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5 Reasons Why You Need a Marine Insurance Policy

Posted on 19 Jun, 2023

Maritime activities may involve a wide category of risks that need to be mitigated from the very beginning to ensure safer transits. Marine insurance comes by insuring the uncertainties associated with the specific maritime activities. The criticality of this type of insurance is constant across all types of sea journeys, be it a small barge or large-scale international shipping operations.

So, if you are into the shipping industry, then here in this article, you will explore five key reasons why obtaining marine insurance is vital for you.

Need of Marine insurance policy

Reasons Why Marine Insurance Policy is Important:

Protection against Loss or Damage

Every new endeavour undertaken across the seas or oceans is associated with some or the other unpredictable dangers or risks like storms, collisions, piracy or accidents, all of which could lead to the loss or damage of the vessel or cargo, leading to serious financial implications. A marine insurance policy can help you cover losses to the cargo that occur due to such unexpected circumstances. Marine insurance offers financial protection in case of events leading to damage to the cargo. Other types of risks that marine insurance may cover include theft, sinking, natural disasters or fire. Having a marine insurance policy in place can help build a strong financial foundation, upon which you can resume operations within a short period of time if any unfortunate incident occurs.

Protection under General Average Losses

According to the law of General Average, all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. The purpose of this law is to ensure that a party who has suffered some extraordinary expenditure or loss in order to save property belonging to others has the right of compensation for its loss from all parties that benefitted from that voyage. Since there is no effective way to determine beforehand which pieces of cargo will be jettisoned or sacrificed if trouble on the high seas occurs, and there is no way to guess when and/or where that trouble might arise, the risk is spread among all the owners of the cargo and the owner of the vessel.

Some examples of situations that can result in the declaration of GA are:

  • A Fire onboard the Ship

  • Mechanical Engine Failure

  • The Ship Running Aground

  • A Case of Piracy or Ransom of the Ship

  • Getting Caught in a Storm that Forces the Ship to Find an Unplanned Safe Harbour

As you can see all of these example situations are unpredictable and can happen to any crew despite their level of experience on the sea. If you are shipping goods via an ocean vessel, you are a party in that sea venture and are, therefore, at risk of a General Average claim. Once a ship captain declares GA, all parties become part of the claim process.

Cargo Protection

Protecting your cargo should always be a priority for maritime businesses that are involved in international trade or shipping. A marine insurance policy offers financial coverage for the goods that are being transported through the vessel. The policy may cover various risks including thefts, loss, damage or non-delivery of cargo. Cargo generally has to pass through multiple ports before arriving at the final destination, which is why, protecting your valuable cargo is extremely critical. Apart from international shipments, marine insurance also helps in safeguarding goods that are transported domestically through the seas, coast-to-coast. When you have covered all the possible risks involved with your cargo, you can also take more strategic decisions for expanding your business to new territories.

Compliance with Legal and Contractual Requirements

Marine insurance is also a prerequisite for undertaking any kind of legal agreement or being part of contractual partnerships. Having marine insurance greatly helps in boosting the trust of your business partners, as they would rest assured that all the risks have been managed before entering into any kind of partnership. Be it charter protocols or international regulations, if you are in the maritime industry, then having sound marine insurance is important to ensure that there is transparency and smooth paperwork when it comes to legalities or government policies. It also greatly helps in building stronger relationships with clients, regulatory authorities and suppliers.

Peace of Mind and Business Continuity

When you have coverage, you can relax and enjoy complete peace of mind while confidently executing your new business strategies. Once you have considered all the risks and liabilities, you are free to focus on aspects that will drive your business further. It also gives you the courage to bounce back strongly after any unforeseen events while transporting your cargo across the seas or while engaging in any other kind of maritime activity.

Marine insurance also provides liability coverage while protecting important assets such as vessels or cargo. It is a very vital aspect of any risk management strategy that also contributes to legal and contractual aspects of the maritime business. It also helps greatly in managing investments better, apart from maintaining the reputation of the company and ensuring smooth operations. Choosing the right marine insurance can be a big difference as all policies have different claim processes and cycles. Having financial support in times of emergencies is very important to bear heavy losses.

Understanding and being aware of the various types of risks involved in the industry is important for any kind of business. Analyse them through different lenses and perspectives according to the processes and business model of your shipping company. By doing this, you will be in a better position to make a more informed decision when it comes to choosing marine insurance for your business. By mitigating the possible risks, you can focus more on growing your business further, rather than worrying about the future.

At ICICI Lombard, our team of experts will help you in safeguarding your maritime business against any kind of financial losses

It is always advisable to invest in a marine insurance policy so that you don’t have to bear any unexpected losses that may occur during the journey. This holds true for businessmen or individuals involved in maritime activities such as boat owners, and cargo shippers. Marine insurance acts like a shield that protects maritime businesses from various risks, while protecting your assets, complying with legal obligations, and ensuring the smooth continuity of your business. Taking proactive action is very important for avoiding or minimising the occurrence of any crisis. Speak to our experts today to know more about our Marine Insurance policies.

  • Marine Insurance
  • Product Code: 2005
  • Product UIN: IRDAN115P0011V01200102

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This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Workman Compensation, 4010 , IRDAN115P0010V01200607)