Types of Marine Insurance
Marine insurance is broad and encompassing which explains why there are so many different types of marine insurance covers.
Why Is Marine Insurance Necessary?
Insurance policies are designed to mitigate unforeseen yet unfortunate incidents such as damage to property; in this case ships, loss of life or damage to the environment.
With ships, this incidents would expose the policy holder to exponential loss, that is risk of losing expensive ships, valuable cargo, damage to the environment caused by an oil spill, and loss of the life of seafarers.
As a way to minimize incurred losses, it is prudent to take up maritime insurance. In fact, it is mandatory for ship owners to take insurance.
Marine Insurance Variety
Below we list down on marine insurance that is available to ship owners.
This type of insurance offers coverage to both the hull and torso of the ship. The coverage also includes pieces of furniture and articles that are on board the ship. This type of insurance is usually taken out by the owner of the ship to avoid any loss in the event that any mishaps occur.
Under this insurance, all the machinery that is used in the operation of the ship is covered. Claims are usually compensated after approval by the surveyor.
The two insurances are usually bundled together as one to create the Hull & Machinery insurance policy. When combined, these two insurance covers can be used to extend strike and war risk covers.
Protection and Indemnity Insurance
This type of insurance cover is offered by the P&I club which is a mutual insurance association. P&I insurance offers a cover for risks that are not covered by H&M insurance.
Protection refers to risks that ship owners are exposed to for instance claims that are made by the crew while
Indemnity refers to risks the ship is exposed to when the ship is hired out such as cargo-related claims.
This type of insurance is designed to cover any losses that are caused by the ship colliding or crashing as well as other included attacks.
Freight, Demurrage and Defense Insurance
Also known as FD&D insurance or Defense, this type of insurance provides claims for legal costs costs for a number of disputes that are neither covered under P&I or H&M.
This insurance cover is designed to provide protection to freight companies in the event that the ship’s cargo is lost in an accident.
Marine Cargo Insurance
Like freight insurance, marine cargo insurance covers the goods on the ship nut in addition, it also offers for any losses that might be incurred due to delay in unloading of the goods or voyage. It also provides a liability cover in case the goods that are being transported damage the ship, port or other forms of transportation.
The time limit for claims varies from one marine insurance cover to the next. An agreement exists between a shipowner and the shipyard for newly built ships, that the shipowner has to buy an insurance cover for the ship starting on the date of yard delivery.