If you are involved in shipping or trade, understanding marine insurance is crucial. From cargo transport to liability cover, marine insurance offers protection against a wide range of risks. Let's look at what marine insurance contracts are, their features and types.What is a marine insurance plan contract?
A marine insurance contract is a legal agreement between the insurer and the policyholder. It provides protection against losses or damages to cargo and ships while in transit. The goal is to ensure compensation in case of accidents like storms, fire, theft or collision during shipping.
Features of marine insurance contract
Before choosing a policy, it’s good to know the basic features:
- It is based on utmost good faith – both parties must share accurate information.
- It includes insurable interest – the policyholder will lose financially if the cargo is damaged.
- It covers indemnity – the insurer pays for actual loss only.
- The contract is legally binding once the premium is paid and the terms are accepted.
Types of marine insurance contract
Depending on the coverage needs, here are the most common types:
- Cargo insurance contract:
- Offers cover for goods in transit.
- It can be for single or multiple shipments.
- A good option for businesses importing or exporting goods regularly.
- Hull insurance contract:
- Covers loss or damage to the ship or vessel itself.
- Freight insurance contract:
- Protects against loss of freight revenue due to accidents.
- Liability insurance contract:
- Covers third-party liabilities such as injury or damage caused by the vessel.
- Time and voyage policies:
- Time policies cover risks for a set period.
- Voyage policies cover risks during a specific journey.
You’ll often find that such policies include specific clauses of marine insurance policy. Common clauses include:
- Inchmaree clause: Covers negligence by crew or breakdowns.
- Sue and labour clause: Encourages taking steps to reduce loss.
- Free of particular average clause (FPA): Limits claims to total loss only.
The various clauses of marine insurance policies define what is covered and what is not, so be sure to read the fine print.
If you’re sending goods from one location to another only once, a single transit insurance policy is ideal. For regular shipments, an annual open policy may work better.
Conclusion
Choosing the right type of contract depends on the kind of goods and the risk involved. Always read through the terms and conditions and understand the marine insurance contracts before signing any.
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.