Yes, past claims impact the premium of a marine insurance policy. In a situation where the claim is very high, the existing marine insurance company can increase the premium at the time of policy renewal. However, in case you are approaching the new insurer, your insurance premium would be lower, but again it would depend on various facts like nature of your claim.
In any case, if the claim is not substantial, there would be no change in marine insurance premium rates. Here, it is necessary to note that what claim would be considered substantial or minor, would be decided by the marine insurance company. So, it is better to ask the insurer and get clarity on which claims would increase premium in the marine insurance policy.
Along with the claim history, there are various other factors as well which would impact the premium of your marine insurance policy. Some of the factors which would affect your premium rates are-
- Nature and value of the goods
- Route and type of vessel
- Inherent risks your products may have
- Destination to which your goods would travel
- Strike, riot and civil commotion that could affect the goods delivery
Further, some of the factors which can raise the premium of your marine insurance policy are detailed below=
- Natural Forces= Though, natural perils are beyond the control of human beings, it is still feasible to curtail their impact by taking certain Some ports lack good anchorage and protection facilities against tides, and therefore, if you are travelling through these ports, your premium might be high.
- Construction and Type of the Vessel= The quality of the vessel plays a crucial role. While deciding the premium, the underwriter would be interested in knowing which vessel would be used along with the material used in constructing it. The underwriter would check the adaptability of vessels to carry various kinds of cargo.
- Nationality of the Vessel= It shows the experience and skills of the crew members. Further, premium rates would depend on the age of the vessel along with the risks covered.
- Policy Conditions= Various clauses are added to a marine insurance policy in order to limit the liability of the insurer. While some insurers would cover total loss, some would be interested in covering only the partial loss. On the basis of the policy coverage, your premium would be determined.
Considering the nature of its business, K.S Shipping has purchased a comprehensive marine insurance policy. Last year, during the transit of one of its consignment, the fire erupted and damaged the vessel. As K.S Shipping had a marine insurance policy, it approached the insurer for the claim settlement. Here, the insurer appointed a surveyor who found the claim to be valid and thus, accordingly settled the claim.
When a few months ago, K.S Shipping approached the insurer for the renewal of its marine insurance policy, the insurer took into account the last year claim as well. As the claim amount was high, the insurer increased the premium of the marine insurance policy at the time of policy renewal.
Read More: How does Warranty Work in Marine Insurance?
Incepted in 1996, K.G Engineering is a Delhi-based engineering company supplying and exporting high-quality engineering items in India and abroad. The company is involved in manufacturing various engineering items and has a vast base of clients which are situated in different parts of the world. Last year, the company got a major order of exporting engineering items to a buyer situated in Maldives.
As it was the consignment which worth $500 million and was scheduled to send via sea, the engineering company decided to purchase a marine insurance policy. Here, the insurer considered various parameters like the value of goods, nature of goods, the type of vessel, the distance to be covered etc.; while deciding the premium rates. As K.G Engineering was using two vessels for the consignment, the insurer also insisted upon checking the nationality and quality of the vessel. Here, the insurer also checked the structural strength of the vessel in order to ascertain the total premium rates of a marine insurance policy.