Importance of Marine Cargo Insurance in International Trade

As we all know, international marine trade involves transporting goods across borders. But we can not ignore the fact that transportation via rail, road, air, or seaways comes with plenty of risks such as accidents, piracy, and natural calamities.

Below are the reasons behind the need and importance of marine insurance in international trade:

Risk Management: Perhaps the biggest reason why you should have marine insurance is that it allows you to manage your risks without disturbing your ongoing business operations.

Let us understand this with an example. Suppose your freight worth ₹10 Lakh gets damaged during transit. In the absence of marine or transit insurance, you will have to pay for the entire loss out of your pocket.

Not just that, dealing with the losses and other legal obligations may also hinder your business operations. However, with the right marine insurance policy, you can manage this stressful event without impacting your business.

Financial Security: Financial security and assistance in the event of loss/damage during transit is another reason why it is important to have a marine insurance policy. The compensation offered by a marine policy allows you to handle the ongoing as well as resulting losses and damages from an unfortunate event.

Enhanced Reputation: Knowing that your company has transit insurance, more and more clients will choose you over your competitors. The reason behind this is simple, your clients will stay assured that their cargo is safe with you.

In short, having a marine insurance policy will act as your USP and help you gain a reputation in the industry.

Abide By the International Regulations: While marine insurance is not mandatory for domestic transportation, it can be a legal requirement in some nations. It means it might not be able to cross some borders in the absence of an insurance policy. So, in order to stay within the legal boundaries, you must have suitable marine insurance.

We have covered the reasons to have marine insurance. Below are some benefits offered by marine policy:

Customised Policies: The type of policies is one of the main important factors affecting marine insurance coverage. The good thing is you can get your marine insurance customised based on your requirements.

For example: If you are a freight forwarder, you can purchase customised freight insurance in marine insurance. Similarly, if you are an individual or occasional shipper, cargo insurance will be an ideal option for you.

Comprehensive Coverage: The comprehensive coverage offered by marine insurance policies is another plus. To begin with, it covers multiple modes of transportation.

On top of it, it comes with an extensive list of inclusions covering most of the potential risks. This includes damage and loss to insured goods in events such as accidents, water damage, collisions, natural calamities, and so on.

Efficient Claims Settlement Process: Marine insurance policies from reliable providers come with a hassle-free claims settlement process. By filing your claim at the right time and providing your insurance provider with the required supporting documents and evidence, you can get reimbursed in a short span. Moreover, you can also raise complaints in case you are not satisfied with the final settlement.

Reasonable Premiums: Having a marine insurance policy is totally worth considering the extensive coverage and protection it provides. Sure, it comes with slightly higher premiums than a regular insurance policy, but you can easily bring your premiums down by eliminating the unnecessary add-ons and covers from your marine open policy.

Moreover, if you are on a tight budget, then you can invest in a single-transit policy, which allows one-time transit and comes at an affordable cost.

Extended Coverage to Multiple Modes of Transport: Another benefit of purchasing marine insurance is that you do not have to invest in different transit policies for different modes of transport.

A single marine policy will suffice for covering your transits via rail, road, air, and seaways. It is both cost-effective and easy to manage.

Suits All Businesses: Marine insurance policies are designed to meet the requirements of all kinds of businesses. So, regardless of how small or well-established your business is, you can purchase a policy that stays in line with your potential risks and insurance needs.

As we have seen above, marine insurance is an integral aspect of international trade via multiple modes of transport. By providing financial coverage against the involved perils, a marine insurance policy not only relieves the involved parties from the stress of incurring the resulting damage but also helps in running international trading operations in a smooth and safe way.

Tata AIG offers marine insurance policy with various features and benefits at affordable costs.

How many vessels are covered under a marine insurance policy?

The number of vessels covered under a marine policy depends on the type of policy and insurance provider. The good thing is most marine insurance providers offer customised plans in which you can add multiple vessels.

What are the types of marine insurance?

There are different kinds of marine insurance policies such as single transit policy, marine open policy, hull and machinery policy, and so on.

Is marine insurance mandatory for all international shipments?

No, marine insurance is not a mandatory requirement for all international shipments. However, some countries have strict requirements for commercial shipments. Whether or not it is a legal obligation, marine insurance is known for the protection and safety it provides.