International trade has always relied heavily on sea routes for the transport of various kinds ever since ancient times. Ships have been a primary mode of business well before aeroplanes or trains were invented. However, sea routes were not the easiest as it was plagued with risks such as bad weather, attacks by pirates, collisions, accidents and so on. These perils gave birth to the need for Marine Insurance which is believed to be the very first form of developed insurance. This article talks about Marine Insurance and the essential information related to the same.
Types of Marine Insurances
Like many other types of insurance, marine insurance helps to protect not only a vehicle such as a ship but also the cargo carried and being transported by the ship. It offers coverage in the case of any damages or loss of freight, to vessels and terminals, and any transport by which any property is acquired, transferred or held between the point of origin and its destination. There are mainly four types of Marine Insurance that have been designed for ships, boats, and for shipment that is being transported on either of these carriers. They are as follows:
- Cargo Insurance: This kind of a marine insurance policy caters explicitly to a ship’s cargo. However, this insurance also covers the belonging of the ship voyager.
- Freight Insurance: This kind of marine insurance policy provides an additional layer of security to the merchant vessel’s corporation for situations involving loss of cargo due to an unfortunate event. These insurances are required by companies that are facing financial losses due to accidents and other unprecedented circumstances.
- Liability Insurance: As the name of the policy indicates, the liability insurance offers compensation when a liability is sought due to a ship crash, collision or an attack.
- Hull Insurance: A Liability Insurance is chosen to ensure the protection of the torso and the hull of a vessel including the furniture and articles present within it. This policy safeguards the owner’s ship or vessel against any unfortunate situation or accident.
Marine Insurance is an insurance that is a compulsory requirement for all individuals who own a ship or a yacht for commercial or transportation purposes.
Types of Insurance Plans
There are various types of marine insurance policies that are adopted by marine insurance providers, and the significant ones have been listed below.
When a marine insurance policy plan is issued for a particular period, it is known as a Time Policy. Most commonly, this kind of policy is valid only for a specific period such as for one year.
A Voyage Plan is a kind of marine insurance policy for those individuals who want to ensure a specific sea voyage. This sort of a plan expires as soon as the journey comes to a halt.
Port Risk Plan
This marine insurance policy ensures the safety and security of a ship while it is anchored at a port.
A Mixed Plan is a marine insurance policy that offers the benefits of the Voyage Plan and the Time Plan together.
This kind of a marine insurance plan is where the amount that may be claimed is defined in advance. Other information is not disclosed until the ship starts its journey. The Floating Plan is recommended to clients who undertake frequent cargo transportation trips.
Under the Values Plan, the value of the cargo or the consignment is evaluated and stated in the insurance documents beforehand. This is done to specify the insurance value in advance in case of a loss of shipment or cargo occurs.
This sort of an insurance plan does not have a predefined fixed reimbursement term. However, if the concerned insurer finds any loss or damages of meritorious claims, the reimbursement is provided. If the damages that are caused are not worth considering, then the insurer would not provide any compensation. It must be noted that the wager plan is not a written insurance policy and hence will not hold up in court during a trial.
Benefits of a Marine Insurance Plan
Marine insurance comes in handy for all ship or yacht owners for an array of reasons that are mentioned below.
- Marine Insurance provides an all-around coverage against a wide range of risks that may be faced while at sea.
- Most of the Marine Insurance providers offer to claim survey assistance around the world along with a claim settlement assistance.
- Various Marine Insurances providers offer an array of options and plans under the policies for marine insurance explicitly designed for different requirements and budgets depends on the Customer.
- A marine insurance cover may be customised and tweaked according to the specific needs and budgets of the customers.
- In various cases, Marine Insurance policies provide an extension to offer protection against any damages that are caused due to strikes, riots and other similar perils.
Marine Insurance Coverage
The principal objective of a marine insurance policy is to protect the finances and assets of an individual while they are commuting or transporting via the sea routes. It is common to find different insurance companies offering multiple types of marine insurance policies. As a result, there is no specific standard list of risks against which every marine insurance will be able to protect a user. Though most of the marine insurance policies provide a cover against damages or losses to valuable cargo, some of the plans may or may not extend its cover against cross-border civil disturbances or sea pirates.
Some of the most common situations or losses which marine insurances provide cover against are given below.
- Export or import of shipments
- Goods which are transported using sea, rail, road, post or air.
- Goods that are being transported by coastal vessels which ply between different ports inside the country.
- Goods that are transported via the vessels plying along rivers.
Marine Insurance Policy Exclusions
Marine Insurance policies cover many instances for a user, but there are some apparent exceptions. Some of the limitations are listed below.
- Routine tear and wear or a common leakage.
- The inadequate and incorrect packaging of goods being transported.
- Any damages caused due to delays.
- Any damages caused wilfully or with the intention to generate losses.
- Any damages caused due to a civil commotion, war, strikes, riot and similar situations.
- Any damages or losses occurred due to a financial situation such as bankruptcy or financial default of the owner of the transport vessel.
Marine Insurance Claim Process
The process of a claim for marine insurance is similar to that of any other type of insurance. Some of the necessary steps to claim in the case of marine insurance are as follows.
- A marine insurance policy user must either contact the representative who handles all the claims. The user may also pay a visit to the nearest branch of the insurance provider and inform the company about the request.
- In an event where damage has occurred to the goods while they are on the ship or the port, the marine insurance user must arrange for a port or a joint ship survey.
- The marine insurance user must submit the policy documents or the policy certificate which was previously issued to the user while signing up for the policy. The user also needs to provide the original copy of the invoice and any other additional documents which may be required to verify the claim.