Marine insurance plays a crucial role in global trade. Whether it's a large shipment travelling overseas or a smaller consignment within the country, this insurance protects you from losses that may occur during transit. Understanding the basic principles of marine insurance is essential if you're involved as a business owner, importer or exporter.
Let's break down the general principles of marine insurance that form the backbone of this policy.
Various principles of marine insurance policy
Before taking out any kind of marine insurance, it's important to understand the rules that govern such policies.
Here's a simple breakdown:
- Principle of utmost good faith: The insurer and the insured must honestly disclose all important information.
- Principle of insurable interest: You must have a financial interest in the goods being insured. This means you'll face a loss if the goods are damaged or lost.
- Principle of indemnity: The insurer will only compensate you for the actual loss. The aim is to put you in the same financial position you were in before the loss – no profit, just recovery.
- Principle of contribution: If you've insured the same goods with more than one insurer, all insurers will contribute proportionately to the compensation. This prevents double claims.
- Principle of subrogation: Once the insurer pays for your loss, they get the legal right to recover the amount from any third party responsible for the damage.
- Principle of proximate cause: The policy only covers losses caused by a risk that is directly related to what is covered. If the main cause of damage is not insured, the claim may be rejected.
These principles of marine insurance ensure that the process remains fair for both parties and avoids misuse.
If you're looking at covering your goods for a one-time journey, a single transit marine insurance policy can be a smart option.
Conclusion
In a nutshell, understanding the basic principles of marine insurance helps you pick the right policy and avoid claim rejections. These rules, from utmost good faith to proximate cause, are designed to build trust and provide clarity. Whether you're going for a long-term plan or a single transit marine insurance policy, knowing these principles will keep you covered and confident.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.