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Marine Insurance

 Marine Insurance

Marine insurance refers to a contract of indemnity. It is an assurance that the goods dispatched from the country of origin to the land of destination are insured. Marine insurance covers the loss/damage of ships, cargo, terminals, and includes any other means of transport by which goods are transferred, acquired, or held between the points of origin and the final destination.

The term originated when parties began to ship goods via sea. Despite what the name implies, marine insurance applies to all modes of transportation of goods. For instance, when goods are shipped by air, the insurance is known as the contract of marine cargo insurance.


Voyage Policy

It covers the risk from the port of departure up to the port of destination. The policy ends when the ship reaches the port of arrival. This type of policy is purchased generally for cargo. The risk coverage starts when the ship leaves the port of departure.


Time Policy

This policy is issued for a particular period. All the marine perils during that period are insured. This type of policy is suitable for full insurance. The ship is insured for a fixed period irrespective of voyages. The policy is generally issued for one year. Time policies may sometimes be issued for more than a year or they may be extended beyond a year to enable a ship to complete a voyage. In India, a time policy is not issued for more than a year.


Mixed Policy

This policy is a mixture of time and voyage policies. A ship may be insured during a particular voyage for a period, e.g., a ship may be insured between Bombay and London for one year. These policies are issued to ships operating on a particular route.


Valued Policy

Under this policy the value of the policy is decided at the time of contract. The value is written on the face of the policy. In case of loss, the agreed amount will be paid. There is no dispute later on for determining the value of compensation. The value of goods includes cost, freight, insurance charges, some margin of profit and other incidental expenses. The ships are insured in this manner.


Unvalued Policy

When the value of insurance policy is not decided at the time of taking up a policy, it is called unvalued policy. The amount of loss is ascertained when a loss occurs. At the time of loss or damage the value of the subject-matter is determined. In finding out the value of goods, freight, insurance charges and some margin of profit is allowed to the policy in common use.


Floating Policy

When a person ships goods regularly in a particular geographical area, he will have to purchase a marine policy every time. It involves a lot of time and formalities. He purchases a policy for a lump sum amount without mentioning the value of goods and name of the ship etc.

When he sends the goods, a declaration is made about the particulars of goods and the name of the ship. The insurer will make an entry in the policy and the amount of policy will be reduced to that extent. This policy is called an open or a floating policy.

The declaration by the insured is a must. When the total amount of policy is reduced, it is called ‘fully declared’ or ‘run off. The underwriter will inform the insured who will take another policy. The premium is called on the basis of declarations made.


Block Policy

Sometimes a policy is issued to cover both land and sea risks. If the goods are sent by rail or by truck to the departure, then it will involve risk on land also. One single policy can be issued to cover risks from the point of despatch to the point of ultimate arrival. This policy is called a Block Policy.


Advantages of a Marine Insurance Contract


The insurance provides financial stability to the business in Case any mishappening.

Helps manage the risks and operate business without any worries

It compensates for any financial loss that Business faces during the transit of goods

Mitigate the risk in cargo theft

To Increase cases related to containers lost at sea every year


Some of the Perils Covered Under Marine Insurance Policy are:


  • Fire and explosion
  • Perils of the sea
  • Jettison
  • Breakage
  • Accident
  • Theft
  • Barratry
  • Non-delivery
  • Pilferage
  • Resource 


Resources : 

https://www.dripcapital.com/en-in/resources/blog/marine-insurance-meaning-types-benefits


https://www.policybazaar.com/commercial-insurance/marine-insurance/



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