What Is a Voyage Policy?

A voyage policy is marine insurance coverage for risks to a ship's cargo during a specific voyage. Unlike most insurance policies it is not time-based but expires when the ship arrives at its destination. It covers only the cargo, not the ship that carries it.

A voyage policy is also known as marine cargo insurance.

Understanding a Voyage Policy

Voyage policies are commonly used by exporters who need marine shipping only occasionally or for relatively small amounts of cargo. Large exporters who ship by sea routinely tend to prefer open cover marine insurance, which covers all cargo shipped by the policyholder for a specified time period.

A voyage policy is in effect only while the ship is at sea; additional insurance is needed to cover losses during loading and unloading of cargo.

A voyage policy covers unforeseen risks but not preventable risks. For a voyage policy to be valid, the vessel transporting the cargo must be in good condition and capable of making the journey, and the vessel's crew must be competent.

Voyage policies generally cover against accidental damage and collisions as well as natural disasters. Losses due to delays may be covered as well. Voyage policies may specifically exclude losses caused by willful misconduct, ordinary leakage, ordinary wear and tear, improper or inadequate packaging, and labor strikes. Acts of war and terrorist activity also are usually excluded.

The policyholder may need to purchase additional insurance to cover the cargo during the entire transport process as voyage policies typically exclude losses that occur during loading and unloading of the cargo.

Key Takeaways

  • A voyage policy, or marine cargo insurance, covers losses incurred to a ship's contents during a journey.
  • A voyage policy is used mainly by exporters who need to ship only occasionally or only in small amounts of cargo.
  • Exporters who ship routinely generally use open cover marine insurance.

The policy is in place for the duration of the voyage, however long it takes. If there are unanticipated delays en route, the coverage remains in place. This allows for factors such as inclement weather at sea or a shortage of docking at the destination port.

Because each policy is specific to a particular cargo and voyage, all details of both are recorded in the policy contract.