Marine Insurance
What is Marine Insurance?
Marine insurance is a contract where the insurer agrees to cover financial losses a business may face while transporting goods across sea, air, road, rail or inland waterways. It broadly includes cargo insurance (for goods in transit) and hull insurance (for damage to vessels, machinery, or equipment).
The marine insurance meaning also extends beyond just transit routes; it encompasses multimodal transport, tailored policies and legal compliance.
Policies are often aligned with international trade terms like CIF (Cost, Insurance and Freight), FOB (Free On Board), DDP (Delivered Duty Paid) and EXW (Ex Works), which define who bears the risk during different stages of transit. This makes marine insurance vital for risk mitigation and compliance.
In India, marine insurance is governed by the Marine Insurance Act, 1963 and regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
Features and Benefits of Marine Insurance
Marine insurance offers a critical layer of protection for businesses involved in transporting goods across domestic and international borders. Here are the key features of marine insurance:
Financial Protection Against Cargo Loss
Marine insurance provides compensation for the loss or damage of goods in transit, whether due to theft, natural calamities, collisions or accidents.
Trade Contract Compliance
International shipping contracts require insurance under terms likeCIF (Cost, Insurance and Freight) or CIP (Carriage and Insurance Paid To). Marine insurance ensures smooth compliance with such agreements.
Supports International Trade
As per the International Union of Marine Insurance (IUMI), marine insurance is intrinsically linked to global trade growth. It underpins cross-border transactions by reducing financial uncertainty and facilitating smoother logistics.
Customisable Coverage Options
Choose from all-risks or specific risks, single-transit or annual plans, get specific coverage for war or strike cover and tailor coverage based on cargo type, route and risk level.
Strengthens Business Reputation
Prompt claim settlements and reliable coverage help businesses maintain strong relationships with customers, suppliers, logistics partners and other stakeholders.
Supply Chain Resilience
Businesses can manage trade risks proactively, reduce capital lock-in and ensure continuity in global and domestic supply chains, further highlighting the importance of marine insurance in supporting long-term business sustainability.
Competitive Advantage
Freight forwarders, exporters, logistics providers and stakeholders with insured operations offer greater trust and reliability and thus improve their standing in the marketplace.
Is Marine Insurance Mandatory?
Marine cargo insurance is not legally mandatory in India for all cargo movements. However, it is strongly recommended, especially for businesses engaged in international trade or high-value shipments. Many exporters, importers and logistics partners opt for marine cargo insurance to protect against loss, damage or delays during transit by sea, air, road or rail.
Who Needs a Marine Insurance Policy?
- Ship owners
- business or individual
- Shipbuilders and repairers
- Port authorities and terminal operators
- Marine contractors
- Charterers