cargo insurance, it can cover the entire journey, door to door.
For instance, if I.C.E. Transport issues a door-to-door bill of lading, then that would result in door-to-door insurance coverage. If damage occurs on a truck moving to or from the port, the trucking company’s policy would reimburse for a portion of the cargo value (based on coverage limitations) and the all risk policy would cover the balance.
Marine insurance is essential for protecting vessels, cargo, and associated interests involved in maritime operations. It provides financial security against various perils that can occur during sea transport. Coverage is typically divided into two main types: hull and machinery insurance and cargo insurance, with several specialized policies catering to unique maritime risks.
Hull and Machinery Insurance
Hull and machinery (H&M) insurance covers physical damage to the ship and its machinery. It protects shipowners from financial losses due to risks like collisions, fire, or grounding. H&M insurance covers the cost of repairs or replacement of parts, ensuring that shipowners can recover quickly from incidents affecting the vessel’s seaworthiness.
What It Covers:
- Collisions and Stranding: Damage caused by running aground or colliding with another vessel or object.
- Fire and Explosions: Financial protection against losses from onboard fires or explosions.
- Storm and Weather Damage: Coverage for damage caused by rough seas, severe weather, and adverse marine conditions.
- Piracy and Theft: Protection against losses due to acts of piracy or theft of the vessel.
- Salvage and Towing Costs: Expenses related to rescuing or towing a damaged ship to safety.
Cargo Insurance
Cargo insurance protects the goods transported by sea, covering losses or damage to cargo during shipment. This type of insurance is crucial for importers and exporters, as it secures the value of goods against potential risks that could impact profitability and supply chain reliability.
Types of Cargo Insurance:
- All-Risk Coverage: The broadest form of cargo insurance, covering all physical losses or damage except for specifically excluded events.
- Named Perils Coverage: Coverage limited to specific risks listed in the policy, such as fire, sinking, or collisions.
- Institute Cargo Clauses (A, B, C): Standardized clauses that define the extent of cargo coverage, with Clause A providing the most comprehensive protection.
Common Risks Covered:
- Weather Damage: Destruction or loss of goods due to storms and extreme marine conditions.
- Theft and Piracy: Protection against loss from cargo theft or pirate attacks.
- Jettison: Coverage for goods that are deliberately thrown overboard to save the vessel in emergencies.
- General Average: A principle where all parties in a maritime adventure share the loss proportionally if cargo or property is sacrificed for the common good.
Liability Cargo Insurance
Marine liability insurance, or Protection and Indemnity (P&I) insurance, covers shipowners for liabilities to third parties. This can include injury or death of crew members, pollution liability, and damage caused to other vessels or cargo.
Coverage Details:
- Crew Injury or Death: Compensation and medical expenses for injured crew members or their families.
- Pollution and Environmental Damage: Liability for oil spills or other pollution events.
- Collision Liability: Coverage for damage caused to other vessels during a collision.
- Fines and Legal Expenses: Financial protection against fines and legal costs related to maritime incidents.
Freight Insurance
Freight insurance covers the loss of freight revenue. It is relevant when a shipper has agreed to be paid freight charges only when cargo arrives safely. If the goods are lost or damaged in transit, freight insurance compensates for the loss of expected income.
Exclusions and Limitations
Marine insurance policies often have exclusions, such as:
- War Risks: Generally excluded but can be covered through a separate war risk policy.
- Willful Misconduct: Losses caused by the deliberate actions of the insured.
- Nuclear Damage: Exclusion of damages resulting from nuclear incidents.
- Poor Packaging: Cargo insurance may not cover losses caused by improper packing or stowage.
