Difference between Warranty & Condition in Marine Insurance

Marine insurance is a contract of indemnity, which provides assurance that the goods shipped from the origin place to the place of delivery are insured. The reason to buy marine insurance is that it covers the loss/damage that occurs to ships, cargo, or any other means of transport through which goods are transferred, received, or stored between the origin place and destination.

However, the payment or settlement of loss is subject to the fulfilment of conditions and warranties mentioned in the insurance. Now, to understand what warranty and conditions mean in marine insurance, let us head to the next section.

Warranties in marines insurance are the promises or assurances made by the insured to the insurer. These promises are made by the insured regarding the condition and the usage of the insured vessel.

If the warranty is breached, then the insurer is entitled to be discharged from certain or all obligations in regard to marine insurance taken by the insured.

There are different types of warranties in marine insurance, which are discussed in the next section.

Here are the types of warranties contained in marine insurance in India:

Implied Warranty in Marine Insurance

Certain assumed and automatic promises that are considered to be at the core of marine insurance are known as implied warranties. There is no specific mention of such warranties in the insurance documentation, but they are considered to be there and need to be fulfilled. Some of the implied warranties include:

Zero Misinterpretations and Concealments- This is the promise from the insured that no information will be hidden or misinterpreted that might risk the validity of insurance. Everything will be transparent.

Vessel Seaworthiness- It is promised that the insured vessel is competent for the journey from its origin place to the destination, including proper types of equipment, preventive tools and experienced crew members.

Legal Expedition- The insured warrants the legality of the journey and promises not to engage in any illegal practices during the entire expedition.

Express Warranty in Marine Insurance

Express warranties in marine insurance are different from implied warranties. Unline implied ones; the express warranties are not assumed or fundamental in insurance.

An express warranty is clearly written in the marine insurance policy documents, and both the insured (the owner of the ship/cargo) and the insurer (the insurance company) agree on it. These warranties are a must and should be followed strictly so that the insurance remains valid.

There are various terms and conditions in insurance. The part “conditions” are requirements that need to be fulfilled by the insured in order for marine insurance to remain valid. Somehow, if the insured fails to fulfil these conditions, then the insurer is not liable to pay the claim amount or fulfil insurance conditions.

There are different types of conditions in marine insurance in India, which are discussed in the next section

Here are the types of conditions implied in marine insurance that need to be fulfilled by the insured:

Implied Conditions in Marine Insurance

Conditions which are not stated in marine insurance documents but are assumed to be implied automatically are known as implied conditions. Such conditions present in the fundamentals of insurance policy include:

Having Good Faith- It is essential that the insured has good faith while buying the marine insurance and should show faith sincerely during the claim settlement. Any kind of deceitful behaviour by the insured can lead to refusal of payment from the insurer.

Seaworthiness of Vessel- It is vital for the validity of marine insurance that the insured vessel is seaworthy. The vessel should be in a condition to withstand the whole voyage from origin to destination; if not, then the insurer can refuse to pay the claim amount.

The Legality of Journey- It is another condition that the insured vessel should be used only for legal voyages. If the insured engages in any illegal practices during the whole journey, the insurer can refuse to pay for insurance settlement.

Conditions and warranties in marine insurance play a vital role in the validity and settlement of claims. After reading about both warranties and conditions, you might have understood their meaning and might question whether conditions and warranties are the same.

No, the warranties and conditions of marine insurance are two different elements of it and play their role. The difference between the two can be understood in this way: conditions are mandatory terms of marine insurance, but warranties are not. It means, the breach of insurance conditions will leave the marine insurance policy null and void. However, the breach of the warranty will release the insurer from the liability for losses that are the result of the breach.

Rights and Obligations: Conditions and warranties stated in marine insurance determine the rights and obligations of both the insurer and insured once they come into an insurance contract with one another.

Creates Legal Framework: Having a legal framework is crucial in any kind of insurance. The conditions and warranties create that in marine insurance by stating terms upon which the insurer will pay the claim settlement amount, and the insured promises to follow them.

Easy Claim Settlement: Adhering to all the warranties and conditions of marine insurance by both parties ensures an easy claim settlement process in case of loss/damages, thus facilitating the insured.

Establishes Good Faith: It is assumed that the marine insurance is being taken and given by the insured and insurer with good faith. It means both parties will be transparent with each other regarding all the terms and conditions of the marine insurance.

After reading about the difference between warranty and condition in marine insurance, you must have understood how crucial it is to read and know about every element of any kind of transit insurance before buying it.

Having a marine insurance policy that provides liability protection, covers loss and damages and is flexible according to your needs is great for any ship or cargo owner. It gives you peace of mind that your goods are protected if any unexpected event happens.

Tata AIG offers customisable and affordable marine insurance plans that can be used to cover transportation of goods through air, land, water and rail.

What are the 3 main types of marine insurance?

The three main categories of marine insurance are cargo insurance, freight insurance and hull or ship insurance.

Who needs marine insurance?

Any individual or business person engaged in transportation activities is advised to have marine insurance to avoid bearing financial losses in case of any damage or loss to goods.