Everything you need to know about marine insurance

Marine Insurance Overview - Visual representation complementing the blog post, summarizing key information about marine insurance.

“Prepare an umbrella before it rains”Malay

Almost every international business works with this principle. Since proper planning and intervention help them to mitigate the risks associated with overseas cargo.

When it comes to supply chain and logistics, the slightest lapse can lead to a significant threat. At any point in international trade, these risks can damage your precious cargo at any time. So, you require a marine insurance policy to avert these risks. This is because marine insurance policy covers most types of cargo, with greater ease of buying and processing it.

What is Marine Insurance?

Marine insurance is a contract of indemnity that covers loss or damage to ships and cargo in transit from one point to another through various transit modes like rail, road, sea, air and courier. It covers

  • Damage to the ship
  • Damage to hull and machinery
  • Any loss to the cargo during the actual shipment

Though the name indicates that the policy covers the transit of goods only by waterways, it is not so. Marine cargo insurance encompasses all forms of transit of goods – By Road, Railways, Water and Air. Goods, whilst in transit, are liable to loss or damage through various stages. Marine cargo insurance intends to protect the insured against the risk of loss or damage to goods in transit. It is also popularly known as transit insurance.

Why is Marine Insurance Policy Important?

The shipping industry has gone through a different set of challenges over the years, and many more will come in the future. The growing risk of piracy, rising costs, accidents, collisions due to human error, and damage to stock during the loading or unloading cargo is all too common. This is where a marine insurance policy comes to the rescue. Marine insurance accepts the liability of billions of dollars’ worth of goods when the shipment leaves the warehouse and builds redundancy into the distribution networks. Different policies are available to provide coverage according to the requirements of the business.

Let us understand the importance with an example. ABC Ltd. is in the sports merchandise business and is based in Mumbai. They have been exporting to other countries via sea. Last year, a consignment work of Rs.50 lakhs was lost due to a cyclone. ABC Ltd. could not handle the loss since they had to send a new consignment to the customer. At this time, they could have claimed the loss against the marine insurance policy and avoided significant losses to the business if they had purchased marine insurance.

Marine Insurance and its Types

  • Open Policy:
  • It is difficult to insure individual transactions for large commercial firms and establishments with huge trade volumes. Open policies provide automatic and continuous protection to all consignments of such insured. Open policies are typically issued for a year. If they are fully declared before that time, a fresh policy may be issued or an endorsement placed on the original policy for the additional amount. On the other hand, if the policy has run its normal period and is cancelled, a proportionate premium on the unutilised balance is refunded to the insured if the full premium has been collected earlier. The Open policy will not operate upon the expiry of the policy period or on exhaustion of the sum insured, whichever is earlier. Hence, the insured should take care that the sum insured is enhanced by an additional premium in case it can be exhausted before the policy expires.

    Features of Open Cover - Import and Export

    A marine cargo open cover is an agreement between a merchant and an insurance company to insure all goods in transit within the agreement for a definite period.

    • An Agreement with the insured is made for a specific period, generally 12 months.
    • Rates, Terms & Conditions are agreed to in advance by both parties.
    • Funds are remitted in advance for the projected exports and imports to be covered.
    • Details of all shipments without any exceptions to be exported or imported should be declared by the insured.
    • Certificate would be issued against each declaration by the insurer or the insured through the online portal on a periodic basis as agreed with the insurance company.
    • Agreement ceases on the expiry of the period or when the sum insured gets exhausted, whichever occurs first.
  • Specific Policy:
  • Specific policy is valid for a single transit only. The policy is usually issued before the voyage begins. The coverage will be as soon as the voyage ends. The specific voyage policy must show complete details of the risks covered. It should contain particulars of conveyance, vessel name, bill of lading, airway bill, consignment details, sum insured terms and conditions of cover, voyage, cargo description and many more.


    • Covers only particular consignment
    • Insurance on case-to-case basis
    • To be arranged before the commencement of transit, or can be issued on backdated basis with underwriting approval
    • Particulars of dispatch to be furnished at the time of buying the specific policy

Coverage Description

All Risk

Basic Risk


Breakage of Bridges

Collision with or by the carrying vehicle

Overturning of carrying vehicle

Derailment or accident or like to carrying vehicle/railway wagon

Non delivery of entire consignment or packets

Theft, Pilferage

Fresh and Rain water damage

Damage by hooks, nails, oil, mud, acids and other extraneous substances

Any other risk not specifically excluded under the policy

What does a Marine Insurance Policy not cover?

    • Wilful misconduct
    • Ordinary leakage, wear & tear, weight & volume
    • Insufficiency or unsuitability of packing, inherent vice, delay
    • Insolvency or financial default of carrier
    • Use of any weapon of war employing, atomic or nuclear fission, unseaworthiness / unfitness

Why choose DgNote for your Marine Insurance needs?

DgNote is a global technology company empowering its customers to optimize the supply chain by offering cost-efficient and customer-centric solutions. We provide contextual commercial InsurTech solutions for the logistics industry, including marine insurance, warehouse insurance, credit insurance, liability insurance, etc., and FinTech solutions, such as supply chain finance, bill discounting, dynamic discounting, and many more.

    DgNote creates value for our clients by leveraging deep tech and providing its customers with smart and easy-to-use office solutions. Our culture of innovation, excellence, and teamwork is the key to delivering cutting-edge solutions.

    In summary, we aspire to transform the way businesses interact with each other and invite you to be a part of this exciting journey!

    Don’t leave anything to chance.

    Protect your business with DgNote tech platform.

    For more information contact us at sales@dgnote.com or +91-90040 54921.

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