What is marine insurance?
The definition of marine insurance refers to the insurance of goods shipped from the country of origin to the country of destination. The term originates from the fact that goods destined for international trade were traditionally transported by sea. Despite what the name suggests, marine insurance applies to all modes of freight transport. When the goods are shipped by air, your insurance is also known as ocean freight insurance.
Insurance is often mandatory in many commercial export contracts. It may be the obligation of the exporter or importer to pay the cost of insurance on the shipment, depending on the terms of the contract. However, the need for insurance goes beyond contractual obligations, and there are many valid arguments for purchasing it before making an export shipment.
Insurance is often mandatory in many commercial export contracts. It may be the obligation of the exporter or importer to pay the cost of insurance on the shipment, depending on the terms of the contract. However, the need for insurance goes beyond contractual obligations, and there are many valid arguments for purchasing it before making an export shipment.
Cargo must be insured for transit by one of the following three parties:
- shipping agent
- Source
- importer
How does marine insurance work?
Marine insurance transfers the responsibility of cargo from the parties and intermediaries involved to the insurance company. Legal liability is limited to intermediaries who initially handle the merchandise. The exporter, instead of assuming sole responsibility for the merchandise, can contract an insurance policy and have coverage of the exported merchandise against any potential loss or damage.
The carrier, be it the airline or the shipping company, may be liable for damage and loss of cargo while on board the ship. However, the agreed compensation is usually "per package" or "per shipment". The coverage provided may not be sufficient to cover the cost of the goods shipped. Therefore, exporters prefer to ship their products after insuring them with an insurance company.
Marine insurance is necessary to comply with contractual export obligations. To comply with agreements such as Cost of Insurance and Freight (CIF) or Transport and Insurance Paid (CIP), the exporter needs to obtain marine insurance to protect the interests of the buyer or the bank and fulfill the contractual obligation. Similarly, in the case of the terms Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP), the seller may not be required to insure the merchandise, although it generally does so.
To avoid insurance claims, make sure of the following:
The carrier, be it the airline or the shipping company, may be liable for damage and loss of cargo while on board the ship. However, the agreed compensation is usually "per package" or "per shipment". The coverage provided may not be sufficient to cover the cost of the goods shipped. Therefore, exporters prefer to ship their products after insuring them with an insurance company.
Marine insurance is necessary to comply with contractual export obligations. To comply with agreements such as Cost of Insurance and Freight (CIF) or Transport and Insurance Paid (CIP), the exporter needs to obtain marine insurance to protect the interests of the buyer or the bank and fulfill the contractual obligation. Similarly, in the case of the terms Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP), the seller may not be required to insure the merchandise, although it generally does so.
To avoid insurance claims, make sure of the following:
- The goods will be packed with safety in mind during loading and unloading.
- The packaging must be good enough to resist natural hazards as much as possible.
- Take into account the possibility of tampering or theft when packing the merchandise.
Types of marine insurance:
- Shipping and insurance
- Liability insurance
- Helmet lock
- Sea freight insurance
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