Marine insurance is a contract between the insurance company and the insured. In a marine insurance contract, the insurance company agrees to compensate the insured. They do so based on the agreement made between them for the damage or loss to the subject matter insured during the shipment. The scope of cover in the marine insurance policy mentions the perils covered. Innominate terms or express warranty in marine insurance play a pivotal role in defining the coverage and obligations of the policy.
Marine insurance contract has many important features. Understanding marine insurance terms is essential. It ensures you can benefit from the policy when needed. Warranty in marine insurance is one such important feature of the marine insurance contract. Let us know more about the types of warranties in marine insurance.
What is a warranty in marine insurance?
Warranty in marine insurance is an important statutory undertaking between the insurance company and the insured. In this statutory undertaking, the insured undertakes to do or not to do a particular thing or satisfy a particular condition. The marine insurance contract includes a warranty. It indemnifies for loss or damage to insured cargo, ships, or vessels during transportation. Warranty is a promise of faith that comes in a statutory form and is hence extremely crucial. Marine insurance contract becomes null and void if you do not adhere to the warranty stated in the contract.
There are mainly two types of warranties in marine insurance –Implied warranties and express warranties.
What is implied warranty in a marine insurance?
Implied warranty in marine insurance is the condition that is not incorporated in the marine insurance policy but is assumed to have been incorporated by custom, law, or general agreement. This includes seaworthiness, non-deviation, and legality of the voyage. The ship is seaworthy when it can withstand ordinary perils of the sea or insured transport. This warranty lasts until the ship sails.
What is an express warranty a marine insurance?
As per the Marine Insurance Act, 1961, express warranties –
- Any form of words implying an intention to warrant constitutes an express warranty.
- The policy must include an express warranty in writing or incorporate it into a referenced document.
- An express warranty does not exclude implied warranties unless it is inconsistent therewith.
The marine insurance policy expressly states an express warranty. In other words, promises that are written into the contract are known as express warranties. However, there are no restrictions on the number of express warranties in the marine insurance policy. Some express warranties in marine insurance policies pertaining to the seaworthiness of the ship for the intended journey, legality of the cargo or the ship, compliance with operational practices, statement of fact, and many more. Breach of warranty can terminate the marine insurance contract. The Insured would not be able to claim any compensation as the marine insurance contract becomes null and void in case of any breach of warranty.
To sum up, it is important to be aware of every important feature of a marine insurance contract before you avail of the coverage. Understanding the significance of Innominate terms or express warranty in marine insurance is vital for both insurers and policyholders. As marine insurance covers the broader risks, one needs to be aware of the clauses in the marine insurance policy, scope of coverage, and exclusions to get all the benefits the policy offers. A clear understanding of the terminologies helps to make the right purchase decision.
