Ship insurance is an insurance policy or coverage that protects shipper from damages, package, loss or theft. In this sense, if a policyholder’s ship/package does not get to its destination or if it suffers damages on delivery, the shipper gets indemnity the value of the items or ship in question. stolen. In shipping insurance, the value of the items determines how expensive the premium that will be payable.
There is no gain saying that ship insurance is very important to both business shipper and even casual shippers. This is as a result of the fact that nothing can be more frustrating for a shipper who has been waiting patiently for his shipment to arrive only to open the package to disclose that it has suffered damages on transit. And as a result, the shipment could not get to destination. Shipping insurance covers the cost of loss or damaged deliveries.
CATEGORIES OF SHIPPING INSURANCE
There are three categories of ship insurance and they include:
- Self insurance
- Third party insurance
- Carrier insurance
Self insurance:
This is when the seller of the items own responsibility for the lost or damaged goods. And will also cover cost of replacement in favor of the buyer.
Third party ship insurance:
this is a class of shipping insurance whereby insurance coverage is provided by an external insurance company. In most cases, it is normally applicable for international shipping business or for delivery of consignment of high value.
Carrier ship insurance:
This class of ship insurance is usually provided by the shipping company. It is most often attaches with the cost of delivery. And some other times exists as an optional extra. Carrier shipping insurance is highly worth it. Most especially when you are making a shipment of fragile items or goods of high value. And as mentioned, the most common damages are storms sucking of ships, crushed containers, or even loss of containers etc.
You most times believe that your consignments will get to you in good conditions but due to the million of packages delivered by carries every day, the high risk of damages to packages and even loss of a package becomes high and when these happens, you lose the shipping cost as well as the value of the original package.
Consequently, since there is always a risk that package will sustain damages or lost, it is wise to insure them. This is especially goods or packages with a higher value and as well as when undertaking international shipping. In the same vein, shipping insurance operates to ensure that cargo valuing millions of dollars safely gets to its destination. And in the event loses or damages occur, that there is a mechanism in place for indemnity from the insurers.
Moreover, shipping insurance coverage/policy can be time bond or on a basis of a specific journey, the policy maybe specific to one journey from one part to another point of destination. A shipping insurance policy is time bound. That is to say, that the policy remains valid for a specific time after which it lapses. Although it is subject to renewal after such expiration.
In all, ship insurance covers issues relating to goods that it’s transportation is through cargo ships, vessels and even through terminals. Ship insurance covers agreement between the policy holder and the insurance company which places liability on the insurance company to reimburse the policy holder if the goods gets missing or damaged during the transportation while the policy holder pays premium in exchange of the underwriting from the insurer to provide financial assurance to the insured and saves them financially during any transportation mishaps
Advantages of ship insurance
- Ship insurance covers compensation for injury, illness or death of any transporters on board the ship.
- It equally covers damages arising from mishandling of cargo or mistakes associated with transporting
- The policy holder get financial coverage theft or in extreme cases, hijack of ships.
- The policy holder secures financial coverage in the event that goods get damaged as a result of bad weather conditions like rains and snows etc.
- Ship insurance guarantees full financial coverage in the events of accidents during transportation or voyage
Disadvantages of ship insurance
There are few disadvantages associated with ship insurance and they includes
- The price of transportation increase as a result of payment of insurance premium which adds to the cost of shipment.
- In rare cases, the insurance companies may refuse to compensate for the insurance claim especially if the shipped item is not properly packaged
Conclusion
In modern economics and commence, the need of transporting goods and services from one location to another by ship has become of high necessity. And as expected, shippers around the world send and receive shipments all round the time. Ship insurance gives shippers/transporters financial protection associated with package loss or damage in the course of transportation. Even with the addition to the cost of transportation, the desirability of ship insurance is still very high when compared to the risk involved in a shipment.
