Marine Insurance plays a vital role in National as well as International Trade.
Importers, Exporters, Manufacturers, Distributors, Retailers and Wholesalers engaged in the movement of goods by sea, air, road, rail and post face multiple risks/hazards during transit.
The risks include:
- Perils of the sea
- Malicious Damage
- Fire and Accidental Damage, etc
The term ‘perils of the sea’ refers only to accidents or causalities of the sea, and does not include the ordinary action of the winds and waves. Besides, maritime perils include, fire, war perils, pirates, seizures and jettison, etc.
Though the name indicates that the policy covers the transit of goods only by waterways, it covers transportation of goods by rail, road, air as well as couriers. The coverages vary from a Restricted Cover to an All Risk Cover.
In broad terms, open cover is issued for import/export and is a contract for 12 months during which period the insurance company agrees to provide cover to all shipments coming within the scope of the open cover. Open cover is not a policy. As and when shipments are declared, specific policies are issued as evidence of the contract and on collection of premium.
This policy is issued for transit of goods within India. Policy is valid for one year and all transits during the policy period and declared are automatically covered by the insurance company.
Specific Voyage Policy
It is valid for a single voyage or transit. The policy will be issued before the voyage starts. The coverage will cease on completion of the voyage.
Is issued to cover goods in transit by road or rail or sea from specified godowns or units owned or hired by the insured. The goods covered must belong to or held in trust by the insured.
It covers the insurance of the vessel and its equipment i.e. furniture and fittings, machinery, tools, fuel, etc. It is taken generally by the owner of the ship.
Provides protection against the loss of freight. In many cases, the owner of goods is bound to pay freight, under the terms of the contract, only when the goods are safely delivered at the port of destination. If the ship is lost on the way or the cargo is damaged or stolen, the shipping company loses the freight. Freight insurance is taken to guard against such risk.
Is one in which the insurer undertakes to indemnify against the loss which the insured may suffer on account of liability to a third party caused by collision of the ship and other similar hazards.