Overview

Marine insurance protects ships, cargo, freight, and related liabilities against financial losses arising during transportation by sea, road, rail, or air. It helps importers, exporters, logistics companies, and ship owners manage risks such as accidents, fire, collisions, and natural disasters.

Key Types of Marine Insurance

  • Marine Cargo Insurance: Covers goods being transported domestically or internationally.
  • Hull Insurance: Protects the vessel, including its machinery and equipment.
  • Freight Insurance: Covers loss of freight earnings if cargo is not delivered.
  • Marine Liability Insurance: Covers legal liability for third-party injury or property damage.

Common Coverage Clauses Around Institute Cargo Clauses (ICC)

  • ICC (A): Comprehensive "all-risk" cover.
  • ICC (B): Covers specified perils only.
  • ICC (C): Basic protection against major catastrophes.

Policy Options

  • Single Transit Policy: Covers one specific shipment.
  • Open/Floating Policy: Covers multiple shipments under a single annual policy.

Marine insurance is offered by general insurers like HDFC ERGO and New India Assurance.

According to the Press Information Bureau (PIB), India's major ports handled 855 million tonnes of cargo in FY 2024–25, highlighting the country's expanding trade ecosystem. As cargo volumes continue to grow, marine insurance has become an essential safeguard for businesses against transit-related financial risks, which ensures goods remain protected from origin to destination.

In the next few minutes, you'll learn what marine insurance covers, how it works, who needs it, the different policy types, the claims process, and how to choose the right cover for your shipments.

Confused which insurance to purchase first: health, term, or marine? Book a free call or chat on WhatsApp with a Ditto advisor, and let us help you out.   

What Is Marine Insurance?

Marine insurance is a contract under which an insurer compensates the insured for financial losses arising from risks during transit. Simply put, it acts as a financial safety net for businesses and individuals transporting goods or operating vessels, protecting them against losses from damage, theft, legal liabilities, and more during the journey.

Take Note: According to the IRDAI Annual Report 2024–25, India's marine insurance sector recorded a gross written premium of ₹5,504 crore, highlighting its vital role in safeguarding domestic and international trade.

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Types of Marine Insurance: Cargo, Hull, Freight & Liability

01

Marine Cargo Insurance

Marine cargo insurance protects the goods being transported, not the ship carrying them. It compensates cargo owners, such as importers, exporters, traders, and manufacturers, if insured goods suffer loss or damage in transit. The cover extends across sea, air, road, rail, and multiple modes of transport, making it the most widely used type of marine insurance in India.

02

Hull & Machinery Insurance

Hull & Machinery (H&M) insurance protects the vessel itself, including its hull, engines, machinery, and onboard equipment. It serves as comprehensive insurance for ships, similar to comprehensive motor insurance for cars. This cover is essential for shipowners, fishing companies, vessel operators, charterers, and shipping lines that rely on commercial vessels.

03

Freight Insurance

Freight insurance protects the freight revenue that carriers, shipping companies, and freight forwarders expect to earn from transporting cargo. If goods are lost or damaged before delivery, the carrier can lose its freight charges. This policy helps safeguard business income, especially where freight is payable only upon successful delivery or is paid in advance.

04

Marine Liability Insurance

Marine Liability Insurance, commonly known as Protection and Indemnity (P&I) insurance, protects shipowners, charterers, and vessel operators against legal liabilities arising from vessel operations. It covers claims involving third-party injury, cargo damage, pollution, wreck removal, and property damage.

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How Marine Insurance Works in India

Step 1: Assess Your Coverage Needs

Start by identifying what you need to insure. Consider the type of goods, mode of transport, shipping route, shipment frequency, and applicable Incoterms (a set of 11 internationally recognized rules that define the responsibilities of sellers and buyers). High-value or fragile cargo often requires broader protection, while businesses with regular shipments usually benefit from an open policy (one policy that covers multiple shipments over a defined period) rather than buying insurance for each consignment.

Step 2: Compare Quotes and Buy the Policy

You can purchase marine insurance directly from an insurer, through an IRDAI-registered insurance broker, or via a licensed bank offering trade finance. Compare coverage, exclusions, deductibles, and premiums before selecting a policy that matches your transit risks.

Step 3: Receive Policy Documents

After purchase, you receive the policy document or open cover certificate, a marine insurance certificate for each shipment (under open policies), and any endorsements for changes such as route modifications, additional cover, or higher insured value.

Step 4: Meet Your Policy Obligations

The insured must pack goods properly, accurately declare shipment details, and take reasonable steps to minimize losses during transit. Failure to follow these responsibilities can result in claim rejection.

