The shipping industry is exposed to a lot of risks that can be quite costly: piracy, natural calamities, machine failures, and even human errors to name a few. Luckily, there are marine insurers that offer various types of insurance to cover ships and their cargo in case of any unfortunate event. There are many types of marine insurance, all of which pertain to different aspects of the shipping industry and its operations. Whether you are a shipowner offering logistics services or a client taking advantage of freight and logistics services, it is important to know the different types of marine insurance.
Hull Insurance
This covers the hull of a vessel, as well as any articles and furniture on it. This is often taken out by a shipowner to avoid loss due to mishaps and calamities.
Machinery Insurance
This covers the essential equipment on the ship, not just the vessel itself. Hull insurance and machinery insurance often come under one type of insurance called H&M insurance.
Protection and Indemnity (P&I) Insurance
This is offered by a P&I club. It covers risks that most traditional marine insurers don’t, such as third-party risks of damage, environmental risks (oil spills), and even war risks.
Freight, Demurrage and Defence (FD&D) Insurance
Also referred to as defence insurance, this covers everything else that is not covered by H&M and P&I insurance. It covers claims handling assistance and legal costs of defending or pursuing different types of disputes.
Cargo Insurance
This covers physical damage or loss of one’s goods when in transit. It is often taken out by the owner of cargo. Cargo insurance that is specified to cover the cargo only during its transportation in the ship is called marine cargo insurance. Depending on the terms of the insurance, the compensation can also cover delays as well as any damage or loss during unloading.
Freight Insurance
This covers the merchant vessel and helps the shipping company avoid losing money from accidents that would result in losing cargo. Thus, if a ship loses valuable cargo due to an accident, the freight insurance will cover the cost of the lost or damaged cargo instead of the shipping company.
Marine Liability Insurance
This covers compensation for any liabilities in the event of a ship crashing or colliding. Sometimes it is unavoidable that ships collide, which causes damage to them and the loss of cargo. Marine liability insurance covers the compensation for any damage or loss. This type of insurance is, simply put, an extended and marine version of your car insurance if ever another vehicle hits your car.
As a shipowner, it is important to know the different types of insurance that can protect you and your ships. As a supplier of goods or a client of a shipping company, it is important to know the kinds of insurance in place for your precious cargo. Make sure that you also read up on marine insurance policies to have a holistic idea on the insurance of your ship or cargo.
