Top Marine Insurance Mistakes to Avoid – Cargo Policy Tips (2025 Guide)
Whether you're exporting auto parts to Europe or importing electronics from East Asia, one thing is certain—marine insurance is your financial safety net in global trade. But simply buying a policy isn’t enough. Many Indian businesses unknowingly make costly mistakes in their marine insurance that only surface during a loss or claim.
In this article, we’ll walk you through the top marine insurance mistakes made by shippers, freight forwarders, and traders—and how to avoid them in 2025.
1. Not Reading the Policy Terms Thoroughly
Most companies rely on their shipping agent or broker to buy the policy—but never read the fine print.
Why it matters: Key terms like exclusions, limits, deductible, and liability clauses affect whether your claim will be paid.
Avoid This: Always review your policy wording, especially for exclusions like delay, improper packing, or war risk.
2. Choosing the Wrong Type of Policy
There are multiple policy types—open policies, specific voyage policies, named-perils, or all-risk. Choosing the wrong one could leave gaps in coverage.
Example: A single-shipment exporter opting for an annual open cover could overpay or miss shipment declarations.
Avoid This: Match your policy to your shipping frequency, cargo type, and destination.
3. Underinsuring the Cargo
Some businesses insure only the invoice value, ignoring freight, taxes, or expected profits.
Standard best practice is to insure for CIF + 10% to fully protect your shipment value.
Avoid This: Calculate coverage based on the total landed cost and add a buffer for unforeseen losses.
4. Delayed Policy Activation
Some companies issue policies after the cargo has already left the origin port, especially under voyage policies.
Result: Insurer may deny claims because coverage begins only from the time specified.
Avoid This: Ensure that the policy is active before cargo moves, especially for door-to-door shipments.
5. Not Declaring All Shipments Under Open Policy
An open marine policy requires the insured party to declare each shipment. Failing to declare even one can void coverage.
Avoid This: Set up an automated declaration process through your insurance provider or freight partner.
6. Ignoring Inland Transit Coverage
Many think marine insurance only covers sea or air transport, but forget about inland movement from warehouse to port or final delivery. Damage often occurs during road or rail transit in India.
Avoid This: Choose warehouse-to-warehouse coverage or explicitly include inland legs in the policy.
7. Using Incomplete or Incorrect Descriptions of Goods
Vague terms like “electronics” or “machinery” can lead to disputes during claims, especially if the goods are high-value or fragile.
Avoid This: Use HS codes, invoice numbers, and detailed product descriptions when filling in proposal forms or issuing policies.
8. Relying Solely on the Freight Forwarder’s Insurance
Many shippers assume that if the forwarder books freight, insurance is automatically included.
Freight companies may only provide basic liability coverage, not full cargo insurance.
Avoid This: Confirm what’s covered and consider buying your own policy for better protection and control.
9. Missing Required Add-Ons or Extensions
Standard cargo policies often exclude strike, war, or theft unless added as endorsements.
Avoid This: Ask your insurer about add-ons relevant to your trade route (e.g., strike risk for Africa, war risk for Red Sea routes).
10. Poor Claims Documentation
Even valid claims can be denied if documents are missing or incorrect.
Commonly required: Invoice, packing list, bill of lading, policy copy, photos, and survey report.
Avoid This: Train your logistics team on how to file claims, or partner with a consultant who handles documentation end-to-end.
Bonus Tip: Not Reviewing the Policy Annually
Shipping routes, cargo value, and international risk profiles change over time. Using an outdated policy can leave your business vulnerable.
Avoid This: Review and renew your marine insurance terms every 12 months or after major route or volume changes.
Conclusion
Marine insurance is a powerful tool but only if used correctly. From choosing the wrong policy to failing to declare a shipment, small oversights can lead to major financial losses.
In 2025, make sure your marine insurance is not just a checkbox, but a strategic part of your supply chain risk management. By avoiding these common mistakes, you can ensure faster claims, better protection, and peace of mind for every shipment.
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