Marine insurance is arguably one of the oldest types of insurance in the world. There is even evidence of marine insurance dating back as far as 1792–1750 BC of the First Babylonian Empire. The dangers and perils of sea transport are a well-known and established fact, which has made marine insurance a requirement for centuries. One important type of Marine insurance is the Time Policy, which we will learn about in this article.
What is marine insurance?
Marine insurance offers coverage for any loss and damage to ships, shipments, and cargo. It covers the financial costs of damages to terminals as well as any transportation that obtains and relays. It also holds the insured goods between their point of origin and the final destination.
Maritime voyages of all kinds are exposed to a wide range of dangers. Such as unforeseen events like bad weather, collisions, accidents, burning, sinking, and piracy. Marine insurance is a way for ship and cargo owners to protect themselves. Protection from bearing huge liabilities in case of loss and damage to the ship and cargo.
What does Marine Insurance cover?
Marine insurance covers a wide variety of waterborne vessels, including yachts, cruise liners, tugboats, large container ships, offshore oil rigs, and more.
Marine insurance is a vital component of the export/import industry. There are many types of marine insurance available. Some of the marine insurance coverages are hull insurance, liability insurance, machinery insurance, inland transit insurance, and many more. Marine insurance is highly customisable and is amendable depending on who buys the policy. The design and customisation of marine insurance policies depend on whether it is international or domestic trade as well as the coverage requirement.
Common buyers of marine insurance are import/export merchants, manufacturers, buying agents, banks, sellers, contractors, etc. In fact, anyone who is involved in the business of the movement of goods can buy. Anyone who has an insurable interest in goods or property exposed to maritime perils and dangers can buy marine insurance. In this case, even a person who has a landlocked business may need to purchase marine insurance.
What are the different marine insurance policies you can take for your shipment?
Hull and machinery insurance:
Hull insurance covers the main body of the ship along with its furniture and some other related articles. Machinery insurance covers the tools and machinery on the ship as these are important components of the ship and its efficient and safe functioning. Hull and machinery insurance are usually bought together by ship owners.
Liability insurance:
This type of insurance protects the financial liability of the insured person. It covers the liabilities that arise due to the damages or injuries caused to a third party, for example, the death of a third-party travelling on a ship.
Marine cargo insurance:
This insurance protects the cargo owners against losses and damages caused to the cargo during their transit to the final destination. This type of insurance has wide coverage but also has certain limitations. For example, the insurance company will not entertain a claim settlement for damage to the cargo if the packaging is defective. Marine cargo insurance comes with third-party liability. It provides protection against damages caused to a ship, port, or railway track due to issues with defective cargo.
Freight insurance:
Freight insurance covers the shipping company or logistics provider for any damage or loss caused to the shipment during transit.
What is a Time policy in marine insurance?
There are different types of policies in marine insurance. One of the most popular policy types is the Time policy in marine insurance. Here, as the name of the policy implies, insurance companies offer this policy for a fixed period. In India, according to regulations, the fixed time for time policy in marine insurance is 12 months.
What are the features and benefits of a time policy in marine insurance?
Here are some of the features and benefits of a time policy in marine insurance:
- During the tenure of the time policy in marine insurance, there is full coverage for the insured property against all perils and damages that may occur.
- Coverage for the insured property depends on the tenure period and nothing else. This condition makes this type of policy suitable for hull and machinery insurance. It covers the ship and its machinery rather than cargo insurance.
- This policy offers coverage to the insured property or ship for an entire year regardless of how many voyages it actually undertakes during the tenure of the policy. Whether the ship undertakes 1 voyage or 100 voyages does not affect the insurance coverage.
Additional features available in Time Marine Policy :
- Even though the fixed period for the time policy in marine insurance is one year, there are no restrictions on how short it can be. The policyholder can choose to make the tenure of the policy for less than a year if he or she chooses to do so.
- The conditions of a time policy in marine insurance make it ideal for tramp shipping. Tramp shipping means that the ships do not follow a fixed route or schedule like liner services. Tramp shipping, on the other hand, is suited to transport cargo only, in contrast to liner services that transport passengers and cargo separately.
- At the end of the policy tenure, the policy automatically lapses. However, this may a problem since a voyage may face unforeseeable circumstances causing a delay. This may expose the ship to liabilities outside of the policy tenure. Hence, to address this problem, a time policy may contain a ‘continuation clause’. This clause means that if the ship does not complete its voyage by the time the policy is about to end, the policy will continue its coverage of risk until the end of the voyage or until the ship arrives at the port of call.
What is the truck insurance coverage?
Even though the term marine insurance implies maritime travel coverage, it may also cover inland transit of insured goods and property. This means that it may cover transit over the rail, road, registered post, and courier. Inland transit insurance is an important aspect of marine insurance. It protects the policyholder’s goods at all phases of transit. Truck insurance coverage falls under inland transit for marine insurance.
As the term suggests, truck insurance covers the trucks used to relay goods from one destination to another. Since this usually involves long-distance travelling, the trucks are exposed to a wide range of dangers, such as natural calamities, accidents, and more. The policy here covers all types of goods that are transported, including raw materials, machinery, and finished goods.
Some insurance companies that provide marine insurance may offer truck insurance coverage as part of a basic premium plan. Others may charge an extra premium for this insurance coverage.
If the policyholder has multiple vehicles for transporting goods, they can get coverage for all their vehicles under a single marine insurance policy.
This type of insurance coverage in marine insurance is effective from the moment the vehicles leave with the goods from the warehouse or storage place and terminates as soon as the delivery is complete. This insurance remains in force in circumstances that are out of the policyholder’s control, where there are deviations, delays, or a forced discharge.
Conclusion
Marine insurance is an important aspect of import/export, which is mandatory by law. Any business that engages in commercial transport must purchase marine insurance. There are many different types of marine insurance available, so business owners must select their policy of choice very carefully.
