A marine cargo insurance policy is tailored to provide protection against losses caused to cargo or goods transported on ships and other modes of water transport.
Products and goods damaged or lost while in transit can lead to significant expenses for you and your business. Thus, marine cargo insurance is essential for businesses, especially ones involved in international trade and transportation by sea.
The benefits of an ocean marine insurance policy include flexible coverage, prompt claim settlements, protection against financial losses, international coverage, compliance with regulations and peace of mind for business owners.
However, traders and shippers have several misconceptions about marine insurance. Continue reading to debunk these common misconceptions and avoid any confusion.
Common Misconceptions Related to Marine Cargo Insurance Coverage
Below are some common misconceptions about marine cargo policies that you should be aware of before buying marine cargo insurance online.
All Risks are Covered by Marine Cargo Insurance By Default
One of the most common misconceptions is that a marine cargo policy covers all risks.
A marine cargo policy does not necessarily offer coverage for all possible scenarios. While this policy provides a wide range of coverage against physical damage or loss, there are some exclusions.
These exclusions in marine insurance include losses caused by inherent market loss, delay, or vice and damages caused by being held at customs. As a shipper, you must understand these limitations to avoid surprises in the future.
Filing a Claim is Rarely Successful and Complicated in Marine Insurance
Several shippers believe that the claim process of marine cargo policy is rarely successful and very complicated. While the claim process in this policy can be detailed, it is tailored to ensure just and fair compensation for every policyholder.
For a smooth and fast claim process, you must ensure a complete understanding of the policy terms, timely loss notifications and proper documentation.
Ensuring these aspects makes the claim settlement process under a marine cargo insurance policy straightforward and easy.
Marine Cargo Insurance is Unnecessary for Small-Scale Shipments
Many shippers believe this policy insurance is not necessary for small shipments, as they consider them less prone to risks. This assumption can be risky for shippers. The shipment size usually never correlates with the potential loss or damage. Small shipments are just as vulnerable to environmental factors, theft or mishandling.
Fragile shipments, such as precious artwork or antiques, may be small in size but are susceptible to damage, theft, or loss in transit, requiring additional insurance coverage.
Therefore, irrespective of the shipment size, a marine cargo insurance policy offers shippers financial protection and peace of mind.
Marine Cargo Insurance Premiums are Very Expensive
The interpretation that purchasing marine cargo policy is not affordable is another major misconception. Marine cargo insurance is much more affordable than most shippers anticipate.
Its cost might differ depending on several factors, such as the shipping route, extent of coverage and the value of the cargo. Additionally, paying all the expenses of losses without marine cargo insurance can be more expensive than the insurance premium amount.
Marine Cargo Insurance Guarantees Financial Gain in Case of Loss
Some shippers believe that marine cargo insurance offers guaranteed financial profit in case of damage or loss. However, insurance is designed to compensate the policyholder and not to lead to a financial profit.
The compensation amount typically depends on the market value of the goods or their declared value, excluding any deductibles and subject to the terms and conditions of the policy.
Besides offering financial coverage, marine cargo insurance protects your business and helps maintain a good client relationship. As a shipper, you can be held responsible for loss or damage if you do not provide insurance to your customers.
To Wrap It Up
If you are involved in the logistics or shipping industry, you must have a complete and accurate understanding of ocean marine insurance policies. To recognise the true value of marine insurance, you must debunk misconceptions or myths about marine insurance.
You should consider purchasing marine insurance for liability protection, competitive advantage, customised coverage, peace of mind and protection against damage or loss. Before purchasing marine insurance, make sure to familiarise yourself with what is covered under the policy and what is not.
For example, online insurers like Tata AIG allow you to view policy documentation on their website. This will help you avoid any unexpected surprises in the future. Lastly, ensure that the marine insurance provider you choose is reliable and trusted.
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