Definition of Marine Insurance: Marine Insurance is such an insurance contract by which the insurer undertakes to compensate the owner of a ship or cargo for complete or partial loss at sea during the voyage.
Despite following laws and safety regulations, transporters can’t control natural occurrences that might disrupt the cargo or vessel. Things like weather hazards encounter with pirates, and cross-border conflicts are very common in water transportation, and the damages associated with these situations can cause significant financial hardship for ship owners. This is a marine insurance policy that comes to the rescue, protecting the interests of shipping corporations and transporters by providing them with Insurance coverage needed to defend against possible losses.
Types of Marine Insurance Policies :
Marine Insurance policy are of different types: such as-
- Voyage Policy: The insurance policy which is taken to cover the risk from the port of departure up to the port of arrival, is called Voyage Policy.
- Time Policy: The insurance policy through which the ship, cargo, and freight are insured for a particular period is called Time Policy.
- Values Policy: The marine insurance policy in which an agreed value of subject matter of insurance is mentioned, is called Valued Policy.
- Open Policy: The marine insurance policy in which nothing is mentioned about the value of the subject matter of insurance, is called Open Policy.
- Mixed Policy: The marine insurance policy which is taken for a particular voyage during a particular time is called a Mixed policy. For example, a ship is insured between Kolkata and London for one year. It is a mixed policy.
- Port-Risk Policy: If the ship or cargo is lost or damaged when the ship is anchored in a port, the policy which is taken to indemnify that loss, is called Port-risk Policy.
- Single Vessel Policy: When a shipping company takes individual policy for each of its ships, the policy is called Single Vessel Policy.
- Fleet Policy: When a shipping company takes only one policy for all its ships, it is called a fleet policy.
- Composite Policy: When a ship is insured with more than one insurance companies, the concemed policy is called Composite Policy
Procedure for taking a marine insurance policy:
A person can take a marine insurance policy from the insurance company or from the underwriters of Lloyd. The procedure for taking marine insurance policy from these two sources are discussed below:
Taking policy from the insurance company: The following steps have to be followed for
taking a marine insurance policy from an insurance company-
- Contact with the insurer: The person intending to take a marine insurance policy has to
contact either directly or through an insurance agent with the insurance company.
- Selection of favourable policy: In the next stage, the willing insured has to select
the favorable policy out of various types of policies from the brochure published
by the insurance company.
- Filling up Application form: After selecting the favorable policy, the willing insured
has to fill up the application form issued by the insurance company.
- Acceptance of proposal: The insurance company scrutinizes the filled-up application
form. If it is found all right, the company accepts the proposal.
- Payment of premium: The willing insured pays the premium to the insurance company.
- Issue of insurance policy: After receiving the premium, the insurance company issues
an insurance policy to the insured and the contract of insurance comes into effect.
Importance of Marine Insurance:
The remarkable points in the context of the importance of Marine Insurance are-
- Contract of utmost good faith: Marine insurance is a contract of utmost good faith. So,
the insured must inform the insurer about all the material facts of the subject matter of
insurance. Similarly, the insurer must disclose all the terms and conditions to the insured.
- Insurable Interest: The insured must have an insurable interest in the subject matter of
insurance at the time of loss. But it is not necessary to have an insurable interest at the time.
- Contract of indemnification: Marine insurance is a contract of indemnification. So, the
insured is entitled to recover only the actual amount of loss from the insurer.
- Proximate cause: If the proximate cause of the accident is covered by the policy, only then
the insurer is liable to pay compensation to the insured.
- Attachment of Risk: Without attachment of risk for which insurance is undertaken, the
contract of insurance