What is Marine Insurance?
Marine Insurance is a type of insurance policy that provides coverage against any damage/loss caused to cargo vessels, ships, terminals, etc. in which the goods are transported from one point of origin to another. Marine insurance coverage includes loss or damage caused to the shipment/cargo/ ship while is grounded, and also from untoward perils like- sinking, collision, burning, weather conditions, navigation errors, theft, jettison, improper stowage by the carrier, hook damage, strikes, war, and natural perils
A marine cargo insurance policy is necessary for all the owners of the ship who use it for a commercial or transportation purpose. However, the insurance coverage is not only limited to sea there are plans that offer coverage during rail, land, sea, and air transport.
Any untoward perils can cause huge financial loss to the shipment. Insuring the goods against any unforeseen incident such as an accident, collision, overturning, etc. during transit also means a secured business. There is another important sub-category i.e. Marine Cargo insurance.
Features of Marine Insurance
Whatever be the reason for shipping goods, a marine cargo policy protects the insured goods against material damages. Mentioned below are some of the benefits of buying marine insurance in India:
1. Comprehensive Coverage: A marine cargo insurance policy offers comprehensive coverage against all the potential marine-related perils that the goods are exposed to while they are in transit.
2. Easy Customization: The plans can be easily customized and be adjusted to meet certain needs of the customers.
3. Flexibility: The plans are flexible enough and have a variety of options to cater to the requirements of the insured, considering their budget.
4. Claim Survey and Settlement Assistance: This insurance policy frees from stress about the claim as the policy offers worldwide claims settlement assistance along with a claim survey.
5. Extension of Coverage: Under this policy, one has the liberty to enhance the coverage with add-on benefits and cover the risk arising due to strikes, riots, etc.
Types of Marine Insurance Policies
There are different types of marine insurance plans that are designed to cater to the different needs of the customers. Mentioned below are some of the common types of plans. However, it can vary from one insurance provider to another.
Marine Cargo Insurance
Marine Cargo insurance is a type of insurance policy that covers the loss or damages caused to marine cargo during the transit. The protection is offered to the cargo owner along with the cover to the cargo for any loss or damage caused due to delay in the voyage, ship accident or unloading.
Marine insurance also covers third-party liabilities arising from any loss or damage caused to the ship, port, or other transport forms from the insured cargo. This type of insurance is mainly beneficial for tankers and other heavy cargo shipments. Simply put marine insurance policy safeguards the ship
This type of insurance protects the ship in case of a crash, collision or any attack that can lead to a huge loss or damage. It compensates the policyholder for any such liabilities that are beyond his control.
This marine insurance policy provides coverage to vessel including the furniture and articles of the ship against any unanticipated mishaps. It is imperative for the ship owners to buy this policy and not to overlook it.
It is a type of marine insurance policy that compensates the shipping company in case the freight is lost or damaged.
Let us have a look at various other marine insurance plans available, some of which are:
- Open Marine Insurance Policy: An open policy is issued for a specific time period and covers all the shipments during that duration
- Time Plan: When a plan is bought for a specific period it is called a time policy. This policy is generally valid for a year or so.
- Voyage Plan: This plan is can be bought by those who wish to ensure a specific sea voyage. The moment the journey ends, the plan will be expired.
- Mixed Plan: When a policy provides the advantage of both a voyage plan and a time plan, then such a plan is referred to as a mixed plan.
- Port Risk Plan: When the ship is stationed at the port, a port risk plan is useful to ensure that it is protected against the risks involved.
- Valued Plan: Within this plan, the value is determined either of the cargo or the consignment, which is mentioned in the document of the policy in advance. This helps in a case if cargo or consignment gets lost determining the insurance value.
- Floating Plan: Under this plan, the amount of claim is specified beforehand. It is to be noted that the other details cannot be disclosed until the ship starts with the voyage. This plan is best suited who undertake regular cargo transportation trips.
- Wager Plan: This plan does not have any predefined fixed repayment terms, nevertheless, if the safety net provider finds any shortfall or harm deserving of cases, at that point reimbursement is given. If the harms are not worth considering, at that point there will not be any remuneration.
What is Covered in Marine Cargo Insurance?
The policy provides coverage from the risks arising during transit via sea and other modes of transport. The insurer compensates for the following:
- Marine insurance coverage is provided from dire situations like fire or explosion, sinking, stranding during a cargo journey
- Compensation is provided for expenses incurred due to collision, overturning or derailment of land conveyance
- Compensation is provided for expenses under a circumstance wherein the cargo is discharged from a port of distress/disturbance.
- Coverage for general average sacrifice salvages charges
- Protection against any natural calamities such as an earthquake or lightning
- It covers expenses such as survey fees, forwarding expenses, costs of reconditioning and charges of sue
- It also covers situations like jettison and washing overboard
- It also covers the total loss of the package whether overboard or dropped amidst loading or unloading
What is Not Covered in Marine Cargo Insurance?
