Just like a host of other industries, principles govern the insurance industry and how it functions. Principles are the very foundation on which the policies rest. Principles guide their operations, which regulate their distributions and make them reliable with interrelated parties and customers. In this regard, the marine insurance is no different. A marine insurance policy can impact several industries at one go – sellers, distributors, traders, law enforcement, tax authorities, buyers, insurers, logistics companies, and several other entities.
This is the reason why, to expedite a seamless lifecycle for every shipment, the industry needs to abide by the principles of marine insurance.
Understanding the principles of marine
There are broadly 6 principles of a marine insurance policy, of which the principle of good faith is considered an essential mandate commonly agreed among all the parties involved. It states that when two parties, the insured and the insurer, agree, all the cargo details shall be provided with utmost honesty. This is most important and more a fundamental that no one can ignore when talking about marine insurances.
Other than this, the other 5 principles of marine insurance are as follows:
Indemnity: Various types of marine insurance policies are specifically designed to protect against losses. Hence, the payable claims on these can never exceed the loss incurred by the policyholder. So, under this principle, the insured can never claim beyond their losses. This regulates the policy offering and does not allow the misuse of the policy in order to make unnecessary profits.
Insurable Interest: This principle justifies the insurer’s interest in the safe arrival of the goods at the end of the transit cycle. If the goods arrive on time and undamaged, the insured entity stands to benefit, and if they do not reach at their stipulated time in their described condition, the same entity stands to bear a loss. So, this principle guards the interest of the policyholder, be it loss or gain.
Proximate Cause: This is a very efficient and essential principle and it states that the insured will accept the nearest and most plausible cause for the damage in case one is incurred. This means that when you raise a claim for the damages incurred on your cargo, the insurer will calculate the proximate clause of the occurrence to judge if the claim is genuine. This principle in general is quite exhaustive and covers most proximities, so gaining a claim on genuine accidents will never be an issue for policyholders, with policies backed by this cause.
Subrogation: This principle further limits the scope to profit from an insurance contract. After disposing of the damaged goods, the net amount exceeding the actual price of the goods post the claim must be returned to the insurer under the principle of Subrogation.
Loss minimization: Marine insurance policies also cover complex transits and this principle guards the interest of both the insurer and the insured. Under this principle, someone having a marine insurance policy, is stopped from behaving reckless whenever an accident happens. It does not mean the person can act irresponsibly. It is important to abide by the policy terms to seek the maximum claim.
Apart from understanding the principles of marine insurance you should also check the inclusions and exclusions for the policy you are buying. Moreover, claim settlement in marine insurance is a big factor you need to consider and account for when buying the policy. So, when choosing the best marine insurance policy count in all the factors and get in touch with an agent like Akshar to help you decide better. Being the best marine insurance agent in Mumbai Akshar stands for its 65 years of legacy and brings that to the table to plan and suggest the best insurance policy for you. It is never a cookie cutter approach, but a personalized one well-suited to your nature of business and needs.
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