Different Types of Marine Insurance Policy in India

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Introduction

Did you know that marine insurance in India is valued at around $950 million? But a mere 5% of the insurance market comprises marine or transit insurance. Investors put a lot of money into ships and the goods they carry, but there’s always a risk of loss or damage due to natural and artificial disasters. Marine insurance protects such investors by covering the goods during shipment.

What Is Marine Insurance?

The main feature of an insurance policy is to protect the goods. Marine shipping needs insurance to protect against losses. This is where marine insurance steps in. It is vital to the shipping sector and helps pay the losses caused to goods in transit. In India, there are many types of marine insurance.

Principles of Marine Insurance

Certain principles of marine insurance are:

Utmost Good Faith: The company will disclose all information to the insurer.
Insurable Interest: Buying a policy requires an insurable interest. This means that the insured should benefit from the safe delivery of goods.
Indemnity: This principle tells us that you will be compensated only for the losses. This means that a person should not buy marine insurance for gain. It should be use-based.
Cause Proxima: Profits can’t be made from losses incurred. You will need to look at the proximate or nearest cause at the time of a loss. This would help you figure out the real cause of the loss.
Loss Minimisation: This principle states that you must protect goods and minimise losses by taking all steps.

Types of Marine Insurance in India

India has many types of marine insurance based on the area and the contract terms:

Hull and Machinery Insurance:Hull insurance pays for losses during shipping. The most vital part of the ship is the hull. The ship’s hull, or the body, keeps the cargo safe from damage from water and bad weather.
Marine Cargo: This insurance keeps shippers from losing money. It can be from theft, fire, or other things that can go wrong. It gives compensation and a lot of coverage. But there are also some limits. For example, the owners can’t claim losses if the cargo isn’t packed correctly.

Liability: This insurance protects the insurer’s money in case a court rules against them. Its main job is to protect the owners and operators of the ship from being sued. It can also happen if someone else gets hurt in an accident.

Based on the Contract Structure

Scheme documents specify what the insurance deal is based on. It’s a deal between the insurer and the person or shipment company who needs insurance. The contract terms include what is covered, how much is covered, for what time it is, etc.

Here are some of the groups based on the agreement:

Open Policy: An open or ‘floating’ scheme covers an unlimited number of transit trips for the length of the policy. It is helpful for businesses that do a lot of trading. This insurance covers all shipments in transit at the same time.
Voyage Insurance: A trip policy, voyage insurance is like ship cargo insurance. The insurance company will pay for any damage or loss to the cargo during the trip. Small exporters who choose sea shipping are in the insured group.
Time Policy:These are given for a certain amount of time. During this time, the ship can make as many trips as it wants. Mostly, the scheme from the insurance company is suitable for a year. Both parties can agree on the time duration.
Mixed Policy: This policy is a combination of trip and time policies. Through this coverage, the insurer promises to pay to fix or replace the ship if anything goes wrong during a specific trip and period.
Single-vessel Policy: It protects a single ship. You can choose to insure a single ship under a single scheme or a fleet of ships under a single policy, depending on their needs.
Unvalued Policy: Insurance policies can be unvalued or valued. An unvalued approach is when the insurance company doesn’t put a dollar amount on the value of the item they are covering (the ship or its cargo). The assets will be valued once an insurance claim has been made. Before the insurance company pays, you must show proof of the owner’s value through invoices or estimates.
Valued policy: In a valued policy, the insured assets are given a dollar amount when the scheme is issued before a claim settlement. It doesn’t matter how much the insured losses. They will get a certain amount of money when they make a claim.
Block Policy: An ‘all hazards’ or ‘block’ scheme covers all possible risks. Unless otherwise specified, the insurer is responsible for any damage to the goods while they are in transit, in bailment, or on the assets of a third party.
Port-risk: It keeps ships safe while they are docked or getting repairs at a port. The scheme is an ‘all-risk’ scheme unless something else is said. It means that it protects against all possible risks.
Named Policy: When a ship’s name (or names) appear in an insurance policy, the cover is known as a ‘named’ policy.
Wager Policy: ‘Wage insurance’ protects against the loss of assets for which the insured gives a clear title.

Conclusion

Marine insurance is meant to protect your money and property. In 2020, the global marine insurance market was worth $26.83 billion. By 2028, it is expected to be worth $33.90 billion, thanks to a 3.1% compound annual growth rate from 2021 to 2028. Marine Insurance is a way for people to get help and security when things go wrong. The policy pays for damage to the ship while it is grounded or in transit due to weather, attacks, etc.

Frequently Asked Questions

Q1. Why is marine insurance important?

Marine insurance is essential for protecting goods while transporting them by sea. Sea logistic companies ensure that the goods are protected at all costs.