Marine cargo insurance

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Marine and cargo insurance

Take a look at our guide to marine and cargo insurance to find out what a policy could cover.

The protection of goods and merchandise while being transported overseas via ship vessels is covered by marine and cargo insurance. This policy, sometimes referred to as marine insurance or marine cargo insurance, provides cover for the goods throughout the duration of their transit. 

What risks are covered by marine and cargo insurance?

There are two main types of risks that a ship and its cargo will be exposed to when travelling, both of which can be covered by a marine & cargo insurance policy: natural risks and man-made risks.

Natural Risks

Natural risks are typically considered to be severe weather risks that could pose a threat to ships and their cargoes. Types of weather risks covered by marine cargo insurance can include:

  • Hurricanes.
  • Typhoons.
  • Cyclones.
  • Monsoons.
  • Heavy gales.
  • Heavy seas.
  • Icebergs.

Some other natural, non-weather perils are also covered under a marine policy. These include:

  • Volcanic eruption.
  • Earthquakes and landslides.
  • Changes to undersea sandbank and rock formations.

Man-made risks

The non-natural risks covered in a marine and cargo insurance policy include:

  • Fire – if a boiler on-board the ship bursts, or there is a fire in the engine room.
  • Theft – if the ship and its cargo fall victim to pilferage or piracy, and goods are stolen.
  • At-sea collision – if the ship collides with another, and cargo is damaged or destroyed.
  • War and terrorism – if a ship hits a derelict mine, or is attacked.
  • Strike action – if transit strike action is taking place, this could disrupt cargo transport.

Which types of cargo are covered?

Many different types of goods are covered by marine cargo insurance – almost anything that can be feasibly transported by ship. This could include solids, powders, liquids and gases.

Some of the most commonly transported types of cargo include:

  • Crops.
  • Minerals.
  • Fertilisers.
  • Cement.
  • Steel.
  • Refrigerated cargo.

Marine cargo insurance: terms and conditions:

There are a number of exclusions that apply to most marine & cargo policies, meaning that cargo would not be covered in these events. These are grouped into several different categories:

Inevitable losses

  • Leakage of the cargo during transit.
  • Loss in weight or volume of the cargo during transport - for example, due to natural evaporation.
  • Ordinary wear and tear of products.
  • Delays during transit which may result in deterioration of the cargo.
  • Nature of the cargo causing it to deteriorate or decay.
  • Unsuitable packing or preparation of cargo, meaning that it can’t withstand ordinary transit.

Losses placing responsibility on the policy holder

  • Wilful misconduct or malicious damages caused by the policyholder to cargo.
  • Use of an unseaworthy ship, or container within the ship which causes unsuitable transit of cargo. In some cases, if the policyholder is proven unaware of this unsuitability, a claim could still be made.
  • Loss, damage and expense caused by the financial default of the owners, managers, charterers or operators of the vessel.

Other cargo

Items of high value, such as paintings, bank notes and precious stones, may be considered too valuable to be covered under a typical marine insurance policy, and require insurance from a specialist provider.

It is important to check the stipulations of any insurance policy you take out before committing to it, to ensure that you will be comprehensively covered against the risks that could threaten your cargo while in transit. Also, you should make sure that you are fully aware of any terms and conditions which you may need to adhere to in order to validate your policy.

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