Easy Ways to Choose Marine Cargo Insurance for New Exporters and Importers

The global trade industry is now a major driving force of the Indonesian economy. Export and import activities continue to record significant growth, opening up significant opportunities for new exporters and importers to reach international markets. However, behind the lucrative profit potential lies the challenging logistics pipeline. From the risk of cargo damage due to extreme weather and loss of goods at ports to legal risks resulting from force majeure at sea, all can threaten your company’s financial stability. Shipping large volumes of goods overseas requires preparedness not only in terms of product quality but also adequate asset protection.

This article will thoroughly review how to easily choose the right marine cargo insurance. We’ll examine the fatal mistakes often made by new exporters and importers, guide you through selecting policy clauses (ICC Clauses A, B, and C), and the strategic role of insurance brokers in global shipping risk management. A thorough understanding of marine cargo insurance is key to ensuring your cargo arrives safely at its destination. L&G Insurance Broker, a specialist marine cargo insurance broker located in South Tangerang, is ready to be your reliable partner in navigating the complexities of logistics and the risks of international trade. Therefore, before risks halt your shipment, ensure you have the best protection.ContactL&G Insurance Brokernow in08118507773for free consultation before risk.

Understanding the Basics of Marine Cargo Insurance (MC)

A. Definition and Main Functions

What is marine cargo insurance? Simply put, marine cargo insurance is insurance coverage that protects your cargo or shipment from the risk of loss or damage during transportation. Despite the name “marine,” this policy covers the entire logistics chain, from the originating warehouse, through the land journey to the port, through the sea voyage (shipping), and through the land journey to the destination warehouse (door-to-door coverage).

Its primary function is to transfer risk. As an exporter or importer, you transfer the potential financial losses resulting from unexpected shipping risks to an insurance company. Without marine cargo insurance, you would be responsible for the replacement costs of damaged or lost cargo, which could amount to billions of rupiah.

B. Who is Required to Have Insurance (Exporters vs. Importers)

The obligation to own marine cargo insurance is determined by the Incoterms agreed upon in the sales contract. Misunderstanding Incoterms (International Commercial Terms) is a major cause of losses for new exporters or importers.

• Exporter (Seller): Marine cargo insurance is required if using terms such as CIF (Cost, Insurance, and Freight). Under this term, the exporter is responsible for insurance until the goods arrive at the importer’s port of destination.
• Importer (Buyer): Marine cargo insurance is mandatory if terms such as FOB (Free On Board) or EXW (Ex Works) are used. Under FOB, risk responsibility shifts to the importer from the moment the goods are loaded onto the ship (on board).

With guidance from a professional insurance broker, exporters and importers can ensure they are not responsible for risks that should be the responsibility of another party in global shipping.

Fatal Mistakes New Exporters and Importers Make When Choosing Marine Cargo Insurance

1. Ignoring Incoterms in the Policy

This is a fundamental mistake. Many exporters or importers purchase marine cargo insurance with coverage that doesn’t align with the contract’s Incoterms. The most common example: Importers purchase goods on FOB terms, but only insure the cargo after it arrives at the destination port. However, the risk has already transferred since the goods boarded the ship. If the ship sinks at sea, the importer must bear the total loss. Insurance brokers ensure that marine cargo insurance clauses align with each stage of shipping for which the client is responsible.

2. Only Take Standard Protection (ICC Clause C)

Marine cargo insurance has three main clauses (ICC A, B, and C) that determine the level of protection. Beginner exporters or importers often choose an ICC Clause C policy because it offers the lowest premiums. An ICC Clause C policy only covers major casualty risks, such as ship fire, capsizing, or stranding. This policy excludes general damage, such as loss or damage during loading and unloading (logistics), which are more common. For high-risk shipments, ICC Clause A is a safer option.

3. Under-Insurance (Insured Value Too Low)

Underinsurance occurs when the insured value of the cargo is lower than its actual market value. Exporters or importers often forget to include shipping costs, freight, duties, and potential profit (usually 10% of the CIF value). In the event of a loss, the insurance company will only pay compensation for the insured value, not the total loss. Avoiding underinsurance is a crucial part of an insurance broker’s strategy to protect clients’ financial risks.

4. Failure to Check Vessel and Packing

Marine cargo insurance policies may be rejected if goods are improperly packaged (poorly secured) or transported by a vessel that does not meet insurance requirements. Exporters and importers must ensure their vessels meet seaworthiness standards. Insurance brokers can advise on packing that meets international standards for shipping goods, especially for sensitive cargo such as machinery or electronics.

