What Factors Decide Premium of Marine Insurance Policies?

Aug 09, 2022

Business Insurance

What Factors Decide Premium of Marine Insurance Policies?

If your business regularly transports items from one place to another over water, it's crucial to carry a marine insurance policy. Both buyers and sellers involved with ocean shipping benefit from carrying this policy. The insurance coverage protects the value of the goods in case they are damaged, lost, or compromised during the shipping process. Lowering your marine insurance premium comes down to understanding what it covers and lowering risks associated with the transportation segment of your business.

Factors Impacting Marine Insurance Premiums

Some of the main factors that affect marine insurance premiums include the nature and value of goods, risks related to the products, vessel characteristics, and routing. Risks include exposure to government regulations involving imports/exports and events that slow down productivity, such as labor strikes. Here are the main areas that shape your marine insurance premium:

  • Natural disasters - Some of nature's worst disasters are seasonal, while others can happen at the least expected moment. Places where the same natural disasters regularly occur are usually associated with higher insurance prices. When a seaport is adversely affected by a natural disaster such as a hurricane, it can lead to a supply chain crisis.
  • Construction and vessel type - The vessel used to transport the goods can impact insurance premium pricing. Other key factors include the ship's age, construction materials, structural length, and capability to carry diverse types of products.
  • Where the vessel originates - Insurers must know a vessel's country of origin and where it was manufactured. This information affects how certain nations depend on ocean trade. Where the ship was made may indicate the skill level of the master and crew.
  • Policy parameters - A standard policy can be expanded to include various coverage extensions. Start with the details of your standard policy, then fill in gaps with extensions that fit your business model.

Cover Your Marine Business with GrayStone Marine Liability Insurance

Each insurance company sets its own premiums, which is why it's best to take your time finding the right plan that fits your budget and your risks. GrayStone covers all types of businesses, providing access to a variety of policies. Our clients include banks, contractors, and import/export merchants. The three most common types of contracts a marine insurance policy serves are Free on Board (FOB), Cost & Freight (C&F), and Cost, Insurance & Freight (CIF). While buyers of FOB and C&F contracts are responsible for securing the right insurance coverage, it's up to sellers of CIF contracts to seek the proper coverage.

To get the lowest monthly premium, your business needs to demonstrate its close attention to reducing risks. One method is to limit the amount of goods you ship at one time. The less mileage involved, the better chance you have at lowering insurance costs. GrayStone assists businesses of all types in selecting the type of insurance they need to protect their inventory financially. We work with an impressive network of reputable insurers to cover a variety of shipping conditions.

Get Started with Graystone Insurance Group Today

Shipping products over water can be an effective transportation process, but to be on the safe side, it's best to carry marine insurance. Your marine insurance premium depends on the above factors, along with your history of filing insurance claims. At GrayStone Insurance Group, we take your organization's niche and nuances into consideration. Contact us today to get started on a marine insurance policy that protects your assets while they travel over.