Marine Cargo Insurance

Many things can happen during transit that could result in you losing money if you are not insured. For example, your haulier might be involved in an accident that destroys your goods, or your goods may be stolen. You can reduce the impact on your business of such events by taking out marine cargo cover.

Insurance is available for UK and European firms that import materials or stock from abroad, or that export goods overseas, whether you are a manufacturer, supplier, wholesaler, retailer or cargo agent.

Yes marine cargo and goods in transit insurance is available for individuals. You can arrange cover yourself for goods you are sending abroad, directly through an insurance broker. This is often more cost-effective than going through international movers and transport companies for your cargo insurance.

It is important to insurer your goods or materials for the right value. This is usually: cost + freight + 10% The limits on a cargo insurance policy are usually on a maximum amount per consignment basis.

The price of marine cargo insurance varies depending on individual circumstances. The premium is usually calculated on the amount of goods sent around the world annually and also takes into account geographical area, type of goods, limit per consignment, any previous claims/loss experience and market conditions.

Even if you use a professional freight forwarder or haulier, it's worth considering taking out your own marine cargo insurance because the haulier's insurance insures the haulier's legal liability rather than your cargo.

If you do decide to rely on the haulier's insurance, you should check the conditions of carriage to see if they are adequate for your needs.

If limits of liability are insufficient, you could request that they are increased. However even if the haulier removes any monetary limitations from the cover that they are offering, there would still be differences between this and a policy taken out by you, the cargo owner.

For example:

1. If the haulier is not negligent then their policy will probably not respond. For example, if there is a road traffic accident that is not the fault of the haulier or a Hi-Jack etc., then a haulier’s liability policy may not respond.

2.There may be specific exclusions within the haulier’s policy - unattended theft exclusion etc. If this is the case and the cargo is stolen when the vehicle is left unattended then you will not be able to claim against the haulier’s policy.

3. A haulier’s liability policy does not provide cover for any marine perils such as: General Average (see below), Jettison, Fire, Explosion, Vessel being grounded, capsized, sunk or containers falling overboard due to bad weather or any other peril when the goods are on the ‘high seas’.

General Average is an ancient legal principle of maritime law. Basically, if all or part of the cargo is lost or damaged in order to save a ship in an emergency, all the cargo owners have to contribute to the loss.

A classic example is that of a ship which runs aground in a storm and is threatened with the loss of the entire vessel and cargo unless the vessel can be re-floated. Costs incurred in attempts to re-float the vessel, which might mean throwing some of the containers overboard to lighten her or paying expenses to tow her off, would be shared proportionately by the vessel and cargo owners.

If General Average is declared, the owner of the vessel and every cargo owner  is responsible for loss or damage to all the cargo as well as the ship itself. The cargo will not be released until the cargo owners put up a cash bond or the cargo insurers put up a General Average guarantee. 

A General Average claim can be very expensive and take years to resolve. If you have marine cargo insurance,  your insurance company provides the guarantee and pays any contribution required for the loss.