Beau Swan
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Marine insurance is a type of insurance that covers boats and ships, as well as their cargo and in some instances the places where the boat or ship is docked. It has a colorful history, beginning informally in England during the 17th century. In 1906, the Marine Insurance Act was passed under British law, creating a standard operating procedure for policies that dictates the world's policies to this day. The standards set forth by the act are considered reasonable, but due to changes in technology and social standards, the act is generally seen as obsolete and is being replaced by more modern legislature.
There are several varieties of insurance that can be taken out by a boat or ship owner. Marine cargo insurance covers whatever goods the boat is carrying. Inland marine insurance can be procured for floating vessels that are not ocean-bound, but travel primarily on lakes, rivers and reservoirs. There are also more general policies that cover the boat itself and its passengers, liability for damages to other moving vehicles and liability during an encounter with a non-moving object. These all fall under the heading of a marine insurance policy.
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Paul starts by defining a few terms Cregg needs to understand. Perils are risks. Insurance policies have covered and excluded perils. When Cregg receives his marine policy, it's imperative he review the policy to understand coverages and exclusions. Open cargo is another important term; it means the insurer agrees to pay for covered losses incurred for a specific period of time when the insured provides an average value and pays the premium. Cregg asks Paul to define and explain 'premium'. Premium represents the cost of coverage. Premiums are typically paid monthly, quarterly, or annually for most insurance policies. For marine insurance, the company may require a premium per shipment.
Paul now explores the types of marine property coverages:
Hull protects the vessel during transportation within a specific geographical location. Out-of-region and international locations are typically excluded unless stated.
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Open Policy – The inland marine insurance policy covers the inland movement of a consignment for a specified duration of time, which is generally of one year. The policy is apt for companies which are indulging in numerous transactions around the year as it also offers continuous cover.
Comprehensive Protection – The policy offers protection against various types of losses or damages like a total loss of goods, partial loss of goods, related expenses while still in transit, etc.
Customisation – As per your business requirement, it is feasible to customise the policy.
Mark up Value – The policy allows a portion of profit to be included in the sum insured. It is known as a mark-up in the marine insurance industry.
source: https://securenow.in/insuropedia/what-is-marine-insurance
Coverage
Marine insurance is a lot like any other kind of insurance: It guards against damage to or loss of something of value. It can cover ships, cargo, terminals or ports. It can even cover pipelines and oil platforms.
Protection and Indemnity
This kind of insurance covers any damage to cargo the ship is carrying; it protects the ship’s owners from liability resulting from the injury or death of anyone on board the ship; and it covers infrastructure, like piers and bridges, damaged by the ship.
Vessels
The ships themselves are insured with hull insurance. The common clauses in policies cover damage related to fire, collision, sinking and stranding. In collision clauses, the insurance extends to both ships involved.
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Marine insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman marine loan. it was the oldest risk hedging instruments our ancestors used to mitigate risk in medieval times were sea/marine (Mutuum) loans, commenda contract, and bill of exchanges.Separate marine insurance contracts were developed in Genoa and other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied with intuitive estimates of the variable risk from seasons and pirates. Modern marine insurance law originated in the Lex mercatoria (law merchant). In 1601, a specialized chamber of assurance separate from the other Courts was established in England. By the end of the seventeenth century, London's growing importance as a centre for trade was increasing demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house on Tower Street in London. It soon became a popular haunt for ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping news.
Open cover is a type of marine insurance policy in which the insurer agrees to provide coverage for all cargo shipped during the policy period. Open cover insurance is most commonly purchased by companies that make frequent shipments, as the blanket coverage keeps them from having to purchase a new policy each time a shipment is made.
BREAKING DOWN Open Cover
Open cover policies are commonly used in international trade, specifically by companies involved in high volume trade over long periods of time. Companies purchase this type of coverage because it eliminates the need to negotiate terms of a new policy each time a shipment is made. Since the insured is agreeing to purchase a longer-term contract, it may be able to realize lower premiums because the insurer does not have to spend time on administrative activities and because the insurer benefits from a having a guaranteed premium over a longer period of time.
