Marine Insurance

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The transport of goods creates a set of unique risks. Minimizing exposure to these risks requires a specialized type of insurance policy – commonly referred to as marine insurance.


Damage in transit, damage caused to the property of others, inclement weather or natural disasters preventing transit are just a few of the risks faced by Cargo owners.


Marine insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman marine loan. It is the oldest risk hedging instrument our ancestors used to mitigate risk in medieval times. London’s growing importance as a centre for trade was increasing demand for marine insurance. In the late 1680’s, Edward Lloyd opened a coffee house on Tower Street in London. It soon became a popular haunt for ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news.

Lloyd’s Coffee House was the first marine insurance market. Nowadays, Marine insurance is often grouped with Aviation and Transit (cargo) risks.


This insurance not only covers the obvious risks of loss or damage to cargo but also little understood risks like General Average.


All shipping lines transport cargo under a General Average clause. In order for General Average to be properly declared,

1) there must be an event which is beyond the shipowners control, which imperils the entire adventure;

2) there must be a voluntary sacrifice,

3) there must be something saved.


The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in damages. “General Average” requires all parties concerned in the maritime venture (Hull/Cargo/Freight/Bunkers) to contribute to make good the voluntary sacrifice. They share the expense in proportion to the ‘value at risk” in the adventure.


This clause would create a liability for the cargo owner, if anything was to happen to during the voyage. Without a Marine Insurance policy that covers this risk – it would be very costly for the cargo owner to shoulder these costs.


The Incoterm that the goods are purchased on will also determine whether the seller or the buyer is responsible to insure the goods, and where the seller’s responsibility ends and the buyers responsibility for the insurance of goods being transported starts.


As your freight forwarding agent we understand the importance of having this cover and therefore we have partnered with JLT to be able to provide you with comprehension marine insurance cover, which is charged to you on your freight forwarding invoice and we will assist your with the claims process should the need arise.


For a small percentage of the value of your goods, we can provide you with the peace of mind that your risks when transporting your goods are taken care of.


Wikipedia Last Edited 13 October 2018) Marine Insurance’. Retrieved from 


By Wendy Nel – 29 November 2018

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