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Marine Insurance

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What is marine insurance ?

Marine insurance is a contract of indemnity that covers loss or damage to ships and cargo in transit from one point to another through various transit modes like rail, road, sea, air and courier. It covers:

Damage to the ship

Damage to hull and machinery

Any loss to the cargo during the actual shipment.

Though the name indicates that the policy covers the transit of goods only by waterways, it is not so. Marine cargo insurance encompasses all forms of transit of goods – By Road, Railways, Water and Air. Goods, whilst in transit, are liable to loss or damage through various stages. Marine cargo insurance intends to protect the insured against the risk of loss or damage to goods in transit. It is also popularly known as transit insurance.

What are the Types of Marine Insurance Policies?

Below are a few typical marine insurance policy types:

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Hull
protection

Physical harm to the vessel, including damage to the structure, equipment, and gear, is covered by hull insurance policy.

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Cargo
insurance

Cargo insurance protects againstharm or loss to cargo while it is being transported by water.

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Freight
insurance

Freight insurance compensates you for any lost freight income caused by damaged or lost cargo.

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Indemnity and
protection insurance

This kind of policy covers liabilities brought on by the operation of a ship, including harm to third parties' property, harm to personnel or guests, and environmental pollution.

War risk
insurance

It covers losses or damages brought on by wars, terrorists, pirates, and other violent crimes.

What are the Types of Plans under Marine Insurance Policy

Open marine insurance policy

A maritime insurance policy known as a "open marine insurance policy" is one that is given out to cover a variety of deliveries or deploys for a period of 12 months based on a sum that is sufficiently insured and lowered by the worth of each cargo using the reducing balance method.The traders who show the greatest interest in utilizing the open policy are those who send out regular dispatches.

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Features of Open Policy-Inland

Commonly used for dispatches within the country by rail, road, air, inland waterways and registered post parcels

The policy term is one year.

Policy issued for a substantial sum insured based on the projected value of dispatches.

Periodic (monthly or quarterly) declarations are made.

The policy ceases on the expiry of the term or when the sum insured gets exhausted, whichever occurs first.

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Features of Open Cover - Import and Export

A marine cargo open cover is an agreement between a merchant and an insurance company to insure all goods in transit within the agreement for a definite period.

An Agreement with the insured is made for a specific period, generally 12 months.

Rates, Terms & Conditions are agreed to in advance by both parties.

Funds are remitted in advance for the projected exports and imports to be covered.

Details of all shipments without any exceptions to be exported or imported should be declared by the insured.

Certificate would be issued against each declaration by the insurer or the insured through the online portal on a periodic basis as agreed with the insurance company.

Agreement ceases on the expiry of the period or when the sum insured gets exhausted, whichever occurs first.

Specific marine insurance policy

One transit only is covered by a specific marine insurance policy. Typically, the policy is released in advance of the cruise. Once the cruise is over, coverage will begin. The particular voyage policy must include comprehensive information on the risks covered. It should include information on the mode of transportation, the name of the vessel, the bill of lading, the airway bill, the details of the shipment, the amount covered, the provisions of the insurance, the voyage, the description of the cargo, and many other things.

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Features of Specific Policy

Covers only particular consignment

Insurance on case-to-case basis

To be arranged before the commencement of transit, or can be issued on backdated basis with underwriting approval

Particulars of dispatch to be furnished at the time of buying the specific policy

Why is Marine Insurance Important?

Marine insurance is crucial for a number of reasons, such as:

Protection from monetary loss:
Marine insurance covers damages or damages to vessels, freight, and other maritime risks, helping to reduce financial damage that would otherwise have to be incurred by the insured.

Handling risk:
The maritime sector is exposed to a variety of dangers, including piracy, weather-related damage, and collisions with other vessels. For people working in the business, marine insurance may assist control these hazards and give them peace of mind.

International Trade:
Maritime insurance can assist in facilitating international trade by giving buyers and sellers the confidence that their commodities will be covered during transit. This can help lower trade barriers and boost economic growth.

Why is Marine Insurance Policy Important?

Following are some major points that highlight the importance of a marine insurance policy:

Financial loss protection:
Marine insurance policies offer protection against monetary losses that may result from damage to the ship or its cargo, liability lawsuits, or lost wages as a result of delays or other problems. Without insurance, these losses may be sizable and might even jeopardize the company's capacity to make money.

