Private and pleasure marine insurance

What is Marine Insurance?

Marine insurance is a broad term that covers the loss or damage of cargo, or damage to ships, ports or terminals. It also provides protection to goods during the course of delivery, when transported via other means to and from ships.

Whether you have a shipping liner or use your yacht for commercial activities or transporting goods, you will want to take out marine insurance. Unlike boat insurance, which is taken out by private owners, marine insurance relates to commercial activities and can also include insurance for fishing vessels, marinas and harbours, and tradespeople who carry out work on vessels.

Why do you need marine insurance?

You likely don't think twice about taking out travel insurance when you go on holiday, or paying for car and home insurance, so why wouldn't you take out marine insurance? The sea can be a dangerous and unpredictable place, with a huge number of ships and cargo moving around the world at any given time. If you transport goods across the globe, run commercial passenger charters, operate a shipyard, or build or repair ships, marine insurance will protect you from associated risks.

Just like other forms of insurance, marine insurance is designed to protect you from the risk of damage, accidents, medical bills, and even loss of life. Marine insurance covers you against:

• Loss or damage to goods
• Loss or damage to ships (hull and machinery)
• Theft
• Collision
• Natural disasters

It's reassuring to know that if something unfortunate does happen, then you have a policy to protect you financially. Each policy is different and covers separate requirements, which is why at A-Plan we will take the time to assess your needs and make sure you have exactly the right level of cover.

What are the principles of marine insurance?

Marine insurance covers a lot of possibilities and impacts on many different industries, from logistics companies to retailers and sellers. In order to protect the interests of all of these parties, marine insurance is governed by 6 principles:

• Indemnity: Any person who takes out an insurance claim will only be compensated up to a maximum value of their loss. This prevents anyone from taking out a policy just to try and make a profit.
• Good faith: This is a universal principle in all other insurance policies and means that the person completing the insurance documents should provide accurate information and not withhold any details.
• Insurable interest: This principle is designed to protect the insurance company by stating that the insured stands to benefit from the safe arrival of their cargo.
• Proximate cause: As marine insurance is complex and policies include and exclude different claims, proximate cause is used to establish the closest and most logical cause for a claim. For instance, let's say the satellite navigation on a ship was prone to malfunction and the captain knew this before making a voyage. During the journey the equipment breaks, the captain is unable to navigate and veers off course and runs aground. But, while this is happening there is also a storm. You could try and claim that the storm was the reason that the ship ended up being damaged but the actual cause is due to the faulty equipment.
• Subrogation: This prevents the insured from profiting from a compensation claim. For example, if you take out an insurance policy and your goods are damaged in transit you will receive compensation. If you were to then sell the damaged goods and make a profit (exceeding the original value the goods were insured for) you will have benefitted twice from the event. In this case, the profit would need to be returned to the insurance company.
• Contribution: As there is so much cargo being transported, it may happen that two policies are taken out with different insurers that cover the same goods. If there is a claim, the liability will lie with both insurance providers.

What is covered by marine insurance?

There are a number of specialist policies that you can take out as part of marine insurance. These include:

Protection and Indemnity

Protection and Indemnity are taken out by owners to protect them from the risk that comes with owning and operating a vessel. This can include liability claims from any crew or passengers on board and third parties who may suffer damage as a result of a collision, damage to cargo, or environmental damage from an oil spill or shipwreck. Protection and Indemnity will cover an owner for the financial responsibility for removing a vessel if it has been damaged, compensation claims for lost or damaged cargo and medical bills for crew members who suffer injury.

Freight, Demurrage and Defense (FD&D)

FD&D provides cover for legal fees and representation that may arise from disputes not covered by Protection and Indemnity insurance. This includes disputes over vessel sales and purchase contracts, crew contracts and salvage and towage.

Marine cargo and goods

With goods being transported all over the globe, freight containers and ships are always at risk of being delayed, disrupted or sometimes damaged or lost at sea. Cargo insurance will protect your goods from the time they leave your premises to the point at which they arrive at their destination. Not all of the journey will take place at sea, so cargo insurance also covers transportation by road, rail and air.

