Different Types of Marine Insurance

There are various types of marine insurance policies available and they could broadly be classified into 5 types.

1. Time policy - Insures property for a period of time.
2. Voyage policy - It insures property from one place to another it may include a date limit.
3. Mixed policy - It covers both a voyage and a period of time of voyage and in port after arrival.
4. Construction policy - It insures vessels while in course of construction not for a period of time.
5. Floating policy - cargo policy that insures a number of shipments. In Canada & US, this policy is continuous and covers all shipments to a limit of liability for any 1 loss.

The marine insurance policies that a ship owner can take are
1) Hull & machinery policy
2) Protection & indemnity cover.

The insurance policies for a cargo owner include
1) Marine cargo insurance
2) Goods in transit insurance.

Hull and machinery policies :
These are usually time policies with a maximum period of 12 months. Normally the items covered will be clearly stated in the clauses of each policy. Any extra port to be covered will raise the insurance premium.
Perils include

1. Peril of seas
2. Fire / explosion
3. Theft from outside
4. Jettison
5. Piracy
6. Earthquake volcanic eruption, lightening
7. Accidents during loading or discharging
8. Machinery damage
9. Latent defects in machinery or hull
10. Negligence of master, officer or crew
11. 3/4 collusion liability

Items not covered under insurance include:

1. loss/damage eg insurer deliberately set fire to ship caused by willful misconduct wilful negligence by the owner.
2. loss of charter hire due to delays
3. loss due to wear and tear
4. war risk cover.
5. Cost for scraping & painting vessel underwater part due to fouling
6. Valuation clause i.e. in case the vessel is a constructive total loss, salvage values are not considered.
7. loss/damage from a nuclear weapons or by radioactive material.

P & I cover:
P&I club is a mutual club of ship owners for covering the various liabilities. P&I cover available for Cargo claims, Crew claims, Liability against the collision with fixed or floating objects and installations, Claims for various fines of innocent breaches, Third-party death, and injury claims, 1/4 Collision liability which is not covered by the hull and machinery policy, Oil pollution liability, Special compensation, stoways , unrecovered GA, Salvage expenses under LOF, wreck removal, ships contribution of GA Etc.

Limits and restrictions on P&I cover:
Deviation, Delivery of cargo at port not specified in the contract of carriage, Failure to arrive or late arrival at port, Delivery of cargo without bill of lading, outdated bill of lading, clean bill of lading in respect of damaged cargo, arrest or detention.

Cargo insurance policies :
Most policies incorporate the institute of cargo clause A, B or C. Institute of cargo clause C: This covers only against major casualties. i.e, Fire, Explosion, Stranded, grounding, sinking, capsizing, collision or contact, discharge at port of distress, GA sacrifice and jettison.
Institute of cargo clause B: This covers all the above plus the damages due to earthquake, volcanic eruption, lightening, washing overboard, entry of sea.
Institute of cargo clause A: Offers cover against all possible risks.

Items excluded in marine cargo insurance are

1. Claims resulting from insufficient or unsuitable packing or protection of subject matter insured.
2. Claims for loss or damage arising from the financial default of Owners Company, manager or charterer.
3. Claims against the use of nuclear weapons.
4. Claims arising from the damage by terrorist or politically motivated groups.
5. Claims arising from the unfitness of the ship.

War risk and strike risk cover are available for cargo insurance for an additional premium.
Open cover policies and floating policies are available for cargo for long term insurance.