It’s challenging enough keeping everything safe on land, right? Now, thanks to the human race’s desire to expand, explore and experience, we travel across the globe.
Needless to say the risks that accompany your assets on open water are much more intimidating than on land. Winds howling outside your building don’t always fill you with fear—you’re inside a solid structure. But winds during a sea voyage can wreak havoc, resulting in damage, safety concerns and even disasters.
What is modern society’s answer to this challenge? Enter marine insurance.
It seems simple enough and of course it’s necessary when you’re shipping merchandise between ports. But the industry is much more intricate than you think, and many people don’t realize it pertains to them too.
Are you sure you shouldn’t have this checklist jotted down in your diary? A few basic facts will help you get the right cover in future.
Marine Insurance Basics
If you’re getting this coverage for your assets, it’s insurance for goods traveling between two ports. Note that it’s not only while in transit, but the times of storage too.
The scope of marine insurance makes it the ideal solution if you need to protect your assets wrapped up in:
- Container terminals
- Oil platforms
Is this a recent innovation? Not at all. Marine insurance history goes back as far as the fourteenth century. You can imagine it was vital in that age. Your cargo would have been subjected to unique dangers that included pirates and the weather. These factors determined the variable risks, making for an interesting age in insurance.
Without the tech driven intel, you can use today, it was extremely risky to plan a journey.
Brave souls persevered in their journeys and the insurance industry developed over the years. The first official marine insurance market was Lloyd’s Coffee House in London, established in the 1600s.
Today you’ll go online to get the latest news about marine news, but back then everything was shared in these institutions. It was also there that deals were made about underwriting new ventures.
Now, it’s much more regulated. While open water is still a danger that will always win the fight of brute force, you may feel slightly more secure in your investment after garnering the right insurance policy.
Do You Know About Special Policies?
But what is the right policy?
To ensure others don’t swindle you it’s valuable to take note of these unique policies:
- Newbuilding risks: If your concern is your ship itself, marine insurance must be in place even before your first journey. With this clause you get cover for the hull during its construction phase.
- Yacht insurance: This relates to pleasure crafts, but we’ll share about this below.
- War risks: You need this type of coverage if you want your assets (ship or cargo) covered as it travels through confirmed war zones. Note that normal coverage does NOT cover this scenario.
- Clauses for cargo insurance: Cargo gets coverage based on three different clauses (A, B and C). A-type coverage will provide you with the most coverage. Before you sign, check what your contract states.
As you can see marine insurance can give you peace of mind even before and after your valuable assets set out to sea. Make sure you have it in place, instead of regretting not planning ahead well enough.
It’s More Applicable to Your Life than You Think
Do you dream of owning that dream yacht and setting out towards the sunset?
Many may not realize an important part of your budget should go towards marine insurance for pleasure craft. On most of these items you will need liability coverage and also ask your broker about the lineslip basis. This applies specifically to underwriting small vessels.
One Insurance Covers it All
As mentioned above, marine insurance doesn’t stop at the water’s edge. Of course cargo and even ships don’t only travel over water. Much time is spent in harbors, in maintenance areas, in storage and many more places on shore.
Luckily you don’t have to concern yourself with finding insurance solutions for each of these scenarios. Marine insurance is flexible enough to incorporate all kinds of environments, which makes brokering at least a bit more manageable:
- Exposed property on shore or off shore
- Terminals where your assets are kept in containers before or after being shipped
- Oil rigs’ platforms in the middle of the sea
- Pipelines running under water
- The ships themselves as well as cargo inside
If you have a ship, merchandise or assets you plan on sending on a long journey that includes being on the water, start by requesting marine insurance quotes. You may just get all you need from one vendor, whereas other insurance brokers may not be able to provide marine insurance as an add on.
Understand Technical Jargon
When you talk to these brokers it can be confusing and you need to prevent them swindling you into paying more than you have to.
Understanding a few technical terms may help you make sense of contracts and discussions:
- IV (Increased Value): This is for ship owners who desire cover if there’s a difference between market and market value, relating to the vessel itself.
- Indemnity: You’re only allowed compensation to the value of what you lost, you can’t make profit on the asset or cargo.
- Abandonment: If you abandon your cargo after it’s damaged and you’re paid your insured amount, your insurer owns the cargo. If the entity manages to sell it, even for more than its original value, the income goes to the insurer, not the originally insured.