Marine insurance is a contract by which the insurer, in consideration of payment by the insured of a specified premium determined under tariff rates or otherwise, agree to indemnify the latter against any loss incurred by him in respect of the merchandise exposed to the perils of the sea or to the particular perils insured against.
In a c.i.f. contract, marine insurance is obligatory, and the policy must be one which is usual in the trade and is in a negotiable form. The policy must be stamped and bear a date not later than that of the bill of lading; and if the export is under a letter of credit, it must conform to the terms and conditions laid down in it.
Types of Marine Insurance Policies
1. Single Cargo Risk / Open or Blanket Policy
A marine insurance policy may be a “single cargo risk” policy, i.e., a policy which covers a single cargo risk or an “open” or “blanket” policy i.e., a policy which automatically covers all the shipments of the exporter up to an estimated amount during a given period. In an open policy, the overall amount and the period of insurance are specified but not the particulars of the insured cargo. The particulars of shipments, as and when made, have to be supplied to the insurance company, which then issues a certificate covering the shipments under the policy. Premium is charged on the value of the cargo actually shipped during the period of insurance. Under a blanket or open policy, a lump sum premium is initially charged on the basis of the estimated value of the cargo to be shipped during the period of insurance and at the end of the period, the amount of premium charged in excess is refunded or the amount undercharged is recovered.
2. Floating / Named Policies
An open marine insurance policy, which covers the cargo ready for shipment but for which shipping space is still awaited, is called a floating policy. When on obtaining the shipping space the exporter intimates the intimates the name of the ship to the insurance company and the insurance company issues an endorsement, the policy becomes a “named” one.
3. Valued and Unvalued Policies
A valued policy is a policy which specifies the agreed value, not necessarily the actual value of the foods insured. If the goods prove to be overvalued, the insured is entitled, at the time of claim settlement, to a refund of a proportionate part of the premium paid, but no amount against anticipated profit is to be included in the claim. An unvalued policy does not specify the value of the insured goods, but subject to the limit of the sum insured, leaves the insurable value to be determined later.
4. Contingency Marine insurance Policy
The Exchange Control Regulations of certain countries do not permit remittances in payment of imports into them in the event of the cargo getting lost in transit and in consequence not reaching the destination, the exporters in India are therefore, required to protect their interest in respect of export to such countries by taking a special marine insurance policy, viz., contingency Marine Insurance Policy, from the G.I.C. or any of it subsidiaries.
Credit: International Finance-MGU