Insuring marine businesses and cargo

If you operate a marine business or regularly ship cargo overseas, you should consider purchasing ocean marine insurance. The following types of businesses are especially exposed to maritime risk and may need specialized marine coverage:

• Marine service providers—including shipyards, builders and repairers, dealers, terminal operators, stevedores and others.
• Marine transportation providers—operators of any type of water vessel.
• Businesses dependent on overseas shipping—such as commodities traders, freight forwarders, importers and exporters, manufacturers and others.

Types of coverage

Marine insurance is a broad category that includes several types of specific coverage. An insurance professional who specializes in marine insurance can walk you through potential risks and available insurance products. Key coverages include:

• Cargo insurance—covers product losses when products are being transported overseas or warehoused prior to or following overseas transport.
• Hull and machinery (H&M) insurance—coverage for damage to a vessel’s hull, machinery and equipment caused by collisions and other ocean perils.
• Marine liability insurance—broad business liability coverage for specific types of marine businesses, such as boat dealers, rental companies, shipbuilders, terminal operators and others.
• Marine pollution insurance—covering costs associated with pollution from fuel spills and other events. Some pollution coverage may be added to a general marine liability policy.
• Protection and indemnity (P&I) insurance—often offered in conjunction with marine hull insurance, this covers ship owners against liabilities for property damage and bodily injury.

Additionally, shipyards, terminals and other marine facilities often purchase specialized “bumbershoot” policies, which provide umbrella coverage for a range of risks, including liability, collision and salvage costs.

Recognizing coverage limitations

Marine insurance policies include limitations in coverage amounts and types of incidents covered. While certain events may not be covered by a standard policy, you may be able to supplement your policy with special riders or endorsements. Exclusions may include losses caused by:

• War or military action.
• Riots or other civil strife.
• Mold, mildew and dampness.
• General wear, tear and weathering.
• Marine life.

Bear in mind, too, that marine cargo insurance covers losses when products are transported overseas by ship or airplane. That coverage ends when products continue their journey overland by rail or truck. To continue coverage for ground transportation, you’ll need an inland marine policy. Some insurers also offer worldwide cargo policies that combine all forms of transit. Talk to your insurance professional about the best options for your business.

Note also that specific war risk insurance is available to both marine and aviation businesses. This type of policy covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction. The majority of ships are insured against piracy under their war risks coverage; however, stand-alone piracy coverage is also available. In some cases, the risk of piracy may be covered under a ship’s Hull and Machinery (H&M) policy.