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Marine Cargo Insurance Costs: Factors Influencing Premiums

May 30, 2023
 By Jacob Lee
Marine Cargo Insurance Costs: Factors Influencing Premiums
Last Modified: March 14, 2024
Step into the world of marine cargo insurance costs, explore claim settlements, coverage needs, and factors that drive insurance rates.

Marine cargo insurance costs can be a significant concern when it comes to shipping goods internationally. Finding the right type of coverage can be challenging for exporters. However, shippers shouldn’t overlook the importance of protecting their cargo during transit. 

According to the American Institute of Marine Underwriters (AIMU), marine cargo insurance costs vary depending on factors like shipment value, mode of transport, and coverage type. On average, rates can range from 0.2 to two percent of the goods’ total value. Shippers should assess the potential risks before getting coverage. 

Despite the difficulty of understanding marine cargo insurance costs, exporters should always ensure the safety of their shipment with some type of coverage. 

How Much Does Marine Cargo Insurance Cost?

One way to mitigate potential risks and financial losses is through marine cargo insurance. Although the amount for this type of coverage can vary, the average amount is typically around 0.5% of the total value of a shipment. However, international marine cargo insurance rates can fluctuate between a variety of ranges. 

Factors That Determine Ocean Cargo Insurance Cost

Covering international shipments is a precaution that every exporter should take. Unfortunately, the cost of marine cargo insurance can change due to numerous factors. Shippers should be aware of the variables that can cause rates to rise and fall. 

These include: 

  • Value of the goods
  • Mode of transportation 
  • Destination
  • Level of coverage required
  • Perceived risks associated with the shipment
  • Packaging and handling
  • Claim history
  • Deductibles
  • Additional risk factors

Higher value shipments will have an increased marine cargo insurance rate. Shipments of luxury electronics and similar items will probably have higher premiums. The country that an international shipment will be sent to can sway cargo insurance costs.

Certain nations could have problems with theft or political instability. These risks lead to an increase in ocean cargo insurance prices. How much coverage the shipper obtains also impacts rates. 

Broader types of marine cargo coverage will result in higher costs compared to more narrow variations. For example, an all-risk insurance policy is much more expensive because of the dangers it protects against. Named perils coverage is less because it only defends from certain types of disasters.  

Insurance providers assess the perceived dangers associated with a shipment. When doing so, they often take into account certain variables to determine the risks freight might face.

These include the:  

  • Nature of the goods
  • Historical loss data
  • Shipping route
  • Final destination 

For example, shipping hazardous materials or fragile items may be considered higher risk and result in more expensive insurance rates. The shipper’s history and loss experience can impact costs as well.

Exporters that have a history of frequent claims or who have a lost numerous high value shipments might have to pay more for coverage because they will be a riskier client for a provider to insure.

Companies will charge more expensive rates based on the deductible chosen by a shipper. A higher deductible means the shipper assumes more risk, resulting in lower premiums. Lower ones transfers more risk to the insurer, leading to higher international cargo insurance costs.

There are additional risk factors that providers will assess before settling on a rate, such as:  

  • Seasonality of the shipment
  • Specific cargo characteristics (perishable, fragile)
  • Use of specialized equipment

All of these variables can influence marine international cargo insurance prices. Therefore, shippers should also assess these factors to get a rough estimate of their rate. 

The Average Cost of Marine Cargo Insurance Premiums

Despite the average amount of marine cargo insurance being 0.5 percent, the total amount an exporter spends will change with each shipment. We’ve provided a few examples to demonstrate how much a 0.5 percent rate will cost across for shipments with different overall values.

Examples of  Marine Cargo Insurance Costs 

Overall Value of ShipmentCost of Marine Insurance*

*based on a range of average charges

Regardless of the amount of an insurance premium, shippers can calculate how much they’ll pay for coverage by following the same steps. 

These include:

  1. Determining the total cost of the shipment
  2. Determining the premium
  3. Turning the rate into a decimal
  4. Multiplying the decimal by the total value

Completing each of these steps precisely will reveal the cost of a marine cargo insurance premium rate for a particular load of freight. 

A cargo ship burning off in the distance

Types of Marine Cargo Insurance and the Corresponding Rates

Different types of marine cargo coverage have unique corresponding prices. Shippers should be familiar with these costs before deciding on a level of coverage that works best for their load.  

All-Risk Cost

All-risk marine cargo insurance provides the broadest level of coverage. There are many dangers of ocean travel that this plan will protect against.

Some of these include:

  • Fire
  • Theft
  • Accidents
  • Natural disasters
  • Mishandling

Because of the increased level of protection afforded by this type of coverage, shippers can expect to pay a premium that’s on the higher range of marine cargo insurance rates. Typically, this amount is between one percent to three percent of the total value of a shipment.

Named Perils Cost

Unlike all-risk coverage, named perils marine cargo insurance provides coverage specifically for the dangers that are explicitly listed in the insurance policy. Therefore, named perils offers a more limited scope of protection. 

