Marine insurance is a lot like any other kind of insurance where it protects you against damage to, or loss of something of value. This type of insurance is specifically for ships, boats, and cargo carried on either.
Oil and Gas account for 35 per cent of the country’s Gross Domestic Product. Petroleum exports in Nigeria contribute to 90 percent of total exports revenue. Oil theft seems to be a serious issue and attacks on ships are common, which results in a large chunk of the nation’s revenue. On average, oil theft costs Nigeria $8 billion annually.
With that being said, it is now quite clear to see why marine insurance is mandatory in Nigeria. Marine insurance protects owners against oil spills, fire and in particular, loss and damage of cargo. What is even more, the ocean is a temperamental mistress, so it is imperative that you do not allow yourself to be at her mercy – without cover.
There is no standard marine insurance policy with different companies offering coverage for different risks. Apart from covering expensive damages or losses involved at sea, marine insurance may also cover circumstances related to piracy and cross-border armed battles.
As we all know, the open waters can pose as a huge threat to your vessel and cargo. Financially this could cause some trouble. Marine insurance is specifically designed to ensure your finances and assets are protected against such threats.
The amount and cost of your marine insurance depends on the size of the vessel, routes taken, and the value of the cargo.
By choosing specific coverage you can even eliminate cargo coverage to meet the very precise needs of your business.
However, as one of the oldest forms of business insurance, marine insurance can be tricky to navigate, and companies are very strict when it comes to making claims.
A major part of marine insurance is the coverage related to your vessel which is known as Hull Insurance. Hull insurance intends to cover loss or damage to a vessel.
Coverage is determined to cover a specific time frame or a single trip with an assortment of policies related to yachts, fishing vessels, tugs, barges, large commercial vessels and passenger carrying vessels.
The hull coverage of a marine insurance policy is typically offered in two forms; Open Perils Policy or Named Perils Policy. The Open Perils Policy, also known as an All-Risk insurance policy essentially covers all potential external risks, barring a few that should be clearly named in the policy such as ice or aging conditions.
The ‘Named Perils Policy’ covers specific perils such as heavy weather, piracy, fire or other additional weather-related storms. Additional non-sea-related insurance can be purchased at an additional cost. Hull insurance usually covers the cost to repair and prevent future damages to the vessel. Most policies will also include liability for damages associated with another vessel while at sea.
The cargo, also considered the secondary part of marine insurance covers the loss or damage to any goods while in transit. Cargo policies are also offered in two plans, Open Perils and Named Perils as mentioned above.
Cargo can be insured for a single shipment or multiple shipments over a specific time frame. Most policies will provide coverage for the cargo’s value as well as other charges based on the payment that would have been received if the cargo were to reach its destination.
Keep in mind, that some cargo coverage policies have geographical restrictions, so make sure to read your policy carefully before deciding whether it suits your needs.
1) Port Risk policy is a marine insurance that guarantees the safety of the ship while it is stationed in a port.
2) Liability Insurance is the type of marine insurance where compensation is sought to be provided on any liability that may occur such as the ship crashing or colliding with another vessel as well as other induced attacks.
3) Freight Insurance offers and provides protection to merchant vessel corporations that are at risk of losing money in the form of freight. This would occur when the cargo is lost following an accident and solves the problem of companies losing money as a result of unprecedented events and accidents occurring.
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