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 that can suit different needs and requirements. Availing the best marine insurance policy can help business to mitigate the financial pitfall that can happen due to loss or damage of goods in transit.
Here are some of the perils covered under a marine insurance policy are
- Fire and explosion
- Perils of the sea
- Jettison
- Breakage
- Accident
- Theft
- Barratry
- Non-delivery
- Pilferage
Here are the basic features of the marine insurance policy
PROPOSAL AND ACCEPTANCE
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 proposal will not be covered under the marine insurance policy.
PAYMENT OF PREMIUM
Coverage of risk will also start from the date of payment of premium. If the payments are made in cheque, the date of realization of money will be considered for providing the risk coverage.
CONTRACT OF INDEMNITY
Marine insurance is a contract of indemnity. That means, the insurance company is liable to compensate only till the extent of 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 says an insured has a marine insurance policy for Rs.25 lacs. In the event of loss, actual loss was estimated as Rs.15 lacs. In this case, insured will not receive compensation more than Rs.15 lac even if the coverage is Rs.25 lac.
INSURABLE INTEREST
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 as ‘freely assignable’. Policy can be assigned freely prior to or after the occurrence of damage or loss unless the terms and condition of the policy restrict it.
UTMOST GOOD FAITH
Marine insurance policies work on the principle of utmost good faith. 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 insured makes the marine insurance policy voidable at the time of claim.
PRINCIPLE OF SUBROGATION
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, the insurer can recover the amount of compensation paid to insured from the third party. The aim of the principle of subrogation is to ensure that the insured receives the compensation only for the actual loss suffered.
PRINCIPLE OF CONTRIBUTION
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 is 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.
COMES WITH WARRANTY
Marine insurance policies come with a warranty which is a legal undertaking between the insurance company and 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 express warranty which are expressly included in the policy or can be an implied warranty which is not included expressly in the policy but are assumed and understood by both the parties in the contract.