Transporting cargo is one of the most critical businesses that operate without notice in people’s everyday lives. All the items available for purchase at the store or critical medications that hospitals rely on have to get there somehow, and sometimes, on-the-road trucking isn’t the best option. In these situations, ocean marine transport can fill important gaps in the industry. Ocean marine insurance covers essential parts of this industry.
However, with ocean travel comes significant risk, and it’s important for marine businesses to secure comprehensive insurance to protect themselves and their cargo. There are a number of different types of ocean marine insurance to choose from, so here’s what you need to know about the various coverages available and who is most affected.
Who Needs Ocean Marine Insurance
Ocean marine insurance covers any industry that relies on transport over the water, using ships and boats. Most commonly, this includes not only the transport companies themselves but also manufacturers, energy companies, construction businesses, the pharmaceutical industry, and even the food and beverage niche—all of whom commonly rely on shipments that travel via ocean.
Marine insurance can cover international travel, even if the boat does not make port but only crosses over country lines. Boats that do not venture beyond their domestic waters can also be insured with ocean marine coverage, but once the cargo begins its transport off the water, it will need to switch to inland insurance.
Marine insurance is not the same thing as boating insurance, which is purchased when individuals want to take their watercraft out for leisure in a marina.
The Different Types of Ocean Marine Insurance Coverage
Each voyage is unique, and the risks faced by marine transport should be individually addressed by insurance policies. These can include:
- Hull and machinery insurance (H&M) – This type of coverage offers protection against operational damage and damage to the hull during a voyage. These are incidents that impact whether the ship can continue to sail and make its deliveries on time.
- Protection and indemnity (P&I) – If a claim is made related to the crew, ownership of the ship or how it is hired, P&I insurance can help.
- Freight insurance – No one can prevent unpredictable things from happening, like a ship getting stuck in a canal or a port being unable to make space for arrival due to an emergency. If a freight ship may lose money as a result of lost cargo, should such an accident occur, freight insurance offers protection.
- Marine cargo insurance – Similar in some ways to freight insurance, marine cargo coverage protects the owner from cargo loss, but it also safeguards third-party elements (like damage to a marina that happens during docking).
These are just some of the most popular types of coverage that most marine companies will rely on. Ocean marine insurance covers a wide range of potential issues, so speak with the insurer to make sure your pain points are protected.
Policy Types and Variants
In addition to the numerous protections that ocean marine insurance covers, you will need to determine which type of policy best suits your business. Voyage or time policies will last for the duration of a voyage or a certain period of time (whereas a mixed policy can extend for both).
An open (unvalued) policy covers cargo, but only in retrospect. That is, the value of what is lost is determined once it is lost, not before. This is in contrast to a valued policy, where the value of the cargo is determined before any loss occurs.
The most common policy type is the floating policy, in which only claim value is indicated before a ship embarks. Other details are added later.
For companies that rely on a single ship, a single vessel policy is ideal; conversely, those with many vessels can benefit from a fleet policy. If a company is concerned about protecting its cargo from its sea voyage through its on-land transport and finally to delivery, a block policy offers this type of coverage across the sequential transportation options that the cargo will undergo.
Trust Your Marine Business to the Ocean Marine Professional Insurers
If you are considering the various types of insurance and are not yet sure what ocean marine insurance covers and which policies you may need, speak with an expert who works in the industry.
The professionals at Burton & Company can help your business to secure the ocean marine insurance coverage that is right for you so that you don’t face any unnecessary risks during your voyage.
Reach out to learn more about the insurance options that we offer as well as how we can help you identify the right policies for comprehensive protection.