Marine Cargo Insurance

Marine Cargo Insurance covers physical loss or damage to goods, materials, and equipment during transportation between locations, regardless of whether the mode of transport is sea, air, road, or rail, protecting both the seller and the buyer against the financial consequences of transit losses.

What is Marine Cargo Insurance?

Despite its name, marine cargo insurance covers all modes of freight, not just sea shipments. The policy attaches when the goods leave the shipper's warehouse or factory, remains in force during all transit legs including warehousing at intermediate points, and terminates when the goods are delivered to the consignee's designated location. This is the "warehouse to warehouse" or "door to door" coverage that international trade depends on.

Policies are written on either an all-risk basis, covering loss or damage from any cause not excluded, or on a named-perils basis covering only specific risks such as fire, sinking, or collision. Development-bank-financed supply contracts routinely require all-risk cargo coverage, often specifying the Institute Cargo Clauses (A), which are the broadest standard cargo clauses used in the London market.

The allocation of insurance responsibility between buyer and seller in a supply contract follows the Incoterms trade term. Under CIF (Cost, Insurance, and Freight), the seller procures cargo insurance; under FOB or EXW, the buyer is responsible. International procurement contracts may specify a different arrangement, so the bidder must read the contract's insurance-requirements and the applicable Incoterm together.

Why Marine Cargo Insurance matters for bidders

Equipment-supply contracts for development-bank-financed infrastructure projects often involve long supply chains crossing several countries. A bidder that has not priced and confirmed insurance cover for the entire journey from factory to site, including last-mile road transport in potentially poor-condition rural areas, risks absorbing an uninsured loss if a shipment is damaged or lost in transit. The contract will state who is responsible for insurance and what cover is required; the bidder should read this before finalising price and confirm with an insurer that the specific routing and cargo type is insurable at the required terms.

FAQ

Does marine cargo insurance cover theft during transit?

Yes, theft is covered under the all-risk Institute Cargo Clauses (A), which is the broadest standard form. Named-perils policies (Clauses B or C) have narrower theft coverage and should be checked carefully against the contract's requirements.

Who is the beneficiary of a marine cargo insurance policy?

The policy can be taken out by the seller or the buyer depending on the Incoterm and the contract terms; the beneficiary is the party that bears the risk of loss at the time of transit, which is the party that suffers the financial loss if the goods are damaged or lost.

Is separate marine insurance needed if the contractor already has a construction all-risk policy?

Construction all-risk policies often include transit extensions, but these may not cover the full supply chain from overseas factory to site. Contractors should confirm with their insurer whether the CAR policy covers the entire transit route or whether a standalone marine cargo policy is needed.