Marine insurance is often misunderstood by many people who need it due to the complex nature of the marine business. Many ships travel internationally, which can make the regulations and requirements for insurance a little more challenging to understand. Regardless, it is crucial for companies involved in the marine business to be adequately insured to avoid highly costly situations in the event of an accident.
While specific terms and benefits vary worldwide, many marine insurance policies are custom-tailored for particular shipments. A few general principles apply to the entire industry that is important to understand.
What is Marine Insurance?
Marine insurance refers to a contract of indemnity. It is an assurance that the goods dispatched from the country of origin to the land of destination are insured. Marine insurance covers the loss/damage of ships, cargo, and terminals. It includes any other means of transport by which goods are transferred, acquired, or held between the points of origin and the final destination.
The term originated when parties began to ship goods via sea. Despite what the name implies, marine insurance applies to all modes of transportation of goods. For instance, when goods are shipped by air, the insurance is known as the contract of marine cargo insurance.
Marine Insurance Act 1963:
The Marine Insurance Act in USA came into existence in 1963. As per section three of the act, any time the term ‘marine insurance’ is used, expressed, or even extended for the insuring of goods against loss or damage, the insurer will be at risk of bearing the charges. The insurer will consider all the certainty of goods in case of misfortune sustained during marine ventures.
Process To Select The Best Marine Policy :
Several insurance companies provide marine insurance. Therefore, you must compare different marine insurance online before deciding on a policy that suits you best. You must do the following before purchasing a policy:
- Compare and analyze the coverage provided
- See if the policy meets all your requirements
- Set your budget
Principles of Marine Insurance:
- Principle of Good faith – Parties demand absolute trust on the part of both; the insurer and the guaranteed.
- Principle of Proximate Cause – The proximate cause is not adjacent in time; also, it is inefficient. Nevertheless, it is the definitive and adequate cause of loss.
- Principle of Insurable Interest – Any object presented as a marine risk and the assured covering the insurance of goods – both should have legal relevance. Also, a series called ‘Incoterms’ is devoted to respectfully assigning the insurance of goods to each party.
- Principle of Indemnity – The insurance extended to the parties will only be applicable up to the loss. The parties can’t buy insurance to gain profits. If they do, they won’t get more than the actual loss.
- Principle of Contribution – Sometimes, the risk coverage for goods has more than one insurer. In such cases, the amount has to be fairly distributed amongst the insurers.
What Does Marine Insurance Cover?
Marine Insurance covers businesses that operate in the water. Whether for trade, travel, or leisure, these businesses face unique risks that require specially tailored coverage plans. Some of the central portions of coverage include:
Where to get Marine Insurance?
The process of purchasing marine insurance in India is easy. The country’s geographical position allows many banks and financial institutions to provide marine insurance.
Coverage For Goods:
While there is no law against carrying or transporting freight without insurance, this could mean financial ruin for you if you are not covered in the event of an accident. Without insurance, you would be personally responsible for the costs of the damages and all the lost goods. Ensuring that your marine insurance plan includes sections discussing coverage for the goods shipped is essential.
The covered perils included in many marine insurance plans often vary based on the client’s unique needs. The most common perils listed include theft, vessel sinking, improper handling of the ship, hijacking, saltwater exposure, and more. The key here is to know that when working with an insurance specialist, you can be sure that you will get all of the necessary coverages relevant to your operation.
It is important that your insurance policy is very clear about the locations it covers. Policies are available to protect goods while in transit, but damage can also occur while the ship is in port, while the goods are in transit to the warehouse, or while they are at the warehouse itself. These variations make it crucial to be covered in the same way at all of the locations your business interacts with.
What Is Not Covered In Marine Insurance Plans?
The marine insurance companies do not cover the situations given below:
- Intentional loss/damage caused
- Packaging is not up to the standard
- In situations of bankruptcy, liquidation, or failure of finances
- Wear and tear of goods in transit
- Loss due to delay in cargo
- Unfortunate and unexpected situations like war, riots, strikes, and civil strife
What Are The Benefits Of Marine Insurance?
Now that we have a better understanding of the most common coverage types found in standard marine insurance plans, let’s examine why these plans are so important. Marine insurance plans are essential for a variety of reasons. One of the main reasons is that when it comes to watercraft and seafaring vessels, accidents are prevalent. Not only that, but they are also very expensive! Getting a personalized marine coverage plan can be the difference between a small accident and one that puts you in a very financially binding situation.
Some of the main benefits of marine insurance include the following:
As we mentioned, boat repairs can be extremely costly. Whether for maintenance or the result of an accident, these repairs can run you tens of thousands of dollars if you are not adequately covered!
Peace of Mind:
As a marine business manager, you most likely understand this business’s daily stresses and fast-paced nature. Accidents can happen anytime, and you don’t want to be caught unprepared when they inevitably occur. With a properly designed marine insurance plan, you can focus on getting work done and not on how you will pay for the damages related to a recent accident.
A cargo ship crashed near the shore needing Marine Insurance. In the same way; you could hit another car on the road; accidents can also occur in the water. Suppose you’re found to be at fault for an accident involving another watercraft or person. In that case, you’ll require liability insurance to cover this accident’s damages and legal costs. Considering how expensive boat accidents can be, this is a significant kind of coverage and an important advantage of having a well-designed marine insurance plan tailored to your needs.
As you can see, marine insurance plans are vital to businesses involved in the marine industry. They can help you be protected from all the main risks your business faces while also ensuring that you can focus your energy on running a great business and not on your insurance concerns. If you are wondering what your business may need, reach out to a marine insurance specialist today to learn more.
Risks of Marine Transportation:
The transportation of goods by sea is quite complex. Once the goods leave your hands, they are in the hands of many other people, and anything could go wrong. The risks associated with marine insurance are vast, so you need to ensure you get the right marine insurance.
Marine insurance ensures financial stability for businesses, prevents financial loss for goods in transit, and helps businesses cope without worrying about risks. Marine insurance offers coverage for goods wherever they are in the world. Payment can also be made for an annual or single trip cover.
Marine insurance has several benefits. Fortunately, different policies cover various types of businesses and products.
Importance of Marine Insurance:
Marine insurance is required in many import-export trade proceedings. Admitting the terms, both parties are liable for the payment of goods under insurance. However, the subject matter of marine insurance goes beyond contractual obligations, and several valid arguments are necessary for buying it before dispatching the export cargo.
Goods in transit need to be insured by one of the three parties:-
- The Forwarding Agent
- The Exporter
- The Importer
Also, it can be taken by anyone involved in the transit of goods.
Now that you had known what marine insurance covered and what doesn’t covered as well as the principles guiding the marine insurance. Congratulation, for your cargo (goods) are now saved. However, don’t hesitate to ask question (s) any where you don’t understand as well as any correction(s). You can drop you questions or comments in our contact us page, we are here for you 24/7. Have a nice day.