One of the oldest branches of general insurance is marine engineering. Even the term ‘underwrite’ which was coined in 1430 originated from the norm of accepting the risk to any ocean vessel and its cargo during transit. Marine insurance originated formally as an insurance form in the 17th century in London. Today, this coverage is an essential part of the shipping industry and any industry and activity related to the marine. In this write-up, we would throw light on the basics of marine engineering.
What is marine insurance?
In layman terms, marine insurance can be described as the insurance which covers various types of risks to all cargo and naval vessels from the port of departure to port of arrival. Later the protection also got extended to cargo which is stored in the warehouse as well.
Need and importance of marine insurance
Regardless of whether you are an individual, ship owner or a cargo owner; marine insurance is vital for all. It is also of critical value even for any country’s government. Few of its significance highlighting its need are:-
- Ensures the economic property
Marine vessels like a ship, submarine, etc. cost a fortune. The goods carried by them including cargo are also expensive if by nothing than by their bulk amount. The ship-owner gets revenue for transporting the goods and cargo which itself cost a fortune to the cargo owner. Both ship and cargo are exposed to risks like fire, theft, loss, risks due to war, various dangers arising out of the sea, etc. which can cause significant economic loss. However, the loss can be effortlessly neutralized with marine insurance.
- Provides mental peace
The knowledge that all potential financial losses from any kind of marine risks are covered renders an unparalleled psychological peace to all parties and individuals involved. People are freely able to trade.
- Facilitates global trade
The risk of the sea has been an increasing trend. Protection against it encourages countries to increase trade with each other and spike both global trade and economic prosperity as a whole.
- Improves the quality of life
Since all kinds of financial losses due to marine risks gets covered; global trade increases, as well as businesses, can grow steadily. This means more jobs and economic prosperity both for the individuals and the country which leads to an overall improvement in the quality of life led by the people. The social benefit ultimately leads to the growth of the country’s economy.
Types of marine insurance
Like all insurance in any other niche, the subject of marine insurance is also wide and encompassing. The requirement of various individuals also varied. Hence different types of marine insurance policies were crafted to cater to a wide variety of risks. Few of the major types of marine insurance are:
- Hull insurance
Under this insurance, the torso and hull of the vessel along with all its apparatus like the machinery, furniture, fuel, tools etc. are provided protection against any damage or theft.
- Machinery insurance
This insurance covers all essential machinery against any operational damages. The insurance often gets combined with the previous one as Hull and Machinery insurance which can even further be extended to cover port strikes as well as war risks.
- Freight Insurance
This protection is sought by merchant vessels’ corporations who can suffer economically significantly due to loss or damage to freight during transit from port to port. With the insurance of the freight; the damage is minimized.
- Cargo Insurance
Under this insurance, the personal goods of the passengers and crew of the ship as well as all other transported goods are covered against any potential risks.
- Liability Insurance
Here protection is provided against losses due to any liability to third party. This insurance comes into play when a ship collides with another ship or any other similar induced attacks.
- Freight, Demurrage and Defense (FD&D) Insurance
Under this cover, one can claim reimbursement any assistance and legal costs for any disputes which are excluded from above mentioned insurance policies.
Apart from these, any individual can choose different other types of marine policy like:
- Voyage Policy
- Time Policy
- Mixed Policy
- Valued Policy
- Unvalued or Open Policy
- Wager Policy
- Floating Policy
- Single Vessel Policy
- Floating Vessel Policy
- Fleet Policy
- Block Policy
The subject of marine insurance is quite vast, but its importance cannot be overstated especially in the view of increasing natural calamities and increased attacks by pirates and terrorists. Thankfully, the marine insurance is available with all leading general insurance companies. With the right choice and customized plan, marine insurance is imperative for any marine vessel floating in the water.