Marine insurance covers the losses or damages caused to ships, terminals and any transport or cargo by which goods are transferred, acquired, or held between different points of origin and final destination. The term may also apply to inland marine but it is usually used in the context of ocean marine insurance. Marine insurance is a haven for transporters and shipping corporations because it helps to lower the aspect of financial loss due to cargo loss.
Marine insurance is a crucial aspect because through this policy, shipowners and other transporters can be sure of claiming damages in case of a mishap. Sometimes, it happens that despite following all the safety regulations, losses or damages arise. Along with natural hazards which have the potential to disrupt the cargo and vessel, there are other incidents and attributes which could also cause a major financial loss to the transporter. For instance, incidents like piracy and possibilities of cross-border shootouts are more prevalent when it entails water transportation and therefore, to avoid any such loss or damage, it is in the interest of the transporter to buy a marine insurance.
Here are some of the features of a marine insurance policy –
- Open Policy – The inland marine insurance policy covers the inland movement of a consignment for a specified duration of time, which is generally of one year. The policy is apt for companies which are indulging in numerous transactions around the year as it also offers continuous cover.
- Comprehensive Protection – The policy offers protection against various types of losses or damages like a total loss of goods, partial loss of goods, related expenses while still in transit, etc.
- Customisation – As per your business requirement, it is feasible to customise the policy.
- Mark up Value – The policy allows a portion of profit to be included in the sum insured. It is known as a mark-up in the marine insurance industry.
In the eventuality when goods are destroyed, damaged or stolen, it becomes important to file a marine insurance claim immediately with the insurer. Then the insurer will take all efforts to find out whether the reasonable care was taken while transporting goods or not in order to ensure no deliberate efforts were made in order to file a claim.
Here, it is important to understand that just because you have a marine insurance policy, it doesn’t mean you can act carelessly. You are expected to take care of your goods in the same manner you would have done in the absence of a marine insurance policy. Also, there is a time-window of usually one year for filing a claim with a marine insurance company at the time of any loss or damage.
Though, marine insurance offers comprehensive cover, there are some instances which are not covered under the policy, like,
- Loss or damage due to willful negligence
- Loss or damage due to improper packaging
- Removal of wreck
- Contamination due to radioactive rays
- Loss or damage due to riot, strike, civil commotion, etc.
Incepted in 2014, M.K.G Engineering exported a consignment of engineering products. However, upon arrival of the cargo, the buyer refused to take the delivery as he found some goods were damaged and not as per the contractual agreement.
Luckily, M.K.G Engineering had a marine insurance policy and they approached the insurance company for the claim settlement which later appointed a surveyor to compute the damages. The surveyor found out that despite good packaging, some goods came into the contact of the sea and got damaged. After receiving and reviewing all the documents, the insurer settled the claim as per the actual loss which was within the coverage limit.
Read More: What is Warranty in Marine Insurance?
As J.S Automobile exports various automobile parts in different parts of the company via sea, the company has also purchased a marine insurance policy to secure its consignment against various types of perils like an earthquake, storm, flood, etc.
Last month, when the company was exporting goods to a buyer situated in Malaysia, via water, the ship was caught in the heavy rainfall which damaged and delay the consignment. Upon reaching at the destination, the buyer refused to take the delivery of cargo. At this point, the marine insurance policy bought by J.S Automobile came to their help. The company approached the insurer who appointed a surveyor for calculating the damages. Later, based on the documents and surveyor’s report, the insurer settled the claim.
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