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Marine insurance is an important contract that you need to understand if you wish to move goods from one part of the world to another, using the maritime route. Marine insurance is a contract between the insurer and the insured, where the insurer agrees to insure a particular object of the insured for a certain fee.
The scope of this article is to understand some of the features of marine insurance so you feel comfortable while navigating through your next marine insurance policy. We will be discussing the following marine insurance features below:
As mentioned above, a marine insurance contract is an agreement between an insurer and the insured. There are various terms within this agreement that need to be honored and adhered to. Terms within a marine insurance agreement may be unique but the underlines remain the same. Mentioned within are some of the common features of a marine insurance agreement:
Plurality: A marine insurance agreement requires two or more parties.
Offeror and Offeree: The insurance company is the offeror as it offers indemnity in exchange for a fee. The insured is the offeree as he has been offered the offer to be indemnified. Offer terms will be clear and concise and both parties must be on the same page.
The sanity of Mind: The agreement will only be valid if both parties are of a sane mind.
No insurer will provide indemnity to the insured without consideration. This consideration is called an insurance premium. The insurance company provides coverage in exchange for a premium. This premium can be used by the insurance company to expand its operations and grow its business.
What does the insured receive in exchange for paying a premium to the marine insurance company? They receive coverage and indemnity. The insured will be indemnified against any losses that may occur up to a certain coverage amount. This provides protection to the insured and ensures continuity and stability of their business.
A marine insurance contract can be of varied periods. There are contracts that last for a single voyage, to contracts that last for a year. There are certain contracts that even last for multiple years, but they are relatively rare.
A marine insurance document is a legal document. This document can be used to file a suit in the courts of the lands by either party if they deem it worthy.
Note: A wager policy is not a legal document and cannot be used to file a suit.
Every marine insurance contract is governed by certain principles. Let us briefly talk about them:
Indemnity: The insurance company will only indemnify and insured up to the extent of the damage caused.
Utmost good faith: Both, the insured and the insurer have to be transparent and honest with each other. There should not be any intentional falsification from either party.
Subrogation: Once a claim is passed, the insurance company will assume ownership over the insured object.
Proximate cause: In the event that the loss is caused by two or more causes, the first cause will be considered while handling the claim. The claim will only be passed if the first cause is covered under the policy.
Loss minimization: An insured must attempt to minimize loss to an insured object. He should not sit by ideally just because the object is insured.
Insurable interest: The insured must have an insurable interest in the insured object. That means that he can only avail insurance on an object if the loss or damage of that object would affect him adversely.