Marine insurance is an agreement that offers protection for your goods during transportation. It guarantees that your shipment, from its starting point to its final destination, is insured. Having this insurance will cover all your loss along with the damage caused to the means of transport like ships, cargo, terminals, etc from the starting point to the final destination. Marine insurance emerged when individuals began transporting their goods and other items via sea routes. Despite its name marine insurance is applicable for all means of transportation, where goods are dispatched from one location to its desired destination. For instance: if your goods are shipped by air then it is termed marine cargo insurance.
What is the Importance of Marine Insurance?
Marine insurance plays a crucial role in all types of import and export trades. If there’s damage to insured goods, both parties are liable for payment as per the agreed terms and conditions. Marine insurance extends the coverage beyond mere contractual obligations to encompass the subject matter comprehensively. Before shipping any cargo, you must buy a policy as there are various arguments that can prove the importance of marine insurance. After purchasing your marine insurance, you must check that your goods are insured by any of these three parties:
- The Exporter
- The Importer
- The Forwarding Agent
Where to Get Marine Insurance?
The process of purchasing marine insurance is very easy in India. Due to the country’s geographical location, various banks, as well as financial institutions, are the places that offer many types of marine insurance:
- HDFC ERGO
- TATA AIG
- ICICI PRUDENTIAL
- MANIPAL CIGNA
- ROYAL SUNDARAM
Marine Insurance Act 1963
India passed the Marine Insurance Act in 1963. Under Section 3 of the Marine Insurance Act, the term ‘marine insurance’ applies when goods are insured against loss or damage, with the insurer responsible for covering the costs. The insurer will assess the security of goods in the event of unwanted circumstances during any trade transactions.
Principles of Marine Insurance
Principle of Faith
This principle demands the utmost trust between both the parties; the guaranteed and the insurer. Good faith is an essential foundation for the effective functioning and success of any institution.
Principle of Proximate Cause
A fundamental principle of marine insurance. It addresses various potential issues that could lead to loss or damage in a shipment. On the other hand, you should always remember that it is referred as the nearest cause rather than a remote cause.
Principle of Insurable Interest
Both the insured party covering goods under insurance and the item carrying marine risk must hold legal significance. The insurance of goods is allocated to each party with due consideration for any inconveniences.
Principle of Indemnity
It specifies that the insurer will pay an amount that is sufficient to recover the loss. The proposer won't receive extra revenue for their damaged products. Any party who takes insurance to earn profit must remember that the company is not going to pay any profit amount for its loss. Compensation is provided based on actual loss incurred.
Principle of Contribution
Sometimes, the risk coverage of a single product has multiple insurers. In case of loss or damage, the coverage amount is evenly distributed among the respective insurers involved.
Features of Marine Insurance
- Agreement to the offer
- Insurance coverage
- Premium payment
- Insurable interest
- Indemnity contract
- Claims process
Types of Marine Insurance
Critical illness insurance plans typically cover the following illnesses:
Flight Insurance
Freight insurance provides compensation for the loss of or damage to goods during transportation.
Liability Insurance
This is the compensation amount provided to the proposer in the case of any liability arising from an incident involving a ship, such as a collision.
Hull Insurance
This insurance safeguards your vehicle, covering losses when your hull or body sustains damage due to an accident.
Marine Cargo Insurance
Marine cargo insurance is a policy you can purchase to protect your goods while transporting them between countries. Please be aware that this list is not exhaustive and is only indicative. Various critical illness insurance policies cover different critical illnesses.
Types Of Marine Insurance Policies
- Floating policy
- Voyage policy
- Time policy
- Single vessel policy
- Blanket policy
- Fleet policy
- Port policy
- Named policy
- Maxed policy
Several Clauses Covered by Marine Insurance Policy
Are you considering purchasing a marine insurance policy but still confused about the coverages? Here it is you can understand it by going through various risks which are handled by your insurance policy loaded by three marine insurance clauses:
Coverage Under Marine Insurance Policy
- Clause A: Minimum Coverage – It covers all your losses that occur due to breakage, chipping, denting, bruising, theft, non-delivery, and various types of water damage (clause a cover clause B and clause C).
- Clause B: Additional Coverage – It provides coverage for the shipment against various natural calamities like earthquake, volcanic eruption, and damage due to rainwater(flood), seawater, and river water (clause B also cover clause C).
- Clause C: Basic Coverage: It offers coverage for your shipment against events such as fire, cargo discharge during distress, explosions, accidents like sinking, capsizing, derailment, collisions, and more.
Upon receiving the documents mentioned above, the claims team will proceed to verify the details. Upon verification of your claim, you will receive notification of its approval or denial.
What is not Covered in Marine Insurance
- Delivery issue
- Bad quality goods
- Personal insolvency
- Renovation and repairs
- International loss
- Wars and Situation
Difference between Fire Insurance & Marine Insurance
Fire insurance covers the risk associated with fire incidents. This policy covers any of your physical assets or property. Your moral responsibility holds significant importance here. With Fire Insurance, you can’t expect a profit margin from your damaged assets or property because you have to present the insurable interest before buying a policy and at the time of any fire incident.
Yet, your marine insurance policy encompasses different types of risks associated with the ocean. The ship, freight, or cargo is the major subject matter.
Final Words
Before purchasing marine insurance, it’s important to review the various features offered by the insurer. This will assist you in acquiring a policy that aligns best with your needs and demands.