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What Are the Requirements to Buy a Marine Insurance Policy?

  • Author :
  • TATA AIG Team
  • Published on :
  • 11/04/2024
  • 2 min read

One of the most significant contributors to the constant growth of the Indian economy is the country’s export market. However, with the increasing exports and modes of transportation to carry out related activities, the risks of security and damage have grown significantly.

To reduce the financial liability in such cases, companies and individual business owners invest in marine insurance to ensure maximum financial security in the event of damage or loss to shipped goods or modes of transportation.

With marine insurance, also known as transit insurance, the owner of cargo and marine vessels benefits from a financial safety net in times of need. However, it is crucial to understand the INS requirements for marine insurance.

In this blog, we will explore the various marine insurance requirements, types of marine insurance plans, why you should buy marine insurance, and the right way to choose marine insurance in India.

Eligibility Criteria: Marine Insurance Requirements

To purchase a marine insurance policy, you must meet a set list of INS requirements to meet the eligibility. Based on the type of marine insurance, the specific requirements might be different. However, the standard eligibility criteria for marine insurance are as follows:

Registration of the Vessel or Cargo

One of the first marine insurance requirements is proper registration of the vessel or cargo which will be used for transportation of goods.

All the owners and companies who want to buy marine insurance must provide sufficient proof of ownership. Without this, no vessel or cargo can be insured under any marine insurance policy.

Proof of Direct Interest

Another requirement for buying marine insurance is proof of direct interest in insuring the cargo or vessel. Under this aspect, the business or cargo owner must showcase the direct relation between the successful transportation of the cargo or vessel and the financial liability attached to it.

For example, ship or cargo owners and businesses using their services for goods transportation are clear stakeholders in the final result, and thus, they are eligible to buy marine insurance.

Type of Voyage

Different types of cargo and vessels are involved in shipment transportation based on the mode of transport.

Insurance providers around the country calculate the premium of any marine insurance policy based on the type of cargo or vessel, and thus, providing all accurate details and documents regarding the vessel is a necessary requirement for marine insurance.

Purpose of the Voyage

For accurate risk analysis, insurers need to know about the key purpose of the cargo or vessel. Therefore, when looking to buy marine insurance, you must have the correct documentation for the type of work or the purpose behind the shipment or cargo.

This detailed information will help an insurer assist you with the best coverage insurance plan based on the purpose of the voyage and the risks involved with it.

Types of Safety Equipment

When calculating the insurance premium for any mode of goods transportation, the insurer also assesses the types of safety equipment installed in the cargo or vessel. Based on the quality and quantity of safety equipment, the premium value is determined.

Owner or Driver Qualifications

Along with the vessel or cargo registration and type details, the insurer also evaluates the driver or owner’s experience and qualifications in the mode of transportation they operate.

This is because, other than the unexpected risks and accidents that can damage the shipment and the vessel, the driving or operating experience can also be a significant reason behind accidents.

Different Types of Marine Insurance

  • Marine Cargo Insurance - A marine cargo insurance policy extends financial coverage for any loss or damage incurred by the products or goods being transported from one place to another.

  • It is an ideal marine insurance plan for all exporters, businesses sending shipments, buyers or sellers, and all other stakeholders who have a direct interest in the timely and safe delivery of goods.

  • Hull Insurance - This is a type of marine insurance policy that covers all the damages and losses incurred by hull or machinery/equipment onboard. This insurance plan is usually a preferred option for vessel or cargo owners, and other involved parties who have a valid interest in protecting the hull.

  • Under this plan, you can claim partial or complete compensation from an insurance provider based on the terms and conditions and the total valuation of the loss.

  • Freight Insurance - As the name suggests, this type of marine insurance extends financial coverage for freight loss or damage. All businesses that rely on shipping their goods require this financial protection to avoid significant losses due to unforeseen circumstances.

This insurance plan can be open or specific based on the number of shipments that are covered under one policy.

Top Benefits of Marine Insurance in India

  • Increased Financial Security - One of the most significant benefits of marine insurance in India is increased financial security for goods and vessels, ensuring reduced financial burdens and losses for businesses.

  • Moreover, with the both-to-blame and Jettison clauses in marine insurance, fair distribution of losses between all parties involved is a significant advantage.

