Although Marine Cargo Insurance is a choice, we recommend that every customer should take it out when shipping cargo with any company.
We’ve had over 20 years of experience in the shipping industry, and we’ve seen some unfortunate situations. These have resulted in damaged, lost or destroyed cargo, and very unhappy clients. These incidents are unavoidable, unpredictable but insurable. Below, we answer the most frequently asked questions on Marine Cargo Insurance:
What is Marine Cargo Insurance and what are the types?
Marine Cargo Insurance is a type of insurance which covers the damage and loss of cargo. The main policy types are Open Cargo (covers goods from departure to destination), Perils (which only covers certain incidents) and All-Risk (covers all losses except during incidents the provider excludes).
How important is Marine Cargo Insurance?
Marine Cargo Insurance is extremely important - there are a number of maritime perils which can occur. These perils pose a threat to cargo on the vessel. Unfortunately, damage or destruction does occur and without insurance you could be put in a poor financial position due to costs. Below is a list of a few of the risks:
The Transported Asset Protection Association (TAPA) reported year-on-year growth in cargo crimes by 64.1%! There were 151 incidents recorded in January 2017 alone (116 of which were in the UK). The total reported value of these losses came to €13.8 million. Unfortunately, all types of cargo are susceptible (a stolen HGV was used to steal a trailer of car engines).
This is a constant threat to the shipping industry and your cargo. On the International Chamber of Commerce’s Commercial Crime Services website, you can see how frequent these incidents are. According to Save Our Seafarers, piracy costs the global economy £18 billion a year.
This is the most frequent risk. Many circumstances can lead to damage, including human error. According to UK P&I 25% of damage is physical, 14% is temperature related, 11% is containers lost overboard, 9% is theft and 8% is shortage. Although we work hard with our principals to mitigate damage, it’s not always avoidable.
Vessel Malfunction or Grounding
Fortunately, vessel issues are not regular occurrences, but that doesn’t mean it can’t happen! Just recently World Maritime News reported a containership stranded on the Westerschelde estuary, the Netherlands. Although there was no major damage, there could be the next time a ship runs into issues.
This week saw one of the most powerful hurricanes ever recorded wreak havoc in the Caribbean. This disaster could be as costly as Hurricane Harvey, if not more. Sadly, natural disasters are unpredictable and could occur at any time damaging vessels and cargo in their wake. Marine Cargo Insurance can be complex, but we are here to help. In an event beyond the ship owner’s control, any damage to your cargo, other cargo on the vessel or the vessel itself results in “general average”.
What is General Average?
General average is where all parties share the cost of the damage or loss equally. This means you could be liable for someone else’s cargo or even the vessel! It’s possible your cargo could be held until payment is received.
You will still have to pay the freight costs, and the general average of the cargo on board. For example, if your cargo is a second-hand refrigerator but the rest of the cargo on the vessel consists of brand new motor vehicles, you’ll be obliged to pay the average value of all cargo.
Without being covered by insurance, this could be very costly. You must always take total loss insurance as a minimum (a low-cost option which only covers general average claims or if cargo is completely lost overboard).
Who are the recommended Marine Cargo Insurance brokers?
Accidents DO happen no matter what measures are taken, which is why we urge you to take out insurance. We recommend you work with Seven Seas Insurance who provide a superlative service. They can help you with insurance issues including your Marine Cargo Insurance premium.
How do I claim Marine Cargo Insurance?
If you take out Marine Cargo Insurance with our recommended provider, you can email them with any claim queries at firstname.lastname@example.org. They are based in Florida and are open between 8AM and 5PM (EST).
It’s important to note that you will normally be covered for the loss or damage of the goods and the duties you have paid (if declared). You will only be insured for the value of the goods not what you hope to sell them for.
We hope this FAQ has been helpful, giving you insight to why Marine Cargo Insurance is extremely important. In future posts, we will be talking about specie, hull and ports and terminals insurance. If you have any further questions, please don’t hesitate to get in touch with our team of professionals:
Tel: +44 1279 818888