Step 5: File a Claim if a Loss Occurs

Notify the insurer immediately after discovering the loss, arrange a survey, preserve evidence, and protect recovery rights against carriers or other liable parties. Submit all required documents, such as the survey report and claim form. Once the insurer verifies that the loss is covered under the policy, the claim is settled according to the policy terms.

Note: Most marine insurance policies require you to notify the insurer within 7 days of delivery if you discover loss or damage. Always verify the exact reporting timeline in your policy document, as delayed intimation can result in your claim being rejected.

Did You Know?

General Average is a centuries-old maritime principle that still applies today. If part of the cargo is deliberately sacrificed to save a ship during an emergency, every stakeholder whose cargo reaches safely shares the resulting loss proportionately, even if their own goods remain undamaged.

What Marine Insurance Covers and Excludes

ICC (A) is often marketed as "all-risk" cover, but it actually covers all risks except specific exclusions. Delay, poor packaging, inherent vice (a natural problem or weakness within the item itself that can cause it to be damaged without any external accident), war, and nuclear risks remain outside its scope. See the infographic below to understand exactly what is covered and what is not.

What Marine Insurance Covers & Excludes
    • The New India Assurance Company Limited: India's largest general insurer, offers cargo, hull, voyage, open, turnover, and duty insurance with ICC (A), (B), and (C) options. 
    • ICICI Lombard General Insurance: A leading private insurer known for digital-first marine solutions. ICICI Lombard offers cargo, hull, inland transit, open cover, and annual turnover policies with online policy issuance, digital certificates, and AI-enabled claims tracking.
    • TATA AIG General Insurance: Well-suited for exporters and large commercial shipments. TATA AIG marine insurance provides cargo, hull, freight, transit, and marine liability coverage with strong expertise in international trade and Incoterms-backed transactions.
    • Bajaj General Insurance: Bajaj General offers flexible marine cargo, hull, container, and annual turnover policies. 
    • HDFC ERGO General Insurance: Popular among Small and Medium-Sized Enterprises (SMEs) and import-export businesses. Provides cargo, export cargo, inland transit, and hull insurance, seamlessly integrated with trade finance and banking services.
    • United India Insurance Company Limited: A trusted public-sector insurer with a strong presence in the Public Sector Unit (PSU), government, fisheries, and port-related marine business. Offers cargo and hull insurance backed by a wide survey and claims support network.

Take Note: After tariff deregulation (marine insurance pricing is no longer fixed, different insurers can charge different premiums based on risk, cargo type, route, claim history, etc.), don't compare only on the basis of prices. Assess claims settlement record, surveyor network, certificate issuance speed for Letters of Credit (LC) backed trade, digital capabilities, and solvency. For high-value or complex shipments, consider using an IRDAI-licensed marine insurance broker.

How to Buy a Marine Insurance Policy?

    • Identify the right policy based on your shipping pattern. Next, choose an open policy or annual turnover policy for frequent shipments, a specific voyage policy for one-time consignments, an inland transit policy for domestic transport, and hull & machinery insurance if you own the vessel.
    • Select the appropriate coverage based on your actual needs. For example, ICC (A) is suitable for high-value or fragile cargo, while ICC (B) or ICC (C) may be sufficient for bulk or lower-risk goods. You may add war and strikes coverage when shipments pass through high-risk regions.
    • Calculate the correct sum insured. Ideally, insure the Cost, Insurance, and Freight (CIF) value plus 10% to cover expected profit and incidental expenses.
    • Keep shipment details ready, including cargo description, packaging, value, transport mode, origin, destination, shipment frequency, and vessel details where applicable.
    • Compare insurers based on coverage, claims support, and pricing. Standard cargo policies can usually be purchased online, while high-value, complex, or international shipments are often better handled offline through an IRDAI-licensed broker. 

Goods and Services Tax (GST) Implications for Marine Insurance

Marine insurance premiums attract 18% GST, in line with other commercial general insurance products. The GST exemption introduced for individual life and health insurance policies from September 2025 does not apply to marine insurance, so the full 18% GST remains payable on marine policy premiums.

Why Choose Ditto for Insurance? 

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Conclusion

Marine insurance is not just for large shipping companies. It is an essential safeguard for any business that moves goods by sea, air, road, or rail. A well-chosen policy protects against financial shocks, keeps supply chains resilient, and ensures business continuity. As India's trade ecosystem expands, the right marine insurance is more than just a compliance requirement. It is a smart business decision.

Note: Ditto offers personalized guidance and purchase assistance only for health insurance and term life insurance. We do not advise or facilitate the purchase of marine insurance or other general insurance products. Please consult a licensed general insurance intermediary or insurer for product-specific advice.

Frequently Asked Questions

What is marine insurance meaning, and what does it cover?

