Marine insurance plays an imperative role by covering you against loss or damage of cargo, ships, and through any other transport, including inland transit. The policy comes loaded with the following special characteristics of Marine insurance are =
It is available both at ‘agreed value’ and ‘market value’=
At the time of buying marine hull insurance, the insurer would cover the vessel, its equipment, engines, and various other parts against various losses or damages. At the time of buying the marine hull insurance on market value, the value of the vessel would be different. Which would gradually start depreciating with time. To combat this issue, you can buy purchase marine insurance policies on the ‘agreed value’ as well.
With the agreed value, the marine insurance company agrees to cover the value of the vessel upfront. It means, if something unfortunate happens to you, the insurer will pay upfront as per the agreed value. Here, depreciation doesn’t play a major role.
It can be assigned=
It is feasible to assign a marine insurance policy either before or after the loss unless it has terms & conditions which specifically prohibit this. An assignment of the policy by the insured in the subject matter doesn’t transfer his rights in the marine insurance policy to the assignee. Unless explicitly mentioned the same.
In short, marine insurance policies are freely transferrable. However, allowing the policyholder to assign only his/her insurable interest in the cargo and not the entire interest which is there in the policy. In the case of a joint marine insurance policy, for instance, like that between the policyholder and the financier.
It is available as unvalued marine insurance policy=
An unvalued marine insurance policy is that kind of insurance plan which doesn’t mention the value of the insured subject matter. Subject to the sum insured, the policy leaves the value of the loss to be subsequently calculated. As per the manner explicitly mentioned at the time of buying the policy. Here, the policyholder and the marine insurance company decide the value of the loss, in case of an unvalued policy.
It comes with a warranty=
In a marine insurance policy, a warranty is like a significant undertaking between the policyholder and the insurance company. Here, a warranty means that the matter (voyage) is being conducted properly. It also says that no object, condition, or content attached to the marine insurance policy is illegal.
It comes with the principle of subrogation=
In marine insurance, subrogation means that if the insurance company settles the claim, the insurer gets all to right to sue the third party if the loss happens due to its fault. In this situation, the insurer can be compensated for the claim amount paid to the other party. Here, it is necessary for the policyholder to assist the marine insurance company in seeking compensation from the third-party
As the consignment is urgent, K.S Shipping doesn’t cancel the cargo even when weather conditions are not favorable. In this situation, if any loss or damage would happen to the cargo ship during transit, K.S Shipping wouldn’t be able to get coverage from its marine insurance policy. Knowing the fact that weather conditions are not good, K.S Shipping still carried on with consignment. This is a clear case of breach of warranty.
Suppose the consignment safely reaches the destination port. Though at the time of receiving goods, everything was looking fine. However, when the goods reach the warehouse and open the package, the consignee notices some damaged packets. The buyer sues K.S Shipping, who may not get coverage from a marine insurance policy. It is likely to find damaged goods during the sea transit. And, as K.S Shipping continued with the consignment even when it knew about unfavorable weather conditions.
Read more: Why do You Need Marine Insurance?
K.S Shipping Co. lost Rs 5 crore due to a ship stuck in sand in deep water. As the cost of recovering the vessel was more than the actual cost of the new ship. K.S Shipping Co. decided to abandon the ship and approach its marine insurance company for the claim settlement. Here, the insurer found the claim to be valid and settled the shipping company accordingly. After a few weeks, they found the ship floating in a nearby sea. The crew members of the shipping company spotted it and informed the marine insurance company who captured and later sold it to a scrapyard and got Rs 10 lakh from it. Here, applied the principle of subrogation as the shipping company abandoned all its rights over the ship. Once the insurer concerning settled the claim.
Now you must have understood the full concept of the Special characteristics of Marine Insurance well. if you would like to more about Marine insurance then visit SecureNow or connect with us on Linkedin