How Ocean Marine Insurance Protects Your Business

What is Ocean Marine Insurance?

Ocean marine insurance is a variety of coverages designed to protect your ship, cargo, passengers, and crew while traveling around the world. Marine insurance provides coverage for the loss of or damage of ships, ocean cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

Ocean marine can also extend to land and air travel if it is an extension of your shipment. Ocean marine coverage is necessary for anyone working in international manufacturing and distribution.

Who Needs Ocean Marine Insurance Coverage?

Anyone who transports goods via ocean (importers/exporters, fisherman, charters, etc.) should obtain coverage. Shoreside operators should also consider this policy, including but not limited to ship repairers, contractors, stevedores, wharfingers, and terminal operators.

Ocean marine insurance policies can include businesses who own:

• Container Ships
• Yachts
• Barges
• Fishing boats
• Ferries
• Tugboats
• Tankers
• Sailing Charters
• Oceanic Research Vessels
• Cargo Vessels
• RoRo Vessels
• Barges

Why Do You Need Ocean Marine Insurance?

Anyone who transports goods on open waters knows that you face many risks.

Example #1: A shipping vessel traveling the Atlantic tries to skirt a hurricane—and ends up in the middle of the dangerous storm. Dangerously high waves sweep a few of the shipping containers from the ship—losing all of the products in them. The cargo operator can file a claim with the insurance company that provides their ocean cargo insurance to cover the losses that occur. 

Example #2: Your ship is caught in a storm and you lose radio signal. You collide with another vessel, causing severe damage to both hulls. The hull coverage that’s included in your ocean marine policy will cover the damage to both vessels.

Example #3: Some of your employees are injured by falling cargo. The marine general liability portion of your policy will help pay to cover the medical expenses for their injuries. 

The bottom line is obtaining adequate insurance protection for your business.

What Do Ocean Marine Policies Cover?

Most ocean marine insurance policies commonly include hull coverage, cargo coverage, freight coverage, and legal liability insurance. Each protects your business from different risks.

Hull Insurance

Hull insurance (or the more inclusive hull and machinery insurance) is similar to collision coverage in a car insurance policy. A hull policy usually protects the vessel, permanently attached machinery, and any propulsion equipment from physical damage. The coverage also extends to property damage to a third party if there is a collision at sea. Aside from physical damage from a collision, it usually covers damage from fire, weather events, sinking/capsizing, piracy, barratry, or jettisoning. Normal wear and tear is not covered under this policy. There are sometimes two different types of policies: blue water hull and brown water hull.

• Blue water hull refers to coverage for ships that sail on large bodies of water.
• Brown water hull covers damage that occurs while boats are traveling on inland waters close to shore.

Hull and machinery insurance protects the actual assets of your business: Your boat.

Marine Cargo Insurance

Marine cargo insurance—or ocean cargo insurance—provides coverage for legally transported goods on your vessel in both foreign or domestic waters. Coverage begins from the moment goods are loaded onto your ship and delivered to their final destination. Some insurance companies allow you to tailor your ocean cargo coverage to include protection for your goods when:

• Stored in a warehouse: This includes expected storage or an unexpected delay.
• There is concealed damage to goods: This is damage that may not be apparent upon delivery but is discovered once goods are fully inspected.

This policy usually includes coverage for loss of revenue due to the damage of goods or delay in arrival. Freight coverage is similar in that it protects the vessel owners in the case the cargo becomes damaged or lost in transit.

Marine General Liability Insurance

Ocean marine liability insurance is also referred to as protection and indemnity coverage. Protection and indemnity coverage indemnifies the owner of the ship against legal liability arising from bodily injury or property damage to those other than the owner of the vessel. This liability coverage includes illness, injury, or the death of crew and passengers. It can also cover liability claims arising from collisions, cleanup and removal of a wreck, and oil spills or pollution. It's similar to a general liability policy for business owners.

What is Excluded from Ocean Marine Insurance?

There are some exclusions from ocean marine coverage that you need to be mindful of:

• Passenger Ships: Ships such as ferries and cruise lines aren’t covered by ocean marine. 
• Cargo not transported over water: This does vary depending on the insurance policy, but some stop coverage as soon as a transfer is made from sea to land.
• Temporary Storage is not covered unless specified by the policy.
• Employe riots, civil strikes, or commotions are excluded from coverage.
• Damages from acts of war are not covered.
• If you need parts repaired from damage that is excluded from hull coverage, it is not covered.
• Losses from shipping delays are often excluded.

Interestingly, while these are common exclusions, they can also be added as coverage options with policies at multiple insurance companies. Agents with an expertise in marine insurance can help you decide if you need any of these policy additions.

Are Ocean Marine and Inland Marine Different?

Ocean marine and inland marine insurance both cover goods that are being transported. However, inland marine refers to goods and cargo in transit on land. Ocean marine refers to goods being delivered via the ocean or sea. So how did the name come about? Inland marine used to refer to transport on “inland” waterways such as rivers, lakes, or canals. It’s been updated to include more modern means of transportation (motor vehicle, train, etc.)

What is the General Average Principle?

This is a principle that is unique to maritime coverages. If a vessel encounters an emergency such as a storm and must throw cargo overboard to save the ship and crew, this rule applies. It means that each person—regardless of whether or not their cargo was included in the loss—helps contribute to replacing the lost cargo. 

How Much Does Ocean Marine Insurance Cost?

Because the coverages are highly customizable, there is no one-size-fits-all pricing for ocean marine policies. Some things that can influence the cost include:

• The type of goods being transported/their monetary value
• The risks you face en route and at destination
• Types of policy(s) and policy limits chosen

We recommend speaking with an insurance agent to help you determine your insurance needs.

Get a Free Ocean Marine Insurance Quote

Let us help you with your insurance needs! Whether you need ocean cargo coverage, liability coverage, or a policy that covers all of your bases, we can help. To get more information and a free quote for ocean marine insurance, complete the form at the top of the page or give us a call at 877-907-5267.

Other Coverages to Consider: Workers' Compensation Insurance, Uninsured Boat Coverage, Bumbershoot Insurance