Shipping insurance is one of the various forms of insurance which covers the loss of damage or loss of ship, goods, and property at sea. Such insurance acts as a necessary talisman for exporters and cargo businessmen against factors like rough weather conditions, rough handling of cargo, fire, shipwreck, and so on. It however excludes losses that can be recovered from a carrier.
Marine insurance covers the loss to the ship or cargo during water transportation. The loss can either be a complete loss or partial loss or damage. It also includes any loss incurred on the point of origin or destination, during loading or unloading or material.
Insurer takes a certain amount of premium and protects the shipping party from financial risk of loss of property. A marine insurance policy is generally taken in order to obtain protection against the risk included in the clause.
The marine insurance law originated with the establishment of a specialized chamber of assurance in England in 1601. The growth of the London insurance market led to the standardization of policies and the marine insurance law was further developed. (In 1906 the Marine Insurance Act was passed)
With the growth of International trade, more goods are sent across the sea via cargo ships. Marine insurance has helped in moving the risk from exporters to insurance company.
Marine Insurance Policies are of following types :
• Time based policy: It is taken for a definite period of time usually 1 year or less. It is suitable for hull insurance.
• Voyage policy: It covers a particular voyage from one port to another port.
• Mixed policy: It is a combination of time policy and voyage policy , it covers risks of a specific voyage for a specific time period.
• Port risk policy: It covers the risks to ship when it is standing at the port.
• Open or unvalued policy: Here the value of the cargo is not mentioned and reimbursement is done affect the assessment of loss.
• Valued policy: The total value of the cargo inculding the shipping cost and profit is added to calculate the value of the shipping. It is reciprocal of unvalued policy.
• Floating policy: It covers several shipments for which a large lump sum amount is paid. After each dispatch necessary amount is deducted from the lump sum amount. It is suitable for regular carriers who deal with huge valued goods.
• Blanket policy : The maximum protection amount is estimated and a lump sum premium is paid in advance to cover all the risks associated.
• Port risk policy : It covers all the risk to the vessel while it is in a port.
• Special hazards policy: It covers special risks like war and piracy.
Marine insurance is composed of three parts:
• Marine Cargo Insurance is a type of property insurance that protects the cargo property as it moves from place to place via sea, aircraft from loss and damage .
• Marine Hull and Machinery: It protects the body and hull as well as the fixed machinery of the ship from any damage.
• Shipowner’s liability insurance: It protects the shipowner’s from the risk of loss to other’s property that is done by the ship.
Essentials of the valid marine insurance contract:
- General consideration
- Contract of indemnity
- Condition of the cargo
- Insurable interest
- Non deviation from trade route
- Sea worthiness
- Legality of the venture
- Fair dealing
Last Updated on : 26th August 2013