Risk management:
A marine insurance policy aids companies in controlling and reducing the risks involved in marine operations. Businesses can minimize or reduce the chance of losses by recognizing and evaluating the risks, and insurance coverage offers a cushion in the event of unanticipated catastrophes.

Flexibility:
Based on the kind of vessel, the cargo, and other considerations, marine insurance coverage can be customized to the unique needs of the business. This enables companies to properly control their insurance costs and acquire the right level of coverage.

Assistance in the case of an accident:
In the case of a covered loss, a marine insurance policy offers financial assistance to companies to aid in their recovery and ability to continue operations. In order to help with the complaint process, the insurance provider can offer knowledge and resources, including determining the severity of the harm, setting up replacements or repairs, and expediting claim settlement.

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What are the Important Features of Marine Insurance Policy?

The following are some crucial aspects of a marine insurance policy

Coverage

Marine insurance plans can offer coverage for a variety of hazards, including loss or damage to the ship or its cargo, liability lawsuits, and lost wages as a result of delays or other problems. It is crucial to read the policy in its entirety in order to comprehend the extent of cover and any exclusions.

Deductibles
and Premium

Like other insurance plans, marine insurance policies feature premium payments and potential deductibles, which are the sums the policyholder is responsible for paying before the insurance cover begins to apply.

Value and
appraisal

In order to calculate the insured value the sum that the insurance provider would pay in the case of a covered loss marine insurance plans may call for the ship or freight to be valued and evaluated.

Navigation limits

Marine insurance contracts may have navigation limits, which stipulate the areas in which a vessel may be operated while still receiving coverage. To keep the policy in place, it’s crucial to comprehend and abide by these restrictions.

Loss prevention and control

Marine insurance policies can ask the insured to take certain actions to prevent or lower the risk of loss, including putting safety procedures into place, keeping the ship and its equipment in good condition, and giving crew members the right kind of training.

Claims processing and settlement

The policyholder must submit a claim to the insurance provider and follow the claims management procedure in the case of a covered loss. It is crucial to comprehend how claims are processed and resolved under the plan, including any documentation or loss-proof requirements.

Risks included and excluded in a marine insurance policy

The majority of risks connected to marine operations are typically covered by marine insurance plans, while some risks may be excluded. Below are a few instances of dangers that a marine insurance policy might cover or not.
Risk coverage depends on the coverage clauses, but standard insurance policies will typically cover below risks or perils:

Coverage Description	All Risk	Basic Risk
Lightning	✓	✓
Breakage of Bridges	✓	✓
Collision with or by the carrying vehicle	✓	✓
Overturning of carrying vehicle	✓	✓
Derailment or accident or like to carrying vehicle/railway wagon	✓	✓
Non delivery of entire consignment or packets	✓	✓
Theft, Pilferage	✓	✗
Fresh and Rain water damage	✓	✗
Damage by hooks, nails, oil, mud, acids and other extraneous substances	✓	✗
Any other risk not specifically excluded under the policy	✓	✗

Excluded coverage, risks or perils not covered by an marine insurance policy:

Loss or damage due to inherent vice or willful misconduct

Loss or damage caused by delay, including consequential loss or damage

Loss or damage caused by illegal or criminal acts committed by the insured

Loss or damage due to wear and tear, corrosion, rust, or gradual deterioration

Loss or damage due to improper packing, insufficient stowage, or poor handling of goods

To comprehend the precise risks that are included and excluded, it is crucial to carefully analyze the policy. Also, certain endorsements or provisions in policies may change the cover or exclusions. Acts of war, conflicts, or terrorism are not covered risks unless specifically covered by the policy

Standard Terms and Conditions Covering Marine Insurance Risk:

Standard terms and conditions are published by the International Chamber of Commerce (ICC) for various types of contracts, including marine insurance policies.

The ICC clauses provide a framework for determining the rights and obligations of the parties involved in the contract, and they are intended to ensure fairness and consistency in the interpretation and enforcement of the contract.

The specific ICC clauses that apply to a marine insurance policy will depend on the type of policy and the nature of the risks being insured.

What are INCO Terms?

International Commercial Terms (INCO Terms) are standardized trade terms that are recognized worldwide and used in international commercial transactions to define the obligations, risks, and costs associated with the transportation and delivery of goods. It helps to clarify the extent of coverage and liability of the parties involved in the shipment of goods.