Commercial marine insurance can benefit nearly any business transporting cargo or goods. But it doesn’t cover damage if you fail to take reasonable safety precautions, like locking up your items to prevent theft.
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Commercial marine insurance is designed to cover damage and theft to a business’s ship, truck or plane cargo during transport. It also covers medical and legal bills for injuring someone and lost business income for a variety of businesses from freight companies to fishermen.
What is commercial inland marine insurance?
Inland marine insurance refers to coverage for cargo shipped on land, rather than by sea. The coverage works similar, however.
What does commercial marine insurance cover?
A typical marine insurance policy involves covering four major sections of your business. Coverage includes:
Cargo damage. Your policy can reimburse you for damage or theft that happens to the cargo while en route to a new location.
Liability. Marine liability insurance covers a business for accidents that cause bodily injury or property damage to a third party, including the cost of medical, repair and legal bills.
Lost income. This covers a shipowner when damage to or loss of their ship results in a loss of business income.
Hull insurance. Hull insurance offers protection against the loss of ships, as well as any damage to the ship itself. A policy can cover the hull, motors and machinery, equipment and accessories, sails and masts, trailers and even a dinghy or tender.
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Who should consider commercial marine insurance?
If your business transports goods using a boat — whether they’re imported, exported or moved within the US — liability insurance is essential for legal protection. You can also protect your business financially by picking up a more comprehensive policy. This type of insurance cover can be highly useful for:
Companies that ship goods
Ship charter companies
Marina and port operators
Tourist craft operators
Road transport companies
What are the risks of not having commercial boat insurance?
For most marine businesses, going without commercial boat insurance isn’t worth risking:
Damages and losses to stock. A container could be washed overboard and lost during a heavy storm.
Damages and losses to cargo. Your vessel could be damaged by bad weather — or even hijacked by pirates.
Loss of income. Damaged could result in lost income of not being able to sell the goods.
Liability. If you’re cargo business causes damage or injury to third parties, you could be held liable.
How do I file a commercial marine insurance claim?
Each insurance provider will have their own unique process for handling claims, but typically you’ll be able to find a claims form online. You’ll need to fill out this form with all the details of your claim.
In some cases your insurance provider will request more information, which could include anything from photographic evidence to police reports. Supply any evidence as quickly as possible to ensure the prompt resolution of your claim.
Most insurance providers will have an expert claims team that specializes in managing marine insurance claims to help guide you through the process.
What’s excluded from this policy?
Exclusions can differ between policies but will typically include:
Failing to take due care to prevent a loss. For example, failing to lock a vehicle that is transporting goods. This can also include improper handling or storage of goods.
Acting recklessly. This includes any act that an insurer could argue you knew could lead to a loss and committed anyways.
Wear and tear. Insurance won’t cover expected wear and tear of your boat or losses occurring from mold, mildew or insects.
Not taking care of livestock. This includes claims related to the inoculation of livestock or livestock kept in an unhealthy condition
Using autopilot. If an incident occurs when a vehicle is being driven under its own power, except when being loaded or unloaded, your claim can be denied.
Pre-existing damage. Your insurer won’t pay for any equipment or goods that were damaged before you got them.
Fraudulent or dishonest acts. This can include anything from not disclosing something on your insurance application to lying about the cause of an accident.
Failure of your refrigeration equipment. Check your refrigerators regularly, because your insurer won’t cover any losses that happen if they fail.
Traveling to unsafe areas. Vessels may only be covered in certain geographical areas — check your policy to find out if there are any off-limits waters.
When your hull is undergoing major hull repair. Your insurer may not cover damage to your boat while it’s undergoing major repairs.
Risk management tips for commercial boat owners
A crucial part of any business insurance plan is minimizing the risks your business is exposed to. When any disruption to your regular operation could lead to a financial loss, it’s essential that you develop a risk management plan to help limit your exposure.
To develop a risk management plan, ask yourself what marine risks your business faces. How likely are those risks of occurring? What would be the financial consequences if they did occur? Once you understand the risks, you can put plans in place to reduce them. This could mean increased security at certain storage sites, upgrading the machinery on a certain vessel or any number of backup plans.
Common risks that you’ll want to consider include:
Epidemic or pandemic
Injuries to yourself or your crew
Regulatory or governmental changes.
If your livelihood depends on your cargo, protect it with a commercial insurance policy. And if shipping is just one piece of your company’s puzzle, consider bundling it with your business insurance to save money.
Frequently asked questions about commercial marine insurance
Yes, you can get a policy that will pay out the value of your boat if it sinks due to a storm or collision. However, if your boat sinks due to wear and tear on a part that keeps it afloat, your policy can refuse to pay out because the sinking is a result of improper maintenance.
Yes. Even if it’s just a small fishing boat, it’s important to disclose all information about how you use your boat to your insurer. If you file a claim and an insurer finds out that you lied on your application, it can be denied.
Yes, marine cargo insurance can cover damage that occurs in the air and on land. For example, if you’re a logistics company whose main channel is air transport and your stock is damaged in the air, marine cargo insurance will cover the cost of replacing the goods.
But not all marine cargo policies offer this, so it’s best to check with your insurer before purchasing a policy.
Dawn Daniels is an assistant publisher with Finder, based out of Oregon. Her background includes editing more than 40 published books, including Financial Fitness: 21 Easy Exercises to Get Your Personal Finances in Shape Fast by Dr. Vi Scott. In her spare time, Dawn enjoys hiking ridiculous distances and collapsing in exhaustion.
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