Marine insurance coverage is not provided under the following situations:
- Compensation is not provided for any intentional loss/damage
- When the packaging quality of the cargo is not appropriate
- No cover shall be provided if the damage occurs due to bankruptcy, liquidation, failure/collapse in the finances
- Wear and Tear of the goods in transit
- No cover shall be provided if the loss occurs due to delay in the cargo
- Not all the insurers cover extreme unpredictable situations like war, strikes, riots and civil commotion
- Any loss or damage resulting due to insolvency
What Does the Institute Cargo Clauses Cover?
Marine insurance coverage is based on the Institute Cargo Clauses. And the coverage available under these standard clauses includes the following:
- Constructive Total Loss
- Actual Total Loss
- Particular Average i.e. Partial Loss by an insured peril
- General Average
- Collision Liability
- Expenses such as Reconditioning Costs, Survey Fees, Forwarding Expenses, Sue and Labor, etc.
Finding the Best Marine Insurance Policy Online
In India, there are a plethora of insurance companies who provide marine insurance coverage. What becomes a strenuous task is to select the most suitable policy as per one’s requirements.
The best way to buy a marine cargo insurance policy is to compare different online marine policies and accordingly select the plan, which suits you the most. It is easier to select online from the various variants that are available in a marine policy. The correct approach is to compare, analyze coverage and find the best marine insurance policy online.
Claim Process for Marine Insurance Policy
Here is the process and documents required for online marine insurance claim intimation and procedure:
- For claim intimation the insured need to provide the insurance policy number as printed on the policy document.
Below is the list of documents that are required for the claim process:
- Claim Bill
- KYC (above Rs. 1lakh)
- Damage Certificate
- Monetary Claim on Transporter
- Letter of Subrogation
- NEFT mandate duly filled & stamped by the bank / cancelled cheque with the name of the policyholder / Account number/ IFSC code
Once the claim is successfully filed the insurer will provide the URN/claim number, that can be used for uploading documents and checking the insurance claim status.
If the insured items are damaged, all the necessary steps should be taken to protect from further damage or loss.
Marine Insurance- FAQs
Ans: Marine insurance covers you in below situations: 1. Fire or blast, sinking, stranding etc. 2. Collision, the overturning of land transport 3. The release of cargo at the port of disturbance 4. Average sacrifice recovery charges 5. Washing overboard 6. Earthquake or lightning 7. Total loss of package lost overboard
Ans: The following are the exclusions of Marine Insurance: 1. Willful misconduct of the insured 2. Ordinary leakage, loss of weight or volume 3. Insufficient package 4. Loss or damage due to any financial default or insolvency of the ship-owner etc. 5. Loss caused due to the delay of cargo 6. War and strikes
Ans: In India, various financial institutions, including major banks offer Marine Insurance. If we talk about insurance companies, then you can go for: 1. Bharti AXA 2. New India Assurance Co. Ltd. 3. Tata AIG 4. HDFC Ergo 5. Royal Sundaram 6. United India Assurance Co. Ltd 7. Cholamandalam Insurance Company
Ans: The claim process of Marine Insurance is simple. Below are the steps to make a claim: 1. Inform the insurer immediately by approaching the claim representative or visiting the nearest branch 2. In case of damages caused to the goods that are on the ship, a port or joint ship must be arranged by you 3. Submit the policy document and other relevant documents, which may be required to testimony your claim
Ans: A plenty of plans are offered under Marine Insurance. A few of them are: 1. Voyage Plan 2. Mixed Plan 3. Time Plan 4. Port Risk Plan 5. Floating Plan 6. Wager plan 7. Valued Plan
Ans: There are factors to be considered in order to ensure the right marine insurance policy. Firstly, the reputation of the insurer and its financial background. Following this one must ensure that the insurer has a robust marine claim department. Secondly, the coverage should aptly be designed as per your insurance needs. Moreover, the premium should be affordable. Third, prefer buying marine insurance online. Some insurers offer discounts on their plans when you buy online. Fourth, analyse your needs first, then buy. The one suits the others may not be proved as useful to you. So, review your needs and buy accordingly.
Ans: There are insurance providers in India who offers marine insurance. You can approach one of them. The best part is, you need not have to visit them physically, you can go to their websites, compare the plans and buy according to your requirements.
Ans: The premium is decided based on the following factors: 1. Type of ship 2. Age of the ship 3. Valuation or cost of the ship 4. Trading and tonnage limits of the ship 5. Management and ownership terms of the ship 6. Type of insurance cover required
Ans: Those who own a ship & cargo with an insurable interest in the boat or ship can buy marine insurance.
Ans: 1. The owner of the ship 2. The owner of the cargo 3. The master and crew of the ship 4. The creator who has advanced money on the security of the boat or ship 5. The mortgagor if the insurable subject is mortgaged 6. A trustee with a property in trust 7. The person advancing the freight
Ans: The types of contract under marine insurance are: 1. FOB Contract- Free on Board 2. FOR Contract- free on Rail 3. C&F Contract- Cost &Freight 4. CIF Contract- Cost, Insurance & Freight
Written By: PolicyBazaar - Updated: 14 August 2020