Marine insurance may be critical to the profitability and survival of an importing and exporting business. When negotiating the conditions of imports and exports, keep insurance risk and cost in mind when negotiating an agreement. If you don't, your company may be doomed to failure.
Neglecting Marine Insurance Exposes You to Significant Risk
One of the most challenging factors for importers and exporters to consider is the critical role that marine insurance plays in their businesses. They know the importance of getting their goods to the final destination safely. Still, many don't realise that the combination of the perils at sea and the insurance rates charged by marine insurers can make an import or export venture unprofitable or just not viable because the insurance costs are too expensive.
However, there are significant risks involved with international shipping. The shipments you create, import or export through your company have a lot of risk outside your control.
Marine Insurance Can Help Your Business Survive
Suppose you send a product from Australia to China. When the product reaches its destination, the container ship experiences mechanical problems and is delayed by some horrible luck for six weeks. You have a few options. You can stash your product in a warehouse at your expense, or perhaps you can persuade your customer to pay for the warehouse expenses. Either way, you’re not making as much profit as you would be if your product arrived on time.
This is an example of a business risk that marine insurance can help mitigate. Still, some businesses do not purchase marine insurance because they’ve never experienced a maritime insurance claim (or maybe they’ve experienced one and haven’t called their marine insurance provider because they were afraid to face their failure). When this happens, businesses are left unprepared when they suffer a maritime insurance claim and might not recover without incurring an expensive loss.
How Marine Insurance Works
If you import or export goods for a company, you must understand marine insurance. The purpose of marine insurance is to help businesses avoid the financial loss they will experience if a shipment gets lost or damaged. If your shipment goes missing, marine insurance will help your company recover any losses by covering the cost of recovery or reimbursement.
You agree to pay the marine insurance company a premium in marine insurance. In return, the marine insurance company gives you a policy that covers the business actions that you'll be taking under the policy. You can claim your losses under the policy's terms and conditions. The marine insurance company will then decide your claim and pay you to recover your losses.
What Marine Insurance Covers
Marine insurance covers more than just physical loss of shipments. Many marine insurers also offer coverage for indirect losses due to shipping problems. If your load is delayed, you might experience financial losses as a result. Storage costs may become an issue if the delay is lengthy, and you may have to cover the cost of re-shipping the product.
When You Need Marine Insurance
You don't need marine insurance if your business is small or have small shipments. But if you're an importer or exporter and you're shipping high-value goods, you may want to consider purchasing marine insurance.
Many importers and exporters don't realise that their business needs marine insurance. But cargo insurance is not the same thing as marine insurance. If you need marine insurance, you need it to protect your business from financial losses. It's worth paying a premium to ensure that you protect your business against the significant financial exposure that your company faces when things don't go right.
Conclusion
If your business is embarking on importing or exporting goods, you must understand the risks that you may face. Depending on the type of goods you're importing or exporting, there will be a lot of financial exposure if a shipment goes wrong. It's essential to protect your business. The best way to do this is to purchase marine insurance.
Get in touch with New Wave Insurance if you require marine transit insurance coverage. We can assist you in identifying the most appropriate insurance for your assets, company and cars.