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Understanding marine insurance: its scope and specific risks

By Yasmine EDDAM22 April 2025

Maritime transport is a vital artery of the global economy, carrying the vast majority of goods traded on the planet. But the sea, a source of prosperity, is also an unpredictable and potentially dangerous environment. To safeguard these essential activities, a protection mechanism has developed over the centuries: marine insurance. Much more than just a branch of general insurance, it constitutes a legal and economic universe in its own right, with its own rules, players and challenges.

Navigating the intricacies of marine insurance can seem daunting to the uninitiated. Its often complex contracts and technical vocabulary can be confusing. But whether you're a shipper, carrier, shipowner or logistics player, understanding the basics is essential to protecting your interests. This article aims to shed light on what makes marine insurance unique and what it involves. great guaranteesthe activities it actually covers, and the specific nature of the risks it is designed to cover.

What makes marine insurance unique?

There are a number of fundamental differences between marine insurance and other forms of insurance, such as motor or home insurance, with which the general public is more familiar.

Firstly, its character international is in its DNA. By its very nature, maritime trade knows no borders. Ships criss-cross the world's oceans, linking ports in countries with different legal systems. Historically, it was the great trading nations, from medieval Italian cities to the British Empire, that shaped the principles of this insurance. Even today, strongholds such as London, with the emblematic and centuries-old institution of Lloyd's, play a predominant role. This international dimension means that practices need to be harmonised, often underpinned by international conventions, but it also means that there is fierce competition between the different insurance markets, as is the case in theaviation insurance.

Secondly, marine insurance is a world of professionals. Unlike mass insurance, it mainly brings together knowledgeable economic players: shipowners, charterers, transport companies, major shippers and, of course, the insurers themselves. The latter, whether they are large companies, mutuals or more specific entities, have a high level of expertise. Around them gravitate other professionals essential to the smooth running of the system: shipbrokers, essential intermediaries in the negotiation of policies, and surveyors, technical experts responsible for assessing damage in the event of a claim. We should also mention the P&I Clubs (Protection and Indemnity Clubs), which are Anglo-Saxon shipowners' mutual societies that cover certain liability risks not covered by traditional insurers. Although they are not strictly covered by maritime insurance law as governed by the French Insurance Code, their economic weight is considerable. The marine claims management is a crucial aspect of this industry, requiring close collaboration between all the players involved. From the initial claim to the final compensation, each stage must be handled with diligence and expertise. This dynamic not only protects the interests of insurers, but also ensures business continuity for shipowners and other professionals in the sector.

Finally, marine insurance is based on a complex legal framework and constantly evolving. In France, although it is recognised as a commercial act by the Commercial Code (article L. 110-2, justifying the jurisdiction of the commercial courts), its specific rules are mainly defined in Title VII of Book I of the Insurance Code. This title has been extensively revised to take account of developments in transport, particularly multimodal transport. However, French law coexists with international maritime law (United Nations conventions, York and Antwerp rules for general average, etc.), European law (freedom of establishment and freedom to provide services) and, of course, the provisions of the Transport Code concerning ships, crews and liability. Professional practices also play a significant role. This multiplicity of sources makes the subject particularly technical.

What activities are really covered by marine insurance?

The scope of marine insurance, as defined by article L. 171-1 of the French Insurance Code, is both broad and precisely defined. Marine insurance covers a variety of risks associated with maritime activities, encompassing both loss of or damage to cargo and shipowners' liability. Key elements of the marine contract include specific cover, exclusions from cover and conditions of indemnity. This precision in terms enables the parties to have a better understanding of their rights and obligations, thus ensuring efficient claims management.

The core business obviously remains linked to navigation itself. This includes any floating craft capable of autonomous movement on the sea, whatever its size or function: from supertankers to small coasters, from container ships to fishing vessels, from tugs to service vessels. The key concept is "seaworthiness". It doesn't matter whether the purpose of the voyage is to carry passengers, cargo, fishing, scientific exploration or other commercial activities.

However, practice and the law have extended the field beyond simple navigation. Essential related activities are treated as maritime operations, and are therefore likely to be covered by marine insurance:

La shipbuildingeven when in dry dock.
The repairs carried out on a docked vessel.
The installation and operation of offshore oil and gas platforms (offshore installations), as well as their associated floating equipment (docks, cranes, pontoons).

It is important to understand limits in this area. Certain water-related activities are explicitly excluded or governed differently:

La pleasure boating The insurance of a sailing boat or yacht used for non-commercial purposes is not subject to the specific rules of marine insurance, but in principle falls under the rules of land-based insurance (article L. 171-5 of the Insurance Code). The underlying idea is that the yachtsman is considered more as a consumer requiring different protection from that of maritime professionals.
La river and lake navigation Although some marine insurance rules may apply, this type of navigation has its own specificities and a partially distinct regime. Certain maritime provisions (such as abandonment for lack of news of the vessel) would make no sense on a river or lake.

