Types of Marine Insurance Policy

Prof. Isha JaiswalTypes of Marine Insurance Policy

IntroductionA document in which there is a contract of marine insurance between two parties- the insurer and insured is said to be a marine insurance policy.

When the premium is paid by the insured in the marine insurance, a cover note is immediately issued to the insured and the policy is issued afterwards.

Marine Insurance Policy includesName & address of insured and his agent.Name of subject matter and the description of the risk which is required to be covered by this insurance.The time period and the voyage for which the policy has been taken.The insured sum, premium payable.The name of the issuerMarine insurance policy is considered valid agreement only when it is duly stamped.

Types of Marine PolicyOn the basis of insured interestHull PolicyCargo PolicyFreight PolicyOn the basis of time periodTime PolicyVoyage PolicyMixed PolicyOn the basis of value of the insured subject matterValued PolicyUnvalued or open policy

Types of Marine PolicyOn the basis of description of insured ships, goods or subject matterUnnamed PolicyNamed PolicyFleet PolicyFloating PolicyBlanket PolicyPolicy Proof of Interest (PPI)Block PolicyCurrency PolicyYatch PolicyOn the basis of issuing authorityLloyds PolicyCompany Policy

On the basis of insured interestHull Policy:The insurance policy taken by the owner of ship and its equipments are known as Hull policy. It is basically a property insurance which covers the ship itself, the machinery and equipment. Furthermore, the insurance covers some liabilities, normally collision liability with another ship and sometimes also liability for colliding with other objects than another ship.

Claims includeTotal loss of the shipDamage to the ship, engines and equipmentExplosions and fireCollisions damage sustained to the ship and sometimes also liability towards the other ship.

Cargo PolicyThe insurance policy taken by owners of the goods.Cargo insurance (also called marine cargo insurance) covers physical damage to, or loss of goods while in transit by land, sea and air and offers considerable opportunities and cost advantages if managed correctly.The cargo transported by sea is subject to manifold risks such as: Loss or damage at the port and Loss or damage during the voyage.

Marine cargo insurance providesthe insurance cover in respect of:

Loss of or damage to cargo during transit by rail, road, sea or air.Export and import shipments by oceanShipment by inland vessels Consignments sent by rail, road, air & articles sent by postDamages from bad weather Seawater or freshwater flooding

Freight PolicyFreight insurance indemnifies the ship owner for the loss of earnings if the goods are damaged or lost and are not delivered.

On the basis of Time PeriodTime Policy: This is designed to give cover for some specific period of time. Time policies are usual in case of hull insurance.Voyage Policy: This is a policy in which the limits of the risks are determined by place of particular voyage. Generally done for goods insurance, sometimes for freight insurance. Mixed Policy: A mixed policy is blend of time policy and voyage policy.

On the basis of value of the insured subject matterValued Policy: A type of insurance coverage that places a specific value on the insured property, such as the hull or cargo of a shipping vessel. A valued marine policy pays up to, the specified value in the event of a total loss.

Unvalued Policy: The value of the property would be determined following the event of a loss.

On the basis of description of insured Ships, goods or subject matterUnnamed Policy: The marine policy in which the name of the ship, the name of voyage and the name of the route of the voyage are not mentioned .

Named Policy: The marine policy in which the name of the vessel, name of the voyage, the kind of the goods, the description of the quota of goods and route etc. have been mentioned.

Fleet Policy: When a single policy is taken for a group of vessels, the policy is known as a fleet policy.

On the basis of description of insured Ships, goods or subject matterFloating Policy: An open policy is also known as floating policy. It is issued for a long duration and all consignments sent during the period are covered by the insurers. This policy is suitable for big companies that have regular shipments it saves them from the tedious and expensive process of acquiring an insurance policy for each shipment. The rates are fixed in advance the assured has to declare the nature of each shipment and the cover is provided to all the shipments the assured needs to deposit a premium for the estimated value of the consignment during the policy period. It only mentions the amount for which the insurance is taken out, and leaves the name of the ship or ships and other particulars to be defined by subsequent declarations, which will be declared by the assured by endorsement on the policy or in other customary manner.

On the basis of description of insured Ships, goods or subject matterBlanket Policy: In such a policy the type of the goods and the geographical boundaries have been informed. Under this policy the amount is indemnified for a fixed time period to the insured. The policy is taken to cover losses within the particular time and place. The policy is taken for a certain amount and premium is paid on the whole of it in the beginning of the policy and is re-adjusted at the end of the policy according to the actual amount at risk.If the actual coverage of risk is less than the total amount of insurance, the premium related to the excess amount is returned to the insured.On the other hand, if the amounts of shipments are greater than the insured sum, additional premium is charged over the excess protection.

On the basis of description of insured Ships, goods or subject matterPolicy Proof of Interest (PPT): The policy is issued to avoid the complication of the principle of insurable interest. These are called 'Policy Proof of Interest' and are honored by the insurer even in absence of insurable interest.This policy is based on mutual understanding, so, it is called honored policies. This is also called wagering policies because insurable interest is not required; consequently, it cannot be legally enforceable.

On the basis of description of insured Ships, goods or subject matterBlock Policy: This policy is considered to be wide-spread because it includes the risk of marine and land routes. It can cover the risk right from the manufacturing factory to the distant over seas destination. It covers the inland risk as well as the marine perils.Construction or Builders Risk Policy: This policy is designed t cover the risks incidental to the building of a vessel, usually given cover from the time of laying the keel until completion of trails and handling over to owners. In the case of very large vessel, the period may extend over several years.

On the basis of description of insured Ships, goods or subject matterYacht Policy: This policy is provides the risks to the small boats, used for boating for pleasure. It provides to cover the risk against the mechanics and the parts of the boats. It is used for the specific area used for boating, racing etc. It does not provide a cover to the risks in the open sea. It is popular in rich countries like America.Currency Policy: This policy provides the risk against the rates of foreign exchange. Policy issued in foreign currency is called currency policy, where sum assured is stated in foreign currency.

On the basis of issuing authorityLloyds Policy: Marine insurance when effected by Lloyds underwriter it is Lloyd policy.

Company Policy: Marine insurance when effected by marine insurance companies and policies are known as the company policy.