Businesses that are involved in import and export need to consider investing in marine insurance or transit insurance. These insurance plans safeguard the business’s financial assets during any unforeseen scenarios occurring during transit.
Furthermore, marine insurance is also mandatory for businesses to enter the ports of some countries. Marine insurance plans have various elements that make them legal and valid. Knowing these elements can help you understand your plan better. So, keep reading to know in detail about the different elements of marine insurance.
Crucial Elements of a Marine Insurance Policy Contract
The marine insurance meaning refers to a type of insurance that protects against risks associated with the transportation of goods and vessels over water, land and air. It covers financial losses due to damage, theft or destruction of cargo, ships, or any other assets involved in maritime trade.
To make the insurance valid, a marine insurance contract is needed. It is the document which binds the policyholder and insurance provider. There are various elements of a marine insurance contract, which we are going to explain below:
1. Declaration
The declaration is the first element of the marine insurance policy. It provides the details of marine/transit insurance, such as the policyholder’s name, coverage period, policy number, subject matter, etc. It is the statement for the insured party buying the marine insurance plan.
2. Covered Risks
The nature of risk covered by the policy is another important feature of marine insurance policy. Maritime voyages give rise to a variety of risks. Reliable insurance providers like TATA AIG demonstrate transparency by outlining the risks covered by the plan.
3. Deductibles
Marine insurance policies cover some components, such as a deductible. The deductible is the amount that the policyholders need to pay before the policy can be activated on their behalf. A higher deductible amount increases the marine insurance policy premium.
4. Transit or Voyage Details
Transit or voyage details are also included in the marine or transit insurance contract. The data is specific to the transport or the movement of the goods or cargo insured under a marine insurance policy. You will also be able to see the route, the mode of transport, how long things take and the stops or points that the goods go through, among other data.
5. Valuation and Sum Insured
The valuation and sum insured details are also included in a marine insurance contract. The valuation states the process used to figure out the value of the insured property. For instance, calculating a cargo valuation is usually based on a cargo invoice, market value and so on.
6. Policy Limits
Another important feature of marine insurance contracts is policy limits. Basically, it is the highest limit that an insurance company can pay to its policyholders as compensation. Depending on the coverage type you choose for your marine insurance plan, the policy limit varies.
7. Subrogation
The right of subrogation is another important clause found in marine insurance contracts. It allows an insurance provider to assume the rights of the insured after it has paid a claim and pursue recovery from the third party that caused the loss or damage.
8. Claim Procedures
The policy document also contains details on the claim procedure. This will allow policyholders to know how to approach an insurance provider when filing a claim request. It provides information about simple steps policyholders should follow, such as the last date for claim filing, document submission, etc., to make the claim hassle-free.
9. Premiums Detail
Premium detail is also one of the significant aspects of marine insurance plans. This will be helpful in the determination of how much a business needs to pay for insurance in return for coverage. It also emphasises the information about the policy premium payment period and other facts.
10. Exclusions
Another aspect of marine insurance contracts is exclusions. Exclusions are a list of all the losses, damages and perils that a marine insurance plan does not cover. This section is designed to maintain transparency and to help policyholders avoid mistakes when filing a marine insurance policy claim.
Conclusion
The marine insurance contract is crucial for insurance providers and businesses. The contract helps in understanding the marine insurance policy. Without the marine insurance contract element, it would be hard for policyholders to understand policy coverage, issuance date and other things. By understanding all the contract elements, policyholders can make an informed decision.
