In the era of commerce and evolving business, transport is being carried out in extended places domestically and internationally. Enterprise looks out for different ways to send their products to longer distances.

Marine transportation played a pivotal role in securing good domestic and international transactions while carrying out huge trades. However, there are a lot of risks involved while transporting goods through the way of water, air, land, rail, etc, such as natural calamities like rain, animal attacks, collisions, etc.

Marine Insurance is the known way to reduce the impact of these risks involved in transport. With leading insurers like Tata AIG, marine insurance is available not only for waterways but also for transportation by land, rail, and air.

This article includes all about Maritime Insurance and key terms generally used in it.

 What is Maritime Insurance?

Maritime insurance, commonly called “marine insurance”, is a type of insurance specifically for things related to sending goods to longer distances. Maritime insurance is a safety net that protects you from losing money if something unfavorable happens to your goods ensuring the transport.

For example: If your ships or transport vehicles get damaged, or your goods are lost on the route, marine insurance can help you cover the costs.

 When is Marine Insurance Required?

Marine insurance is usually needed when you own a ship or for a business that wants to trade and thus move goods to distant places. Also, if you are a business that sends goods to different countries by cargo, you will want this insurance. Often, the law also requires you to have a marine cargo policy, particularly if you are moving expensive goods or essential stuff.

 Key Terms and their Definitions

Here is a simple explanation of some key terms related to the Maritime Insurance:

 Agreed Valuation

An agreed value is the mutual agreement between the insurer and the insured of the asset (in this case, like a vehicle, ship or cargo). This agreed value is used to determine the insurance coverage and premiums.


It is a process of transferring the rights and benefits of an insurance policy from the policyholder to another party. In marine cargo insurance, the assignment takes place when ownership of transport goods or vessels is transferred to the insurance party.

 Insurance Average

It refers to a situation where there is partial loss or damage to the insured vessel or cargo. It means that part of the insured value is affected or claimed by the holder. The insurer will pay out if the amount of loss or damage exceeds the percentage of the total insured value of the cargo.

 Bill of Lading

Just like a monetary instrument, a bill of lading is a legally binding document issued by the carrier to the owner of the goods, listing which goods are being transported. It serves as an official receipt for the cargo and contains the terms and conditions of the carriage contract.

 Protection and Indemnity  Insurance

Protection and Indemnity insurance covers a vehicle owner’s liabilities, such as damages to cargo, injuries to crew members, pollution, and collision liabilities. In general, all maritime risks related to the ownership and vessel operations are covered under it.

 Certificate of Insurance

An insurance certificate is an official document that provides evidence of an insurance policy. In this, all aspects of the insurance policy are covered. It also includes the coverage limit, details of the policyholder, and insured vessel or cargo. For maritime insurance online, the certificate can be received online.


When more than one insurance company shares the risk of insuring a single vehicle or cargo consignment in part, then those independent insurance providers are called co-insurers. It spreads out the risk among various insurers.


A collision is an act of accident when a vessel collides with an object, causing the loss of goods. Collision insurance covers damage resulting from colliding with another vehicle or object. The insurance can cover repair costs for the insured vessel.

 Contingency insurance

It is a type of coverage that protects against unforeseen or uncertain losses that are not typically covered by the standard marine cargo insurance policy.

 Delay Clause

Delay cause is a provision in the insurance policy that addresses compensation or other considerations in case of unexpected delays in shipping or delivery of the cargo.

 Ex-Gratia Payment

An ex-gratia payment is a payment made by an insurer out of goodwill, not because of any legal obligation or fault. It’s usually made in exceptional circumstances that are not strictly covered by the policy.

 Insurance Cargo Clauses

The terms and conditions in the ocean marine insurance policy inform the types of insurance covers and the damages and losses they cover for the cargo transport.

 Full Permit

A complete permit is an authorisation granted by the insurance company allowing a vessel to operate on certain routes or carry specific types of Cargo.

 Liability Coverage

Liability coverage is the insurance coverage that protects the policyholder against legal liabilities to the third party, such as damage or injury caused by the insured vessel. It is also called a third-party insurance policy.


Reinsurance is a process that involves an insurance company transferring a portion of its risk to another insurer to reduce its overall risk exposure.

 Salvage Loss Adjustment

Salvage loss adjustment is the evaluation and calculation of the cost involved in salvaging a damaged cargo. It determines the amount that the insurance company needs to pay for the salvage operations.


Subrogation is the right of an insurance company to pursue a third party that caused an insurance loss to the insured. It is done after the company has paid the claim to its policyholder.

 Undiscovered Loss

Loss occurs when the insurance coverage is less than the total value of the insured item, leading to reduced claim payouts.

 Sum Up

The article covers all significant and essential keywords related to Maritime Insurance policy. Now, you can rest assured of the terms you see in the insurance documents whenever dealing with marine insurance.