Marine Insurance Policy is the one of the most useful covers offered by the insurers to protect the businesses exporting/importing and transporting the goods. It is a comprehensive policy that includes several covers depending on the type of transit that is undertaken.
The policy is available in a customized format and covers all kinds of legal exports and imports of goods between different nations as well as the domestic transit within the country. With the development of larger carriers and development of road and rail transport, it has become comparatively easier to transport the goods from one place to another. The fear of natural disasters, sea perils and other unexpected mishaps can lead to considerable loss to the businesses and economy.
The potential hazards on the sea are covered by Marine Hull and Marine Cargo Insurance Policies while the domestic transit of goods is protected through the Inland Transit Insurance Policy. There are however many conditions which are considered out of the umbrella of the comprehensive marine cover.
Let’s look at these Marine Insurance Exclusions through the examples below:
Expanding Business: Suppose an organisation avails an inland transit policy for the transportation of its goods within the country. With rise in its commercial business and good-quality of its products, it starts getting orders from foreign countries. Will the export of its goods be covered under the inland transit cover?
The answer is no. This is because an inland transit insurance policy solely covers the cost of damage to goods through land. Sea and air routes are excluded from this policy. For the export and import of goods, one needs to avail the Marine Cargo Insurance policy that provides cover for goods being transported by means of transport used in trans-national trade.
Marine Exclusion: Exclusions often depend on the type of policy availed. Assess your prospective needs and avail a suitable policy accordingly to save yourself from paying up extra premium. Read the policy document thoroughly before signing.
Criminal Act of Employees/Agents: A manufacturing organisation requires the transportation of coal and iron ore to its subsidiaries in other countries. It has availed the Marine Cargo Insurance for the same. However, during transit, there is an unfortunate explosion and complete loss of complete cargo and intense injuries to some crew members.
When the owner demands compensation from the insurer, it initially seems to be a case of oxidation of coal that caught fire resulting in explosion. But, after proper investigation, it is found that the explosion was a result of deliberate criminal act of some crew members who had personal grudges with the owner or others on the ship.
Marine Exclusion: No insurer is responsible to pay up for the criminal act of others. In case it is found that crew members or managers have committed such acts with criminal intention, the insurance policy ceases to exist.
Packaging of the Material: Packaging of cargo is the key to ensure safe transit on high seas or on long distances by road.
A tomato farmer prepares to transport the vegetable into the city market which might take an overnight journey. He has availed an inland transit insurance policy for any emergency. He packs the produce in some cartons which are made from low-quality material. While transportation, he halts at a place for a night. He plans to keep the produce in the truck for the night. However, due to sudden rainfall, arises the need to store them in a ware house.
The shifting and storage process breaks some of the packages (due to lower quality packaging), leading to loss and contamination of tomatoes.
Marine Exclusion: The insurance policy will not cover any damage caused due to packaging defect. This stands true for all kinds of marine insurance policies
Transporting Perishable Goods: An ice cream manufacturer transports it in a refrigerator truck. However, the route taken for transit includes a flood prone area. Unfortunately, as the goods are being transported, the flood occurs. This leads to delay in transit. Excessive delay leads to melting of the ice cream.
Marine Exclusion: Though it might be written in the insurance policy guidelines that the loss due to delay and natural disaster will be covered but such is not the case when the inherent property of the goods leads to contamination or loss. The property of ice cream is that it will melt if suitable temperature is not maintained. Such inherent vice of the product leading to loss will not be covered under the insurance policy.
So, it is feasible to talk to your broker or insurer beforehand to avoid any misunderstanding regarding when any marine insurance policy will be applicable. Assess your needs properly, make sure that the policy being availed is suited to your needs, choose the most reliable insurer so that you can be assured at the time of need.
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