Factors Affecting Inland Marine Insurance Costs
There’s a common misconception that the cost of marine insurance is solely based on the journey taken by the goods.
Types of Goods Covered:
The cost of Inland Marine Insurance actually depends on the nature of the goods being transported.
Example 1 – Occupancy: Edible oils and lubricant oils are considered high-risk bulk oil shipments, which results in higher premiums. These goods have a higher risk of being completely lost when a claim arises.
Example 2 – Occupancy: Fast-moving consumer goods (FMCG) like snacks and biscuits, which are packed in boxes or cartons, pose lower risks when a claim arises. Most of the time, these goods are either recovered or suffer minimal damage in cases of theft or accidents.
Shipping Routes and Destinations:
This factor is particularly important in hilly areas or regions of India with high rainfall. Different routes and destinations come with varying levels of risk. For instance, goods transported to remote areas might have higher insurance costs.
Coverage Limits and Deductibles:
The extent of additional coverage, such as loading and unloading clauses, temperature-sensitive goods, and overloading clauses, as well as the deductibles you choose, also impact the cost. Comprehensive coverage and lower deductibles come with higher premiums.
Comparing Inland Marine Insurance Rates
While everyone has the right to negotiate for affordable and high-value policy premiums, it’s equally important to consider other factors. Selecting a knowledgeable agent or broker with a history of successful claims settlements is crucial.
It’s essential to remember that the premium’s cost, whether high or low, becomes irrelevant if you can’t expedite the claim settlement process.
How to Shop for the Best Rates:
Stay in touch with your business contacts to gather insights on their insurance policies, where they obtained them, and who their agent or broker is. Recommendations from your business peers can be incredibly helpful. Once you have the details of three or four brokers or agents through your business network, make contact with each one to request quotes based on your specific requirements and the commodities you’re dealing with or manufacturing.
Benefits of Price Comparisons:
Engaging in price comparisons is an excellent practice for educating yourself further about marine insurance. By obtaining quotations from three or four different brokers or agents, you can compare the coverage, premium, and the additional services provided by the agent or broker, all while aiming for a lower premium.
How Much Does Inland Marine Insurance Cost?
In this article, we’ll explore the cost of Inland Marine Insurance, an essential coverage for protecting goods in transit in India. We’ll break down the key factors that influence the cost of this insurance and its relevance in the Indian context.
1. Understanding Inland Marine Insurance
Explaining the Basics of Inland Marine Insurance:
Inland Marine Insurance is a specialised policy designed to protect goods during transit, whether by road, rail, or within India’s extensive waterway system. It safeguards against a wide range of risks, including damage, theft, loot and Natural disaster like flood , earthquake etc loss.
Its Key Role in Safeguarding Goods:
For Indian businesses, Either it may be a buyer , supplier, manufacturer or trader etc those involved in valuable goods can be transported confidently, with the assurance that they are shielded from unforeseen events, thereby minimising any potential financial impact in the event of mishaps during the journey. This coverage ensures that their goods remain protected throughout the journey, from manufacturer to consumer.
2. Factors Affecting Inland Marine Insurance Costs
It is a myth that marine insurance is depend on Journey covered by the goods .
Types of Goods Covered:
The cost of Inland Marine Insurance depends on the nature of the Occupancy of the goods
Example 1 : Occupancy – Edible oil and lubricant oil : The bulk oil shipment extra has a higher risk of transportation so the premium is higher As the risk is higher . when the claim arises ,They have higher chances of goes into total loss of the goods .
Example 2: Occupancy – FMCG products like namkeen biscuit etc who are packed in boxes or cartoons , they have lower risk when the claim arises , Most of the goods are recovered or the damage is quietness either in case of theft or in case of accident .( in most of the cases)
Shipping Routes and Destinations:
This factor came into the concentration for the hilly areas or the area in India which have high rainfall ratio. Different routes and destinations come with varying levels of risk. For example, goods transported to remote areas might have higher insurance costs.
