Find the right Marine Insurance plan for you
What is Marine Insurance?
Marine insurance is a type of policy that protects items and goods from loss or damage while they're being moved from one place to another, including ships, goods, and various transport methods. It is not just for shipping goods by sea. It also covers goods during transport by rail, road, and air. Cargo insurance is a part of marine insurance and also includes coverage for things like containers, ports, oil platforms, and pipelines, as well as any damage or liability related to marine activities.
Meaning of Marine Insurance
Marine insurance is a type of insurance that protects ships, cargo, and other goods during transportation over water, rail, air, or road. It covers losses or damages that might happen during the journey, such as accidents, theft, or natural disasters.
Typically, marine insurance is purchased by a forwarding agent, importer, or exporter. Businesses involved in the transit of goods can also buy marine insurance. Many individuals who ship their belongings from one point to another can also get marine insurance.
Marine Insurance Act 1963 Notes
The Marine Insurance Act of 1963 is a law in India that governs marine insurance. It sets rules and guidelines for insurance policies that protect goods and vessels (or vehicles) during transport by rail, road, air, and sea.
The act outlines the duties of insurance companies and explains how to evaluate losses or damages that occur during marine trips. The main goal of the act is to ensure consistency in how marine insurance is handled.
Transportation Modes Covered Under Marine Insurance in India
- 01
Sea Transport
Gives protection for items that are shipped by sea.
- 02
Air Transport
Provide coverage for cargo transported by aircraft.
- 03
Land Transport
Gives insurance for goods and products transported by trains, trucks, and other road vehicles.
- 04
Inland Waterways
Provides coverage for items moved via sea, canals, rivers, and other inland water routes.
Importance of Marine Insurance
Marine insurance is important when goods are involved in import and export trade proceedings. It applies to all modes of transportation for goods and cargo. Some reasons that reflect the need for marine insurance are
Offers Maximum Protection Against Financial Loss
Marine insurance provides maximum protection and covers against loss incurred due to cargo damages, damages to ships, and damages caused by other maritime assets. With this safety net, you never have to worry about any financial loss that may happen due to theft, accidents, or other events.
Gives You Peace of Mind
When you purchase high-value cargo, ensuring protection with marine insurance provides peace of mind for all the parties.
Offers Customisable Coverage
Cargo requiring specialised marine insurance can also be protected with customizable policies that cover risks such as collision, piracy, and more, apart from general losses.
Fulfil the Adherence to Industry Standards
In many countries, businesses transporting goods must get marine policy insurance to comply with industry regulations and standards.
Helps in Efficient Risk Management
For a relatively small price paid as an insurance premium, businesses can protect their goods against different types of maritime risks such as accidents, theft, piracy, natural disasters, and others. This helps in effective risk management, thus helping to focus on other tasks at hand.
Fulfil Contractual Obligations
Marine insurance is also crucial to fulfilling necessary contractual obligations. The insurance policy must meet the requirements of Carriage Insurance Paid (CIP) and Cost Insurance and Freight (CIF). An adequate marine insurance policy covering the total value of the cargo is needed even if the goods are delivered under Delivered Duty Paid (DDP) or Delivered Duty Unpaid (DDU) terms.
Types of Marine Insurance Policy in India
| Marine Insurance Types | Clause/Extent of Coverage | Geographical Classification |
|---|---|---|
| Single | *A. All Risks: All risks except rainwater damage. *B. Basic: Accidental damage. | Inland: Transit within Indian border. Import: Transit from anywhere in the world to India. Export: Transit from India to anywhere in the world. |
| Annual | ||
| STOP | ||
| Hull | Coverage for the vessel only (Truck, Ship, Train, Airplane) |
Cargo Insurance/Transit Insurance
Marine insurance for cargo protects goods during transportation from the starting point to the destination. There are three types of marine cargo insurance policies you can choose from, depending on how many trips you need to cover and the type of protection you want. These types are:
Open Policy
An Annual Open Policy is a type of marine insurance that provides ongoing protection for cargo during multiple shipments throughout the year. It's a smart and cost-effective option for businesses that ship regularly, as it covers goods on several trips within one year, unlike Single Transit Insurance, which only covers one journey.
Specific Policy/Single Transit
Single Transit Insurance in a marine cargo policy is a type of coverage that protects goods during one specific trip. It covers the cargo while it is being transported from one place to another by a truck, train, ship, or plane.
Annual Sales Turnover Policy (STOP)
The Marine Sales Turnover Policy provides insurance coverage based on a company's estimated yearly sales from marine transportation. This policy protects the company's finances by covering potential losses or damages that may happen during their operations.
Other marine insurance types includes:
Hull Insurance Hull insurance covers the damages to the ship itself. This includes damage from accidents, storms, or other unexpected events.
Freight Insurance Freight insurance assures the freight charges are covered if the cargo is lost or damaged during transit. It protects the shipping company's earnings.
Liability Insurance Liability insurance covers all the legal responsibilities if the ship causes damage to other ships or property.
