What are the different types of marine losses?

Marine transport plays a big role in global trade, but it also comes with risks. Ships and cargo can face damages, losses or delays during transit. This is wheremarine insurance steps in. It offers financial protection against losses that occur during marine transportation. In this blog, we’ll walk you through the different types of marine losses covered under marine insurance and what each one means for you as a business or individual involved in shipping.

What is marine insurance?

Marine insurance is a type of insurance that provides coverage for loss or damage to cargo, ships and other goods during transportation by sea or inland waterways. It helps shipping companies, cargo owners and transporters avoid financial losses in case of accidents, theft or natural disasters.

There are many types of marine insurance policies. One example issingle-transit insurance, which provides coverage for goods during a one-time shipment. This is useful for businesses that don’t ship goods regularly.

Understanding marine losses

A marine loss happens when the insured ship or cargo faces damage, loss or liability. These losses are usually divided into two main categories:

●        Total loss

●        Partial loss

Each of these types can be further classified into sub-categories.

Let’s look at them in detail.

1. Total loss

A total loss occurs when the insured subject matter is either completely destroyed or so badly damaged that it is no longer usable or recoverable.

There are two types of total loss:

a)      Actual total loss

This means the complete destruction of the insured goods or a ship.

For example:

●        The cargo is completely destroyed by fire.

●        The ship sinks and cannot be recovered.

●        The subject matter is so damaged that it ceases to be what it was insured for.

b)Constructive total loss

This occurs when the cost of recovering or repairing the damaged ship or goods is more than their actual value.

For example:

●        Salvaging the ship is possible, but too expensive to make sense.

●        The cargo is still there, but damage or retrieval costs exceed its value.

In such cases, the insured party may choose to abandon the goods and claim compensation.

2. Partial loss

This occurs when only a part of the goods or a ship is damaged, resulting in a partial loss.

Partial losses can be either:

a)      General average loss

A general average loss occurs when a voluntary sacrifice is made to save the ship and cargo from a common danger.

For example:

●        Throwing cargo overboard to prevent sinking.

●        Using firefighting equipment that damages some part of the cargo.

In these cases, all parties involved share the loss proportionately. This concept is based on the principle of shared risk.

b)Particular average loss

A particular average loss refers to partial damage to the goods or ship that is not shared by all parties.

For example:

●        Cargo damaged due to seawater leakage.

●        Fire damages goods in one container but spares the rest.

Here, only the party whose goods are damaged can claim compensation.

3. Liability loss

These are losses that arise when a shipowner is legally liable for damage to another party.

For example:

●        Collisions at sea.

●        Environmental damage caused by oil spills.

Such claims fall under marine liability coverage.

4. Voyage and time losses

These refer to specific periods or routes covered under a marine insurance policy.

●        Voyage policy: Covers goods or ships for a specific trip.

●        Time policy: Covers for a fixed period, regardless of the number of trips.

Losses occurring outside the defined trip or time may not be covered.

5. Losses due to delay or piracy

Delays and piracy are also key concerns in marine transport.

●        Losses due to port delays may not always be covered unless specifically stated.

●        Piracy can cause both physical damage and loss of goods.

Some marine insurance policies include coverage for piracy-related losses.

Why knowing marine losses is important

Being aware of the different types of marine losses can help you:

●        Choose the right marine insurance policy

●        Understand what is covered and what isn’t

●        Make better claims if something goes wrong

This is especially true for businesses that rely on imports or exports. For smaller or one-time shipments, policies like single-transit insurance can offer the necessary protection at a lower cost.

How to minimise marine losses?

Here are some simple ways to reduce your chances of facing marine losses:

●        Choose experienced and certified carriers.

●        Use proper packaging and labelling.

●        Regularly inspect and maintain vessels.

●        Always read the terms and coverage of your marine insurance policy.

Conclusion

Marine transport is unpredictable, but with the right knowledge and insurance, you can sail a lot smoother. Understanding the types of marine losses helps you stay informed and take preventive steps. Whether you’re shipping large consignments or just once in a while, picking the right cove can be a smart move.