A marine insurance policy plays a significant role in protecting the maritime business from various types of perils. It protects goods against losses due to accidents, collisions, natural disasters, etc.Â
Since marine insurance is so important for the protection of businesses that require transportation services, businesses must know marine insurance and types of marine insurance policies and the coverage they offer. It helps them better understand the insurance landscape and opt for the best insurance plan.
Marine Insurance Policy Coverage
- Marine Cargo Insurance
Cargo owners are exposed to the risk of cargo damage during transit due to mishandling, theft, ship sinkage, and so on. To safeguard the cargo against all types of risks and damages, this type of insurance is recommended. Marine cargo insurance coverage also includes any losses caused due to delay in loading, unloading and sailing.
- Liability Insurance
Liability insurance is a kind of marine insurance that protects the ship owner from third-party liabilities that may arise from various incidents. This type of insurance is offered by leading insurers like TATA AIG and it protects the insured from third-party liabilities in the case of accidents, piracy attacks, and collisions.
- Hull and Machinery Insurance
The hull and machinery are the most crucial components of a vessel or ship. Any damage to these components can cause the ship owner to spend huge sums of money on its repair and replacement. But with the help of hull and machinery insurance, the insured is saved from financial losses.
- Freight Insurance
This type of marine insurance cover is highly beneficial to cover any loss to the freight cargo during transit. An adequate freight insurance protects those involved in the shipping and logistics business as it covers the merchandise and goods against loss or damage while shipping it from one place to another.
Types of Marine Insurance Policy
Marine insurance is vast and includes different types of insurance policies and plans. Policies are based on the structure plan and have different benefits, as mentioned below.
- Voyage Policy
A voyage policy is applicable to a specific voyage mentioned by the insured. Soon after the voyage is completed, the policy expires and is no longer in force.
- Floating Policy
A floating policy is also known as an open or blanket policy. Under this type of marine insurance policy, all the shipments sent during a specified period, say one year, are protected under the insurance. It is ideal for major exporters and maritime businessmen.
- Time Policy
As the name suggests, this policy is for a specific time. All the voyages during the policy period are covered under the insurance plan. Thus, there is no need to buy a separate policy for each voyage.
- Valued Policy
Under such insurance policies, the value of the cargo and consignment is specified in the policy wording. The compensation is based on the value mentioned in the policy.
- Single Vessel Policy
Single vessel policy covers only one specific vessel that the insured wants to protect.
- Fleet Policy
A fleet policy protects multiple vessels owned by the insured under a single insurance plan. The policy is valid for a specific time.
- Port-Risk Cover
This marine insurance policy protects the vessels from damages while they are docked at the port. It is recommended to take this policy when the vessel is expected to be stationed at the port for an extended time.
Summary
Marine insurance can be divided into various types based on the coverage and structure of plans. Thus, while purchasing one for your business, carefully understand the different types, know your business needs and opt for the one that will benefit you the most.
Insurance policies based on coverage protect specific parts such as hull and machinery, third-party, etc., while plans based on structure offer coverage to the shipment and goods based on time and other conditions.
Frequently Asked Questions
What are marine insurance clauses?
There are two types of clauses in marine insurance:
- Inland Transit Clauses- This clause applies to transit within the geographical limits of India.
- International Cargo Clause– It applies to international cargo only, i.e. imports and exports.
Is marine insurance mandatory?
Marine insurance may not be mandatory under all circumstances. However, some laws or contracts may require the parties to have one. It is wise to have a marine insurance policy if you are involved in shipping goods, as it saves you from financial losses.
How are goods valued in marine insurance?
For the purpose of marine insurance, goods are valued by taking into consideration their costs, freight charges, insurance costs, etc. An additional 10% may be added for accuracy.
