Marine insurance is a type of transit insurance that can be referred to as an indemnity contract. It provides an assurance that those goods that are dispatched from the land of origin to the country of destination are protected through insurance.
This insurance provides coverage for the damage or loss of cargo, terminals, ships and includes other transportation means that are used for acquiring, transferring or holding goods between points of origin and destination.
If you are an entrepreneur who intends to make a global base for your business, you must learn about the types of marine insurance policies so that you know which one will work best for your business.
Different Types of Marine Insurance
The following are the marine insurance types based on the geographical area or the coverage area wherein the insurance policy benefits apply:
Marine Cargo Insurance
This is a property insurance type that provides coverage to the cargo owner from any damage or loss of their cargo at the time of transit. Although it comes with broad coverage, it has its own limitations, but it includes third-party liability coverage, which proves financially helpful to the insured.
Hull and Machinery Insurance
This insurance provides coverage for the damage or loss of the ship’s body or any equipment or machinery that is used for the ship’s functioning. It generally covers accidents that are caused by collisions or damages that result from explosions and earthquakes.
Freight Insurance
This insurance provides coverage for the liability of the logistics provider or shipping company for the loss or damage caused to the goods at the time of transit because of events that are outside the company’s control.
Liability Insurance
This insurance type provides coverage for the financial liability of the insured. It primarily covers the liabilities that arise because of the injuries or damages caused to a third party, for example, the personal injury or death of any third party travelling in the ship.
Types of Marine Insurance Policy
A policy can be described as an embodiment of the insurance contract’s terms and conditions. It is typically a written agreement form between the insured and the insurer and contains various provisions, including policy limitations, coverage area, etc. Therefore, based on the contract structure, the following are the different marine insurance policy types:
- Voyage Policy – It is a marine insurance policy type that is valid for a specific voyage.
- Mixed Policy – This marine insurance policy type offers the insured the advantage of both voyage and time policies.
- Time Policy – This type of marine insurance policy is valid for a specific time period – typically for a year – and is referred to as a time policy.
- Valued Policy – In this marine insurance policy type, the consignment or cargo’s value is ascertained and mentioned beforehand in the policy document, thereby making the value of the reimbursement clear in case of loss of consignment or cargo.
- Unvalued Policy – Unvalued or open policy is a marine insurance policy type in which the consignment or cargo’s value is not mentioned beforehand in the policy document. Consequently, the reimbursement is made once the loss of consignment or cargo is thoroughly investigated and valued.
- Port Risk Policy – The purpose of this marine insurance policy is to ensure the ship’s safety when it is stationed at a port.
- Floating Policy – This is a marine insurance policy type in which only the claim amount is specified while the rest of the details get omitted till such time the ship starts its journey.
- Fleet Policy – Under this policy, multiple ships belonging to a single owner get insured under a single policy.
- Single Vessel Policy – This policy covers the risk of a single vessel of the insured individual.
- Blanket Policy – This insurance policy covers all shipments under one policy without providing specifications for each shipment. This marine insurance policy type is well-suited for those with a large variety and volume of shipments.
Conclusion
Marine insurance provides a vast range of policies and services, and uncomplicated and easy business transactions can be facilitated. Therefore, it makes sense to invest in the right marine insurance policy.
For example, TATA AIG Marine Insurance offers extensive coverage, and is available to any business that moves goods by sea, air, land or rail. Apart from protection against loss or damage, this policy also provides liability protection, customised coverage, and above all, peace of mind.
