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| Marine Insurance policy - Meaning, Types, Benefits |
What exactly is Marine Insurance?
A contract of indemnity is referred to as marine insurance. It ensures that goods shipped from the country of origin to the country of destination are insured. Marine insurance protects against the loss or damage of ships, cargo, and terminals, as well as any other mode of transportation used to transport goods between points of origin and destination.
The term came about when people started shipping goods by sea. Despite its name, marine insurance covers all modes of transportation of goods. When goods are shipped by air, for example, the insurance is known as the contract of marine cargo insurance.
The Value of Marine Insurance
Many import-export trade transactions require marine insurance. Accepting the terms, both parties are responsible for the payment of goods covered by insurance. However, the subject of marine insurance extends beyond contractual obligations, and there are several compelling reasons to purchase it before dispatching the export cargo.
Goods in transit must be insured by one of the three parties listed below:
- The Forwarding Company
- The Manufacturer
- The Supplier
It can also be used by anyone involved in the transportation of goods.
Where can I obtain Marine Insurance?
Purchasing marine insurance in India is a simple process. Because of the country's geographic location, many banks and financial institutions offer marine insurance.
The Marine Insurance Act of 1963
In India, the Marine Insurance Act was enacted in 1963. According to section three of the act, any time the term "marine insurance" is used, expressed, or even extended for the purpose of insuring goods against loss or damage, the insurer is liable to pay the charges. The insurer will take into account all the certainty of goods in the event of misfortune sustained during maritime ventures.
Marine Insurance Fundamentals
- Principle of Good Faith - Parties require complete trust from both the insurer and the guaranteed.
- The Proximate Cause Principle states that the proximate cause is not adjacent in time and is inefficient. Nonetheless, it is the sole and sufficient cause of loss.
- The principle of insurable interest states that any object presented as a marine risk and the assured covering the insurance of goods must be legally relevant. In addition, a series called 'Incoterms' is dedicated to respectfully assigning the insurance of goods to each party.
- Indemnity Principle - The insurance provided to the parties is only valid up to the amount of the loss. The parties are unable to purchase insurance in order to profit. If they do, they will receive no more than the actual loss.
- Contribution Principle - In some cases, the risk coverage for goods is provided by more than one insurer. In such cases, the money must be distributed fairly among the insurers.
How does Marine Insurance work?
The best way to transfer the liability of the goods from the parties and intermediaries involved to the insurance company is through marine insurance. To begin with, the legal liability of the intermediaries handling the goods is limited. Instead of bearing sole responsibility for the goods, the exporter can purchase an insurance policy and obtain maritime insurance coverage for the exported goods against any potential loss or damage.
The carrier of the goods, whether an airline or a shipping company, may be liable for any damages or losses sustained by the goods while on board. However, the agreed-upon compensation is mostly based on a 'per package' or 'per consignment' basis. The provided coverage may not be adequate to cover the cost of the goods shipped. As a result, exporters prefer to ship their products after insuring them with an insurance company.
The Scope of Marine insurance is required to meet export contractual obligations. To comply with agreements such as cost insurance and freight (CIF) or carriage and insurance paid (CIP), the exporter must obtain marine insurance in order to protect the buyer's or their bank's interests and fulfill the contractual obligation. Similarly, in the case of Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP) terms, the seller may or may not be required to insure the goods, though this is usually the case.
To obtain marine insurance and avoid insurance claims, make the following arrangements:
- Goods should be packed with their safety during loading and unloading in mind.
- Packing should be adequate to withstand natural disasters to the greatest extent possible.
- When packing goods, keep in mind the possibility of clumsy handling or theft.
Marine Insurance Types
- Marine Cargo Insurance - The insurance of goods shipped from the country of origin to the country of destination is referred to as marine cargo policy.
- Freight Insurance - For example, in freight insurance, if the goods are damaged in transit, the operator will lose freight receivables, so the insurance will cover compensation for freight loss.
- Hull Insurance - The hull and torso of the transportation vehicle are covered by hull insurance. It protects the transportation from damage and accidents.
- Liability Insurance -Marine Liability insurance is purchased to cover any liability that may arise as a result of a ship collapsing or crashing.
Marine Insurance Policy Types
- Port Risk Policy - It is a policy implemented to ensure the safety of the ship while it is docked.
