On march 21, as the world witnessed the dramatic wedging of “Ever Given” in the Suez Canal, attention focused on the risks associated with the shipping industry. The problem amplified when the world’s attention was drawn to the imprudent management of chassis, revealing how heavily the globalized world economies depend on the marine and shipping industry. According to a Wall Street Journal analysis, when a giant ship like Ever Given, stops at a port, it takes 3,000 people to get it unloaded and loaded again.
The transition and storage of large volume commodities comes with significant risk.
A marine cargo insurance is a property coverage which protects the cargo owner from monetary loss to their property during the transit. The coverage shields the cargo from external causes of loss from theft, water damage caused by humidity, rogue waves, fire caused by combustion of neighbouring cargo, etc that occur during the transition.
Why is marine cargo insurance important?
The maritime industry is responsible for more than one-fourth of the total GDP and handles more than 40%of all cargo shipped to the US.Cargo insurance is an essential way of preserving financial interest. Unless the cargo owner has an insurance, no or little reimbursement could be provided for the external damage. For instance, airlines and steamship lines are not responsible for losses that are unforeseeable or beyond their control. But, there are certain exceptions when the insurance cannot cover are:
- Lightning or a hurricane
- Starnding , sinking or collision
- Inherent damages to the commodity- rust, rot, etc
- Fire ( caused by unnatural circumstances)
A marine cargo insurance provides coverage from pick-up location to the delivery location. It compensates shippers for the full invoice value of cargo lost or damaged plus freight and other associated costs. Under a cargo insurance, it also pays whether the loss incurred has been due to transporter’s or provider’s negligence. Freight insurance solves the quandary of losing money due to unprecedented events or occurring. It offers protection to the merchant vessels corporation in the form of freight if the ship meets with an accident.
The party responsible for insuring the cargo is determined by the sales contract.