  • Coverage of Different Liabilities - Whether you are looking for single-trip or shipment or multi-trip or shipment cover, with marine insurance, you can choose a plan that fits your business goals and operational needs the best for maximum financial protection for the necessary cargo, hull, or freight.

  • Compliance - Many global markets and industries impose the mandatory requirement of marine insurance for goods export or import. Thus, with marine insurance, you are not only securing your financial well-being but also complying with the necessary regulations to carry out business activities and avoid fines.

  • Business Efficiency - While completing shipments, unforeseen circumstances can arise, attracting significant losses for the business. However, with marine insurance, businesses can avail of financial support to cover losses, ensuring smooth operations.

  • Third-Party Coverage - At times, while completing shipment deliveries, unexpected activities may occur that can injure a third party or the property involved in the course of shipment delivery. With marine insurance, businesses and individual cargo or vessel owners benefit from coverage for such third-party liabilities.

Important Considerations Before You Buy Marine Insurance

  • Specific Needs - The first step is to assess your needs to understand the kind of marine insurance you are looking for. This includes calculating a budget, listing down the key reasons for financial cover, and then choosing the one that aligns with your requirements.

  • Customisation Flexibility - Based on the type of marine insurance, the base policy coverage remains almost constant for most insurance providers. However, given the nature of the shipment and the route of transportation, additional coverage might be required by some businesses. Thus, checking for the availability of customisation is necessary.

  • Claim Settlements - Before you choose and buy marine insurance from any insurance provider, conduct market research by cross-checking customer testimonials, market reviews, and the claim settlement ratio and procedure offered by an insurance provider to make the right choice.

  • Exclusions - It is crucial to investigate the inclusions and exclusions under the marine insurance policy offered by any insurance provider to ensure the basics are covered. Moreover, this allows you to plan and add the necessary add-ons to protect your cargo, hull, and shipment from all types of damage.

  • Premiums - Before you buy marine insurance online or offline, assess the premiums offered by a particular insurance provider and check for the availability of deductibles to choose the plan that is most aligned with your budget.

Why Buy Marine Insurance Online?

  • It is convenient and can be purchased from the comfort of your home.

  • It is extremely quick and easy, saving a lot of time and effort.

  • It offers paperless policies, benefiting the environment and ensuring easy access at all times.

  • It allows you to compare different plans online to choose the one that suits your needs best.

  • It promises complete transparency in all processes, whether it be buying, renewing, or filing a claim.

  • All transactions take place online, ensuring secure payments.

All about the Claim Process for Marine Insurance

The process of filing a claim under marine insurance includes the following steps.

  • Notifying the insurance provider.

  • Collecting the relevant evidence of the damage or loss incurred by the vessel or cargo.

  • Compiling the survey and investigation reports of the vessel to assess why and how the incident took place.

  • If the damage is due to a collision between two vessels, a detailed report and both-to-blame clause investigation will take place.

  • Once done, a claim will need to be filed.

  • The insurance provider will then investigate the claim and the additional documents submitted as evidence.

  • A claim settlement amount will be calculated and provided to you based on the final survey report and blame percentage regarding the total loss incurred.

Conclusion

Marine insurance is a significant investment for all businesses and vessel owners to protect their business finances and shipments from unforeseen events causing damage or loss. However, to buy marine insurance, you must know the key requirements and the eligibility criteria.

When you understand and comply with these requirements, you can carry out business operations of shipments with peace of mind and a financial safety net. Tata AIG offers the flexibility of coverage under marine insurance in over 130 different countries around the globe, ensuring you are financially protected at all times.

Along with a wide range of marine insurance policies for different businesses and individuals, our marine insurance plans also offer ample customisation flexibility to cater to individuals' specific needs and budget constraints. The end goal is to protect your vessels, goods, and hull from unexpected damage and loss.

Frequently Asked Questions

1. What documents are required for a marine cargo insurance claim?

  • Claim form

  • Survey report

  • Bill of lading

  • Consignment details from start point to end point

  • Insured value onboard

  • A detailed damage certificate

  • Shipping specifications, etc.

2. Is marine insurance mandatory in India?

  • Yes, marine insurance is compulsory for all ship or vessel owners who participate in commercial activities.

3. Is general wear and tear included in marine insurance?

  • No, general wear and tear is excluded from all marine insurance policies. This insurance policy only protects against damage or loss incurred due to unforeseen circumstances.
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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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