By In a world where globalised trading is a norm, trade and cargo are of substantial importance in the market. Commercial trade transport is a huge part of the world economy. The transport takes place every second of the day, all over the world, and in every way possible. Through road, air, and water, trade takes every route available.
A person who owns a business knows how important it is for them to protect their business. In the same way, trading company owners make it their priority to protect their cargo and goods.
This is where a cargo insurance policy comes in. Amongst the different types of trading businesses, marine cargo is considered by many, and therefore, marine cargo insurance is also a preference for those owners.
A marine cargo insurance policy is a policy that covers any potential harm to your cargo and goods in case of accidents like collisions, pirate attacks, thunderstorms, water leaks, etc. Every cargo owner needs this financial protection.
Features of Marine Cargo Insurance Policy
Let us discuss some of the very unique and important features of this very unique insurance policy. These features are as they are stated in the Marine Insurance Act 1963.
- Legal Document
It is a legal document that is proof of the safety of a third party and its own damage liability. In India, it is mandatory to have a valid marine cargo policy if you trade in goods and cargo through waterways.
While being a legal document and mandatory, it is also a sign of professionalism. Some international traders do not accept the transport service if the owner does not insure the cargo. This can make trade loss-bearing for you. Hence, insurance gives you and the opposite party an assurance of safety.
- Format: Agreement
A marine cargo policy is an agreement. It is in the form of a proposal and acceptance, and the agreement is in motion after the acceptance is delivered. This means that the damage or loss that occurred before the insurance was issued will not be covered. Hence, it is advised to have an active insurance policy when you are in the trade.
- Premium Payments
There are few options available for premium payments. You can opt for annual, half-yearly, or quarterly premium payments. There is an option of paying the premium in a single payment, too.
This makes the marine policy a flexible one. Once the company receives the premium, your insurance will be active. This means if you pay with a cheque, your policy will activate when the company receives the money.
- Policy Coverage
In exchange for paying the premium, the insurance company provides you coverage. With marine cargo insurance, you receive the coverage that equals the loss. This means the insurance company will calculate the amount of damage you went through due to the event and then compensate you for that amount.
Or, the company will allow you the sum assured if the loss is greater than the insured declared value of your policy. Both ways, you get the maximum coverage possible from the insurance company.
- Good Faith
As we saw before, an ocean marine insurance policy is an agreement. This agreement stands on a strong base of faith. The insured has to disclose every little detail about the goods, cargo, vessel, transport, destinations, etc.
Any kind of non-disclosure, misinformation, or lack of information will make the agreement void, and hence, it nullifies the policy. (You lose your coverage.)
- Policy Tenure
The marine insurance plan tenures vary from one policy to another. As mentioned before, it is in the form of an agreement hence it is a two-party thing. It can be contract-based, which means it ends with one single trade voyage. In your agreement, you can opt for multiple years of tenure, confirming the coverage and benefits.
- Policy Principles
- Insurable Interest
The insurance company will only cover the loss or damage of the policyholder if it is adversely affecting them.
- Subrogation
Subrogation means a transfer of an associated duty. This means once the claim has been passed, the insurance company assumes the ownership of the cargo vessel.
- Warranty
The marine insurance policy for export and import comes with a warranty and will stand cancelled if there is a breach of contract.
Conclusion
Marine cargo insurance is a highly unique type of insurance in itself. It is important for import and export traders that handle these dangerous transports daily, and that too, through waterways.
The marine cargo policy features are unique to the policy for the most part. The other features are common with the standard insurance type, like premiums, insured declared value, claims, etc. But these features are important for the traders to navigate the import and export trading world without risking it all.
