Principles Of Marine Insurance

Square Insurance - 21 Mar 2022

Most people think that marine insurance is a new concept, which was introduced recently to the market. However, the matter of fact is it has been around for years. In due course of time because of the expansion of trade, marine insurance has developed and gained its popularity. Marine trade involves the transformation of goods from one place to another by ship. That's why marine insurance is concerned with overseas trading. There is a fair share of risk in the process of transshipment of goods to different places.

Hence, it is essential to secure the shipment. Apart from these marine insurance is important because it provides protection against any kind of loss or damage incurred to the shipment as well as your waterways vehicle. Marine cargo insurance protects against all kinds of marine-related risks. You can claim these benefits if you are using your yacht or ship for commercial or transportation purposes.

Principle Of Utmost Good Faith

Like other insurance policies, this policy relies on the principle of good faith. Transparency and trust are the two important aspects, which one should know before buying a policy. Therefore while filling a marine policy, you should provide proper details without withholding any kind of material info. If you hide any of your essential information then the insurance company has legal rights to reject or ignore your policy application. So, while filling your policy make sure that you have all the genuine and correct information about the things asked in your policy.

Principle Of Insurable Interest

Insurable interest refers to the investment which is done by a person to avoid financial loss. If you want the safety of your products then you must go with this option. The principle of insurable interest states that the person having this type of investment gets the advantages for the safe arrival of his goods without suffering any losses. In some cases you may not feel the requirement of insurable interest while purchasing marine insurance, however, you might feel the need in the future. If you want to get the claim from your insurer then you must have some insurable interest in your product. Meanwhile having insurance will help you to eliminate the chances of any financial crisis.

Principle Of Indemnity

Marine insurance enables security by covering the losses of your damaged goods only. It doesn't compensate for any extra benefits to the policyholder. The insurer will only provide an amount that is essential to cover your loss. Many times it is observed that people invest their money in this insurance without much research, which results in undesirable consequences. That's why you should not invest your hard-earned fortune in this insurance policy as it will not be a profitable deal. You are not going to get any extra credit in marine insurance other than your actual loss.

Principle Of Cause Proxima

These fundamental principles deal with the nearest cause of claim in any kind of insurance. During loss, it helps the policyholder to consider the nearest loss factors which he/she can claim as early as possible. In case of multiple damages, it helps to identify several aspects which have led to the damage. Liability can't be analyzed for any kind of remote cause of loss. Hence, the insurer will fix your claim when the proximity cause is insured. After knowing about the details of cause Proxima you can easily claim your insured amount without much difficulty.

Principle Of Loss Minimization

It is the most important principle that every marine policyholder should be aware of. Most people act irresponsibly just because they have purchased a marine insurance policy. After buying a policy you must take the necessary steps to eradicate and minimize the chances of losses. This will help you to reduce the risks of various accidents, which can occur in the absence of proper planning. Acting like an irresponsible person at the time of an accident just because you have a marine policy is not a wise decision. A person should always remember that unwanted or unnecessary invitations to any kind of problem will always lead to destruction. That's why you should always try to minimize the chances of loss by proper planning.

Principle Of Subrogation

This principle follows the principle of indemnity where you are not permitted to use those materials or goods(after damage) for which you have claimed an amount from the insurer. After the coverage of your damages or losses, the material will be handed over to the company. You don't have any legal right to claim those things. For example, if you have furnishing which covers insurance of Rs 1,00,000 against fire and ignition. Suppose that furnishing is burnt down due to some reason, then you will get an amount of Rs 1,00,000 from the insurance company. However, the insurer will keep the amount that they can get after selling the damaged furnishing. Subrogation also allows the legal rights of the insurer to pursue any third party that causes loss to a proposer.

Principle Of Contribution

The contribution principle comes to act on those situations when a proposer takes multiple policies against a single subject matter. This principle states that you can't make multiple claims or buy multiple policies for one subject matter. The insurance company has legal rights to refuse such claims and covers demanded by the proposer. For example - if you have purchased a policy for your property worth 5 lakhs from companies A and B respectively. In case of any damage, you are allowed to claim the amount from any one company (due to the contribution principle).

Final Word

It is a component that helps in relieving the risk of monetary misfortune. For example - several kinds of waterways vehicles, merchandise, oceanic vehicles, etc. If you have marine insurance then it can cover all the losses like- monetary reimbursement and harms endured during travel. It is a kind of savior, which can help you to overcome your difficult times. Having marine insurance ensures your financial security.