Transportation of good from the place of manufacture to the place of its consumption to essential to ensure smooth trade follows. A seamless trade is being witnessed due to the diminishing international barriers when it comes to import-export of goods, in effect improving international trade. The world has become one huge marketplace. However, the risks associated with transportation has not been eliminated. It continues to exist which is why there is a need of an insurance cover for such transportation. This is where a marine insurance cover steps in.
You may ask, what is marine insurance? Well, Goods are prone to damages during its transit. A marine insurance policy is the one that safeguards business organisations against the financial loss due to damage to these goods in a consignment. The policy provides end-to-end coverage of all damages, right from the place of manufacture to the its delivery location. While the name may give off that it only insures against marine perils, it also covers air, and inland waterways. Some policies can be enhanced to include the transportation to the warehouses too. Common risks associated with changing weather conditions, piracy, damages during loading and unloading are some of them which can be insured with a marine insurance policy.
Now that you know what marine insurance is, let’s look at the how the premium for these plans are decided upon –
- What is that needs to be transported.
- The value of the goods to be transported.
- The innate risks the goods might possess. For instance, being perishable in nature in case of a delay.
- The route opted for by the shipping company.
- The type of vessel in which it is transported.
- Any prevalent risks at the destination location like political unrest, strike, civil turmoil, and more.
Other than the above factors here are some here are some other parameters that impact premium –
Perils of the nature: Natural perils are those factors that as a result impact the vessels ability to load or unload the goods. Some of them are permanent while some of them are seasonal in nature. For instance, some ports lack sufficient depth or absence of anchorage thereby impacting the docking process.
Type of vessel and its construction: Thevessel in which the goods are transported play a crucial role. The insurance company must know the type of vessel, its age as well details about its construction to determine the premium appropriately considering the risk it involves.
Terms of the policy: Certain conditions in the policy increase the liability of the insurance company. A few policies cover the entire amount of loss whereas a few others limit it to partial liability. Depending on such terms and types of marine losses as per the policy document, the premium of the plan also varies.
While these are the factors that impact the premium of marine policies, it is essential to select a policy that fits your requirements. Among the many types of marine insurance plans, selecting the right one based on the cargo consignment can help you get comprehensive coverage. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.
