Marine insurance is a special insurance policy provided to shipping, boats and, critically, the cargo that is carried in them. Is marine insurance right for you?
Like all other insurance policies, marine insurance policies are aimed at protecting something that you own against potential losses. You pay a fraction of the cost or value of something that you own in order to insure that you will be able to replace it should something happen. Marine insurance is at its core just another type of insurance policy that protects your ocean going cargo. For SDC International Shipping’s relocation customers there are two basic kinds of policy available: total loss insurance policies and damage to cargo insurance policies.
When you insure your home, you can insure the physical building against damages to it from threats like fire, natural disasters and so forth. You can also insure the contents of your home against additional threats like theft, loss. You can choose to insure both, as many people do. This is true not only of home insurance, but many other types as well. For your automobile insurance, you are usually forced to purchase some sort of liability coverage (depends on which state you live in) to cover bodily damage and damage and some minimum coverage of damage liability as a condition of your vehicle’s license. Most people will prefer to purchase some sort of collision or comprehensive policy that will increase the coverage available for a long list of potential damages that you might cause.
When you send your family’s valuable belongings from one country to another, they are usually sent by boat. Since the main portion of your move will be on the ocean, the insurance is called marine. These policies are very different from the ones you are familiar with. In the United States, insurance is licensed by the different states, and while the policies are similar, the state controls and regulates them. Your move is international, and the policy that insures your move has to be international. There are special international insurance companies who insure marine cargo. SDC International Shipping acts more or less as an insurance agent, arranging for our clients’ insurance policies with these companies. [It is important to stress that these companies don’t sell policies directly to the shipper, but insurance claims are made directly to them.]
The Need for Marine Insurance
Container cargo ships are wonders of modern technology. The new ones can transport over 20,000 20’ containers. At sea, containers are constantly being moved while the ship travels from port to port, to minimize total time in port and to adhere to tight schedules. These ships operate with only skeleton crews, and are constantly at work. They don’t rest outside of routine maintenance.
While it would be nice to think that all of this automation means that your container, or the container with your shipment in it if you are sending a less than full container load, will be transferred from the origination port in the United States to ports of entry around the world in tact without any problems, mistakes and mishaps are common. If you fly commonly, you know that suitcases get lost all the time, and that is a far more simple process than sending a container from your old home in the United States to your new home in a different country.
In that ship, your container could be moved many times. In some cases, containers are even transferred from one ship to another. That same container was either loaded at your house or at our warehouse, trucked to the port, transferred to a ship, shipped across the seas to another continent, taken off the ship, passed through customs, sometimes inspected, transferred to our destination teams, placed on another truck and eventually delivered to your new home.
Mechanical failure can cause damage to your container and your belongings with in it. The ship, the port, the trucks and their operators are not infallible. Nor are the operators of the equipment. While it is uncommon, damage occurs. Another occasional occurrence is piracy. Though they prefer to get ransom there is no promise that cargo arrives intact.
Our movers are seasoned professionals, with years of experience preparing personal belongings like furniture and fragile dishes for transport overseas. We will use top quality materials to wrap your furniture, new cartons made especially for international marine transport, and will carefully place your things in the shipping container in a manner that will ensure minimal movement, and when necessary we will secure things to the container walls. However careful our movers are, however, we are unfortunately not the only ones handling your cargo. In many locations it is required that containers be emptied and your goods transferred to moving vans. Some of the times there are manual inspections of containers (for most locations this is done randomly to about 5% of the containers entering the port). If you are sending an automobile or a motorcycle in your shipment, for most locations they are removed from your shipping container and delivered to licensing facilities near the ports. We will prepare your things as well as can be done, but it is impossible to promise that all of your things will arrive without any damage. Other things that might cause extra handling steps are putting your belongings into storage and later removing them, and when small vans are used in locations where moving trucks have difficult access.
You are not required to purchase marine insurance. It is completely optional, and you can decide if you want it or prefer to go without it. Many of our clients decide that they don’t want to insure, and that it is fine.
Marine Insurance Types
There are several types of marine insurance. We, of course, are talking only about insurance of your personal cargo. You can always insure your shipment for total loss. There are other types of insurance that are called marine for anything that touches the water, like yachts and even ships. We help our clients getting insurance specifically for the shipment of personal effects and household goods in sea shipping containers. If you are sending a shipment via air cargo, we can also help you get insurance for that.
The two major types of insurance are against total loss and against damage.
