Marine insurance is a kind of business insurance policy that provides financial coverage against potential losses during goods’ transportation from one place to another. Like any other insurance policy, marine insurance has certain principles that govern its operations. What are they? Let’s find out.
Utmost Good Faith
Every insurance policy relies on the principle of good faith, and marine insurance is no different. Under this principle, it’s believed that the individual/organisation buying this policy will fill up the details accurately and not withhold any information.
In case of concealment of any info, the insurer has every right to deny the claim. So, while filling up the proposal form, make sure all the details are accurate and updated.
Insurable Interest
According to this principle, you must have an insurable interest in buying the policy. It means you should get some benefits from the safe arrival of goods. If there’s a lack of insurable interest, the insurer can deny policy issuance.
Hence, before buying a marine insurance policy online or offline, make sure you have a considerable amount of insurable interest.
Indemnity
This principle states that you will get compensation only to the extent of loss suffered. It means that the claim amount will not exceed the actual losses suffered. So, you may buy a marine insurance policy not to earn profits but to safeguard yourself financially in case of a mishap.
Subrogation
The principle of subrogation closely follows the principle of indemnity. Under this principle, you can’t make any profits from the incurred loss. Let’s understand it with an example. Suppose your goods in transit are burnt, and you suffer losses worth Rs. 50,000.
Your marine insurance provider compensates the amount. If you sell the damaged goods for Rs. 10,000, you need to pay your insurer this amount.
Loss Minimisation
Buying a marine insurance policy doesn’t give you the license to act irresponsibly. You must take all the necessary steps to minimise marine losses and protect your goods.
For example, you should pack them properly as required and not behave irresponsibly, simply because you have a marine insurance policy. If you do so, the insurer may reject your claim depending upon the policy terms.
Summing it Up
Whether you buy marine cargo insurance, hull insurance or any other type of marine insurance policy the principles are the same for all. These are in place to prevent misuse and safeguard policyholders’ interests.