What is marine insurance?

If you’ve ever had anything to do with boats, waterways, cargo or ports, you will likely have heard of marine insurance. But you might not know exactly what it covers, how to get it or …

If you’ve ever had anything to do with boats, waterways, cargo or ports, you will likely have heard of marine insurance. But you might not know exactly what it covers, how to get it or even if you really need it.

If you’ve ever asked yourself: “what is marine insurance?”, thought about buying a boat or just want to brush up on your knowledge of marine insurance cover and policies, then you’ve come to the right place.

There are many types of policies and coverage out there to get your head around. And with all the confusing jargon that surrounds insurance, it’s not surprising that many of us get confused with what’s on offer.

In this article we’ll take you through the key points of marine insurance and demystify the process for you. Whether you own a small pleasure dinghy and want to protect your pride and joy, or feel confused about freight insurance policies, we’ve got you covered.

What is marine insurance? An explanation

Marine insurance provides vital protection to people working in, or enjoying, the marine industry. This includes owners of pleasure boats and yachts, shipping corporations and even cargo owners.

Even if you follow safety protocols to the letter, train your staff well and maintain your vessels, you can’t control everything that happens on the water. Accidents will happen, and natural events will occur that can disrupt your business and damage your ship.

In 2019, 1,090 accidents involving UK vessels or vessels in UK coastal waters were reported the Marine Accident Investigation Branch (MAIB).

So clearly, this applies to experienced sailors and pleasure cruisers alike. Just like any other insurance coverage, marine insurance will protect you and your business should the worst happen, and cover any loss or damage to your watercraft or cargo.

Obviously there are exceptions and different policies will cover different eventualities. It’s up to you to check your policies and budget for your premiums.

Do I need marine insurance?

You’re probably wondering if having marine insurance is a legal requirement, like car insurance.

If you’re sailing for pleasure then no, there is no legal requirement for you to buy marine insurance. That said, most marinas will insist that you at least have third party liability insurance if you want to use their facilities.

Also, boating is an expensive hobby. You love and cherish your vessel, so of course you’ll want to protect it and your pocket. Simply put, making sure that you’re covered for the unforeseen is always worthwhile.

If you’re operating in the commercial marine industry, then you will also need insurance to protect yourself, your business and your employees. Many export contracts will include obligations that the exporter has marine insurance.

Even if you think it’s an unnecessary expense, marine insurance will cover you against a variety of risks that you simply can’t plan for.

What is covered under marine insurance?

Situations that are covered by marine insurance include:

  • Theft and vandalism
  • Loss or damage of goods
  • Loss or damage of boat
  • Fire damage
  • Storm damage
  • Towing assistance
  • Natural disasters
  • Piracy

This gives you a rough idea of some of the eventualities that marine insurance covers. But all this will depend on what type of vessel you have, and what you use it for. And that will vary depending on whether you need private or commercial marine insurance.

What types of marine insurance are there?

If you’re cruising along a canal for fun, you’re unlikely to need to insure any cargo. If you’re planning on shipping high-value items to another part of the world, then third party liability on its own won’t cut it.

Luckily, marine insurance providers offer policies for both the pleasure cruiser and for those operating in the shipping industry.

Private marine insurance

Whether you own a two-man dinghy, a jet ski or a superyacht, marine insurance is there to protect your investment.

It can also save you from having to pay out of your own pocket if you damage someone else’s property with your vessel. Third party liability insurance will protect you from claims made by other people if you’re legally liable for damage, injury or death to another party.

Common boat insurance claims range from theft, to vandalism, to fire and storm damage. Some things you might want to check your policy document includes are cover for:

Collisions

One insurance provider reported that collisions are the top cause for insurance claims. This could come from colliding with an object underwater, or with another vessel. Unsurprisingly, colliding with another vessel is expensive, and repair bills could run into tens of thousands of pounds.

Theft

This could include theft of the vessel itself (from the water, or storage facility) or theft of items from your boat, like cash, laptops or outboard motors or generators.

There are things you can do to make your vessel as secure as possible, like installing an anti-theft device, or keeping it tightly locked up when not on the water. Just make sure you tell your insurance provider what a responsible owner you are to see if you can get a discount on your premiums!

Storm damage

If you sail in the UK, chances are you’ll run into some hairy weather. Strong winds may cause damage to items onboard. Lightning can fry the electrics and even cause a fire. And large waves might even lead to the vessel capsizing.