Total Loss Insurance
True to its name states, total loss coverage will completely insure your entire shipment if it is destroyed or the container is lost (this does happen). As an example, you would be covered if a stack of containers collapses and yours belongings are destroyed. The amount you are insured for is the amount that you have declared in your customs declaration form.
Total loss insurance typically costs less than insuring your shipment against any risks. The policy usually covers either the entire loss or nothing at all.
All Risk Cargo Insurance Policies
You are covered for not only total loss, but also for damages to portions of your shipment or individual items when all risk cargo insurance is purchased. SDC International Shipping goes to great lengths to ensure that your cargo will arrive undamaged across the ocean. We would like to promise no damage, but we can’t. Your personal belongings will be handled many times regardless of whether you are sending a private container or are sending a less than full container load (LCL) sending through a consolidation service. Even when you use SDC International Shipping’s groupage consolidation service something could go wrong that is not in our control.
When total loss insurance is purchased, your entire shipment is either insured, or none of it is. The insurance company will either pay you the entire amount, or they will not pay you anything. If one or two items in your shipping container are damaged, or if a box or two go missing, these will be insured using all risk cargo insurance, but not with only a total loss policy. A box or two could go missing even if you send a full container load (FCL) shipment, if there is a manual inspection, or if your cargo needs to be transferred to storage or to moving vans or shuttles. When your cargo goes into storage at the destination, unless it is stored for only a few days, it will be transferred to a facility.
You should also buy an insurance policy for any automobiles, motorcycles and other licensed vehicles that you are shipping overseas. Your vehicle may be shipped using a variety of methods. SDC’s relocation specialists work with you to figure out the most effective method for you. If you are sending both a motor vehicle and a household, it makes a lot of sense in most cases to send it in your shipping container. This is very popular as it is more convenient than sending separate shipments. In this case, just like any other valuables shipped, the motor vehicle needs to be secured in the container by moving professionals in order to be insured. As placing a car into the container requires a special lift, our movers will be there to prepare the vehicle. Please note that vehicles need to be clean, empty, the battery disconnected and fluids drained.
SDC International Shipping has clients that will send only a car, without any household goods. These are sometimes sent together with other automobiles in dedicated automobile containers. Other vehicles like full sized pickup trucks, RV’s, and even boats that are sent on their trailers are also sent via marine cargo. These are sent using a method known as RO-RO, or roll on roll off, which allows for larger vehicles that won’t fit into a shipping container. When a vehicle is sent using the RO-RO method, it should be insured separately from the remainder of your shipment.
If you want to purchase an all risk cargo insurance policy, you will have to have SDC International Shipping’s professional movers pack and load your shipment. You will have to let us do all of the preparations for you if you want your shipment protected against damage. If you have decided that you prefer to pack your shipment by yourself, you will still be able to purchase a total loss insurance policy.
Please note that your insurance should be consistent with your customs declaration. You will need to declare exactly what you are insuring, along with the value of these items. You don’t have to insure everything, but you will only be indemnified for the things that are insured. For instance, if you are sending along a few boxes of towels and bedsheets, you might decide that you don’t want to insure them. You might prefer to insure only your motor vehicle and expensive pieces. We recommend that you insure most of your furniture.
Insuring for the Cost of Repurchase
There is an interesting feature unique to marine insurance. You are able to insure something for more than its value. If you are moving to Europe from the United States, for instance, there is a very good chance that you will choose to send your car or motorcycle in your container, as they are far more expensive in Europe than they are in the states, and sending one of them over is one of the great advantages of a shipment. If you own a six month old Toyota Camry, a car that is very popular to send, you insurance will never pay you more than about $20K, because this will be the value of the car. The fact that you bought a new one only a few months before is irrelevant, your automobile insurance will pay up to the value of the car in the case of a total loss. However, if you needed to replace this car in France, the same model would probably cost about $40K. If you want to be able to replace the car that you want, you should insure for the replacement value. Otherwise, you might find yourself with enough money for a six year old car in France instead of the six month old car that you sent. We have to emphasize that it will cost you more to insure for the higher replacement cost, but you are able to do so. The cost of your insurance policy is based upon the value insured.
Insuring for the cost of repurchase holds true for other items as well, not only automobiles.
One other thing that you have to keep in mind is that the insurance company might request proof of certain values. If you are sending something that is especially valuable, you might have to provide some sort of appraisal and be required to crate the item.
Ask your SDC International Shipping relocation specialist to give you more details about marine insurance.