6 Principles of Marine Insurance You Must Know

Don’t let the word ‘Inland Marine’ confuse you. It covers materials and equipment that are transported overland by a truck or train. The policy plays a crucial role by covering the damage or loss to the goods of the policyholder, such as equipment and raw material, during transit as per the contract. An Inland marine Insurance policy typically covers goods that are domestically transported. 

Five Basic principles that govern the inland marine insurance policy are:

  • Utmost good faith

Each party must observe and display the utmost good faith and disclose correct information while filling inland marine insurance policy documents. If the party fails to disclose accurate information, the insurance company shall have every right to reject the policy.  

  • Indemnity

It means that only the amount of loss suffered will be compensated to the insured. The party is not allowed to earn profits from the insurance policy.  The underwriter provides an allowance for compensating the insured in cash, while not removing the cargo. The value of the subject matter is determined at the time of policy purchase. Sometimes, the cost may be measured at the time of loss.

There is one exception to the indemnity principle. It is also allowed to include a specific portion of the profit margin in the value of goods. It is assumed that upon reaching its destination, the insured party will receive the profits.

  • Insurable interest

The policyholder must have some insurable interest in the subject they want to purchase. It means the policyholder should benefit from the safe arrival of goods and may suffer losses due to damaged goods.

Parties who must have an insurable interest under an inland marine insurance policy:

  • Cargo owners
  • Shipowners
  • Shipping company

 

  • Subrogation

It is the transfer of the right to the insurance company that has indemnified concerning the losses. Subrogation follows the principle of indemnity, where the insured must not make any profits from the damage that occurred. For instance, furniture is insured for Rs. 10 lacs against fire. If, in any case, the furniture burns down, the insurer will have to pay the full amount to the insured party. You can’t sell the burnt furniture further or the entire sale amount will go to the insurance company.

  • Proximate cause

When a variety of factors have led to the loss, it helps in determining the actual cause of the loss. An immediate cause of loss to the goods is determined to resolve the insurer’s responsibility. The remote cause of failure doesn’t matter when assessing the liability. The insurer must indemnify the damage against the proximate cause of inland marine insurance policy. For example, goods are destroyed by fire and the insured party does not make profits. In such a case, fire is a payable cause, whereas market losses incurred are remote causes that are non-payable.

  • Loss Minimization

The policyholder must take appropriate steps to curb and mitigate losses. During any such incident, the policyholder must not behave irresponsibly only because the property is covered under an inland marine insurance policy.

Inland marine insurance policy is a security for your goods that are in transit through roads. Businesses and individuals must purchase the policy for safety against unforeseen losses. SecureNow is one of the reliable insurance brokers that offer an inland marine insurance policy. It provides a competitive price range for all plans with better claim settlements. The inland marine insurance policy is a must to cover your goods for losses during domestic transit, including warehouse storage.

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