Importers who regularly ship cargo from overseas, whether by ship or by plane, should be taking steps to protect their investment. This means they should be purchasing marine insurance to cover any loss or damage that arises during the trip over the ocean. But, many importers, especially those just starting out, don’t even know there’s such a thing as marine insurance. These three types of marine insurance policies will cover just about any mishap on your cargo’s journey to the U.S.
Hull insurance is a type of marine insurance policy that covers physical damage to or loss of the actual vessel. In most cases, the vessel refers to a ship or boat, but it can also refer to an airplane or any other method of transportation that crosses water at some point between its origination point and its destination point. Most importers do not need this type of policy because they don’t own the vessel and are not responsible for repairing or replacing the vessel in the event it is damaged or lost.
Coverage under a hull insurance policy is either deemed “all-risk,” which means the policy will pay out if anything happens to the vessel for any reason, or “named-perils,” which means it will only pay out if the vessel is damaged or lost due to a specifically named risk in the policy. Traditionally, the named perils are heavy weather, fire, piracy, and other sea-related risks. There is also a clause that will cover perils that are non-sea-related such as employee negligence, latent defects, and accidents in loading or unloading cargo.
This is the type of marine insurance that most applies to importers because it covers damage to and loss of cargo during transit. Generally, a policy will cover goods from the time they leave their port of origin to the time they arrive at their destination warehouse and cover all types of transportation, from boats, to planes, to trucks, to trains. As with hull insurance, cargo insurance can be either an “all-risk” policy or a “named-perils” policy, with a named-perils policy usually being the cheaper option.
Importers can purchase a one-time policy that covers a single shipment or they can opt for an open policy that will cover all shipments during a specified time frame. Importers who ship a lot of goods and freight forwarders who can obtain insurance on their customers’ behalf usually choose open policies because in the end, it’s cheaper to purchase a policy for multiple shipments than a new one each time.
Protection and Indemnity Insurance
The third type of marine insurance is protection and indemnity insurance is another policy that importers usually don’t require. This is because it covers liability of the vessel’s owner that may arise from injuries, death, or property damage on their vessel or to another person’s property. It also covers injuries and deaths on shore that arise from their negligence or that of their employees.
Of the three types of marine insurance policies that are available, importers are most likely to purchase a cargo insurance policy. You can either shop around for a policy at a good price, or go partner with a freight forwarder and have it taken care of on your behalf. Just make sure all your cargo shipments are covered so you’ll be protected if the worst-case scenario comes to pass.