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Voyage Policy: What it Means, How it Works

  • Author :
  • TATA AIG Team
  • Last Updated On :
  • 03/04/2025
  • 2 min read

Marine insurance plays an important role in safeguarding maritime trade and ensuring financial security against challenges encountered by vessels and freight. Among its various types, the voyage policy in marine insurance holds unique significance. Tailored for a specific journey, this policy ensures coverage from the beginning to the destination of the voyage, thereby mitigating potential losses. For individuals and businesses navigating the complexities of global shipping, understanding the concept of a voyage in marine insurance is essential. As international trade continues to grow, the demand for reliable protection through a marine insurance policy also continues to expand, making it imperative to understand how a voyage policy works and its significance. This article explores everything you need to know about a voyage insurance policy so you can appropriately safeguard your cargo.

What is a Voyage Insurance Policy?

A voyage in marine insurance refers to the coverage that secures freight in one particular journey from one port to another. Unlike other time-bound coverages, a marine cargo-specific voyage policy exclusively focuses on the duration of the journey and concludes upon the safe arrival of the freight at its destination.

As outlined under the Indian Marine Insurance Act of 1963, a voyage policy is designed to safeguard against unforeseen risks such as damage, theft, or natural disasters that might occur at the time of transit. This policy is particularly beneficial for businesses concerned with occasional shipments. It offers customisable coverage for individual consignments instead of continuous protection, which an open policy might provide.

Although its key purpose is to secure freight, it can occasionally extend to the vessel itself if this has been specified. In most cases, however, the marine cargo-specific voyage policy exclusively secures the goods being transported. This makes it particularly useful for one-time shipments or irregular trade routes, ensuring precise and cost-effective risk management.

In other words, a voyage policy is an important element of marine insurance, providing flexibility and security for one-time shipments. In addition to offering safety, it also affords the individual peace of mind.

How Does Voyage Policy Work?

A voyage policy in marine insurance is designed to secure freight during a particular sea journey, offering security from the moment the voyage begins until the cargo arrives safely at its destination. Unlike other types of marine insurance, this policy is not time-bound by voyage-specific, making it highly suitable for one-time shipments or occasional maritime trade.

The voyage insurance policy generally covers unforeseeable risks such as accidental damages, collisions and natural disasters encountered at sea. It is important to note, however, that this does not extend to preventable risks, such as improper packaging or willful misconduct.

Losses at the time of loading and unloading are also excluded, making it essential to get additional insurance for these scenarios. Similarly, acts of war, terrorism, and labor strikes are also typically excluded unless it is explicitly included in the policy.

In other words, for the policy to be valid, the vessel must be seaworthy, the crew competent, and the journey must be conducted under normal maritime conditions. The contract comprises comprehensive details about the vessel, freight, and the risks involved along with the bill of lading and the vessel name.

One significant benefit of this policy is its adaptability to delays arising from unpredictable circumstances such as inclement weather or congestion at the destination port. However, regardless of the time that the journey takes, the coverage remains active, thereby appropriately securing your freight.

This flexibility paired with specific risk coverage, makes the voyage insurance policy a critical tool for cargo owners regardless of whether they are engaged in one-time or infrequent international trade, while ensuring their goods are secured against the unpredictable nature of maritime transportation.

Which Risks Are Covered Under Voyage Policy in Marine Insurance?

A marine insurance policy like the voyage policy is curated to protect cargo against unpredictable and unpreventable risks when in transit. However, for the policy to be valid, the vessel that is carrying the freight must be seaworthy when the journey begins, meaning it must be in acceptable condition to face the ordinary perils of the sea. In addition to this, the crew operating the vessel must be adequately trained and competent.

Generally, the scope of coverage under a voyage policy is inclusive of accidental damage, natural disasters, and collisions that could occur at the time of the sea journey. This protection is imperative for businesses that rely on maritime trade as it ensures that their freight is financially protected from major risks.

