Express Warranties in Marine Insurance

Express warranties in marine insurance are explicit and specific promises or undertakings clearly stated in the insurance policy. These warranties are written into the policy documents and agreed upon by the insured party and insurance company.

It is generally written in the certificate or deed of the marine insurance policy. These warranties are fundamental conditions that must be fully met for the insurance coverage to remain valid.

Also Read: Innominate Terms or Express Warranty in Marine Insurance

- Voyage Warranties: One of the common types of express warranty in marine insurance policies is the written specification about the voyage or route the insured vessel is permitted to take. Any deviation or change in the decided route may result in a breach of express warranty.

- Cargo Description Warranties: Another kind of express warranty in a marine insurance policy is details about the cargo being insured. It should specify the description and nature of the cargo being shipped. Any deviation or changes in the provided cargo description could lead to a breach of warranty.

- Compliance with Regulation Warranties: Under this type of express warranty, policyholders will provide assurance that they will comply with the relevant laws, safety standards and regulations during the insured voyage.

- Usage and Purpose Warranties: This type of express warranty in marine insurance specifies the intended use and reason for the vessel insurance. Any changes or deviations from the mentioned purpose or use without prior approval could result in a breach of warranty.

- Notification Warranties: Under this type of express warranty in marine insurance, the policyholder must notify the insurance provider about specific occurrences or changes in the insured vessel or cargo within the stipulated time frame. For example, any changes in vessel condition, such as damage, must be informed to the insurance company promptly.

- Qualification of Crew: Some marine insurance policies come with an express warranty clause regarding the qualification of crew members and staff. It is crucial to ensure that the staff and crew working on the vessel meet certain requirements, such as training and expertise, to fulfil the warranty.

The working of the express warranty in marine insurance is straightforward. At the time of purchasing a marine insurance plan, express warranties are clearly outlined. These warranties are written into the insurance policy, stating what the policyholder must do or ensure.

This could include requirements such as the ship being seaworthy, the proper stowage of cargo, or maintaining specific safety measures on board. These warranties require strict compliance, meaning any failure to meet the terms, no matter how minor, can result in the voiding of the policy or the insurer refusing to pay for the loss.

If an express warranty is breached, the claim can be forfeited, even if the breach was not related to the loss. For example, if a vessel fails to maintain required safety measures and suffers damage, the insurer may reject the claim solely based on the breach of warranty.

Also Read: Principle of Warranty in Marine Insurance

Let us understand the express warranty in marine insurance by example. ABC Shipping Pvt. Ltd., insuring its vessel with the condition that "the vessel must be equipped with functional fire-fighting equipment before departure."

If ABC Shipping ensures that the vessel meets this requirement and a fire breaks out during the voyage, the insurer would cover the damage as the express warranty was fulfilled.

However, if ABC Shipping fails to ensure the vessel has the required fire-fighting equipment, even if the fire is unrelated to the warranty, the insurer could deny the claim. This illustrates how express warranties establish clear conditions that must be met for the insurance coverage to remain valid.

- Risk Mitigation: One reason express warranties or conditions are essential in marine insurance plans is that they help mitigate risks. These are fundamental obligations both parties agreed to adhere to. They specify the policyholder's responsibility, which plays a crucial role in risk mitigation.

- Legal Framework: Another crucial reason for implementing express warranties in marine insurance policies is that they help create a legal framework. They establish terms upon which insurance companies have the right to deny the claim or policyholders agree to fulfil certain obligations. This legal clarity is crucial in the event of a dispute regarding a claim.

- Compliance with Regulations: The express warranty or condition also includes an obligation related to compliance with maritime laws and safety standards. Compliance with maritime laws is crucial for protecting property, lives and the marine environment.

-Good Faith: Marine insurance is also based on the principle of good faith. The policyholder will comply with the agreed-upon terms and conditions, fostering trust between the parties.

- Claim Settlement: Adhering to express conditions and warranties is crucial during the claims settlement process. Failing to meet these contractual requirements can result in disputes or claim denials.

-** Also Read:** Difference Between Warranty & Condition in Marine Insurance

• Periodically inspect and maintain the vessel, ensuring all warranty conditions are met throughout the policy period.

• Keep detailed records of inspections, maintenance and repairs that demonstrate adherence to the express warranties. Documentation can be helpful in case of a claim or audit.

• Before purchasing marine insurance, carefully review the express warranties outlined in the policy. Understand the obligations and ensure you can comply with them.

• Be aware that failure to adhere to express warranties can result in the denial of claims, even if the breach is unrelated to the loss. Make sure compliance is prioritised to avoid financial loss.

Understanding the express warranties in marine insurance is crucial for both the insurer and the insured. These warranties set clear conditions that must be met. For businesses, understanding and adhering to these warranties is essential to ensure valid coverage and avoid marine insurance policy claim denials or disputes.

By maintaining compliance with the specified conditions, businesses can effectively safeguard their assets and streamline the claims process in the event of a loss. TATA AIG offers SME insurance, such as marine insurance, which provides protection against potential losses or damages to goods during transit. This coverage is essential for businesses involved in the transportation of goods, as it safeguards against unforeseen events such as theft, natural disasters, or accidents that may occur during transit.

How many types of warranties are there in marine insurance?

In marine insurance, there are two main types of warranties: express warranties and implied warranties. Both ensure the insured meets specific conditions for the policy to remain valid.

How long does an express warranty last?

The duration of an express warranty in marine insurance typically lasts for the period specified in the insurance policy. It can be tied to the policy's coverage period or the specific condition or event described in the warranty. If a breach occurs during the coverage period, it can affect the validity of the policy.

Should express warranty in marine insurance be in writing?

Yes, express warranties in marine insurance should be in writing to ensure clarity and avoid disputes. Written warranties outline the conditions that must be met, providing both parties with a clear understanding of their obligations and helping to validate claims.