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Insurance
Asked a question 3 years ago

What are the types of marine insurance?

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Ship or hull insurance: Since the

ship is exposed to many dangers at

sea, the insurance policy is for

indemnifying the insured for losses

caused by damage to the ship.

(b) Cargo insurance: The cargo while

being transported by ship is subject

to many risks. These may be at port

i.e., risk of theft, lost goods or on

voyage etc. Thus, an insurance

policy can be issued to cover against

such risks to cargo.

(c) Freight insurance: If the cargo does

not reach the destination due to

damage or loss in transit, the

shipping company is not paid freight

charges. Freight insurance is for

reimbursing the loss of freight to the

shipping company i.e., the insured.

The fundamental principles of

marine insurance are the same as the

general principles. The main elements

of a marine insurance contract are:

(i) Unlike life insurance, the contract

of marine insurance is a contract of

indemnity. The insured can, in the

event of loss recover the actual

amount of loss from the insurer.

Under no circumstances, the

insured is allowed to make profit

out of the marine insurance

contract. But cargo policies provide

commercial indemnity rather than

strict indemnity. The insurers

promise to indemnify the insured

โ€œin the manner and to the extent

agreed.โ€ In case of โ€˜Hull Policyโ€™, the

amount insured is fixed at a level

above the current market value;

(ii) Similar to life and fire insurance, the

contract of marine insurance is a

contract of utmost good faith. Both

the insured and insurer must

disclose everything, which is in their

knowledge and can affect the

insurance contract.