Marine insurance is a policy that protects businesses and individuals against financial losses when goods or vessels are damaged, lost, or stolen during transit by sea, air, road, or rail. Depending on the policy, it can cover cargo, ships, freight income, and legal liabilities arising from accidents, fire, piracy, theft, and more. According to the IRDAI Annual Report 2024–25, India's marine insurance sector recorded a gross written premium of ₹ 5,504 crore. During the same period, marine insurers paid roughly ₹3,192 crore in cargo and hull claims, underscoring marine insurance's critical role in protecting India's domestic and international trade. 

What are the main types of marine insurance?

Marine insurance is broadly divided into four categories. Marine Cargo insurance protects goods during transit and is the most widely purchased cover in India. Hull & machinery insurance safeguards the vessel, including its structure, engines, and onboard equipment. Freight insurance compensates carriers if they lose freight earnings due to cargo loss or damage. Marine liability insurance, also known as Protection and Indemnity (P&I) insurance, covers third-party liabilities such as cargo damage, pollution, passenger injury, and property damage arising from vessel operations.

What is the difference between ICC (A), ICC (B), and ICC (C) in marine cargo insurance?

The Institute Cargo Clauses (ICC) determine the extent of protection under a marine cargo policy. ICC (A) offers the widest cover and protects against all risks except specifically excluded events such as delay, war, poor packaging, and inherent vice. ICC (B) provides cover only for a defined list of perils, making it narrower than ICC (A). ICC (C) offers the most basic protection and generally covers only major events like sinking, grounding, or collision. The clause you choose directly affects the scope of your claim settlement.

Is marine insurance mandatory in India?

A marine insurance policy is not legally compulsory for every business, but it is often a commercial necessity. Banks financing international trade through LCs frequently require marine cargo insurance before releasing funds. Under CIF contracts, the seller is responsible for arranging insurance, while shipowners usually require hull insurance to satisfy lenders or regulatory requirements. Although businesses can legally transport goods without insurance in many situations, doing so exposes them to potentially significant financial losses if cargo or vessels are damaged during transit.

What does marine cargo insurance not cover?

Even the broadest ICC (A) policy has important exclusions. Marine cargo insurance does not cover losses caused intentionally by the insured, normal wear and tear, natural deterioration, rusting, evaporation, or spoilage resulting from the cargo's own characteristics. Damage caused by inadequate or improper packaging is also excluded. Financial losses arising solely from delays are generally not covered, even if an insured event caused the delay. War, terrorism, riots, and strikes remain excluded unless separate war and strike clauses are purchased. Always review the exclusions before buying a policy.

What is an open policy in marine insurance, and who should buy it?

An open policy, also known as a floating policy, is designed for businesses that regularly transport goods. Instead of purchasing insurance for each shipment, a single annual master policy covers multiple consignments, with each shipment declared as it moves. This reduces paperwork, speeds up certificate issuance, and is usually more cost-effective than buying separate single-transit policies. Open policies are particularly useful for importers, exporters, manufacturers, distributors, and logistics companies with frequent shipments. They also simplify trade finance transactions since banks readily accept marine certificates issued under an approved open policy.

What are the different types of marine cargo insurance policies?

Marine cargo insurance is available in different policy structures based on shipping frequency. An open policy covers multiple shipments over a fixed period, usually one year, making it ideal for businesses with regular dispatches. A Specific Voyage Policy protects a single shipment from origin to destination and ends upon delivery. An annual turnover policy insures all shipments based on estimated yearly cargo value, with premium adjustments after the policy year. For domestic transportation, an Inland Transit Policy (ITC) covers goods moved within India by road or rail under Inland Transit Clauses rather than ICC.

What are the different types of hull insurance policies?

Hull & Machinery (H&M) insurance offers different policy structures depending on how a vessel operates. A time policy is the most common option and covers the vessel for a fixed period, typically one year, regardless of the number of voyages. A voyage policy protects the vessel for a single specified journey between two ports and ends upon completion of the voyage. Shipping companies with multiple vessels often choose a Fleet Policy, which covers the entire fleet under one contract. During construction, a builder's risk policy protects the vessel from keel laying through final delivery.

What documents are required to file a marine insurance claim?

Filing a marine insurance claim requires supporting documents to establish ownership, shipment details, and the extent of loss. Insurers generally ask for a completed claim form, the insurance policy or marine certificate, the Bill of Lading, the commercial invoice, the packing list, and an IRDAI-licensed surveyor's report. Depending on the nature of the claim, additional documents such as a short-delivery certificate, carrier's protest note, police FIR for theft or piracy, and a claim bill showing the financial loss may also be required. Prompt reporting and complete documentation help speed up claim settlement.

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