Marine Insurance in India: How it Works
Exporters need marine shipping insurance even though intermediate handling agencies and shipping companies have their own insurance. The intermediaries have limited liabilities for the goods when they handle consignment duties. On the other hand, shipping companies compensate on a per-package or per-consignment basis, which is definitely not enough for the exporters to overcome financial losses due to damaged or lost goods.
Here is how marine insurance works:
- 1. The cargo owner or shipping company buys marine cargo insurance before shipping the goods. You should choose the insurance policy based on the type of cargo, how it’s being transported, the value of the goods, the length of the journey, and the ports involved.
- 2. Once you pay the insurance premium, the coverage starts immediately. It protects against damage or loss caused by natural disasters like storms or earthquakes, and risks like piracy, fire, or theft. Depending on the policy, it may also cover issues like improper packaging or mistakes made by the carrier.
- 3. If the cargo is damaged or lost during transit, the cargo owner can immediately file a claim with the insurance company. You’ll need to provide proof of damage or loss, along with documents like cargo receipts and bills of lading.
- 4. The insurance company will then investigate to determine the right amount of compensation. The settlement is based on the value of the cargo and the extent of the damage. The cargo owner can receive payment for the losses suffered.
Key Features of Marine Insurance Policy
01Risk Coverage
This insurance covers events like the ship sinking, catching fire, being attacked by pirates, or natural disasters.
02General Average
If part of the ship or cargo is sacrificed in an emergency to save the rest of the ship, every involved person shares the loss.
03Warehouse-to-Warehouse Coverage
This protection starts when the goods leave the supplier's warehouse and continues until they reach the buyer’s warehouse.
04Customizable for Specific Needs
You can customise the policy to cover specific risks associated with cargo.
05Worldwide Claim and Settlement Support
When the goods are lost or damaged, you must file a claim for your marine insurance policy at a specific location based on where the loss occurred.
Who Can Get Marine Shipping Insurance?
- Ship owners, to protect against loss, damage, and liability claims.
- Freight forwarders to protect against loss or damage during transit.
- Shipping companies protect their cargo during transport.
- Shipbuilders and repairers to get coverage against risks to vessels and liability risks during the repair, maintenance, and construction of ships.
- Terminal authorities and port operations protect against loss, damage, or liability claims while handling vessels and cargo in ports.
- Marine contractors involved in oil and gas exploration offshore.
- Charterers who take over a vessel's responsibility for a specific period.
- Individuals move household items or valuables from one place to another.
Top Commodities in Marine Policy Insurance in India
FMCGs and electronic Goods
Iron & steel rods, metal pipes, tubes
Machine tools and spares industry
Household items
Non-hazardous chemicals
Electronics and white goods
Delivery businesses
General Principles of Marine Insurance Policy
The fundamental principles of marine insurance policy are basic rules that guide how marine insurance works. They help make sure that both the insurer and the person getting insured know their rights, responsibilities, and what is covered. The basic marine insurance principles include:
Principle of Good Faith
Both the insurance company and the person getting insurance must be honest with each other. They need to share all important information that could affect the insurance contract. This means no hiding or lying about details.
1Principle of Proximate Cause
This principle says that insurance will only cover losses that are directly caused by an event listed in the policy. If the loss happens due to something else, even if related, it may not be covered.
2Principle of Insurable Interest
The person buying insurance must have a financial interest in the item being insured. This means they would experience a financial loss if the item is damaged or lost, which justifies getting insurance.
3Principle of Indemnity
The purpose of insurance is to help the insured person recover from a loss by returning them to the financial state they were in before the loss occurred. It doesn’t allow the insured to make a profit from the situation.
4Principle of Subrogation
After the insurance company pays for a loss, they can become the insured person and take legal action to recover the money from whoever was responsible for the loss.
5Principle of Contribution
If the same item is insured by multiple policies, and a loss occurs, the insurers will share the cost of the claim. Each insurer will pay their part, so the total payment doesn’t exceed the loss.
6
Marine Shipping Insurance Policy According to Geographical Classification
Whether it's a single transit, annual open, or annual sales turnover policy, every marine cargo insurance policy has a geographical limit. These limits define where the transportation starts and ends. Here’s a breakdown:
Inland
Inland marine insurance covers the transportation of goods within India's borders, mostly by road and rail.
Import
This policy covers goods imported into India from anywhere in the world, usually by sea or air.
Export
This policy covers goods exported from India to destinations worldwide, also typically by sea or air.
Marine Insurance Clauses
There are 2 clauses of marine insurance policy which include:
ITC Inland Transit Clauses (ITC)
ITC-A = All Risk CoverageITC-B = Basic Risk CoverageITC refers to Inland Transit Clauses, which apply to goods transported within India's borders. ITC-A covers all types of damage except rainwater, while ITC-B only covers accidental damage. These clauses are used specifically for inland transit.
ICC International Cargo (ICC)
ICC-A = All Risk CoverageICC-B = Basic Risk CoverageICC stands for International Cargo Clauses, which apply to goods transported internationally. ICC-A covers all types of damage except rainwater, and ICC-B only covers accidental damage. These clauses are used for import and export cargo.
