What is Marine Insurance?
A simple definition of insurance would be “Protection against future loss.” Marine insurance is another variant of the general term ‘insurance’ and, as the name suggests, is provided to ships, shipyards, marinas, offshore installations and floating equipment.
Independent owners can avail of insurance facilities for their watercraft (PWC), megayachts, yachts, and pleasure craft. Some boat insurance coverages include wreck removal and salvage without additional hull coverage costs.
Most importantly, cargo insurance provides coverage to cargo loaded onto ships or vessels during the transportation process.
Different types of coverage options offer protection to various kinds and sizes of ships, depending on the shipping routes taken.
Insurance policies are well-laid-out contracts that both parties must abide by. A policy ensures the vessel is against common risks, such as property damage, theft, collision, explosion, capsizing, etc.
Marine Liability Insurance/P&I, or protection and indemnity, protects third-party liabilities that shipowners and companies are exposed to during their operations. It is indemnity and not liability coverage. It includes coverage for injuries, illnesses, and loss of life caused by operating the vessel. Medical expenditures, damage to other vessels, collision and related expenses are also covered.
Many types of marine insurance and marine insurance companies with years of experience and expertise offer different coverage plans.
Some inland marine insurance providers provide coverage for goods in transit, even when they have reached land and are taken to storage and logistics facilities.
Marine insurance coverage is essential because, through marine insurance, ship owners and transporters can be sure of claiming damages, especially considering the mode of transportation used.
Of the four modes of transport—road, rail, air, and water—the latter most worries the transporters. Not only do natural occurrences have the potential to harm the cargo and the vessel, but other incidents and attributes could cause a huge loss in the financial casket of the transporter and the shipping corporation.
Incidents like piracy and possibilities like cross-border shoot-outs also pose a significant threat to water shipments. Therefore, to avoid any loss because of such events and happenings, it is always beneficial to have a backup, such as marine insurance, in the interest of the corporation and the transporter.
Another important aspect of having marine insurance is that a transporter can choose the insurance plan according to the size of his ship, the routes that his ship takes to transport the cargo, and many other minor points that could significantly affect the transporter.
Also, since various plans and policies indicate covering not just the cargo but also the vessel, the transporter can choose and avail of the best policy that suits his business.
However, as much as marine insurance provides a fair claim to transporters and corporations, it has to be understood that the trickiest and strictest insurance areas when the insurance commenced – i.e. from the 17th century onwards.
While dealing with the scope and range of marine insurance, a ship’s captain must follow a rigid protocol regarding the route and time taken for the cargo and the vessel to reach the intended destination port.
If there is any discrepancy or violation in terms of the route taken, i.e. if the captain varies or digresses in his route from the one originally intended as a part of the ship’s course, then even if there is any mishap occurring to the vessel or the cargo, the insurance claim will be rejected entirely without any possibility of the claim being reimbursed to the claimant at some future date after a few tough negotiations.
Therefore, it becomes essential that a ship’s captain consider the prescribed routes to avoid a failed insurance contract due to an accidental loss caused by a deviation in the path. This would encourage caution on the captain’s part and reduce the possibility of losing essential insurance claims due to inadvertence and negligence.
Marine insurance is a haven for shipping corporations and transporters because it helps to reduce financial loss due to the loss of critical cargo. Also, it helps to establish the duty, dedication, and straightforwardness of the insurance companies toward the transporting companies and the receiving parties.
You might also like to read
- Different Types of Marine Insurance & Marine Insurance Policies
- Different Types of Marine Insurance & Marine Insurance Policies
- Marine Insurance for Piracy Attacks: Necessities and Benefits
- The Importance of Marine Insurance Brokers
- What is Marine Cargo Insurance and How to Get One?
Disclaimer:Â The author’s views expressed in this article do not necessarily reflect the views of Marine Insight. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Marine Insight do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendations on any course of action to be followed by the reader.
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About Author
Raunek Kantharia is a marine engineer turned maritime writer and entrepreneur. After a brief stint at the sea, he founded Marine Insight in 2010. Apart from managing Marine Insight, he also writes for a number of maritime magazines and websites.
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i like the information you give on media
A very informative post. Marine insurance is important in case of import and export of goods which is an integral part of the economy. By compensating against the loss of goods and ship, the policy helps exporters and importers bear any losses incurred during transit.
i liked it so mush but can you write about it is polices ,please!!