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Marine insurance is an agreement between the insurer and assured where the insurer undertakes to indemnify the assured under Section 3 of the Marine Insurance Act 1963. Marine insurance covers the loss or damage of ships, terminals, cargo, and any transport by which goods are transferred, acquired, or held between the points of origin and the final destination.
Marine insurance plays an important role in any kind of shipping business by safeguarding you against the risk of damage or loss to cargo, ships, or any transport by which the goods or property is transferred, acquired, or held between the points of origin and the final destination. There are various types of marine insurance policies in India that can suit different needs and requirements. Availing the best online marine insurance policy can help businesses to mitigate the financial pitfall that can happen due to loss or damage of goods in transit.
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It is based on a general proposal and acceptance concept. Coverage of risk will start from the date of acceptance of the proposal by the insurance company. Any loss or damage to goods in transit occurring prior to the date of acceptance of the proposal will not be covered under the marine insurance policy.
Marine insurance cover will also start from the date of payment of the premium. If the payments are made in a cheque, the date of realization of money will be considered for providing the risk coverage.
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Marine insurance is a contract of indemnity. That means, the insurance company is liable to compensate only till the extent of the actual loss suffered. There is no liability lies on the part of the insurance company if there is no actual loss suffered. For example, let’s say an insured has a marine insurance policy for Rs.25 lacs. In the event of loss, the actual loss was estimated as Rs.15 lacs. In this case, the insured will not receive compensation of more than Rs.15 lac even if the coverage is Rs.25 lac.
Marine insurance gets applicable only if the insured has an insurable interest in the subject matter (insurable property) at the time of loss. The requirement of insurable interest to be present only at the time of loss makes the marine insurance policy ‘freely assignable’. The policy can be assigned freely prior to or after the occurrence of damage or loss unless the terms and conditions of the policy restrict it.
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Marine insurance policies work on the principle of utmost good faith. The owner of the goods or property to be transported must disclose all the required information accurately to the insurance company at the time of availing the marine insurance. Non-disclosure, misdescription, or misrepresenting of facts and information by the insured makes the marine insurance policy voidable at the time of claim.
Marine insurance policy works on the principle of subrogation. But the right of subrogation arises only after the payment has been made to the insured. After settling the marine insurance claim, the insurer holds all the right to sue the third party who is responsible for the loss. In this case, an insurer can recover the amount of compensation paid to the insured from the third party. The aim of the principle of subrogation is to ensure that the insured receives the compensation only for actual loss suffered.
The principle of contribution applies in the case of multiple marine insurance policies. Losses will be paid proportionately if the insured holds multiple policies for his goods or property. For instance, goods worth Rs.40 lac are insured with two different insurers. And there is a loss of goods in the marine event, the total amount of loss will be compensated to the insured proportionately by both the insurance companies.
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A Marine insurance features is that its policies come with a warranty which is a legal undertaking between an insurance company and the insured. It’s basically a legal obligation by the insured. Marine insurance policy stands cancelled or terminated as soon as there is a breach of warranty. Warranty can be an express warranty that is expressly included in the policy or can be an implied warranty that is not included expressly in the policy but is assumed and understood by both the parties in the contract.
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Many import-export trade processes require marine insurance as a necessity. Under marine insurance, both parties are contractually required to pay for the cost of the goods, but there are other factors to consider before deciding that you need this kind of insurance when transporting your cargo.
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There are 4 types of Marine Insurance, which are as follows:
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To conclude, marine insurance policies ate loaded with many features. With a variety of marine cargo insurance policies available out there as per the specifications, need and requirement, getting the customized marine insurance plan to suit the business requirement is all the more important to mitigate the risk efficiently.
Marine insurance covers the loss or damage of property being transferred via ships, cargo, terminals, or any other mode of transport. When you transfer your acquired or held property from one point/location and the final destination, you can secure the property by means of marine insurance. This insurance coverage is not limited to transportation via sea only. Some plans offer coverage for rail, land and air transport as well.
The various types of Marine Insurance are namely:
# Marine Cargo Insurance
# Liability Insurance
# Hull Insurance
# Freight Insurance
Below are some features of Marine Insurance:
# Comprehensive Coverage
# Easy Customization to help meet your requirement
# Flexibility in terms of options
# Claim survey and settlement Assistance
# Extension of Coverage
The five fundamental principles of Marine Insurance include:
# Insurable Interest
# Utmost Good Faith
# Proximate Cause
# Subrogation and Contribution
You need marine insurance if you want to ensure the safety of your costly items while they are being transferred. Among the ones who need a marine insurance include import/export merchants, contractors, banks, buyers and sellers. Anyone engaged in the import and export of goods or transportation of it within or outside the country can buy marine insurance.
Marine insurance is mandatory for owners of all ship and yacht. Especially if the owner uses the vessel for commercial or transportation purposes for carrying passengers, workers, or cargo across international waters.
To calculate marine insurance:
# First, you must determine shipment value or the cost of freight.
# Here, you can add 10% for the escalation costs.
# The total value thus obtained and is multiplied by the insurance premium, and quoted by the insurance provider.
# The final value that is received is calculated as the amount to be payable as a premium
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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