Coverage Limits and Deductibles:
The extent of Add-on coverage like Loading and unloading clause , temperature sense goods , overloading clause etc and the deductibles you choose also affect the cost.
More comprehensive coverage and lower deductibles come at a higher premium.
3. Comparing Inland Marine Insurance Rates
Although every person have right to To negotiate the cheap and best premium for the policy. Where as , this factor much to be considered second beside we must choose the good agent or a broker who who have decent good knowledge of the marine insurance and have a history of settling the claim earlier in the past.
As it is saying that what will you do with the premium paid Either it may be higher or lower. if you are can’t get the claim settled swiftly.
How to Shop for the Best Rates:
Be in touch with your business friends are what policy they have from where they have brought the policy who is your agent or broker. You must take the reference from your business friends . it always helpful .
As you get three or four broker or agent details from your business friend . you must contact each and every broker or agent to ask for the quotation with respect to your requirement and your commodity in which you are reading or manufacturing.
Benefits of Price Comparisons:
This is the best practice which helps you to educate yourself more related to marine insurance as you take the quotation from three or four brokers or agents .
Compare the quotation with the coverages and the premium along with their agent / broker services which they are offering besides giving lower premium.
4. Real-Life Examples
Case Studies: When Inland Marine Insurance Made a Difference:
Considering a company name XYZ Private Limited they have 300 crore turnover yearly .
- Company type – FMCG
- Premium paid Yearly – 7.5 lakhs
- Premium in the past 3 years = 22.5 lakhs.
(Each Goods shipment Who have invoice cost around 40 lakh cost of marine insurance is about 1000 INR PER Shipment )
In 2022, They have seen two claims –
=> 1 claim – Due to flood – 46 Lakh INR
=> 2 claim – Due to accident – 42.5 lakh INR
=> Total loss = 88.5 lakhs INR
No See , Advantages of Inland Marine policy.
Early policy sum insured = 300 crores INR
In three year , Total = 900 cr INR
Total premium paid three yearly = 22.5 lakhs INR
Claim taken in one year = 88.5 lakhs INR
“As it is saying in Hindi “oont ke Munh Mein jeera”
Real Scenarios That Emphasise Its Importance:
Consider Mr Suresh, an edible oil trader. His shipment of 40 lakh litres of oil met with a total loss in a road accident while travelling from Kandla to Kolkata. Without insurance, Mr Suresh would suffer the entire financial burden. However, having a Single Transit Marine inland Insurance Policy would have protected him by compensating for the loss of 40 lakhs INR . This policy helps businesses like Mr Suresh to mitigate risks and recover financially from unforeseen incidents, ensuring the smooth continuation of their operations.
5. Exclusions of Inland Marine Insurance Policy
1. Losses due to willful misconduct: This policy does not provide coverage for losses resulting from intentional acts or negligence on the part of the insured.
2. Delay-related losses: Losses incurred due to delays in transit without any physical loss or damage are not covered by this policy.
3. Inherent vice or nature of goods: Losses arising from the natural characteristics or inherent vice of the insured goods are excluded.
4. Insufficient or improper packaging: This policy does not cover losses resulting from inadequate or improper packaging of the cargo.
5. Unseaworthiness of the vessel: Losses caused by the unseaworthiness of the vessel or a lack of proper maintenance are excluded.
6. Nuclear or war-related risks: This policy does not provide coverage for losses resulting from nuclear incidents, war, civil war, or political unrest.
7. Confiscation or detention by customs: Losses arising from the confiscation or detention of goods by customs authorities are excluded.
8. Losses covered under separate policies: Losses that are already covered by other insurance policies are not included in this policy.
6. Documents Required for Claim Settlement under Inland Marine Insurance Policy
1. Aadhaar Card: A copy of the insured party’s Aadhaar card is required for identification purposes.
2. GST Registration Certificate: If applicable, please provide a copy of the Goods and Services Tax (GST) registration certificate.
3. PAN Card: A copy of the insured party’s Permanent Account Number (PAN) card is necessary for taxation purposes.
4. E-way Bill: Submit a copy of the E-way bill, a document required for the movement of goods in compliance with GST regulations.
