Marine Insurance in International Trade-Part IV

In the previous article,we had examined as to who has an insurable interest, and the type of marine insurance available in regard to international trade.   In this article, we shall take a look at the various types of insurance policies offered by insurers to support the four types of insurance.

Types of Marine Insurance Policies:

1)  Specific Voyage Po9licy:  As the name indicates, this marine insurance policy covers a particular voyage only.   The insurance cover becomes effective when the ship starts its voyage, and expires upon the delivery of the consignment at the place of destination.   It is a one off policy covering only one voyage.

This type of policy is suitable only for those who do not engage regularly in international trade, but only ocassionally.  

2)  Time Policy:  This policy is issued for a particular period of time, normally one year at a time.   The cover under this policy commences from the date and time as specified in the policy, and expires at the end of the stated period.

The assets covered under this policy would enjoy the same for the period of insurance, whatever the course of the voyage.   This policy, though issued normally for a period of one year, may be extended beyond this period, through suitable amendment.

3)  Mixed Policy:  Sometimes a mixed policy is obtained which covers the risk to the insured assets during a specific voyage, for a specific period of time.  It may also be insurance to cover two different types of risk, on land as well as by sea.

4)  Valued Policy:  In this policy, the value of the consignment is ascertained before hand and specified in the policy.   The insurance cover is thus restricted to such stated amount.

5)  Un-Valued Policy:  In this policy, the value of the consignment is not specified in the policy.   Rather the insured is favored with a specific amount of insurance within which he may forward the goods for export.   The value of the goods on a particular voyage is ascertained as and when there is a claim.

6)  Floating Policy:  Also called ‘open policy’, it is popular with merchants and exporters who regularly export goods.   It is convinient for them to obtain a floating policy that offers cover for a specific amount, without reference to the cargo, or the voyage, or the ship.  

Every time a consignment is exported, the details of the same must be conveyed to the insurer, in advance, who takes congnizance of the same, and provides for the necessary cover for the stated cargo on the specific vessel, for the concerned voyage, within the overall limit fixed for the particular customer.

7)  Wagering or Honor Policy:  Normally, only a person with insurable interest is eligible to obtain insurance.   For example, a ship owner for the ship, and the cargo owner for the cargo, and so on and so forth.   Sometimes, an insurer issues a policy to a person without insurable interest, without benefit of salvage to himself (the insurer).

8)  Sellers’ Contingency Policy:  This is policy meant to protect the interests of the seller, who may find it difficult to get payment for the goods supplied to the buyer, on account of a change in the quality etc of the goods, for different reasons.

Where the seller of the goods, affords credit to the buyer in an export transaction, but the goods are exported on  F.O.B basis, a peculiar situation arises,  where the  ownership of the goods remains with the seller, but the responsibility for the goods passes on to the buyer.  In such a case, if the buyer does not accept the goods, citing reasons of damage to the goods, then the seller stands the risk of losing money.   The Sellers’ Contingency Policy is meant to address this risk, and protect the interests of the seller.

                                                                                           To be concluded