The exact risks can vary based on what shippers negotiate on with their provider. That said, exporters can expect to pay a rate that’s on the lower than the average cost of international cargo insurance. This amount is usually 0.5 to 2 percent of the total value of an exported load. 

Our article on the types of marine cargo insurance will give you more information about the levels of coverage you can obtain. 

Palletized freight on a dock next to a cargo ship

Misconceptions About the Cost of Ocean Cargo Insurance

Marine cargo insurance provides essential protection for shippers and businesses that send goods to foreign countries. However, there are several misconceptions surrounding this type of coverage that can lead to misunderstandings and missed opportunities for protection.

1. Every Shipping Company Provides Coverage

Ocean carrier shipping companies do provide insurance as part of their services. That said, these options may not always provide comprehensive coverage or meet the specific needs of an exporter’s load.

Despite transporting freight overseas frequently, most ocean carriers don’t have knowledge regarding the risks to cargo and the costs that shippers will incur if their goods are damaged. Many exporters also require the freedom to choose an insurance provider that best meets their requirements. 

This gives them the ability to compare coverage options, premiums, and service levels. Shippers that choose the protection offered by an ocean carrier are limited in their choice of insurance.  

Learn more about ocean freight safety and the dangers facing it in our article on the topic.

2. It’s Too Expensive

While the cost of marine cargo insurance may seem like an additional expense, it’s important to consider the financial impact of not having adequate coverage. Freight that’s damaged can place an even higher monetary burden on a shipper than paying for a policy. 

Based on the marine ocean cargo insurance rates we’ve already discussed, exporters won’t be spending that much more on insurance than they would for their shipment alone. Most marine cargo coverage is well within the budget of businesses and individuals that send goods to other countries. 

Our article on the benefits of marine cargo insurance will shatter any other misconceptions you have about this form of transportation protection. 

A cargo ship in the process of being loaded with new containers at a port

How Much Coverage Does A Shipper Need?

Determining the right amount of coverage is a crucial consideration for shippers when it comes to marine cargo insurance. There are various factors that exporters of international freight have to consider when determining how much protection they need.

This includes:

  • Cargo value
  • Nature of the cargo
  • Transport route and mode
  • Contractual obligations
  • Risk tolerance

Each of these factors are similar to what insurance companies review before they decide on a rate. Therefore, shippers should look at these very carefully before determining how much protection their goods require.  

If you’re shipping by land instead of overseas, then read our article on inland marine cargo insurance and how it can help keep your freight safe. 

How Are Marine Cargo Insurance Claims Made?

Shippers should understand the process of making marine cargo insurance claims. It’s crucial to know how to navigate this process effectively in case a shipment suffers damage. 

1. Steps To File

The process for making a marine cargo insurance claim starts with filing. Fortunately, shippers only have to complete two easy steps. 

These are:

  1. Notify the insurer
  2. Document the loss

Exporters should promptly notify their insurance provider or agent about a claim if a shipment is damaged. Reporting the incident quickly is extremely important. Next, exporters must gather all necessary evidence to support their claim. 

This may include:

  • Photographs
  • Inspection reports
  • Delivery receipts
  • Packing lists
  • Bills of lading

This evidence verifies the condition of the cargo before and after transportation.

2. Required Documentation for Claims

Besides any documents used as evidence to show a shipment was damaged, exporters will need to provide a copy of a completed claim form. All information in the document must be filled in accurately.

Some of the information that a claim form provides includes:

  • Details of the shipment
  • The incident that caused the damage
  • An estimate of the total value of the goods

Once this is done, exporters should submit their claim form, along with other relevant documentation. The paperwork should be organized and legible prior to sending it.

3. Claim Settlement Process

The final part of filing a claim is the settlement process. This can be quite lengthy for shippers to endure. 

This process includes the following steps:

  1. Claim evaluation
  2. Loss adjuster’s involvement
  3. Negotiation and settlement
  4. Claim payment
  5. Claim closure 

Upon receiving the claim, the insurance provider will assess the submitted documentation. This includes the claim form and supporting evidence to determine the validity of the document. The insurance company may use a loss adjuster who specializes in assessing and quantifying damaged shipments. 

They will review the claim and provide their professional opinion on the settlement amount. Afterward, the insurance provider will enter into negotiations with the exporter. The company will initiate payment once a settlement is reached. A claim is closed after the shipper has been paid. Both parties should keep relevant documentation for record-keeping. 

Ensure the Safety of Your Shipment With Freight Insurance Coverage

At Freight Insurance Coverage, all loads booked with us will receive protection. There are many ways that freight can be damaged while in transit. That’s why we make sure that the freight of our customers has the defense it deserves. 

Our quote forms automatically factor the cost of insurance as well. This ensures that you know what you’ll be paying before finalizing the shipment. If you’re ready to send a load of freight, then fill out your quote or call our team at (866) 975-0749 if you have any questions or concerns.

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