5. Invoice Copy: Include a copy of the original bill or invoice for the insured goods.
6. Bilit: If applicable, provide a copy of the Bilit, which is a transportation document used in some regions.
7. LR Copy: Include a copy of the Lorry Receipt (LR) or any other relevant transportation document.
8. Transporter Letter: If the goods were being transported by a third-party transporter, a letter from the transporter confirming the loss or damage is required.
9. Monetary Claim Letter: Please submit a letter requesting the settlement of the claim, stating the amount of the claim sought.
These documents are necessary for the efficient processing and settlement of claims associated with the transportation of insured goods.
7. Additional Coverage Options
Beyond the core coverage, there are additional options that can further enhance protection. We’ll explore these add-ons and their costs.
Exploring Add-Ons for Comprehensive Protection:
1. Extended Coverage for High-Value Goods: This add-on offers extra protection for the transportation of valuable items, ensuring comprehensive coverage in the event of unforeseen incidents during transit.
2. Strikes, Riots, and Civil Commotions (SRCC) Coverage: This feature safeguards against losses or damages caused by strikes, riots, or civil commotions occurring during transit.
3. War and Terrorism Coverage: This add-on provides coverage for losses or damages resulting from acts of war, terrorism, or political violence.
4. Temperature-controlled Cargo Coverage: It offers protection for perishable goods requiring temperature-controlled transportation, covering losses due to temperature deviations or equipment failures.
5. Exhibition or Trade Show Coverage: This extension broadens coverage to goods exhibited at trade shows, exhibitions, or fairs.
6. Customised Coverage: Tailoring the policy to the insured’s specific needs and requirements, this add-on provides additional coverage for unique or specialised goods or circumstances.
7. Valuable Papers and Documents Coverage: This feature ensures the safety of crucial business documents during transit, covering the loss or damage of these valuable papers, providing financial security, and minimising disruptions to your operations.
8. Loading and Unloading Clause: The loading and unloading clause offers coverage for damages occurring during the loading or unloading of goods from the transport vehicle, protecting against potential losses during these critical stages.
9. ODC (Over Dimensional Cargo) Clause: The ODC clause offers specialised coverage for transporting large or oversized cargo, ensuring protection for these unique shipments and addressing potential risks associated with their transportation.
Understanding Their Cost and Benefits:
As It is saying in Hindi earlier “unth ke Munh Mein jeera”
The premium paid for the marine insurance While running your businesses , it acts as a critical illness insurance policy of your business .
In the critical illness insurance policy, when a person is found to have a critical disease as per the policy the amount is compensation to the insured. In the same manner in the marine insurance provide same cover coverages and prevent from financial loss in businesses either it maybe manufacturing or trading .
8. Industry Trends
Current Developments in Inland Marine Insurance:
Business people are very rigid in terms of buying or doing any expenses in inland marine insurance policy. As per our experience It is having the same story like having a Health Insurance policy.
If someone buys the health insurance policy if any claim arrives he never misses the renewal of the health insurance policy as he knows the importance of having the health insurance policy and not the benefit which helps in to prevent the financial losses which he had to be under under some circumstances .
Where as in the same manner, if any claim arises in the marine insurance the businesses actually got experienced of having the Benefit of having the marine insurance policy as they have prevent themselves by settling the claim under marine insurance policy cycling their claim.
But nowadays we are seeing a third kind of business persons who are learning from other businesses experience and there deciding to take the marine policy and preventing themselves from any financial losses .
9. Legal Requirements
Regulations Surrounding Inland Marine Insurance in India:
There is no such law related to having the marine insurance policy for the traders or manufacturers. This practice is totally Carried out by the seller or the buyer . But in the past 10 years it has been seen that many of the manufacturing companies, traders, government authority etc are asking from the traders or the manufacturer to deliver their goods with marine insurance cover.
Their Influence on Pricing:
The practice of buying an Indian marine insurance policy has been increased among the business owners in India. It has a both positive and negative impact on the pricing of the insurance premium.
