What Is Floating Policy in Marine Insurance? Who Benefits Most?

1. What Is a Floating Policy in Marine Insurance?

2. Who Can Benefit from a Floating Policy?

• Exporters and Importers:

• Logistics Companies:

• SMEs and E-commerce Businesses: 

• Frequent Shippers:

3. Key Features of Floating Policies

• Single Policy for Multiple Shipments: 

• Customizable Sum Insured:

• Premiums Based on Aggregate Shipments:

• Ease of Declaration:

4. Floating Policy Trends

5. Advantages and Limitations

• Advantages:

• Limitations:

6. Summary

Marine insurance plays a vital role in protecting goods and vessels during transit. Among various policy options, a floating policy in marine insurance is particularly useful for businesses that ship goods frequently. It offers flexibility, reduces administrative hassle, and provides cost-effective coverage for multiple shipments under a single policy. This blog explores what a floating policy is, who benefits from it, and why it is becoming a preferred choice in the logistics and export-import sectors.

What Is a Floating Policy in Marine Insurance?

A floating policy in marine insurance is designed to cover multiple shipments over a specific period, rather than requiring separate policies for each voyage. The policy mentions the maximum coverage limit, and details of each shipment are declared as they occur. This arrangement is ideal for exporters, importers, or traders with continuous cargo movements, as it simplifies paperwork and ensures uninterrupted coverage.

Who Can Benefit from a Floating Policy?

A floating policy in marine insurance is most beneficial for:

• Exporters and Importers:

  Businesses engaged in regular international or domestic trade.

• Logistics Companies:

  Firms that handle high volumes of shipments for multiple clients.

• SMEs and E-commerce Businesses: 

  Smaller traders seeking comprehensive coverage without issuing multiple policies.

• Frequent Shippers:

   Companies using multi-modal transport (sea, air, and road) on a routine basis.

  
  

Key Features of Floating Policies

• Single Policy for Multiple Shipments: 

  Reduces time spent on issuing separate policies.

• Customizable Sum Insured:

   Coverage can be adjusted according to business requirements.

• Premiums Based on Aggregate Shipments:

   More cost-effective for businesses with regular trade volumes.

• Ease of Declaration:

   Shipment details can be declared periodically, often monthly.

Floating Policy Trends

• 40% of mid-sized exporters in India opted for floating marine policies in 2023, citing reduced administrative effort and lower overall premiums.

• Insurance claims for businesses with floating policies were processed 20% faster, thanks to simplified documentation and consistent underwriting.

• 30% of logistics firms have shifted to floating policies as they manage frequent multi-client shipments.

  
  

Advantages and Limitations

Advantages:

• Continuous coverage without lapses.

• Cost savings for frequent shippers.

• Simplified claim and documentation process.

  
  

Limitations:

• Not suitable for single or occasional shipments.

• Requires accurate shipment declarations to avoid underinsurance.

  
  

Summary

A floating policy in marine insurance is an efficient and cost-effective solution for businesses involved in regular shipping operations. It offers seamless coverage, reduces administrative tasks, and ensures faster claims. Whether you are an exporter, importer, or logistics manager, adopting a floating policy can streamline your marine insurance needs while keeping costs in check.