Types and Policies of Marine Insurance
Marine insurance is such insurance which provides compensation of losses on the Hull, Cargo, Passenger and third party liabilities due to marine risks. There is a definite categorization of various types of marine insurance and different types of marine insurance policies according to the needs, requirements and specifications of the transporter.
Different types of Marine Insurance are as follows:
a) Hull Insurance:
Hull insurance is the insurance against loss caused by damage or destruction of waterborne craft or aircraft to the owner. It is the insurance of the ship which includes all the articles and pieces of furniture in the ship. Hull and machinery insurance are done to protect the ship owner and investment in the ship. It is a property insurance which covers the ship itself, the machinery and equipment. If the ship is damaged, the owner of the ship gets indemnity from the insurance company. This type of marine insurance is usually, taken out by the owner of the ship in order to avoid any loss of the ship in case of any mishaps occurring.
b) Cargo Insurance:
The goods sent through waterway is known as cargo. Cargo insurance is also called marine cargo insurance. It covers physical damage or loss of your goods while in transit by land,sea, and air. It also offers considerable opportunities and cost advantages if managed correctly. It is insured by the owner and insurance of goods shipped through waterways is known as cargo insurance. If the cargo is ruined, the owner gets the indemnity from the insurance company.
c) Marine Liability Insurance:
Liability insurance is that type of marine insurance where compensation is bought to provide any liability occurring on account of a ship crashing or colliding. In the course of the marine adventure, one ship may collide with another ship. The goods of another ship may lose. Marine insurance provides the compensation of such liabilities nowadays if insurance has made insurance of such liabilities. A crew member traveling with expensive items, such as laptop computers, gold watches etc. should make sure that he has such items separately insured.
d) Freight Insurance:
To transfer the goods from one port to another, the amount paid to the owner of the ship is called freight. The payment of such freight can be made in two ways: either in advance or after the ship reaches its destination safely. Freight insurance offers and provides protection to merchant vessels’ corporations. It stands for the chance of losing money in the form of freight, in case the cargo is lost due to the ship meeting in an accident. This type of marine insurance solves the problem of companies losing money because of a few unprecedented events and accidents occurring. (MARINE INSIGHT)
Different types of Marine Insurance Policies are listed below:
1. Voyage Policy:
This policy gives more importance to the voyage. A voyage policy is that kind of marine insurance policy which is valid for a particular voyage. It covers the risk from the port of departure up to the port of destination. This type of policy is considered more useful for cargo. The insurance company should give indemnity for loss/ damage of any property of the insured during the period of the voyage. The liability of the insurer continues during landing and re-shipping of the goods. The policy ends when the ship reaches the port of arrival. This type of policy is purchased generally for cargo. Under this policy "from" and " to" has a great importance.
2. Time Policy:
The policy which is issued for a fixed period of time is known as time policy. A marine insurance policy is valid for a specified time period generally valid for a year. All the marine perils during that period are insured. This type of policy is suitable for full insurance. The policy is generally taken for one year although it may be for less than one year. But there is no restriction to make this type of policy for less than one year. This policy is more commonly used for hull insurance than for the cargo insurance. The ship is insured for a fixed period irrespective of voyages. The policy is generally issued for one year. For example, a period of time from 12 march 2015 to 11th December 2015. This policy is effective for this period.
3. Mixed Policy:
The joint form of voyage policy and time policy is called mixed policy. In this policy, the elements of voyage policy and of time policy are combined . The reference is made certain period after completion of the voyage. The meaning of the mixed policy is that a new policy takes birth from the combination of the fundamental things of time and the place policy. Generally, this policy is used for ship insurance.For example, mixed policy is the policy which states the ship should reach from 1st December 2015, from Paris to October 2015 in New york. Policy expires whichever is met first.
4. Open or Un-valued Policy:
In this type of marine insurance policy, the value of the cargo and consignment is not put down in the policy beforehand. The value thus left to be decided later on is called the unvalued or open policy. The insurable value of the policy includes the price of the insured's property, investment price, incidental expenditure and all the expenditure as well.The unvalued policy is not used in practice so much. This policy is used only in freight insurance.
5. Valued Policy
The opposite of an open marine insurance policy is a valued policy. In this type of policy, the value of the cargo and consignment is ascertained and mentioned in the policy document beforehand, thus, making clear about the value of the reimbursements in case of any loss to the cargo and consignment. Under this policy, the value of the policy is decided at the time of contract. Generally, the insured amount in this type of policy includes the price of cargo, ship, freight and approximate profit. Thus the value which is mentioned in the policy is the insured amount.
6. Port Risk Policy:
The Port Risk Policy is taken out in order to ensure the safety of the ship while it is stationed in a port. It covers the risks when a ship is anchored in a port. It is an ocean marine insurance designed to protect a vessel that is portside for a long period of time. Coverage terminates as soon as the vessel leaves port.
7. Wage Policy:
A wage policy is one where there are no fixed terms of reimbursements mentioned. This is a policy held by a person who does not have any insurable interest in the insured subject.He simply bets or gambles with the underwriter. The policy is not enforced by law.
8. Floating Policy:
The floating policy is also called declaration policy. This policy is useful for the merchant who delivers cargo regularly. When a person ships goods regularly in a particular geographical area, he will have to purchase a marine policy every time. It involves a lot of time and formalities. He purchases a policy for a lump sum amount without mentioning the value of goods and name of the ship etc. It is the agreement between the insurer and insured that the insured declares a number of goods on the basis of shipment documents.
9. Named Policy
The policy which is issued by mentioning the name of the ship and price of the cargo is called named policy. This type of policy has been receiving popularity in marine insurance.
10. Block Policy
It is the policy which takes the risk in the block that is from sea route and land route. It does not only protect from the risk of the marine route but also covers the risk occurred on the land too. It takes the risk of transportation from the place of the seller to the place of the buyer. It is very useful policy to the landlocked countries. (Agrawal)
mARINE INSIGHT. 8 12 2010. Electronic. 16 06 2016.http://www.marineinsight.com/maritime-law/different-types-of-marine-insurance-marine-insurance-policies/
Agrawal, RC. your article library.com. Since 1998. Electronic. 16 06 2016.http://www.yourarticlelibrary.com/insurance/11-kinds-of-marine-insurance-policies/42115/
- There is a definite categorization of various types of marine insurance and different types of marine insurance policies.
- Cargo insurance caters specifically to the cargo of the ship and also pertains to the belongings of a ship’s voyagers.
- Freight Insurance solves the problem of companies losing money because of a few unprecedented events and accidents occurring.
- A voyage policy is that kind of marine insurance policy which is valid for a particular voyage.
- A marine insurance policy which is valid for a specified time period – generally valid for a year – is classified as a time policy.
- Mixed Policy is a mixture of time and voyage policies.
- A valued marine insurance policy is the opposite of an open marine insurance policy.
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