If it is asked that a simple definition of insurance be given, the definition would be “protection against losses in the future”.
Well, like all others, marine insurance is a type of insurance policy, too.
Before we get into the main topic of discussion, I would like to give a short instance.
Imagine your job is importing goods into a country and then reselling those goods at a higher price. Seems like a nice job right? Well, yeah it is.
But imagine you paid for a huge shipping to be done, and the cargo is on sea coming, but a storm occurs and the ship eventually got wrecked. That is heavy loss of money, and I'm sure it'll take a whole lot of emotional strength, and financial strength too, to be able to get back on your feet.
So, what could you have done in order to prevent this ugly occurrence? That's where Marine Insurance comes in.
Why is it marine insurance? Read on to find out.
I'll be touching on topics under Marine insurance, like;
• What Is Marine Insurance?
• Types Of Marine Insurance
• Why Marine Insurance Is Important
• Principles Guiding Marine Insurance
Let's get to it.
WHAT IS MARINE INSURANCE?
Marine insurance is a type of insurance provided by insurers, to working and floating equipment on water, which includes the ships, marinas, shipyards, boats, floating equipment, and offshore installations.
Under the marine insurance, there is marine liability insurance, which is also Protection and Indemnity (P&I).
The marine liability insurance provides protection for the insured shipowners and companies against third party liabilities that they are being exposed to during their respective operations.
It is important to note that it is not liability coverage, but indemnity.
The policy includes coverage for illnesses, Injuries, or death caused due to operating the vessel.
The coverage also extends to costs incurred due to repair of other vessels that are damaged by disasters or collision, and medical expenses, including other related costs.
Different types of coverage options are under marine insurance, and they provide coverage for different sizes of ships, depending on the taken route.
The marine insurance policy is a policy that is well planned and laid out that, in order to be beneficial, needs both parties to be abiding.
A typical marine insurance policy ensures that a vessel has protection against risks like theft, collision, property damage, capsizing, explosion and other similar risks.
Shipowners that are independent can get insurance for either their yachts, megayachts, pleasure craft, or any of their water craft.
There is the inclusion of wreck removal and salvage without additional hull coverage costs in some boat insurance coverages.
Marine insurance companies and companies with many types of insurance with great expertise and many years of experience offer different coverage plans to their buyers.
Some marine insurance companies provide total coverage to goods in transit up till the goods reach land and even when they are being distributed to logistics and storage facilities.
There is a downside in this policy, however.
A ship's captain is demanded by the policy to follow a rigid protocol regarding the taken route and the taken time for the vessel and the cargo to reach the destination port intended.
This is because if there is any violation or disregard of the route that was to be plied, and peradventure the ship encounters any mishap, the insurer will entirely reject any insurance claim made and it will leave the insured without any form of reimbursement.
For this reason, it is very much important for the ship captain to take into careful consideration the planned and prescribed routes to avoid a failed insurance claim when any loss is incurred.
Shipping corporations and sea transporters find their safe haven in marine insurance, due to the fact that it helps in the coverage of bills that result because of loss of finance, due to loss of critical cargo.
TYPES OF MARINE INSURANCE
There are various types of marine insurance. They include;
• Hull insurance
• Marine Cargo Insurance
• Liability Insurance
• Freight Insurance
Hull Insurance
This type of marine insurance is concerned with the catering for the torso and hull of the vessel in addition to all the pieces of furniture and the articles on the ship.
This policy is purchased most of the time by the shipowners so as to avoid any serious loss to their ships in case of a mishap.
Marine Cargo Insurance
This type of marine insurance offers protection to the insured in the case of damage, loss, expense and liability to the insured's goods in the course of transportation from one place to another.
Liability Insurance
This type of insurance covers the costs of settling any lawsuit filed against the insured.
Freight Insurance
This type of marine insurance indemnifies the insured against the loss of freight money if it happens that the shipowner cannot complete his carriage contract due to unavoidable peril.
WHY MARINE INSURANCE IS IMPORTANT
There are tons of important things the marine insurance policy offers.
A part of these things is, marine insurance policy makes it possible for shipowners and shipping companies to claim damages, especially considering the mode of transportation used.
Research has shown that of all the modes of transportation - Road, air, water and rail, it is water that causes the transporters to worry much, because natural occurrences which can harm the cargo or vessel is present, and other accidents which can result in total loss of the goods being transported on the body of water is present also, which is a huge loss to the shipowner/cargo owner.
But in the case where a shipowner who encounters loss had bought a marine insurance policy, there will be a reimbursement and compensation for the cargo that was lost.
The marine insurance policy also makes it possible for the person who wants to buy to choose the plan suitable for his ship, the routes taken in transporting cargo and many other important things which could go a long way in being of great benefit to the insured.
PRINCIPLES GUIDING MARINE INSURANCE
The marine insurance policy has five main principles, which were taken from the 1963 marine insurance act.
They include;
✓ Insurable Good Health
✓ Proximate Cause
✓ Subrogation And Contribution
✓ Indemnity
✓ Utmost Good Faith
