A manufacturer dispatches ₹25 lakh of equipment to a customer. During transit, the vehicle overturns and part of the consignment is damaged. The goods were not in the manufacturer's factory and had not yet reached the buyer.

This is where marine transit insurance can become important. Despite the name, marine insurance can apply to goods moving through several modes of transit, depending on the policy.

What Is Marine Transit Insurance?

Marine transit insurance provides cover for specified physical loss or damage to goods while they are being transported, subject to the selected terms.

It may be relevant for movement by:

• Road
• Rail
• Sea
• Air
• Courier
• Multimodal transport

Simplified definition: Marine transit insurance can protect the value of goods while they are being transported from one location to another.

When Does Cover Start and End?

This depends on the policy and transit structure.

Businesses should understand:

• Dispatch location
• Destination
• Intermediate storage
• Loading and unloading
• Temporary stops
• Return transit
• Installation or testing, if relevant

Do not assume that cover automatically continues indefinitely simply because the goods have not been used.

Key points to check

Ask:

• What transit route is insured?
• What type of goods are declared?
• Are packing requirements specified?
• Is loading/unloading covered?
• Is temporary storage included?
• What valuation basis applies?
• What deductibles apply?

Why Do Sale Terms Matter?

The commercial contract may determine when risk transfers between seller and buyer.

Insurance and contract terms therefore need to be considered together.

A seller may arrange insurance even when the buyer ultimately bears contractual risk, or vice versa.

For significant shipments, obtain appropriate legal or commercial advice on contractual risk transfer rather than relying only on the insurance policy.

Illustrative Policy Wording

The following is fictional:

“The policy may cover accidental physical loss of or damage to insured goods during the declared transit, subject to the selected coverage conditions, exclusions and valuation basis.”

This is illustrative wording only.

Check:

• Insured goods
• Transit commencement and termination
• Excluded causes
• Packing conditions
• Valuation
• Deductible
• Claim-document requirements

Example, How It Works

Suppose:

• Invoice value of goods: ₹25 lakh
• Transit accident causes damage
• Repairable damage assessed: ₹6 lakh
• Salvage value: ₹50,000
• Applicable deductible: ₹25,000

A simplified assessment might begin with:

• Eligible damage: ₹6 lakh
• Less salvage: ₹50,000
• Less deductible: ₹25,000
• Potential amount before other adjustments: ₹5.25 lakh

Actual settlement depends on the valuation basis, coverage selected and policy wording.

The Practical Takeaway

Businesses shipping goods should know exactly when transit cover begins, when it ends, what goods are declared and who bears contractual risk during transport.

Keep invoices, transport documents, photographs, delivery records and damage reports readily available for claims.

Coverage, exclusions, limits and claim requirements vary by insurer and policy. Read the customer information sheet and complete policy wording before buying or renewing.