In business, transit of goods is very important. In fact, it is a necessity. Many businesses operate cross-border and with globalization setting in, overseas exchange of goods is now the norm. How often have you come across the scenario that you have ordered something on an e-commerce site and they have informed you that the product would take some time to reach as it needs to be shipped from another country? Then, you would keep getting messages about the stages of transit before it reaches you. One such stage would be when the online shopping site informs you that your order has been shipped. By the word “shipped”, we understand that the product, along with other products, has been put onto a cargo ship and would be reaching us soon.
Now imagine a situation — what if the cargo ship that was carrying the e-commerce sites goods meets with an accident and is damaged, wrecked or sinks? How will the e-commerce business bear such a massive loss? If such an accident happens on a ship, it can lead to an entire business turning bankrupt and thereby meeting its end. With the unpredictable weather conditions, it is very much possible that the goods carriers meet with such accidents. Hence, transit over the sea can pose a lot of danger to the cargo.
Hence, it is very important that there is a financial support system for the cargo that may be lost or damaged by transit on the sea. Such a financial support system would be marine cargo insurance. This is a sub-part of marine insurance which insures loss or damage of ships, cargo, terminals, and also the cargo that maybe transferred or acquired as a property. Marine insurance, as a measure of marine safety, has been one of the most well developed insurances and has originated with the Greek and Roman maritime loan.
Marine cargo insures the cargo that is shipped from one country to another. Marine cargo insurance covers damage done when there is a collision with another ship or there is a collision with an object in the harbor. This is termed as “running down”. Another instance of insurance coverage is ship wreck, when the wrecked material blocks the harbor and needs to be removed. Hence marine cargo insurance is a means of ensuring safety on the sea. It ensures that in case any cargo is damaged or lost, it does not lead to a major financial loss.