As a small business owner, your activities may include handling, transporting, and shipping goods that don’t belong to you. At the same time, you can’t leave the fate of these goods to chance: Your vendors and customers count on you to make sure they get from point A to point B swiftly and safely.
When you’re looking for insurance solutions to protect you from risk, you might be unsure what kind of coverage applies to these goods. Does your general liability insurance cover shipped goods, or do you need ocean marine insurance? This is your guide to what ocean marine insurance is, how it differs from inland marine insurance, and when you might need it.
What is an ocean marine insurance policy?
The name “ocean marine insurance” might make you think that this kind of insurance is primarily for sea-faring vessels. On the contrary, ocean marine insurance is a specific kind of insurance to protect goods and vessels crossing domestic and international waters by sea, land, or plane.
If you own a marine vessel that you use for commercial purposes or you contract with another company to transport your goods and merchandise, you may need this kind of insurance. An ocean marine insurance policy is most often taken out by businesses in the following industries:
- Marine services and contracting
- Marine transportation
What can ocean marine insurance cover?
As you can guess by the different industries that use ocean marine insurance, this kind of policy can cover a variety of risks. In fact, ocean marine insurance is an umbrella term for three kinds of coverage:
- Cargo coverage
- Hull (vessel) coverage
- Liability coverage
Let’s take a closer look at each ocean marine policy.
If your company deals in international imports and exports, ocean marine insurance can help to cover your goods and merchandise. It may be helpful in situations like the following:
- Lost cargo – Should the shipment you’ve promised your clients never arrive—whether due to a collision or misplacement—you could be liable.
- Lost revenue – Should a shipment be delayed for so long that your client no longer needs the goods and refuses to complete payment, you could suffer a financial loss.
- Legal liability – In a situation like the above, a client could take you to court to sue you for the payments they’ve already made on lost, late, or damaged goods. Without ocean marine insurance, you may be responsible for your own legal fees (depending on the specifics of your other insurance policies).
Hull (vessel) coverage
Ocean marine insurance can also provide coverage against damage to a ship’s hull, or machinery, and against total loss of a ship. If you own or operate a marine vessel for commercial purposes, this kind of ocean marine policy may be essential to protecting your yacht, ferry, or boat.
Similar to general liability insurance, ocean marine coverage can help to protect vessel owners from claims of bodily injury, personal injury, and property damage related to their services.
Ocean marine vs. inland marine insurance
Inland marine insurance, or commercial inland marine insurance, covers goods and merchandise in transit. When your imported or exported goods are covered by this kind of policy, your insurance goes wherever they go. Inland marine insurance most often applies to goods travelling domestically via rail, air, and truck.
Ocean marine insurance can cover not just goods, but also vessels. It can apply to goods travelling domestically or internationally by any means, with continuous coverage if part of the shipping trajectory includes shipping by land, air, or water.
Consider the shipping path your goods take. Depending on the specifics of your business and your policy, you may need one or both of these kinds of insurance.
Doesn’t my insurance already cover that?
As you read through the above scenarios, you may think that an existing business insurance policy already covers your goods, your lost revenue, and your legal liability. In fact, ocean marine coverage may seem similar to policies you already have. For example:
Commercial property insurance can protect your company’s equipment and assets. You may assume this covers any goods you transport—but in fact, commercial property insurance only covers goods at one location, not when they’re in transit.
General liability insurance can provide coverage in the event of client or third-party bodily injury, personal injury, advertising injury, or property damage. However, depending on the specifics of your policy, it may not protect against liability during international transit.
Professional liability insurance can provide coverage against claims of errors, omissions, and mistakes related to your professional services. While lost goods may seem like a mistake, most professional liability policies apply to domestic work, not to international shipping.
In general, it’s important to check with your insurer to discuss the specifics of your policy. This will help you determine whether you need insurance for your goods or vessel.
Ensure smooth sailing for your business
Whether you’re a marine services company or a small importer, it’s important to understand your insurance coverage, and how it applies to goods in transit. Remember:
- Ocean marine insurance can cover liability, goods, and vessels during international transit by sea, air, or land.
- Inland insurance can cover goods in domestic transit.
Your business likely needs other policies like general liability insurance and professional liability insurance to protect against other kinds of claims.
Stay out of rough water by protecting your business. Leave risk management to the professionals, and focus on what you can control—your growth.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.