The premium, which must be paid to an insurance company in order to effect insurance cover, is expressed as a percentage of the value declared for insurance purposes. The cost of the premium amount will increase or decrease in accordance with the insurer’s estimate. The insurer bases his estimate on the following:

  • The nature of the goods
  • The value of the goods
  • The journey along which the consignment will travel
  • Any inherent risks the products may possess
  • The destination to which the goods will travel
  • Any political risk, or strikes riots and civil commotions that could effect the delivery of the goods
  • The extent of cover the assured is requesting for example: Fortuitous risk catastrophe risk and risk cover which is outside of the control of the cargo owner such as the theft and pilferage

Calculating the marine insurance premium

Marine insurance premiums are calculated as follows:

CPT or CFR value Euro 43 000.00
add 10% for escalation costs Euro 4 300.00
Total Euro 47 300.00
Now multiply the total by the insurance premium which was quoted by the insurance company (assume 0.535%) x 0.525% (premium)
The insurance payable is thus: Euro 248.85