The Importance of Marine and Cargo Insurance for Importers

Managing risks is a big part of being in the business of shipping goods across international waters. This is why understanding marine and cargo insurance is a must if a business wants to avoid heavy losses.

Why Does Marine and Cargo Insurance Matter?

There’s no shortage of risks involved for goods in transit. These risks may come in the form of accidents, natural disasters, or even theft. If you are an importer or exporter, it will be good to know that, though it exists, carrier liability is limited and often not enough to cover possible loss. Marine and cargo insurance gives you peace of mind that the goods you’re moving are covered at their 100% value.

The General Average Principle

The law of general average is a principle of maritime law whereby all stakeholders in a sea venture proportionately share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. For instance, should the crew jettison some cargo overboard to lighten the ship in a storm, the loss would be shared pro rata by both the carrier and the cargo-owners.

Marine and cargo insurance becomes invaluable as the financial damage of the general average may have severe implications on the cargo-owners of goods onboard a vessel.

The Francis Scott Key Bridge Disaster and Key Learnings

This case is used to illustrate how the general average principle can affect operations. In the Francis Scott Key Bridge disaster, a container ship faced a situation where the crew needed to jettison cargo to mitigate the catastrophe.

Since the law of general average is applicable, all the cargo owners were mandated to put up contributions for the incurred losses. The cargo owners without the proper insurance dealt with severe financial setbacks including the smaller businesses without financial flexibility. This unfortunate case serves as a reminder of the importance of being insured and the liabilities that cargo owners face in conducting operations.

If you want to safeguard your businesses from risks that come with moving goods, marine and cargo insurance is more than just a formality, it’s a vital requirement that would set you up for smooth sailing operations.  

McHugh and Eastwood have a team of experts who will provide guidance and reliable services to ensure that you undergo the insurance process properly and expediently. For your marine and cargo insurance requirements, you may reach out to our sales team.