Guide to Choosing the Right Marine Cargo Insurance Policy

A. Selecting the Type of Protection (ICC Clauses)

The selection of marine cargo insurance clauses depends heavily on the type of cargo, shipping route, and risk tolerance of the exporter or importer:

• ICC Clause C: The most basic option. Only suitable for shipping non-perishable, low-risk bulk commodities.
• ICC Clause B: Medium coverage. In addition to major disasters, it covers risks from seawater, loss during loading and unloading, and damage due to earthquakes. Better for less sensitive cargo.
• ICC Clause A: The most comprehensive coverage (All Risks). Recommended for shipping high-value goods, electronics, or sensitive cargo. It covers all risks except those specifically excluded (e.g., war or damage due to defects in the goods before shipping).

B. Choosing a Policy Scheme (Open Cover vs. Single Voyage)

Depending on your logistics and shipping frequency, an insurance broker will recommend one of these schemes:

• Open Cover Policy: Recommended for regular exporters or importers who ship more than 10 items per year. Benefits include simplified shipping, automatic coverage, and more stable premiums.
• Single Voyage Policy: Suitable for exporters or importers who only ship goods occasionally (one cargo). The policy is valid for one specific voyage only.

C. Important Factors in Calculating Premiums

Marine cargo insurance premiums are not only about the price of the goods, but also related to the risks covered:

• Cargo Type: Fragile (glass) or flammable goods have a higher premium.
• Shipping Routes: Shipping to geopolitically or pirate-prone areas carries a different premium.
• Insurance Value: Total value of the cargo insured (to avoid under-insurance).
• Deductible: The initial amount of risk that the exporter or importer is willing to bear.

The Strategic Role of Logistics Insurance Brokers (L&G Insurance Brokers)

A. Why is it mandatory to use an Insurance Broker (L&G)?

For new exporters and importers in South Tangerang (which is close to the largest logistics hub), insurance brokers are an indispensable strategic partner. OJK-licensed brokers have the independence to represent their clients’ interests, not just sell products from a single insurance company.

L&G Insurance Broker, specializing in marine cargo insurance, has a deep understanding of shipping risks to and from Tanjung Priok port or other major Indonesian logistics ports.

B. L&G’s Contribution to the Goods Delivery Process

Contract and Incoterms Analysis: L&G helps ensure exporters and importers do not assume risks that should be borne by the other party, auditing clients’ shipping documents.

Best Policy Negotiation: With a network of various insurance companies (including international), L&G can negotiate All Risks (ICC Clause A) coverage with competitive premiums, which is difficult for exporters or importers to obtain if they do it themselves.

Speeding up the Shipping Process: For Open Cover Policy clients, L&G ensures fast and automated issuance of Insurance Certificates, which is crucial for logistical efficiency and timely shipping.

C. Claims Assistance (Main Selling Point of Insurance Brokers)

The marine cargo insurance claims process is the most complex, often involving legal terms such as General Average (when all cargo owners on board must share the loss). L&G brokers act as client advocates throughout the claims process, ensuring exporters and importers receive full compensation without delay, maintaining business cash flow. L&G handles all documentation, coordinates with surveyors, and negotiates with insurance companies for any cargo risks that arise.

Case Study: General Average Losses at an International Port

In 2024, a cargo ship carrying imported goods from East Asia to Indonesia experienced severe engine failure, triggering a General Average. All importers were required to deposit a guarantee of 30% of the cargo value to allow their goods to be released. Importers who used marine cargo insurance through L&G Insurance Broker were able to quickly obtain a Letter of Guarantee from the insurance company, allowing their goods to be released quickly from the port. In contrast, importers without insurance had to provide cash on short notice, resulting in logistics delays and significant financial losses. This case demonstrates the importance of marine cargo insurance as a key protection against unforeseen shipping risks.

Conclusion 

Amid the high risks of shipping goods internationally, marine cargo insurance is a must for exporters and importers to maintain financial stability. A small error in policy selection (ICC B vs. ICC A) or under-insurance can wipe out all planned logistics profits. New exporters and importers in South Tangerang must realize that the global market demands high levels of professionalism in logistics and insurance. Choosing the right insurance broker will protect you from potential significant losses due to cargo risks inherent in international shipping and logistics activities, transforming risk into a competitive strategy.

Exporters and importers should view marine insurance not as an expense, but as a strategic investment. With the support of a professional logistics insurance broker like L&G Insurance Broker, every client can ensure their shipments are protected with marine cargo insurance tailored to their needs. Brokers ensure your policy is valid, documents are complete, and claims are handled professionally, ensuring asset protection and business continuity. L&G’s expertise in navigating insurance and logistics regulations in Indonesia is invaluable, especially in addressing the ever-changing challenges of shipping and logistics.

Don’t wait for losses to destroy your business capital. Protect your export and import business today. Ensure your cargo is secure at every stage of international shipping and logistics.

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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.

HOTLINE L&G 24 JAM: 0811-8507-773(CALL – WHATSAPP – SMS)

Website: lngrisk.co.id

Email: halo@lngrisk.co.id

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