A marine insurance policy is a must for all ships and carrier owners who use them for commercial and transportation services. It offers insurance coverage for both marine and land transportation. Cargo transported via marine route or land, the carriers transporting goods, and the third person liability too, are covered by it. The policy covers the time from origin to the destination of the cargo. Loss/damage to carriers or ships, cargo, terminals, and any transportation used for transporting or storing goods before carrying them further are included in the insurance coverage.
Additionally, marine insurance companies offer coverage for vulnerable on-shore and offshore properties such as ports, oil platforms, container terminals, pipelines, hulls, marine liabilities, and casualties. Cargo insurance is counted as a sub-branch of marine insurance. If cargo is being mailed or sent by courier, it is insured under the shipping insurance. Insurance against any loss or damage to cargo vessels, terminals, and ships that transport the cargo, and the cargo-laden ships, while grounded, are also covered. Natural or man-made calamities like collision, sinking, burning, bad weather conditions, navigational error, thefts, wars, strikes, riots, natural perils, and others also come under marine insurance.
Did you know? An open marine insurance policy covers multiple shipments for a period of 12 months.
What are the Types of Marine Insurance?
The two branches of Marine insurance are:
- Ocean Marine Insurance (Water-based exposures)
- Inland Marine Insurance (Land-based exposures)
There are different marine insurance policies to cater to the needs of customers. Different insurance companies provide different plans, and we have covered some insurance plans which are available with most insurance companies.
Common Plans from Marine Insurance Companies
Marine Cargo Insurance
This plan covers loss or damage to marine cargo while in transit and also covers third-party liabilities caused due to damage to the ship, port, or other transport vehicles for the insured cargo.
This insurance protects the ship in case of heavy loss or damage, compensating the policyholder for liabilities that are beyond their capacity.
Marine insurance companies cover the furniture and articles on the ship, besides the vessel itself. The shipowners can’t avoid this policy, and it is a must for them to purchase.
This policy compensates the shipping company for any loss or damage to the freight.
Some other policies are open marine insurance policy, time plan policy, voyage plan policy, mixed plan, valued plan, port risk plan, wager plan, and floating plan.
Importance of Marine Insurance
A marine insurance policy stands you in good stead in case of a loss/damage to goods or assets during transit. Due to the increase in trade, the shipping lanes are getting congested. An untoward incident may cause the expenses to go beyond your means. In such times, marine insurance can help you in managing and maintaining your business.
A comprehensive marine insurance plan is reassuring because it gives you the confidence to operate on the high seas with optimism. Investing in marine insurance policies is essential as it decreases the risks involved and ensures that the company continues to sail high or, if caught in bad weather, still manages to sail through.
What is Covered in Marine Insurance Plans?
These policies cover any loss or damage during transit by land or sea route. The cover is from the point of origin to the destination of the cargo. The insurance provides compensation for accidents or derailment of land conveyance and expenses incurred in safely removing the cargo from a disturbed port. Such plans offer protection against natural calamities and emergencies like jettisons, washing overboard, and total package loss.
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 in 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
Institute Cargo Clauses
The Institute Cargo clauses govern Marine Insurance. Hence, the coverage available also includes:
- Actual total loss
- Constructive total loss
- Partial loss due to an insured peril
- General Average
- Collision liability
- Expenses include forwarding expenses, reconditioning costs, survey fees, sue, labour, etc.
Features and Importance of Marine Insurance
A marine cargo policy protects the insured goods against any material damage. Below are mentioned the features and importance of marine insurance.
- A Cargo insurance plan provides comprehensive coverage against potential risks to goods during transportation.
- The insurance plans are adjustable according to the needs of the customer.
- The plans offer various options according to the insured's needs and budget.
- The policy provides easy claim survey and settlement assistance. It offers worldwide claims settlement assistance and claim survey.
- This policy also extends the coverage to include risk due to strikes, riots, and other man-made unfortunate situations.
Advantages of Marine Insurance
When operating a business that involves risk factors and unpredictable routes, opting for marine insurance is a convenient and important step. Advantages of purchasing and relying on such schemes are:
- The insurance provides mental reassurance and financial security to the business.
- The insured can rely on it to manage risks and continue the business.
- Any financial loss incurred during transit is compensated by the insurer. So, you can continue your business without much disturbance.
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 analyse the coverage provided
- See if the policy is meeting all your requirements
- Set your budget
The Premium of Marine Insurance Policy
The premium of a marine insurance policy is determined, keeping the following factors in mind:
- Type of the ship
- Age and condition of the ship
- Valuation of the ship
- Trading and tonnage limits
- Terms of Management and Ownership
- Insurance Cover needed
Marine Insurance Companies in India
Companies providing marine insurance in India are:
- HDFC Ergo
- TATA AIG
- United India Insurance Company
- Royal Sundaram
- New India Assurance Company Limited
- Bharti AXA
- All major banks and financial institutions
We hope this article has been of help in providing information about marine insurance. According to Indian laws, it is mandatory for every individual engaged in commercial transport to buy an insurance policy according to their business and needs. Marine insurance, like its peers, offers several practical and convenient policies to its customers. These policies cater even to the needs of the smallest intermediary. But like other sectors, the marine insurance sector also has its drawbacks and limitations. So, it is advised that one must compare and analyse before deciding on an insurance policy.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.