Marine Insurance: Meaning and Types of Marine Insurance

The word marine is related to the sea, river, or water. Before the advent of cars and aircraft, water was the major means of long-distance travel.

And till date, water is still absolutely relevant as a major means of traveling and moving items (especially heavy items) within long and short distance even across continents.

Similar to other means of transportation, there is a need to insure vessels, ships or any other means used on water for transportation as well as the items that are being transported.

As such, marine insurance is absolutely crucial for any traveling or shipping method that is done on water.

So what exactly is marine insurance and how does it works?

What is Marine Insurance?

Marine insurance is an insurance policy that was created to cover loss or damage to cargo, vessels, ships, terminal and all other means of cargo used for transportation on water including watercraft and boat through which items are acquired, held or transferred.

Marine insurance policies are typically determined by the area a vessel operates and this often include:

  • When the vessel is being used in certain precise areas such as in the Pacific Ocean.
  • When the vessel is being used in other oceans across the world. Nonetheless, depending on the marine insurance service provider, the policy may contain exclusions and restrictions and must be reviewed carefully before purchase.
  • When the vessel is in a range of 12-mile limit nearby the coast like in-land estuaries and coastal waters.
  • Onshore insurance is coverage for vessels or ships that are out of the water. For instance, the ship or vessel can be at a boat club, in a marina or even in a garden. Onshore coverage is typically known as “laid up cover.”
  • When the vessel is on water such as a lake, river, or canal.

Boat and Yacht Insurance

Some marine insurance companies provide coverage that include boat and yacht insurance. This coverage typically covers the following:

  • Physical damage to the boat or yacht as a result of a collision with another boat or yacht or perhaps an underwater item.
  • Damage done to your personal property on the vessel
  • Liability for bodily harm or damage done to other people’s property
  • Assistance, towing or gas delivery should your vessel become stuck for whatever reason.

As I mentioned earlier, marine insurance is coverage for ships and their cargo should they encounter a problem when shipping items or in case of damage or loss of goods.

Marine insurance is absolutely useful for moving companies to ensure they are protected by sufficient coverage when shipping customers’ items.

Having this insurance policy gives customers the confidence that their goods are safe in the event of damage or a loss.

Types of Marine Insurance Coverage

Just before I discuss the various types of marine property coverage, it is important to clarify the meaning of some terms.

Many of the terms used in marine insurance are similar to the ones used in other insurance policies and their meaning are similar.

For instance, the term perils still means risk. Just like other types of coverage, marine insurance also have covered and excluded perils. This means what is included in a coverage and what coverage does not protect.

So before you buy marine insurance, ask for the policy. Review the fine print carefully to have a full grasp of what it covers and excludes.

Another key term is open cargo. This means the insurer consent to make payment to cover losses suffered within a precise period of time as long as the insured offers an average value and makes payment for the premium.

The term premium indicates the costs of coverage. Most often than not, premiums are paid monthly, quarterly, or annually. However, marine insurers services provider may request for a per shipment premium.  

Types of Marine Insurance Coverage


This type of marine insurance coverage protects the shipper’s legal liability. For instance, if a shipment is damages as a result of a shipping crew’s inability to create goods appropriately, the insurance service provider will be responsible for making compensation for the damaged goods.


This type of coverage offers compensation for the value of outgoing and incoming freight in the event of an accident such as a collision that makes the ship to sink during transportation.

Freight Revenue

Unlike the others, this type of marine insurance coverage will pay you for profit whenever there’s a loss.

This means the insurance company will pay you the profit you’re expected to make on a particular shipment as agreed in the policy.


This type of marine insurance coverage protects ships during transportation within a precise geographical area.

However, this coverage has some exclusions such as international locations and out-of-region, except otherwise indicated.

How Does Marine Insurance Work?

Marine insurance isn’t all that different from other types of insurance policies. That said, it is important to note that each insurance policy is unique in its own way.

Here are the four key terms that highlights how marine insurance works?


Just like several other types of insurance, marine insurance was created to provide protection against damage to or loss of a valuable item.

Marine insurance can protect ships, cargo, ports or even terminals. Better still, marine insurance can cover pipelines and other oil related items that are anywhere around water.

Protection and Indemnity

This type of marine insurance coverage protects any damage to cargo a vessel is conveying. As such it covers the vessel’s owner from liability that is caused by the injury or death of crews or passengers on board a vessel.

This insurance policy also protects infrastructure such as bridges and piers that are damaged by the ship.   


Ships are usually insured with hull insurance. This type of hull insurance coverage often contain clauses that protect against damages that are connected to sinking, stranding, collision, and fire.

However, in its collision clause, the coverage covers both of the vessels involved.  


In terms of cargo policy, companies that ships goods across international borders have limited options.

They can opt for an open cargo policy, which protects the goods from where they depart from to where they are headed and this includes transporting the goods on land.  

Such companies may also decide to protect certain precise risks such as damages to goods. Also, the company may also buy the insurance to only protect a precise transaction.

Read about other types of insurance policies:

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Williams Oleije

Williams Oleije

Williams Oleije is an Inbound Marketer, and a pop culture enthusiast. He's an avid researcher about how digital media is transforming marketing in several industries.

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