What is Time Policy in Marine Insurance?
Time policy in marine insurance refers to a specified period of time when the insured is covered under the marine policy. It generally comes with a period of 12 months or one year. The insurance policy lapses after the passage of the specified time mentioned in the insurance contract.Read more
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Features & Benefits of Time Policy in Marine Insurance
The time policy in marine insurance is offered for a fixed period of time. According to the regulation applicable in India, the maximum time period for such insurance is 12 months.
Let us discuss some features and benefits of time policy in marine insurance.
The insured may avail coverage against every peril during the tenure of the time policy in maritime insurance. The policyholder shall be entitled to avail the coverage for damage which may occur.
The time policy is available for one year. The property of the insured may depend on the coverage provided by such a policy. In addition, the hull and machinery insurance's policyholder may obtain the utmost advantage. The machinery of the ship is prone to high risk. Hence, such insurance suits the policyholder for hull and machinery insurance.
The policy offers coverage for a period of one year. It does not matter if the policyholder undertakes one or a multiple voyages. The policy shall cover the insured against every peril on every voyage. The insurance coverage shall not be affected due to a high number of voyages.
Additional Features of Time Policy
Let us discuss some additional features of the time policy.
The policy generally comes with a fixed period of one year. However, it is at the discretion of the policyholder to decide how short the time period should be. There is no restriction on determining the short period for this policy. The policyholder is free to choose tenure for less than a year.
The time policy automatically lapses after the expiration of the policy tenure. It may create an issue for the policyholder. The voyage might face or experience an unforeseeable misfortune which may cause delay. Such circumstances are likely to expose liabilities to the ship outside the policy tenure. This problem needed to be addressed.
Therefore, the insurance companies come with a continuance clause. The clause offers some extension to the policy period. It refers that if the ship fails to complete the voyage within the tenure of the policy, the policy is likely to be continued with its coverage until the ship arrives at the decided destination or port.
For example, consider the policy tenure ends on 16th March. If the ship is still on its voyage, then the tenure is likely to continue with the continuance clause. If the ship completes its voyage on 18th March, the policy shall remain in force till 18th March. This gives the ship enough time to arrive at the port. Therefore, the policyholder must opt for a continuance clause.
The time policy is ideal marine insurance for tramp shipping. Tramp shipping refers to ships that do not follow a fixed or set route. Tramp shipping only deals in cargo shipping.
Time policy in marine insurance is an essential aspect of the import and export business. Moreover, the marine insurance policy is a mandate by the law. Every business that engages or is involved in the commercial transport of goods from one nation to another must subscribe to a marine insurance policy. One may find different types of policies such as freight insurance, liability insurance, marine cargo insurance, etc. The policyholder must purchase the policy that suits his business.