There are four main kinds of marine insurance policies. They are:
1. Freight Insurance
This type of marine insurance deals with the loss of freight or cargo due to perils of the sea or other causes during transit. Freight insurance can be taken by the shipowner, the consignor, or the consignee, depending on who bears the risk of cargo loss. This insurance can be either specific or open, depending on whether it covers a single shipment or multiple shipments under a single policy.
2. Liability Insurance
This type of marine insurance policy deals with the insured's legal liability from bodily injury or asset damage to third parties due to the insured's or their agents' negligence or fault during maritime operations. Liability insurance can be taken by shipowners, charterers, operators, managers, or other parties involved in maritime activities. Some of the common types of liability insurance are:
Protection and Indemnity (P&I) Insurance
This is a type of liability insurance that covers the shipowner's legal liability for personal injury, death, illness, or loss of or damage to property of third parties, as well as pollution, collision, towage, salvage, and other maritime risks.
Suppose a shipowner's vessel causes oil spillage in the sea, damaging the marine environment and other vessels. In that case, the shipowner can claim P&I insurance to cover the clean-up costs and compensation.
Charterers' Liability Insurance
This type of liability insurance covers the charterer's legal liability for loss of or damage to the chartered vessel, cargo, or third parties arising from the charterer's negligence or breach of contract.
For example, suppose a charterer hires a vessel and causes damage to it by loading improper cargo or providing an unsafe berth. In that case, the charterer can claim the charterers' liability insurance to cover the costs of repair and indemnity.
Ship Repairers' Liability Insurance
This type of liability insurance covers the ship repairer's lawful liability for loss of or deterioration to the vessel or its equipment under the repairer's care, custody, or control.
For example, suppose a ship repairer damages a vessel's engine or hull while performing repairs or maintenance. In that case, they can claim ship repairers' liability insurance to cover the costs of restoration and compensation.
3. Hull Insurance
This marine insurance policy covers the loss or deterioration of a vessel's hull and machinery due to the sea's perils or other causes. Hull insurance can be taken by shipowners, mortgagees, or other parties with an insurable interest in the vessel.
This kind of plan can be either total loss only (TLO) or all risks, depending on whether it covers only the total loss of the vessel or partial loss or damage.
4. Marine Cargo Insurance
Marine cargo insurance, as the name implies, covers the loss or damage to goods or merchandise being transported by sea due to perils of the sea or other causes. This plan is ideal for exporters, importers, buyers, sellers, or other parties with an insurable interest in the cargo.
Marine cargo insurance can be either specific or open, depending on whether it covers a single shipment or multiple shipments under a single policy.