Inclusions and Exclusions of Marine Insurance Policy
Inclusions
- Fire accident
- Stranding
- Sinking
- Natural calamity damage
- Cargo leaving the port of distress
- Derailment of land transport
- Survey fees
- Forwarding expenses
- Explosion
- Collision
- Overturning
- Washing overboard
- Total loss of package while loading or unloading
- Cost of reconditioning
- Jettisons
- General average sacrifice salvage charges
Exclusions
- War
- Strikes
- Riots
- Civil commotion
- Intentional damage or loss
- Bad packaging
- Bankruptcy
- Liquidation
- Insolvency
- Financial difficulties
- Regular wear and tear during transit
- Bad quality of goods
- Delayed cargo
- Renovation and repairs
- Other types of delivery issues
Marine Insurance Companies in India
| Insurer | Claim Settlement Ratio |
|---|---|
| Cholamandalam Marine Insurance | 90% |
| IFFCO Tokio Marine Insurance | 98.79% |
| Liberty Videocon Marine Insurance | 72.52% |
| Magma HDI Marine Insurance | 78.38% |
| National Marine Insurance | 72.01% |
| New India Assurance Marine Insurance | 86.17% |
| Oriental Marine Insurance | 93.08% |
| Royal Sundaram Marine Insurance | 74.48% |
| SBI General Marine Insurance | 75.51% |
Claim Process of Marine Insurance in India
The claiming process of the marine insurance policy is an important factor to consider when you buy marine insurance online. As your cargo moves from one region to another and, in many cases, from one country to another, you must find an insurance provider to facilitate borderless claims. This allows you to file a claim with your insurer in your country without worrying about where the damage or loss occurred to your cargo.
Now, insurance providers have enabled online claims that allow you to apply for insurance claims using their website. This has simplified the entire process of getting compensation for losses quickly. To claim for any loss or damage to cargo, consignment, or vessel, you have to follow the following simple steps:
- Step 1
Inform your insurance provider about the loss or damage immediately.
- Step 2
File an FIR report in cases of theft, piracy, or missing packages and get the acknowledgment.
- Step 3
Request surveyors to visit the damaged package during transit and lodge a monetary claim with the right shipping company.
- Step 4
Submit the necessary documents and get the claim.
Document Requirement for Marine Insurance Policy Claim
- A completed and signed claim form
- Your KYC documents
- A copy of your car insurance policy
- A copy of the vehicle's Registration Certificate (RC)
- A copy of the driver's license of the person driving during the accident
- A copy of the police FIR for theft claims
- Original repair bills and payment receipts
- Estimated repair bills
How to Calculate Marine Insurance Premium?
Here is the formula that is used to calculate the premium of your marine insurance policy:
Premium = Rate (Commodity/Goods) * Sum / 100 + (GST)
Factors That Determine the Premium of the Marine Insurance
The cost of Marine insurance for cargo depends on things like the value of the goods, the type of cargo, the route taken, past claims, the condition of the cargo, and how the insurer evaluates the risk.
| Cover Amount | All Risk Cover Premium | Basic Cover Premium |
|---|---|---|
| 10,000 to 20 lakhs | Rs. 1180 | Rs. 701 |
| 20 lakhs - 50 lakhs | Rs. 1,240 - 2,950 | Rs. 818 - 1,950 |
| 50 lakhs - 75 lakhs | Rs. 3,010 - 4,425 | Rs. 1,986 - 4,425 |
| 75 lakhs - 1 Cr | Rs. 4,484 - 5,900 | Rs. 2,959 - 3,894 |
| 1 Cr - 2.5 Cr | Rs. 6,000 - 14,750 | Rs. 3,900 - 13,275 |
| 25 Cr - 5 Cr | Rs. 14,750 - 29,500 | Rs. 13,275 - 26,550 |
Disclaimer These prices are estimates and may change based on the type of goods and the insurance provider.
Why To Buy Marine Insurance Policy from Square Insurance?
Buying a Marine Insurance policy from Square Insurance, a trusted broker in India, keeps your cargo safe throughout its journey. We offer custom coverage, good prices, and expert guidance to fit your needs. Our policies protect your goods from risks by sea, air, or land. Trust Square Insurance to secure your shipments. Some reasons to buy online marine insurance from Square Insurance are:
Expert Advice
Our business risk experts give you personal help based on what you need.
Affordable Prices
We work with many insurers to get you the best quotes, so you pay less.
Year-Round Claim Support
Our team is here every day to help with your claims and make sure they are handled quickly.
Dedicated Relationship Manager
You’ll have a dedicated manager who will always be there to support and protect your business from risks.
FAQs
Marine insurance is a type of policy that protects items and goods from loss or damage while they are being transported. This includes shipping by sea, rail, road, and air.
Marine insurance is also known as transit insurance or cargo insurance.
In life insurance, the "3-year rule" means that the insurance company cannot deny a claim after three years from when the policy starts, unless they can prove fraud or that important information was hidden.
You should get marine cargo insurance before the shipment begins. You can only buy it if you have the invoice or transportation receipt ready.
The main principles of marine insurance include:
- Principle of Good Faith
- Principle of Proximate Cause
- Principle of Insurable Interest
- Principle of Indemnity
- Principle of Subrogation
- Principle of Contribution