There are several precautions you can take to protect your boat from bad weather, but it’s still sensible to take out insurance to make sure you won’t get financially stung.

Sinking

A capsized dinghy can be easily righted. Sinking or capsizing for a larger vessel is devastating, and usually the most expensive boating incident you can encounter. If your boat sinks or capsizes, then the damage can lead to the total loss of the boat, which will be expensive to replace.

A boat can capsize or sink due to bad weather so even keeping it in a marina won’t prevent you ever having to make this sort of claim.

Grounding

Grounding can result from reckless sailing, or something as innocent as a ship drifting and hitting underwater rocks.

Either way, it can cause significant damage to your boat and costs thousands to fix.

Commercial marine insurance

Of all the ways we transport goods (rail, road, air and water), water is the one which holds most uncertainty because of the sheer amount of things that can happen to the ship and cargo.

More than 90% of the world’s trade is transported by ocean freight, so it’s not surprising that shipping companies will want to insure against the worst case scenario.

From piracy to bad weather, the sheer number of risks involved when working in the marine sector means that it is always beneficial for ship owners, shipping corporations, or indeed anyone involved in the commercial marine industry to have marine insurance in place.

These are just some of the types of marine insurance you’ll come across in the commercial sector:

Marine cargo insurance

Marine cargo insurance covers goods that are in transit. This includes when they are on and off the water. This type of insurance protects against loss, misplacement or damage to cargo which can happen during loading and handling at the terminal, or on the voyage itself.

Some providers will also cover situations like jettison (where cargo is thrown overboard to prevent a ship from capsizing or sinking) or washing overboard, but this will vary between companies. Around 1,382 containers are lost at sea each year, and those who are shipping cargo will need to protect themselves against the worst case scenario.

Freight insurance

Freight insurance covers your losses for any freight lost or damaged due to an accident.

Hull insurance

Hull insurance offers coverage to your vessel’s hull or torso. It also covers the boat’s machinery and equipment in case of physical damage.

The type of coverage you need will depend on what you intend to use your vessel for. For example, coverage for a racing boat will be different to one for a cargo boat.

Marine liability insurance

This kind of policy offers protection for third party liabilities.

For example, it would protect the policy holder in the event of a collision, a crash or an attack. It usually includes coverage for injuries, illnesses and even death, but it’s wise to check your policy to see exactly what’s covered.

Machinery insurance

There is a wealth of machinery aboard a commercial boat. This insurance will protect your essential machinery on board your vessel from operational damage. Any compensation will be subject to a survey, and will need to be approved by a surveyor.

What isn’t covered by marine insurance

Sadly, not everything under the sun will be covered by your insurance. Check your policy, but instances usually not covered, or rejected by insurers include:

Wear and tear

General wear and tear of your boat, or of any cargo won’t be covered. This also includes leakage of cargo when in transit or storage.

War, riots and strikes

If your boat or goods travel through a country (and its waters) that is at war, then you may not be covered.

Change of route

If the captain changes the planned route of a vessel, then this could have an effect on the policy, or void it altogether.

Intentional damage

If damages are made on purpose, or not enough care is taken to prevent loss or damages, then a claim can be rejected. If there is any evidence of negligence or dishonesty, then the claim won’t be upheld.

Vessel is not seaworthy

If the owner doesn’t maintain the upkeep of their ship, and knows that their ship is unseaworthy, then insurer will reject their claim.

This will depend on the individual knowledge of the customer. An occasional sailor isn’t expected to have the same level of knowledge as an experienced skipper.

Delay

This refers to costs and loss due to delay of cargo.

Poor packaging

If the cargo being shipped is not packed properly, then the insurer will reject the claim.

How do I get marine insurance?

There are a wide range of companies who can provide policies for marine insurance and marine cargo insurance. What you need will depend on your type of vessel and activities.

You can talk to a specialist provider, who will have expert knowledge and be able to advise you on the type of insurance that you need. You could also talk to an agent or broker.

Now is not the time to scrimp. Underinsuring your vessel could lead to you being out of pocket should the worst happen. But you also don’t want to over insure. Talk to an expert to help you find the policy that is right for you and your boat.

Summary

Navigating the world of marine insurance can be a tricky process. There are plenty of risks out there on and off the water that you need to protect yourself, your family and your vessel from.

By learning about marine insurance, the policies available to you and the common risks, you can tailor coverage to your needs and get the right policy for you and your business.