An Overview of Marine Cargo Insurance in Kenya

Written by Wellington Ayugi


A directive by the Kenyan Government compelling local importers, to obtain insurance has presented a unique opportunity for local insurance players. Kenyan businesses that have been importing goods were rarely thinking about purchasing marine cargo insurance policies locally. However, the June directive has shifted focus to marine cargo coverage and its benefits to local enterprises as well as local insurance providers.

Businesses in Kenya face a variety of challenges in penetrating international markets and managing a number of risks resulting from excursions into foreign markets. Marine cargo insurance plays a vital role particularly for enterprises importing goods that are exposed to risks when moving them across borders. Despite the vital role marine cargo insurance plays in facilitating global trade, local businesses have been slow to embrace it.

The low penetration of marine insurance among local businesses has been attributed to several factors, key among them being:

  • High premiums from insurance providers
  • Lack of awareness of the policies available in Kenya
  • The majority of imported goods already being insured at the countries of origin

The main classes of marine cargo insurance are:

  • Cargo insurance: This covers damage or loss of cargo during transit between the place of origin and final destination. It is the most common one.
  • Hull insurance: This involves protecting an owner’s vessel against loss or damage. 

What Does A Marine Cargo Insurance Policy Cover?

Marine cargo insurance policies are typically tailored for specific shipments; however, a few general principles are the same across the board. In this case, the risks that the insurance policy covers are referred to as perils. The different types of perils are:

  1. Maritime Perils

These are events created by either man or God. Examples of such events are earthquakes, cargo being washed overboard, rainwater damage, piracy, vandalism and such.

  1. Extraneous Perils

Also known as incidental perils, they are caused by errors in loading, carrying and loading at the terminals. Examples are leakage, handling, rough handling, and pilferage.

  1. War Perils

These are losses caused by rebellion, civil war and detainment of the cargo. However, most insurance providers do not cover goods that are confiscated due to smuggling.

  1. Strike Perils

These are losses or damages resulting from labor disputes, civil commotions or acts of terrorism of a political nature.

Risks That Are Not Covered by Marine Cargo Insurance

A majority of the marine cargo insurance policies do not cover losses caused by customs officials rejecting delivered goods or improper packaging.  Other claims not covered by marine cargo insurance include:

  • Employee Dishonesty
  • Losses resulting from shipping delays
  • Failure of other parties to pay for goods
  • Cargo being abandoned

The cost and amount of your marine cargo insurance depend on the:

  • Routes that were taken
  • Size of the vessel
  • Value of the shipment

By selecting a specific coverage you can have a policy that is suitable for your business needs.  However, this can prove tricky due to the complex nature of some contracts, and the strict requirements that the insurance providers impose when it comes to following up on claims.

Documents Required to Settle Claims

Therefore, it is best to always be prepared. In the event that you need to settle a claim, here are documents required by the insurance company:

  1. Copy of the bill of lading
  2. Original insurance certificate or policy
  3. Claim bill
  4. Survey report
  5. Original invoice and packing list
  6. Copies of correspondence between carriers or bailees.

Check out the video below to learn more about the procedures and formalities of making a claim for a Cargo Policy. It also addresses the various misconceptions associated with this type of insurance.

Here is a list of local insurance companies who provide various types of marine and cargo insurance products:

As a businessman importing goods, you may have to buy a cargo insurance policy in order to meet your obligations under a letter of credit. If the letter of credit mentions an insurance policy, then you have to present one to the bank, in order to access your money. In addition, some countries require importers to present insurance certificates during the import operations.

Purchasing marine cargo insurance is a smart move for your business as it prevents you from worrying about a number of misfortunes befalling your shipments.

Let us keep the conversation going on about Marine Cargo Insurance. Share any thoughts and comments you have with us!

Learn More:

  1. WATCH: Local firms can handle cargo insurance business
  2. What are the benefits of cargo insurance in international trade

About the author

Wellington Ayugi

Wellington Ayugi handles Business Development at Covered and has a passion for personal finance, microfinance, and developments in financial technology