Marine insurance is a critical component of the global economy, protecting those involved in shipping and maritime industries. From cargo ships and fishing vessels to yachts and pleasure crafts, marine insurance covers a wide range of vessels and operations. Whether you are a shipowner, a cargo owner, or a marine operator, understanding marine insurance is essential to managing risk and protecting your investments. In this article, we will explore the meaning of marine insurance, including what it is, what it covers and excludes and why it is important for anyone involved in maritime activities. So, if you are interested in learning more about this vital aspect of the shipping and maritime industries, read on!

Let’s start with the basics!

What is Marine Insurance?

Marine insurance policies are available to everyone who has an insurable interest as per Section 5 of the Marine Insurance Act 1906 (MIA). A marine policy covers loss or damage to cargo or goods during transportation from the point of origin to the point of destination. There are several types of marine insurance policies, including those for road, rail, air, and sea transportation, as well as those for courier and postal services.

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Fire, explosion, hijacks, accidents, collisions, and overturns are the most common causes of marine cargo loss during transit. In addition to covering theft, malicious damage, shortages, non-delivery of goods, damages during loading and unloading, and cargo mishandling, a marine insurance policy may offer specially curated plans. Coverage can be customized depending on business requirements, and it is available for a wide variety of cargo/goods, whether you trade or manufacture them.

Varieties of Marine Insurance Policies

Types of Marine Insurance in India

Before purchasing marine insurance, you should be informed of the various types available so that you can select the one that suits your needs the most. Different types of marine insurance are  as follows:

  1. Marine cargo insurance

Cargo owners face the danger of cargo mishandling at the terminal as well as during the ship's voyage. It is also possible that your cargo has been misplaced, damaged or lost.  Marine cargo insurance is offered in exchange for an adequate premium payment,  to safeguard the cargo owner from financial damages resulting from such incidents. It includes third-party liability insurance, which covers any damage caused by your cargo to the port, ship, railway track, other cargo, or individuals.

2. Hull & machinery insurance

Without masts, the hull is the main supporting structure on a vessel. Thus, hull insurance protects the insured in the event of a ship disaster. It is commonly used by ship owners. Along with hull insurance, machinery insurance should be purchased to cover the ship's machinery. It protects the insured against operational, mechanical, and electrical ship machinery damage. Because both portions cover the entire ship, the insurance provider issues it as Hull and Machinery Insurance.

3. Liability insurance

The ship could be involved in a collision, crash or piracy attack. In such cases, the valuable cargo is put at great risk. Furthermore, the lives of crew members and others on the ship are in jeopardy. The appropriate liability insurance protects the ship owner from any such obligations caused by situations beyond his control.

4. Freight insurance

This section addresses the loss of freight. If the goods are lost or damaged, or the ship is lost, the shipping business will not be held liable. This insurance can compensate them for their loss.

Why is Marine Insurance important for businesses?

Business items are the source of revenue for most businesses. Insuring them against any untoward incident while they are being transported helps secure the fortunes of your business. The importance of this policy cannot be overstated. Business shipments are typically high in value and any damage can impact the company directly. You are probably worried about plenty of things already if you are making a move for personal or professional reasons. Knowing that all your household items are safe means that you can breathe easy about this thing at least.

What is covered in Marine Insurance?

Some of the most prevalent areas covered by marine insurance are:

  • Total loss protection
  • Sinking, stranding, fire, and explosion
  • Earthquake or lightning strike
  • Unpredictable administrative costs
  • Cargo loss during loading or unloading
  • Dumping or washing overboard
  • Natural disasters
  • Accident, collision, overturning, derailment
  • Average in general

What all are not covered by Marine Insurance?

  • The insured committed a willful act.
  • Liquid leakage, normal weight loss or volume loss, or normal wear and tear of the insured item.
  • Packing is inadequate or unsuitable.
  • The subject matter insured has a vice or nature inherent in it.
  • Delay of goods
  • Owners, managers, charterers, or operators of the vessel defaulting on their financial obligations.
  • Unsuitability/unseaworthiness of the conveyance
Varieties of Marine Insurance Policies

Different  Types of Marine Insurance Policies –

  1. Specific voyage policy:  This policy caters to goods transported through inland transport.

2. Time Policy: Generally, a time policy covers a fixed period, such as a year.

3. Mix policy- Such a marine insurance policy extends insurance coverage for a specific voyage and for the chosen length of time. It allows clients the flexibility to handle numerous uncertainties associated with the movement of the ship and the cargo inside the ship.

4. Wager Policy: If the insurance company determines that the damage is worth the claim, reimbursements are provided; otherwise, there is no compensation offered. There are no fixed conditions for reimbursements in a wager policy. The wager policy is not a written insurance policy, so it is not valid in a court of law.

5. Duty Insurance: According to the Customs Act, cargo imported into India must be insured against Customs Duty. An insurance policy can include this duty in the value of the cargo insured, or it can be issued separately, with the Duty Insurance Clause incorporated into the policy.

6. Contingency policy: If the policyholder is not required to insure under the Terms of Sale or where the cover provided is more restrictive than that offered under this policy, this policy extends to cover the contingent financial interest of the policyholder.

7. Port Risk Policy: Marine insurance policies like this one are taken out to ensure the ship's safety while in port.

8. Single Vessel Policy: Small shipowners can use this policy if they have one ship, or if they have one ship in several fleets. It covers the risk of one vessel for the insured.

9. Fleet Policy: Several ships owned by one owner are covered under this policy.

10. Block Policy: Cargo owners are protected by this policy against damage or loss of cargo through all modes of transportation in which their cargo is transported, including rail, road, and sea.

11. Floating Policy:

The shipping line is issued a floating policy on a continuous basis. The only detail stated in the policy is the maximum sum insured. When the ship starts to sail, the insurance company is informed of all additional facts. This is the best approach for regular cargo owners who require frequent transportation of goods via shipping line, in order to save time and money.

12. Valued Policy: Valued marine insurance policies are the opposite of open marine insurance policies. The value of the cargo and consignment is determined in the policy document beforehand, so it is clear about the amount of reimbursement if there is a loss of cargo or consignment.

How does Marine Insurance Work?

A marine insurance policy transfers the liability of the goods from the parties and associated intermediaries to the insurance provider. The legal liability of those handling the goods is limited from the outset. To protect the exported goods against loss or damage, the exporter can purchase an insurance policy that covers the goods against any possible loss or damage.

If there is damage or loss to the goods while on board, the carrier may be held responsible, though most compensation is on a 'per package' or 'per consignment basis. In this case, the insurance coverage may not be sufficient to cover the cost of the goods shipped. For this reason, exporters prefer to ship their products after they have been insured by an insurance company.

Marine insurance is necessary to fulfil export contract obligations. To align with agreements such as Cost Insurance And Freight (CIF) or Carriage And Insurance Paid (CIP), the exporter must take marine insurance to protect their bank or buyer interests and fulfil their contractual obligations. The seller does not have to insure goods under Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP) terms, but in practice they generally do.


We hope from the discussion above, you have got a fair idea of marine insurance, what it includes, and other related topics. Click here to read about fire insurance.

Frequently Asked Questions

  1. What is the period of Marine Insurance?

A marine insurance policy covers the normal time taken for a transit, usually no more than one year.

2. How is the marine insurance policy premium charged?

The owner is responsible for paying the premiums well in advance so that the risk can be covered.

3. Is insurable interest mandatory in marine insurance policy?

Yes, it is required in all insurance policies including marine insurance. An insured person will be eligible for marine insurance if he has an insurable interest at the time of the loss.

Liability in Marine Insurance

Marine Insurance Elements