What is Marine Insurance? Explain various Types of Marine Policies.
Marine insurance is the agreement whereby the insurer undertakes. in return for a consideration, to compensate the owner of a ship or cargo for complete or partial loss due to events of the sea. At the time of loss, insurable interest must exist. It is a contract of indemnity and doctrine of subrogation and contribution is applicable to all the marine policies. Various aspects like names of insurer and insured, voyage or time period or both, sum assured, amount of premium etc should be specified in the marine policy. Such a policy covers ship, cargo and freight.
Types of Marine Insurance Polices & Functions.
Such policies cover a ship and cargo during a specified voyage only. The covered risk begins from the departure of ship from port and ends when that ship reaches the port of destination. Insurer will not pay any compensation, if the ship changes its direction from the agreed route or if the destination of ship is changed.
In this policy, the risk stated for a specified period, irrespective of the number of voyages made, is covered. Such a policy covers a period of less than 12 months. If the ship continues its voyage, a continuation clause should be included in the time policies. For continuation, monthly prorate premium is payable.
It contains the elements of both voyage and time policies. Such a policy covers the risk during a particular voyage for a specific time. One can take such a policy to cover cargo during voyage from Mumbai to Netherlands from 1st October 2008 to 4th January 2009.
Valued and un valued Policies:
In valued policies, the value of subject insured say ship or cargo is specified on the face of the policy. Insurer has to pay the full amount at the time of loss (amount mentioned in the policy). If loss is not full but partial, a proportionate amount is given by the insurer. In the un valued policies, the value of the subject insured is not mentioned in the policy. If loss or damage occurs, the compensation is decided by assessing the loss, subject to limit of the sum insured.
Such policies are taken by the merchants as they make regular shipments. It helps them from not taking a separate policy for every shipment. A floating policy is taken for a round amount and leaves the details to be declared at a later time. Whatsoever is the outstanding amount on policy, it reduces progressively as shipments are made and premiums calculated. One has to take a new policy when the policy is covered fully as it is said to be fully declared.