The Ultimate Guide to Marine Cargo Insurance

Marine cargo insurance is an essential insurance for businesses which involves in shipping their goods out of their warehouse.

Goods-in-transit can pose significant risks especially when the title of these goods have not been transferred to the buyer.

In this article, we will share:

  • What is Marine Cargo Insurance?

  • Why is a need for Marine Cargo Insurance?

  • Considerations when purchasing marine cargo insurance

What is Marine Cargo Insurance?

Marine cargo insurance pays you for any unexpected damage of your cargo during transit. Although the name suggests the transit is by sea, the insurance usually covers goods transiting by air and land as well.

Marine cargo insurance is useful for any business which involves international trade. This includes:

  • Importers / Exporters

  • Logistic companies

  • Freight forwarders

  • Manufacturers who source goods or deliver goods internationally

Coverage of Marine Cargo Insurance

Most insurance covers the goods the moment it leaves the seller’s warehouse till the goods reach the buyer’s designated area. The insurable risk events include:

  • Theft and piracy

  • Natural disasters such as earthquake or volcanic eruption

  • Fire or explosion on the ship during transit

  • Vessel being stranded, grounded, sunk or capsized

  • Collision of vessel with an external object other than water

  • Fire or explosion on the port or during land delivery

  • Overturning or derailment of land conveyance during land delivery

  • Collision of delivery vehicles with an external object

However, like most insurance policies, a typical marine cargo insurance has the following exclusions:

  • Improper or inadequate packing

  • Failure to pay or collect your goods

  • Rejections by customs or other Governmental Authorities

  • Abandonment of cargo

Also, marine cargo insurance only covers physical loss or damage to the goods. The coverage does not extend to financial loss due to loss of market, reputation loss, or any other liability-related losses due to not receiving the goods on time.

If you are interested in insuring for these risks, you might want to check out our general liability insurance, which also covers product liability, public liability, professional indemnity, and more.

Why is a need for Marine Cargo Insurance?

You might be thinking:

Yes, I know what is marine cargo insurance all about. But do I need it?

Here are 3 reasons on why you marine cargo insurance is essential if you are exporting goods.

Frequency of Cargo Theft and Piracy

Pirate attacks and cargo thefts are more common than you think. Cargo theft is estimated to cost shippers US$30 billion a year in the United States. In 2013, JOC published an infographic on the statistics of cargo theft and piracy.


Southeast Asian and African regions have the highest number of piracy incidents, with Indonesia reported 106 piracy attacks.

Piracy may happen to your cargo, especially when you are shipping to/from these high-risk regions.

Limited Liability of the Carrier

To promote international trade, the international shipping law favors the carrier or the ship managers in any shipment.

Most carriers have limited liability when it comes to damages or loss of their client’s goods. Even then, they are also not privy to the value and nature of goods that their clients carry on their ships. Therefore, the carrier has damaged your goods, it will be difficult for you to claim your damages in full to the carrier.

Controlling Your Insurance Purchase Save You Hassle in Claiming

Even when your shipping carrier provides limited insurance for your goods, it might be troublesome for you to file for claims. This is because:

  • The carrier does not know the value and nature of your goods, and the insurance coverage may not be adequate

  • You will have to go through your carrier to file for insurance claims; and

  • You may not be aware of the languages or other regional requirements if the carrier is not in the same country as you.

For all of the above troubles, it will be better for you to have a stand alone insurance agent to advise you on your marine cargo insurance coverage and policy details

Case Study: Tianjin Port Explosion

In August 2015, there was a massive explosion at the port of Tianjin. It is estimated that the insurance claims for this explosion incident is at $6 billion. Beyond insurance, the cost of damage is at $9 billion. Imagine your goods is place in the port during the explosion? The consequences can be financially devastating.

A marine cargo insurance will be able to compensate for your loss if your goods are affected by the explosion. The insurer will also assist in you recovering your goods, otherwise they will pay you for the full sum insured first, which will help in your company’s cash flow.

Considerations when Purchasing Marine Cargo Insurance

Disclosing the nature of your goods

Before you purchase the insurance, be sure to disclose the nature of your goods. This is often the requirement when you are going to buy marine cargo insurance.

Reading the insurance policy conditions properly

As with other types of insurances, you should always read the terms and conditions of the policy before committing to the insurance.

You might want to pay more attention on the coverage of the insurance policy, particularly on whether is it an end-to-end coverage, or port-to-port coverage. A port-to-port coverage does not include events occur after the cargo reach the port, which includes accidents or hijack that happen during land transport.

Types of marine cargo insurance policies

There are 3 different types of marine cargo insurance policies available in the market. Single voyage, open cover or annual policy.

Single Voyage

Single voyage policy is the most common type of policy. It covers the cargo from one location to another location.

Open Cover

An open cover policy provides coverage for all cargo shipping that meets certain pre-specified conditions during the policy period. Usually, the rates, terms and conditions, and cover limits are pre-agreed. If you have frequent shipments, the open cover might be a good choice. Open cover policy will remain valid until it is cancelled by the insurance company or you.

Annual Cover

Similar to open cover policy, the annual cover offers coverage for all shipment that meets certain pre-specified conditions during the policy period. The difference is that the annual cover has an expiration date, which is usually 1 year after the policy commences.

If you have trouble deciding which type of policies is best suitable for your business, feel free to contact us for a free consultation.

Cost of Insurance

The cost of marine cargo insurance depends on the type of cargoes, origin and destination of the shipment, total turnover of your exports, and the types of packing. You may contact us for a free consultation and quotation for your shipment.

Reputable Insurance Company and Agent

This applies to all kind of insurance. Having a reputable insurance company and an agent will give you the assurance that your risks are being well-managed.

A well-qualified agent will also be able to advise on your coverage, specific to your situation and industry.


Marine cargo insurance is an important risk management device if you are shipping your goods internationally. This article gave you an understanding of the importance of marine cargo insurance, and what factors you have to consider before buying the insurance.

Do you want to manage the risk of your goods in transit? Please consider insuring your risk with Anthola’s marine cargo insurance. Contact us for a free consultation on your business. We love to speak to you!

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