What is Marine Insurance?
Humans invented boats and ships before the invention of airplanes or trains. Boat and ship transport is primarily used for the carriage of people and non-perishable goods, generally referred to as cargo. From ancient times, international trade has relied heavily on sea routes for transportation. However, sea routes are full of risks like bad weather, attacks by sea pirates, collisions, etc. All these perils have given rise to the need for marine insurance which is believed to the very first form of developed insurance.
Marine Insurance is a type of General Insurance which covers the loss or damage of ships, cargo, terminals, and any transport by which the property is transferred, acquired, or held between the points of origin and the final destination. Marine insurance is a compulsory requirement for all ship/yacht owners, who are using their vessel for commercial or transportation purposes. A contract of marine insurance is an agreement whereby the insurer covers against losses incidental to marine adventure.
Types of Marine Insurance:
There are four types of Marine Insurance which has been designed for ships, boats, and for cargo being transported on either of these two carriers.
- Cargo Insurance: – Cargo Insurance includes the cargo or goods contained in the ship and the personal belongings of the crew and passengers. This policy is also pertaining to the possessions of a ship’s voyages. This insurance policy covers the cargo owner against loss or damage of the cargo in case of a ship accident or in case of delay in the voyage or unloading. Marine cargo insurance has third-party liability coverage also that covers the damage to the port, ship or other transport forms (truck or rail) consequence from the hazardous cargo carried by them.
- Hull Insurance: – Hull Insurance covers to the hull, body of the vessel, and its equipment like furniture and fittings, machinery, tools, fuel, etc. This type of marine insurance policy is mainly taken out by the owner of the ship to keep away from any loss to the vessel in the event of any occurrence of unanticipated mishaps.
- Freight Insurance: – This is a marine insurance policy that is designed to provide fortification to the merchant vessels’ corporations. Freight Insurance provides protection against the loss of freight. In many cases, the owner of goods is bound to pay the freight, under the terms of the contract, only when the goods are safely delivered at the port of destination. If the ship is lost on the way or the cargo is damaged or stolen, the shipping company loses the freight. Freight insurance is taken to guard against such risk.
- Liability Insurance: – Liability Insurance is one in which the insurer undertakes to indemnify against the loss which the insured may suffer on account of liability to a third party caused by collision of the ship and other similar hazards. In other words, Liability Insurance is – where compensation is required to be supplied to any accountability taking place owing to a ship colliding or crashing and by reason of any other persuaded attacks.
Benefits of Marine Insurance Policy:
Any type of insurance is always beneficial and helpful for all. Here are some benefits of Marine insurance:
- Marine Insurance provides all-round coverage against a wide variety of risks faced while at sea.
- Most marine insurance providers offer claim survey assistance anywhere in the world along with claim settlement assistance.
- Like other insurance, marine insurance also provides a variety of options and plans according to budgets and requirements.
Who can purchase Marine Insurance Policy:
- The owner of the ship for his ship
- The owner of the cargo for his cargo
- A creditor who has advanced money on the security of the ship or cargo has an insurable interest to the extent of his loan
- The master and crew of the ship for their wages
- If the subject matter of insurance is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any sum due to him
- In case of advance freight the person advancing the freight has an insurable interest in so far as such freight is repayable in case of loss
- The insured has an insurable interest in the charges of any insurance policy which he may take
Exclusions of Marine Insurance Policy:
Here are some common exclusions of marine insurance policy:
- Incorrect and inadequate packaging of goods being transported
- Any damage or loss occurring due to bankruptcy or financial default of the owner of the transport vessel
- Routine wear and tear or ordinary leakage
- Damage due to delay
- Damage willfully or intentionally
- Damage due to civil commotion, strikes, war, riot, etc.
Advantages of Marine Insurance:
- Accident while in conveying (sinking or overturning)
- Theft or hijack of a vessel
- Theft of on-board cargo
- Mistakes in transportation (inappropriate handling)
- Variations in temperature causing complications
- Pollution risks
- Cargo liabilities
- Labor and legal costs
- Compensation for illness, injury or death of persons on-board the vessel
Marine Insurance Claim Process:
The claim process is very simple and similar to that done for any other type of insurance. Here are some of the basic steps to make a claim in case of marine insurance.
- First and foremost step is to contact either the claim representative or the nearest branch of your insurance provider and inform them about the claim.
- In the event that the damage has occurred to the goods while they are on the ship or port, you must arrange for a port or a joint ship survey.
- You must submit the policy document and certificate which had previously been issued to you at the time of taking the policy. You also need to provide the original invoice and any other documents which may be required to authenticate your claim.
- Insurance Company will appoint a surveyor and ask to make a survey report.
- On the basis of the survey, Insurance provider will settle your claim.