Hull insurance

Hull insurance offers protection against damage to your vessel and machinery and covers all types of vessels ranging from freight liners to fishing boats and yachts. If your ship or boat does suffer any damage, then your policy will cover the cost of repairs. Hull insurance often includes certain limitations based on the length of the voyage and where the vessel will be navigating. Some areas may be excluded from cover due to the greater risk of damage from bad weather and piracy.

Commercial yacht or boat insurance

If your business runs fishing trips, boat trips or pleasure cruises, or if you hire staff to operate and manage your yacht, you will want to take out the relevant insurance. Cover includes:

• Skipper charter
• Racing risk
• Hull insurance
• Machinery, gear and equipment
• Cover for fine art and personal effects
• Employers' liability insurance - including medical expenses for passengers and crew
• Protection and Indemnity

When taking out this type of insurance it's important to check the policy to see what is stipulated. Our yacht and boat insurance covers any damage to the hull, machinery and equipment at an agreed value, meaning the claim is paid on what it is worth when you take out the policy, not what it is worth today.

Marine trade insurance

Marine trade insurance covers many professions including:

• Marinas
• Boatyards
• Ports and terminals
• Boat-builders and repairers
• Chandlers
• Marine engineers
• Sailing clubs
• Sailmakers

For anyone working in the marine industry, you can take out one policy and protect yourself from a number of risks and compensation claims that may arise. We can assess the type of work you do and tailor your policy accordingly. Our marine trade insurance can include:

• Public liability: This protects your business from compensation claims and legal fees made by clients or members of the public if their property is damaged or if they suffer injury as a result of your work.
• Product liability: If you manufacture items, product liability will provide cover against your goods causing damage or injury to a customer or third party.
• Employers liability: If you employ any staff, then it is a legal requirement to have employers' liability insurance. This provides you with cover against compensation claims and legal fees if an employee suffers injury whilst carrying out work for you.
• Property: similar to home and contents insurance, property insurance protects your work premises and contents from damage or theft.

What is not covered by marine insurance?

As with lots of other insurance policies, there are some claims that are excluded. For example:

• Goods being damaged because they are not sufficiently packaged
• Wear and tear of products
• Loss or damage as a result of an unsuitable freight container or unseaworthy ship.
• Losses incurred as a result of ship delays
• Combustible substances such as fuel or chemicals
• Dangerous goods
• Insolvency of a shipping company

Types of marine insurance policy

As well as the different types of cover you can take out, there are also different types of policies available. This allows you to be flexible and cover variables such as time spent at sea and the location of your vessel.

Some of the policies available include:

• Voyage policy: this covers your vessel and cargo for the duration of a specific voyage.
• Floating policy: the total value of the amount of cargo insured is specified but there is no breakdown of individual items. This allows the policyholder to add and remove items, as long as the total value of the policy is not exceeded.
• Time policy: this covers your vessel and cargo for a specific length of time.
• Unvalued policy: the value of your vessel/cargo is not determined prior to taking out the policy and is only established when a claim is filed.
• Valued policy: the opposite of the above; a valued policy records the value of the vessel/cargo when the policy is taken out.
• Port risk policy: this covers the safety of a ship when stationed in a port or harbour.
• Fleet policy: If you own several vessels, then it can be much easier to take out a policy that covers them all, as opposed to filling in details for each individual one.

What should I look for in a marine insurance policy?

When taking out marine insurance, the most important thing is that you are covered for any eventualities that you might face in your line of work. If you transport goods, then not only do you need insurance for the cargo, but you also need to be insured for damage you could suffer to your ship, damages you could cause to other vessels, and liability for employees and third parties.

The size of a ship, the total worth of your goods, and the length and course of a journey are just some of the factors that will affect what type of policy you need. When choosing insurance you also need to consider the policy limit and excess to pay if you need to make a claim.

Given the level of risk that is involved with marine activities, it is only sensible to protect the financial health of your business. Hopefully, you'll never have to make a claim but by taking out marine insurance, you can enjoy the peace of mind knowing that you are protected if you are ever in a situation where you need to do so.