What is All Risk Marine Insurance

What is All-Risk Marine Insurance?

“Did you read the fine print?” Sending your cargo out to sea without insurance means your are leaving fate of your goods in the hands of whatever gentle giant (we wish) handles it. And with international shipments, your cargo is most likely bouncing between multiple handlers. There are a multitude of ways you can protect your cargo such as blocking and bracing or shipping FTL or FCL, but nothing will keep your goods protected from damage better than all risk marine insurance.

After all, “ship happens”.

All Risk Marine Insurance

As the name entails, all risk marine insurance is cargo insurance that covers any and all instances of theft, loss, or damage to your cargo. The insurance policy is all-encompassing and covers the following instances of theft, loss, or damage:

  • Stranding
  • Sinking
  • Burning
  • Collision
  • Fault of vessel management
  • Bursting of boilers
  • Latent defects in hull
  • Explosion
  • Water damage
  • Heavy weather
  • Ships sweat
  • Condensation
  • Improper stowage by carrier
  • Theft or pilferage
  • Non-delivery
  • Leakage or breakage

All risk marine insurance will protect you against all the above scenarios. However, remember that it will not cover inherent vice (intentional damage), natural product issues (decay, germination, faulty packaging), or strikes, riots, and civil wars (let’s hope you don’t have to worry about that.)

Using Protection Is Important…

That should always be your rule of thumb. You can never have enough protection. In regards to protecting your cargo, that is! Often, people will assume that proper packaging, blocking and bracing, and extra security measures can keep them from needing cargo insurance.

After all, if you make your goods damage-proof, you don’t need insurance, right? Well, unfortunately, despite your efforts to secure your cargo, there are still instances in which non-controllable factors may cause damage or loss of your cargo.

Uncontrollable Factors

Blocking and bracing, packaging, bubble wrap, newspapers, packing peanuts, old t-shirts, duct tape – there are so many ways to protect your cargo from rattling or breaking. But what about those factors that can cause cargo issues regardless of preparation on your part? Here are a few situations to be mindful of, all of which are testaments to the fact that purchasing all risk marine insurance to cover your potential loss or damage is in your best interest:

General Average Law

General Average Maritime Law is a big deal. Essentially, an ocean vessel captain is permitted to voluntarily sacrifice any cargo overboard to save the vessel in extreme situations. Reasons could vary between bad weather, running aground, onboard fires, engine failure, and so many other situations. Captains may toss containers overboard to save the vessel, and in this instance, you will be responsible for a couple things.

Firstly, you will be responsible for your own goods. If they are not insured, you’re SOL – “Ship Out of Luck” (that’s the last one, we promise.) Secondly, you will also be responsible for paying an equal proportion distributed amongst all shippers with containers on the vessel of the value of all cargo on board. In other words, in the case of a General Average Claim, the steamship line will add up the cost of all voluntarily sacrificed cargo and equally distribute this cost to be paid by all parties with cargo on the vessel. If you don’t have all risk marine insurance, you will end up paying for your own lost cargo as well as your proportion of the General Average Claim.

Theft and Piracy

It still happens – more frequently than you would think. In 2011 alone, 439 pirate attacks took place with 45 merchant vessels being hijacked.

We strongly recommend against loading your goods onto The Black Pearl – it seems to be a hotspot for the pirate type.

No one thinks theft of cargo will happen to them until the day it does. Being left high and dry without your products or any reimbursement plan is scary. All risk marine insurance protects against all loss of cargo which includes piracy and theft. While you have no control over what happens to your goods when they are in transit, you can protect yourself against a variety of negative events at sea.

Storms at Sea

The ocean is a scary place, especially when storms hit. And it happens very frequently. Although ocean vessels are large and can encounter a great deal of storms, there are multiple cases of large storms tossing containers overboard. There’s nothing you can do to protect your container against massive ocean storms other than purchasing all risk marine insurance.

What You Should Do About Cargo Insurance

The classic, “in hindsight” is all it will take to make insuring your cargo a habitual pattern. Fortunately, you don’t have to wait for that day. All risk marine insurance will keep you financially backed in the case of any loss, theft, or damage to your goods. And it’s not all that expensive to ensure your goods. The origin, destination, and commodity type will all play a factor in price variations, but plan on cargo insurance charges calculated at $0.45 per $100 (of CIF value) plus 10% of the CIF value.

If you have experienced the negative consequences of not insuring your cargo in the past, we are happy to chat with you about your options moving forward. All risk marine insurance can keep you clear of almost all problems your cargo may encounter during its journey. Give one of our team members a call and we’d be happy to talk with you about insuring your cargo!


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