- Voyage Policy - A single lot or consignment can be covered by a separate policy. Every time a shipment is sent overseas, the exporter must purchase insurance coverage. The disadvantage is that each time an exporter sends a consignment, extra effort and time are required. Open policies, on the other hand, automatically insure shipments.
- Blanket Policy - The owner of this policy must pay the maximum protection amount when purchasing the policy.
- Time Policy - A time policy in marine insurance is typically issued for a year. One can issue for more than a year or to complete a specific journey. However, it is usually for a limited time. In India, time policies can only be issued once a year under marine insurance.
- Mixed Policy - A mixed policy is a combination of two policies, namely the Voyage policy and the Time policy.
- Floating Policy - Large exporters may choose an open policy, also known as a blanket policy, instead of taking insurance separately for each shipment when float in Marine Insurance policy. An open policy is a one-time insurance policy that covers all shipments made during the agreed-upon period, which is usually a year. The exporter may be required to declare the details of all shipments made during the period, such as the type of goods, modes of transport, destinations, and so on, on a regular basis (say, once a month).
- Named Policy - The named policy is one of the most popular marine insurance policies. The name of the ship appears in the insurance document, which states that the policy issued is in the name of the ship.
- Fleet Policy - A single policy covers several ships owned by the company/owner. It has the advantage of covering even older ships. Furthermore, the policy is time-bound.
- Single Vessel Policy - A single vessel policy covers only one vessel under a marine insurance policy.
Large exporters may choose an open policy, also known as a blanket policy, instead of taking insurance separately for each shipment when float in Marine Insurance policy. An open policy is a one-time insurance policy that covers all shipments made during the agreed-upon period, which is usually a year. The exporter may be required to declare the details of all shipments made during the period, such as the type of goods, modes of transport, destinations, and so on, on a regular basis (say, once a month).
Which clauses deal with Marine Insurance?
The Maritime insurance coverage provided by marine insurance can be understood by looking at the risks addressed by insurance policies that are loaded with various marine insurance clauses:
- The Institute Cargo Clause C provides basic coverage with a limited list of risk covers. It protects the shipment against events such as fire, cargo discharge in the event of distress, explosion, and accidents such as sinking, capsizing, derailment, collision, and so on.
- The Institute Cargo clause B adds an extra layer of security. It not only includes all of the risk covers provided in Clause C, but it also protects the shipment from events such as earthquakes, volcanic eruptions, and damage caused by rainwater, seawater, river water, and so on, as well as loss of package overboard or during loading and unloading.
- The Institute Cargo Clause A provides the most comprehensive coverage, as it covers all risks of loss or damage to the goods. Aside from the risks covered by Clauses B and C, it also covers losses caused by breakage, chipping, denting, bruising, theft, non-delivery, all water damage, and other similar incidents.
- Warfare, strikes, riots, and civil unrest are not covered by the institute cargo clauses. However, the insurer may provide this coverage in exchange for a higher marine insurance premium.
- In terms of marine insurance coverage, there are three types of marine insurance clauses: Institute Cargo Clauses A, B, and C. Clause A provides the most comprehensive coverage, while Clause C provides the most basic risk coverage.
What is the distinction between fire insurance and marine insurance?
Fire insurance is insurance that protects against the risk of fire. Any physical asset or property is the subject matter. Moral responsibility is an important condition in this case. In terms of fire insurance, no profit margin is expected. The insurable interest must be present both before and during the policy's term.
The Functions of Marine Insurance, on the other hand, cover risks associated with the sea. The topic is the ship, freight, or cargo. It contains no provisions concerning the cargo owner's or the ship's moral responsibility. In terms of marine insurance, a profit margin of 10 to 15% is expected. In marine insurance, the insurable interest must also be present only at the time of loss.
Maersk Cargo Insurance
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| Maersk Cargo Insurance |
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Coverage for Container Damage Liability
Use our containers with confidence, knowing that you are covered if they are damaged while in your possession. Maersk Cargo Insurance only covers damages in excess of USD 500 for dry cargo containers.
Covered risks
- Loss or damage to cargo during end-to-end transportation, regardless of transport provider General Average (GA)
- War and strike dangers
- With a few exceptions in dry and refrigerated cargo, almost all commodities
- To and from any non-sanctioned country
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