Marine Cargo and Transit Insurance: Protecting Goods in Movement
The moment a consignment leaves your gate, it is no longer under your control. A truck can overturn, a container can be damaged at a port, goods can be delayed or pilfered. Marine cargo and transit insurance covers the goods themselves for loss or damage during the journey.
Key Takeaways for Policyholders
- ✓Marine cargo insurance covers goods in transit by sea, air, road, rail or inland waterways, including some storage during transit.
- ✓The transporter's liability is often limited by law and contract, so the buyer or seller usually needs separate cover.
- ✓Cover depends on the clause chosen. "All risks" (A) is wider than named-perils clauses (B) and (C).
- ✓Who must insure depends on the sale terms in your contract, such as Incoterms for exports and imports.
Why the transporter's liability is not enough
Under Indian law and standard transport contracts, a carrier's liability for goods is usually limited and subject to conditions. It rarely equals the value of the goods or the loss to your business. Marine cargo insurance fills this gap by covering the goods themselves, up to the sum insured, subject to the policy terms.
The clauses that define cover
| Clause | Cover style | What it generally means |
|---|---|---|
| Institute Cargo Clauses (A) | All risks | Covers loss or damage from any cause, except listed exclusions |
| Institute Cargo Clauses (B) | Named perils | Covers a defined list such as fire, sinking, overturning of a vehicle, and others |
| Institute Cargo Clauses (C) | Named perils, narrower | Covers a short list of major perils |
| Inland transit clauses | Rail and road in India | Tiered cover for domestic movements, similar in structure to A, B and C |
Exclusions apply even under "all risks", such as inherent vice (natural deterioration), improper packing, delay, and wilful acts. Ask your Advisor to walk through them for your type of goods.
Single transit, open policy or annual cover?
- Single transit policy. For one shipment. Easy for occasional movements.
- Open policy. Covers all shipments over a period, with declarations. It suits businesses that ship often.
- Sales turnover policy. Premium is based on turnover for domestic movements. Often practical for traders and manufacturers.
Who needs to buy it?
The answer is in your sale contract. Under some terms the seller arranges insurance, under others the buyer does. For example, CIF terms require the seller to provide insurance, with minimum cover value stated by the rules, while FOB places the risk on the buyer once the goods are loaded. Confirm this before dispatch, not after damage.
Illustration
A garment exporter ships goods worth ₹40 lakh to a distributor. During road transit to the port, the truck overturns and half the consignment is damaged. The carrier's liability is limited by its contract, so the exporter recovers only a small part. With cargo cover on an "all risks" basis, the claim for the damaged part can be assessed by a surveyor and paid within the policy terms.
If cargo is damaged
- Inform the insurer or Advisor immediately. Notify the carrier in writing and note damage on the receipt.
- Do not dispose of damaged goods. Allow the surveyor to inspect.
- Preserve the invoice, packing list, lorry receipt or bill of lading and photographs.
- Submit the claim documents within the time in the policy.
Cargo cover works alongside property cover like Standard Fire and Special Perils. See our SME insurance page for the full set.
Frequently asked questions
Is marine cargo insurance only for sea shipments?
No. It also covers goods moving by air, road, rail and inland waterways, depending on the policy.
Does it cover delay in delivery?
Generally no. Delay and loss of market are commonly excluded, so check the exclusions for your goods.
Do I need cargo insurance if the transporter is liable?
Usually yes. A carrier's liability is limited and may not cover the full value of goods or your losses.
What is an open policy?
It is a continuing cover for shipments over a period. You declare each shipment and pay premium based on declarations.
Talk to a Distroo Advisor
Want to see how this applies to your own situation? A Distroo Advisor can walk you through the options in plain language. Read more about SME Insurance or send us your question. Advice from Distroo is free for customers; any policy you buy is issued by the insurer at its standard premium.
This article is general information for awareness. It is not insurance, tax, legal or investment advice, and it does not guarantee any outcome. Product features, premiums, underwriting and claim decisions depend on the respective insurer’s policy wording and applicable IRDAI regulations. Always read the policy document before you buy.