Coverage that is extended under this type of marine cargo insurance extends throughout the sea voyage, even if there are unexpected delays, for instance poor weather conditions, or docking shortages at the destination port.

While the policy offers robust protection for risks encountered at sea, additional coverage can be purchased to offer security against specific concerns such as strikes, riots or civil commotions. However, insurance holders must note that exclusions are still applicable to risks that are considered preventable such as inadequate packaging, ordinary wear and tear, or willful misconduct.

In other words, a voyage policy is an important type of marine insurance policy that provides comprehensive protection for cargo in transit by sea while allowing for extensions to address additional risks.

Understanding the Difference Between Voyage Policy vs. Time Policy

Knowing the difference between these two policy types helps opt for appropriate protection through either a voyage policy or broader, time-based coverage.

Elements Voyage Policy  Time Policy
Definition A marine cargo-specific voyage policy secures the freight during a single, specified journey from one location to another.  A time policy secured the cargo only for a fixed duration, which is generally one year.  
Coverage Duration This policy is valid for the entire voyage in marine insurance, regardless of delays.   It only covers risks in the specified time frame, regardless of whether the voyage completes the journey.  
Suitability  This is ideal for businesses and traders with infrequent shipments or limited cargo volumes. Generally preferred by major export houses or businesses that require frequent shipments. 
Flexibility  It ensures protection from the beginning of the journey to  Coverage strictly concludes when the policy tenure expires, regardless of the destination of the cargo.  
Administrative Effort A separate policy is required for every shipment.  Provides ongoing coverage for several shipments during the policy period. 
Common Use Case Often used for irregular, one-time shipments or particular trading routes.  Advantageous for businesses with high shipping frequency and consistent cargo movement. 
Risk of Expiry  The coverage remains active throughout the voyage until the freight safely reaches its destination.  Coverage will conclude once the specific time frame ceases even if the freight is still in transit at the time.

Voyage Policy Examples

With voyage policy examples, one can better understand what the policy entails. So, consider that a business that is exporting handcrafted furniture from Mumbai to Dubai via sea. As this is a one-time shipment, the company decides to secure their valuable cargo with a voyage policy in marine insurance. This marine cargo-specific voyage policy would secure the freight from the moment it leaves the port in Mumbai to the time it arrives safely in Dubai.

At the time of the transit, the ship encounters unfavourable weather conditions, which causes some minor damage to the furniture. So, the voyage policy ensures that the exporter is duly compensated for these unforeseen losses during the journey.

However, if the damage to the freight has occurred owing to improper packaging by the exporter, for instance, fragile items are not secured appropriately, the damage claim would then be denied by the insurer. This is because marine cargo insurance does not cover losses that result from preventable risks or negligence. In this case, the exporter will have to bear the loss from their own pocket, highlighting the importance of adhering to shipping standards.

Wrapping Up

In the world of maritime trade, having the right marine insurance is a critical aspect of financial protection. A well-designed cargo insurance policy such as a voyage or time policy, ensures that businesses are safeguarded from unforeseen risks. It also offers peace of mind and financial security during transit.

With TATA AIG’s reliable insurance solutions for maritime journeys, insurance seekers can find comprehensive options tailored to their needs. With robust insurance solutions, traders and exporters can focus on their operations, knowing that their valuable freight is well-secured.

Whether you need coverage for a particular shipment with a marine cargo insurance solution such as a voyage policy or you are seeking broader protection for ongoing trade, selecting a reliable provider like TATA AIG is crucial.

Frequently Asked Questions

How to raise a claim for a voyage policy?

When an incident arises, promptly contact your insurance company and they will guide you through the claims process. Typically, this involves submitting a claim form along with supporting documents.

Can you purchase a voyage policy for domestic shipments?

Yes, voyage policies also offer coverage for domestic shipments via sea, provided the transit involves navigable waters.

Which documents need to be submitted to the insurer to invest in a voyage policy?

To invest in a voyage policy, the insurance seeker typically needs the bill of lading, details of the vessel, and cargo specifications.

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Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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