Marine Insurance

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The principles of marine insurance policy revolve around providing protection against risks associated with maritime activities. The policy covers various risks such as damage to cargo, loss of vessel, and liability towards third parties. Financial security is provided by the policy to the owner or operator of the vessel, cargo owners, and other stakeholders. The policy operates on the general principles of marine insurance. This principle means that the insurer will compensate the insured for the actual loss suffered, subject to the policy terms and conditions. It also includes subrogation rights, which enables the insurer to recover the loss paid from the liable third party.

What are the 5 Principles of Marine Insurance Policy?

There are five general principles of marine insurance. These principles are explained below:


The insured will only be able to receive compensation depending upon the loss. The compensation to be received in any case will never exceed the loss incurred by the insured entity. It is very important for the buyer to clear understand the principle before buying the policy.

Insurable Interest

As per this principle, the insurer must have some interest in the safe arrival of the goods at the end of the transit journey. If the goods arrive as expected on time and undamaged, the insured entity stands to benefit. Any delay in goods reaching their destination in stipulated time and described condition, the same entity stands to bear a loss. Insured entity’s loss or gain, if not immediately borne, should at least be attained in a reasonable time. This principle of insurance protects the interests of the insured entity.

Proximate Cause

Proximate cause is one of the fundamental principles in marine insurance that determines the cause of a loss or damage to a vessel or cargo. It refers to the closest or most direct cause of a loss, which may not necessarily be the initial cause of the loss. In marine insurance, insurers use the proximate cause to determine their liability to pay a claim. If the policy covers the proximate cause of the loss or damage, the insurer is liable to pay. However, if the policy does not cover it, the insurer is not liable. The concept of proximate cause plays a crucial role in ensuring fair and consistent handling of insurance claims.

Subrogation in marine insurance

The principle of Subrogation follows the indemnity principle, wherein the insured is not allowed to make any profits out of the loss they have incurred. It limits the scope to profit from an insurance contract’s perspective. After disposing of the damaged goods, the insured must return any net amount exceeding the actual price of the goods, post the claim, to the insurer.


In marine insurance, there are often occasions when goods are insured against the same perils by two or more insurers. These instances involve multiple insurers providing coverage for the same goods.
Under such circumstances, each insurer must split the weight of the payment proportionate to the insured amount. This ensures a fair distribution of the payment among the insurers involved.

Understanding the five basic principles of marine insurance can help policyholder understand and comply with your insurance contract more actively. Know more about our marine insurance policies on the SecureNow website. All the parties involved commonly agree that the sixth principle, known as the principle of good faith, is an essential mandate. It states that while filing the marine insurance policy document every information given by the applicant must be correct and without any discrepancy.

About The Author


MBA Insurance and Risk

With extensive experience in the insurance industry, Simran is a seasoned writer specializing in articles on marine insurance for SecureNow. Drawing from 5 years of expertise in the field, she possesses a comprehensive understanding of the complexities and nuances of marine insurance policies. Her articles offer valuable insights into various aspects of marine insurance, including cargo protection, hull insurance, and liability coverage for marine-related risks. Renowned for their insightful analysis and informative content, Simran is committed to providing readers with actionable information that helps them navigate the intricacies of marine insurance with confidence.