Positive Aspect :
As we are witnessing, the Awareness of marine insurance among business owners Has increased which leads to an increase in the demand of marine insurance related to the different commodities . As a result, many insurance companies are providing custom plans for certain commodities at a minimum rate.
Negative Aspect :
Basic premium of many of the commodities in the marine insurance policies has been increased across all India insurance companies as some of the commodities like bulk oil , cotton etc. have higher loss making commodities . Hence most insurance companies provide Marine policies with higher premiums .
Inland Marine Insurance is an indispensable shield for goods in transit, and its cost varies based on several factors. Understanding these elements is crucial for individuals and businesses in India. Secure your cargo with the right coverage.
Frequently Asked Questions
It covers goods during transportation, safeguarding against damage, theft, and other perils.
Yes, the type of goods being transported influences the cost.
Comparing rates from different agents / brokers or insurance company providers is the best approach. Keeping the priority of who gives the best service after sales. in Marine policy on the claim approaches the premium has no meaning I that you have paid higher or the lower .
While it's not a legal mandate, it's highly recommended for anyone transporting goods . There is no such law in India but many businesses have Started taking in there business culture .
Yes, the industry trends can impact the pricing of this insurance. for example, edible oil and cotton both commodities have high Loss making across all insurance companies .
Yes, You can take the single shipment policy which s called as single transit marine insurance policy in which one bill is covered from source to destination . when the goods its delivered successfully the policy ends its coverage .
Yes, you can customise your coverage based on your specific needs. Insurers ofer flexibility to tailor policies to your cargo and risks.
We need to understand one thing that commercial Auto Insurance is going to give coverage to your commercial vehicle only , whereas the inland marine insurance policy will give coverage to the goods which are transported by the vehicle
Exclusions can vary, but common ones include loss or damage due to war, intentional damage, wear and tear, Overloading, over dimension cargo temperature sensing commodity and improper packing , Be sure to review the policy exclusions carefully.
No one can stop the claim from arising in the future , but You can potentially lower the cost by choosing higher deductibles, having good security measures, and maintaining a safe track record.
Yes it is always profitable if you take the bundled in land marine insurance policies. There are two kinds of policies: Marine open insurance policy and stop marine insurance policy . both policies are offered on discount rates with comprehensive addon coverages as per our need
Yes, Only in the case of if you are having a small business . otherwise customise bundled policy like open Marine and stop policy should be taken for our businesses.
In the event of a claim, you should notify your insurer, provide documentation of the loss or damage, and cooperate with their investigation. The specific process may vary among insurers.
Inland Marine Insurance primarily covers goods transported within a country. For international shipments, you may need additional coverage through an Ocean Marine policy.
Inland Marine Insurance covers goods in transit within a country, while Ocean Marine Insurance provides coverage for international shipments by sea.
There are two kinds of coverages which insurance companies provide: ITC A and ITC B . ITC A coverages give total cover related to any kind of loss whereas ITC B excludes the loss related to the theft or loot ,which occurred during the transition of the shipment.
Most insurers allow policy changes mid-term, so you can adjust your coverage if your shipping needs change.
Yes, Inland Marine Insurance is crucial for small businesses to protect their valuable cargo during transit, reducing financial risks.
Yes, Inland Marine Insurance can cover perishable goods like fish , milk products , food or flowers, safeguarding your investment during transportation.
In most cases, coverage starts as soon as you purchase the policy and make the initial premium payment.
While there are no direct incentives, having Inland Marine Insurance can improve a business's ability to operate smoothly and recover from losses.
Most policies allow you to cancel with proper notice, but you may be subject to cancellation fees, so it's essential to check the policy terms.
Without Inland Marine Insurance, you would be responsible for covering the repair or replacement costs of the damaged goods, which can be a significant financial burden.
Inland Marine Insurance primarily covers domestic transportation. For international shipping within India, you may require Ocean Marine Insurance.
You typically need to provide evidence of the loss or damage, such as photographs, invoices, and details of the incident. Your insurer will guide you through the required documentation.