Most of world trade is sea trade done through ships of different kinds. All types of goods and materials are transported through ships – it can be coal, oil, iron ore, machinery, electronics, chemicals, textiles, cars, etc.
Shipping insurance is one of the oldest types of insurances and it provides protection against the damage or loss of ships, terminals, cargo and other goods of transportation by ship. Shipping insurance cover is either provided for the buyer/shipper of shipments or the ship owner.
There is a specific split between the shipment and ship where coverage for shipments is called as cargo insurance and coverage for ship is called as hull insurance policy. Before shipping the insured shipments, insurance holders must pack all the belongings properly so that they can withstand the severity involved in shipping methodology. Insurance companies always look for proper documentation as well as enlistment of all the shipment contents. This is also recommended to take the pictures of the package for ensuring its maintained condition.
Benefits of Shipping Insurance
Shipping insurance brings a peace of mind to the insurance holders where their maximum fiscal loss is dependent upon the amount of deductible. This insurance provides benefits like asset protection, claim controls, general average guarantee, local presentation and cost effectiveness. There are other features like customization of pricing plus coverage in addition to continuous and automatic coverage.
However, shipping insurance is complex for understanding due to the worldwide nature of this industry but it is definitely indispensable for large shipments. There is a variation in international terms and conditions but following are some of the general coverage aspects for this insurance:-
Shipment Coverage
Shipment without insurance can lead to a big financial loss if it gets damaged or lost during transportation. This insurance policy is complicated and lengthy in processing along with the carrier liability limitations of the international law but nothing can be as better as safe delivery of the shipment to the desired destination.
Accident Coverage
There is no specific list of accidents associated in a shipping insurance policy. This insurance covers all types of dangers or accidents regardless of the loss cause. General perils included in this policy are theft, temperature variations and hijacking. Transportation mistakes like vessel sinking, inappropriate handling, saltwater exposure and rain are also included in this policy. There can be other loss causes which can be laid down as per the requirement.
Location-Based Coverage
Shipping insurance covers the shipments during their transit on the vessel. Apart from this, damage or loss can happen to the goods when the vessel is anchored on the port. Moreover, there are chances of mishaps to the goods during their road transportation to the warehouse and at the warehouse also. This insurance covers all these damages related to the transportation from the beginning to the ending of the journey. Some insurance companies offer these plans in a single plan whereas others can provide these plans individually. Therefore, insurance holder should make a deeply thought choice before purchasing the insurance policy.
Types of Shipping Insurance
There are several types of shipping insurance which are feasible as per the requirement of the person. Out of all, there are four major types of shipping insurance which are:-
Cargo Insurance : This insurance covers the vessel’s cargo as well as the belongings of the other voyagers on board. Under this policy, insurance holder can only claim for the goods on the vessel.
Freight Insurance : This insurance provides coverage to various merchant ships corporations which have a chance to lose money in terms of freight after losing cargo due to accident.
Hull Insurance : This insurance covers vessel’s hull as well as torso along with all other furniture pieces and articles on the ship. This insurance policy is pertaining to the ship owner if ship comes across any perils during its voyage.
Liability Insurance : Liability insurance is applicable when compensation is supposed to be provided to the third party due to ship collision or crash. This insurance also covers liability related to other induced attacks.
Apart from these insurances, there are various other insurance plans which are provided as per the flexibility of the customers. These policies include:-
- Time policy
- Voyage policy
- Mixed policy
- Valued policy
- Open or unvalued policy
- Wager policy
- Floating policy
- Port risk policy
Various Shipping Insurance Providers
There are many shipping insurance providers which are offering customer-oriented plans. These companies include:-
World Cargo Insurance
Located in Tarzana, California; World Cargo Insurance offers different types of shipping insurances. Their specific insurance plans consist of All Risk Insurance, Basic Risk Insurance and Total Loss Insurance. In All Risk Insurance, World Cargo Insurance covers total or partial loss or damage to the cargo along with other covers for loading plus unloading, riots, war, theft, strikes and non-deliverance of the shipment.
Basic Risk Insurance and Total Loss Insurance provide coverage against following mishaps:-
- Accident to transport vehicle
- Collision
- Cyclones
- Derailment
- Dock collapse
- Earthquakes
- Fire
- Floods
- Hurricanes
- Jettison
- Lightening
- Non-deliverance or theft
- Sinking
- Sprinkler leakage
- Stranding
Basic Risk Insurance covers only partial losses whereas Total Loss Insurance covers complete loss.
Trade Risk Guarantee (TRG) Marine
TRG Marine offers marine cargo insurance, customs bonds and other trade-oriented products to companies. Founded in 1991, TRG Marine has A+ rating by Better Business Bureau. Typical TRG marine insurance policies require minimum deposit with yearly adjustment where lowest premium amount should be $1550. There is no need for monthly reports and insurance is applicable for cargo insurance from one warehouse to another. There is no additional charge for duty and war coverage.
TRG Marine offers four types of coverage plans which are All-Risk, Named Perils, Shipment-by-shipment and C+I+F. In All-Risk cargo insurance, all the voyage perils leading to physical damages or losses are covered. Though, Named Perils policy covers sinking, burning, stranding, fire, collision, crash, lightening and heavy weather but there is no specific coverage against theft.
Shipment-by-shipment policy covers all the cargos-related damages or loss except certain factors such as:-
- Natural calamities
- Dormant defects in machinery or hull
- Vessel problems
- Wars
- Negligence or criminal acts by the captain or crew