Despite the growth in technology, the business of transport still is vulnerable to risk. This risk is usually managed by opting for a trustworthy logistics service provider, using appropriate transport packaging, and availing an adequate marine insurance policy. Marine insurance in the transportation business is one of the irreplaceable necessities for managing transportation losses and damages.
What is marine insurance?
Marine insurance is crucially linked with overseas trade. The insurance provides an assurance that the products dispatched from the originating country to the destination country are insured. It covers the damage/loss of ships, terminals, cargo, and any other transportation mediums by which the products are transferred, received, or held between the countries. Now that you know about what is marine insurance, let’s understand the various principles of marine insurance.
Principles of marine insurance
To facilitate a seamless and perfect lifecycle for each shipment, 6 principles of marine insurance are adopted by the industry.
- Good faith
Marine insurance depends on the principle of good faith, which mentions that at the time of filling the policy documents for marine insurance, the seeker of the policy should provide proper details. The applicant must not withhold any detail linked with the material. In case if the applicant hides any crucial detail, the insurer has all right to avoid the insurance application. *
- Insurable interest
According to this principle, the insured must hold a certain amount of interest in safe arrival of products. In simpler terms, the insured should hold some legal relation with the good, in consequence of which the insured benefits on their safe arrival and is prejudiced by damage or loss of the object. Having some insurable interest for the item helps to get claim approval by the insurer. *
- Indemnity
As per the principle, insured can be compensated just to the extent of loss. This principle prohibits seekers from buying marine insurance to earn profits. *
- Cause proxima
During the loss, the insured must find the proximate cause. Doing so can help analyze the actual cause of loss in the case if there are multiple causes that may have led to the loss. To be precise, for determining the liability, remote cause is not needed. Insurer fixes the claim only if the proximate cause is insured. *
- Subrogation
Subrogation is just a follow through of the principle of indemnity. This principle restricts the scope to earn profit through insurance. Once the damaged products are disposed of, the net amount surpassing the actual goods price is availed by the insurer after providing the claim to the insured. *
- Contribution
There may be chances that specific products are insured with more than one insurer for the same peril. In the case of any damage or when claims are payable, insurers must divide the claim liabilities. *
* Standard T&C Apply
Final thoughts
With marine insurance, insured can be relieved of the dangers of any monetary misfortune to ship, merchandise or any other movable items in the marine vehicle. However, before purchasing the insurance, it is crucial for the insurance seekers to understand all 6 principles of marine insurance. Knowing them can help them comply with the policy contract more actively. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.
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