One point deserves attention: the multimodal transport. With the development of complex logistics chains combining sea, land and air, the law has evolved. Today, marine insurance rules apply to the entire carriage of goods if part of the journey is by sea, simplifying cover for shippers (article L. 171-1 amended). A lorry carrying containers to a port for shipment can therefore have its goods covered by a marine insurance policy, even if the accident occurs on the road.

What risks are covered by marine insurance?

The purpose of marine insurance is to cover the financial consequences of the "risks" associated with maritime operations. But what exactly does this concept cover? The Court of Cassation recently ruled that a maritime risk is any risk that may occur in the course of maritime navigation, whatever the cause (Com. 22 Nov. 2023, no. 22-14.253). This broad definition encompasses a wide variety of dangers. Marine insurance and its guarantees cover not only material damage to the ship itself, but also economic losses caused by unforeseen events. It is therefore essential for shipowners and maritime operators to understand the scope of these guarantees in order to ensure optimum protection. What's more, this cover can also include risks relating to the goods being transported, thereby enhancing the security of commercial maritime transactions.

Firstly, there are risks that could be described as "classic", not specific to the sea, but which can occur during a maritime operation:

L'fire or theexplosion on board a ship or in port facilities.
Le flight of goods, whether on the quayside or during transport.
The water damage not related to the sea (leak in a warehouse, for example).
The accidents during land or air transport as part of a covered maritime logistics chain.

However, marine insurance is best known for covering the specific perils associated with the marine environment, often referred to as "fortunes of the sea. Article L. 172-11 of the Insurance Code states that the insurer is liable for damage caused by any fortune of the sea or an event of force majeure. This includes in particular :

Le shipwreck (total loss of the vessel).
L'grounding (the ship comes to rest on land or the coast).
L'collision (collision between ships or with a fixed or floating object).
The consequences of violent natural events (storm, hurricane, tsunami).

Other events, linked to external circumstances, may also constitute covered maritime risks:

The acts of warof civil warthe mines and other devices of war.
La piracyUnfortunately, this is no longer a historical phenomenon, but a real threat in certain maritime areas.
La capturethe plug or the detention by government authorities.
The riots, popular movementsacts of sabotage or terrorism.

Finally, we need to consider the risks specific to transported goods :

The property damage (breakage, wetting, soiling, contamination).
La loss in whole or in part.
L'alteration the quality of the goods due to transport conditions.

Is it possible to insure against all risks related to the sea?

While the list of potential perils is long, not all of them are automatically insurable or covered by a standard policy. The insurability of a risk depends on a number of factors, including legal and contractual ones.

A fundamental principle governs all insurance: thehazard. For a risk to be insurable, it must be uncertain. You cannot insure against an event that you already know is going to happen or that has already happened.

French law then sets mandatory exclusionsrisks that the insurer is unable to cover. never cover, even if he wanted to:

La intentional or inexcusable fault on the part of the insured party himself (article L. 172-13 of the Insurance Code). You cannot take advantage of your own dishonesty or gross negligence.
Le known inherent vice of the vessel or goods (article L. 173-4 for ships). If the insured knew that the property had an intrinsic defect likely to cause the damage, he cannot be compensated on this ground. In principle, insurance only covers hidden defects.
Damage resulting fromfines, confiscations, contraband or prohibited trade (article L. 172-18). For example, the seizure of a vessel for illegal fishing is not an insurable risk (established case law, see Com. 30 March 2005, no. 03-17.046).

In addition to these strict legal exclusions, there is a category of risks often excluded from basic policiesHowever, it is generally possible to cover these risks, subject to an additional premium and an express clause in the policy. This is particularly the case for "war and similar" risks: civil or foreign war, mines, piracy, capture, terrorism, sabotage, riots and strikes (article L. 172-16). Similarly, nuclear damage is usually excluded but may be covered by specific policies.

Ultimately, the exact extent of cover will always depend on the precise terms of the insurance contract. Insurers offer various formulas, ranging from "all risks" cover (which covers everything except what is expressly excluded) to more limited cover ("No Particular Damage except..."). Careful reading and understanding of the clauses in the policy, often a standard policy drawn up by market professionals, is therefore essential. Negotiating specific clauses may also be considered, especially for major economic players.

The complexity of the maritime sector and the associated risks often makes it necessary to seek expert advice to ensure that the cover taken out corresponds to the needs and activities carried out.

If you are wondering about the coverage of your maritime activities or if you are anticipating international transport operations, our firm can help you analyse your needs and understand the issues involved in marine insurance. For a personalised analysis of your situation and any need for advice on commercial lawOur team is at your disposal.