The Significance of Marine Cargo Insurance for Your Export Operations
According to a press release of the Ministry of Commerce and Industry, during 2022-2023, India’s merchandise exports reached a new high, totalling $447.46 billion. This is one of the tremendous achievements of our country.
While this achievement is undoubtedly commendable, it raises a fundamental question: how can exporters safeguard their cargo during transit?
If you are involved in the export business, the answer lies in marine cargo insurance. So, what exactly is the marine cargo policy, and what is its significance for your export operation? To know this, keep reading this article.
What is Marine Insurance for Export Cargo?
As the name suggests, marine cargo insurance is designed to cover goods and merchandise. It means that insurance companies like Tata AIG will ensure your cargo is transported by sea, air or land without any loss or damage that might occur due to various reasons such as bad weather, accidents, theft or more.
So, let us look at the standard inclusion and exclusion of ocean marine insurance policies for cargo.
- Common inclusions include:
- Loss or damage due to accidents, such as vessel sinking or collisions.
- Damage caused by fire, explosions, or natural disasters like storms.
- Theft, pilferage, or non-delivery of cargo.
- General average and salvage charges incurred during emergencies.
- Coverage for acts of war and strikes, subject to policy terms.
- Protection against risks during land transportation to/from ports (inland transit).
- Tailored options like “All Risks” coverage for comprehensive protection.
- Common exclusions include:
- Willful misconduct or negligence by the insured or their employees.
- Inherent vice or nature of the cargo, like perishability or fragility.
- Losses due to inadequate packaging or improper handling by the insured.
- Delay, loss of market, or loss of profits resulting from shipping delays.
- War and related risks in high-risk areas (may be offered as separate coverage).
- Nuclear incidents, contamination, and radioactive materials.
- Illegal or prohibited goods under international or local laws.
- Damage caused by insufficiency of packing materials.
- Ordinary wear and tear or gradual deterioration.
- Unapproved deviations from the intended route or voyage.
Significance of Marine Cargo Insurance Policy For Your Export Operation
1. Provides Coverage Against Transportation Damage
Marine cargo insurance coverage protects your goods and merchandise from the various risks that might arise when you embark on your journey from sea, air or land. This insurance will ensure that your goods will be transported smoothly to their destination.
So, with this insurance, you will stay worry-free, as any damage during the transition due to the reasons specified in your insurance policy will be covered. It is what also reduces the financial burden from your shoulders.
2. Helps to Mitigate the Cargo Export’s Risks
When it comes to exporting goods, you come across various inherent dangers such as piracy, natural disasters and accidents. However, as a business owner or exporter, managing these risks is essential.
So, here again, marine cargo insurance comes forward and plays a critical role in risk management by transferring some of the risks to an insurance provider. It is how the exporters can minimise the financial impact in case of any loss or damage.
Remember, it is the most important aspect to consider when you are a user to transport delicate goods.
3. Fulfils The Legal Requirement of International Trade
Before exporting the goods, it is essential to fulfil all their legal formalities, requirements and compliances.
However, one critical aspect of international trade is the requirement for marine cargo insurance, as certain countries and shipping regulations make it mandatory to have this insurance in place.
Thus, it becomes crucial to comply with these requirements to ensure lawful shipment of goods across borders. However, failing to have the necessary insurance can lead to penalties and legal complications.
4. Provides Peace of Mind to Export Business Operators
Having marine cargo insurance offers peace of mind to business owners and their organisations. Exporters can feel secure knowing that their goods are protected.
Moreover, this peace of mind allows them to focus on their core business activities and other productive activities without worrying about the financial consequences of shipping goods.
Moreover, it enables businesses to operate confidently, knowing they have taken the steps to manage risks.
Marine cargo insurance plays an essential role in the export operation. It not only reduces the financial risk but also saves you from legal complications.
So, buy the carry insurance with adequate coverage limits before initiating the journey of your goods and merchandise from one country to another country. Invest right and stay worry-free.