Imagine a situation in which the bulk cargo accidently falls off into the water from the conveyor belt attached to the ship while it is being loaded. Some of the accidents may also occur due to the properties of the cargo that pose an extreme danger of fire, contamination, and liquefaction. For example, goods like cotton, coal, and sulphur may heat up through oxidation during the voyage and cause an uncontrollable fire or explosion. Bulk cargo including iron ore fines, nickel, and other minerals might also transform into a liquid state due to compaction of the cargo from engine variations. Such situations are common and can lead to huge financial loss, affecting several parties. Even by ensuring the best security measures, there is no absolute guarantee of cargo safety especially while it is being transported on high seas.International shipping industry carries more than 90% of the world trade. There are a variety of large vessels like the massive 18,000 TEU EEE which have been developed to acquire better economies of scale. But, larger carriers, though designed in such a manner that they can bear the most serious natural disasters, still do not guarantee 100% cargo safety. This is because apart from any natural or man-made disaster, the potential danger may also lurk in some unexpected accident or the dangerous properties of the goods being transported.
The parties vulnerable to huge financial loss due to cargo damage can be the cargo owners, importers, exporters along with the owner and financiers of the ship who may also suffer the brunt of any catastrophe.
Is there a way to ensure your business continues without getting financially distressed?
Yes, the solution lies in the humble marine insurance policy that offers the comprehensive cover for the ship carriers (Marine Hull Insurance) as well as for the cargo (Marine Cargo Insurance) under a single cover. Generally, Marine Hull Insurance is feasible for ship owners, and a cargo policy can be availed by organizations dealing with import and export of their goods.
The Risks on High Seas and Marine Insurance
- Natural Disaster Cover
Potential Hazard: Suppose there is sudden strong cyclone leading to violent wind and rain for a considerable period. Imagine a ship going through such a condition while carrying dry bulk cargo like coal, iron ore or agricultural products like grains. It cannot afford any kind of moisture, but the chances are high that some cargo can be damaged due to it.
Marine Cover: It is certain that cyclone is beyond human control. The resulting damage to the cargo is also unavoidable even with the best safety measure. A marine insurance policy can come handy in such cases as it will reimburse the insured cargo or the ship owner with the estimated loss of damage to the cargo and the ship respectively.
- Complete Loss of Cargo
Potential Hazard: Undesirable geographical conditions can also lead to the sinking of the ship and total loss of freight. These include the appearance of an iceberg, coral reefs, and sandbars which are difficult to navigate especially with bulk cargoes. Despite all efforts, in case the ship sinks, it can lead to a huge financial burden which can be difficult to bear personally or by any organisation.
Marine Cover: Thus, whether it is the shipowner or the cargo owner, both parties are at financial risk which can be feasibly taken care of through an insurance policy.
- Inefficient Storage
Potential danger: Cargo might also be destroyed due to inefficient storage of goods. For example, contamination of products like cement can occur due to the reaction from residues of previous cargo. The water can enter the container through loose hatch locks and damage the goods like dry grains.
Marine Cover: Even though storage of goods might have been done in the most secure manner, such mistakes might happen. The insurer will inspect the exact cause of damage in such cases and cover the estimated loss accordingly.
- Enemy Attacks
Potential danger: Presently, risks of piracy and theft of goods on the ship are on the rise. The Pirates might keep the ship stranded for an extended period.
Marine Cover: The pirate attack can damage both the ship and the cargo. Even if they do not damage the cargo, there is a risk of to it if the goods are perishable. Such losses are also covered under the marine insurance policy.
In all the scenarios like mentioned above, it is feasible to avail the marine insurance policy that suits your requirements and avoid any kind of catastrophe on high seas.
Apart from these benefits, marine insurance may also be a requirement while transporting goods through the international waters. As an exporter/importer, shipping line owner, financier, or owner of the cargo you would like to ensure that you buy a plan which is easy to manage according to your business needs and covers the risks your cargo or ships are exposed to.
Online general insurance advisors like SecureNow can assist you in arriving at a decision, manage your policy, and filing a claim.