Subject Matter Of Marine Insurance

Marine insurance is aimed at providing financial coverage for any damage that can occur to the cargo or the vessel during transportation through the sea, air, or land transportation routes..

To put it another way, this insurance covers the risks resulting from dangers on a particular voyage for a certain period of time.

The most common risks that marine insurance covers are:

• Collision

• Theft

• Fire

• Ship wreckage

• Natural disasters such as hurricanes, typhoons, earthquakes, tsunamis, etc.

The nature and scope of marine insurance is very wide as this type of insurance is mainly suitable for exporters, importers, shipping companies, shipowners, cargo owners, merchants, etc., as it provides financial protection against losses and damages to cargo and vessels.

After knowing the basics of marine insurance, let’s discuss the subject matter of marine insurance to get a deeper understanding of what is and what is not covered under marine insurance.

In general, the main categories of marine insurance are:

-** Cargo Insurance

-** Hull Insurance

-** Liability Insurance

Marine Cargo Insurance

Also called transit insurance, cargo insurance is the most useful and preferred type of marine insurance. As the term “cargo” includes goods and merchandise being transported in a vessel, cargo insurance provides financial coverage for cargo-**related losses.

In simple words, if the cargo gets damaged or destroyed in transit or at the terminal, the insurance company steps in and offers compensation to the insured so that he/she can recover the losses incurred without facing a financial crisis.

Here, it is important to note that the compensation depends upon your policy, its inclusions and exclusions, and the sum insured.

Here is a small list of damages covered by cargo insurance:

• Loss due to stormy sea

• Theft

• Misplacement of goods

• Fire

• Collision

• Sinking of the ship

• Explosion

Types of Cargo Insurance Policies

There are three main types of cargo insurance:

Annual Open Policy- This policy allows the insured to remain covered for all the shipments made during the year. The annual open policy saves you from the hassle of purchasing cargo insurance every time you transport goods.

Specific Policy- Suitable for those who do sea shipments rarely.

Sales Turnover Policy- In this, the premium charged is calculated on the basis of the annual turnover of the sales.

Each of these policies offers unique benefits so it is important to read about them first before purchasing cargo insurance online.

Hull Insurance

Hull refers to the body of the ship and vessel. Hull insurance provides financial coverage against the physical damages to the ship and vessel.

The parts, such as equipment, machinery, and engine, of a ship are quite expensive, and even minor damage to them costs a fortune. This is where hull insurance comes to the rescue and financially protects the shipowners by providing compensation in case the ship/vessel gets damaged.

The main risks covered in this type of marine insurance are:

• Ship grounding

• Collision

• Sea storms

• Hurricanes, earthquakes, lightning

• Fire

Liability Insurance

Along with cargo and hulls, human lives also remain at risk. Collision, natural disasters, or explosions on the ship pose high risks to third parties as well as the lives of crew members.

Marine liability insurance helps the insured by providing financial support for covering the expenses incurred due to legal liabilities and damages caused (to third parties or people on the ship) due to collision, stranding, overturning, derailment, and natural disasters.

As you have read about the events that are covered under different marine insurance policies, here are some customary exclusions:

• Any intentional damage caused to the ship or cargo.

• Damage caused because of overloaded cargo.

• Losses caused due to piracy, terrorism, riots, hijacking, war or civil unrest.

• Losses from fraudulent activities of the policyholder or his employees.

• Damage resulting from wear and tear and defects of the insured ship.

• Losses due to delayed deliveries.

• Damage to cargo because of its poor packaging.

Principle of Indemnity

This principle states that the insurer will compensate the insured only for expenses incurred to recover the damages.

Principle of Proximate Cause

According to this principle, the insurer will reimburse the insured only when the main cause of the incident occurred is included in the policy.

For example, if an unfortunate event happens due to the lack of responsibility of the insured, then the insurer will not be liable to compensate the insured.

Principle of Insurable Interest

In this principle, it is defined that the insured will get compensation only if he has a legal relationship with the cargo or the hull.

In other words, safe delivery of goods must benefit the insured and if the cargo gets damaged or destroyed, then the insured should be the one to face its consequences. Hence, it is necessary that the insured have an insurable interest in the insured property.

Note: Also read about SME insurance and protect your business from dangers that can stagnate or disrupt it completely.

Simply put, marine insurance protects the insured from facing huge financial losses that may occur as a result of loss or damage to the property and cargo during its transportation.

It limits exposure to financial loss during transit and helps you have enough cash flow to replace, repair, and recover the damaged or lost property.

We, at Tata AIG, provide a wide variety of marine insurance policies, such as hull insurance, marine cargo insurance, liability insurance, and freight insurance, so that you get the desired insurance coverage which is best suited to your transportation needs.

What is the scope of marine insurance?

Marine insurance covers a vast range of risks and perils that the cargo and hull face during transportation. It provides compensation for the loss or damage caused to the ships, cargo, and even third parties. However, legal liabilities are covered under marine liability insurance.

Who regulates marine insurance in India?

The Marine Insurance Act of 1963 regulates marine insurance and provides guidelines for the policies, rights, and principles included in marine insurance.