What Is Ocean
Ocean marine insurance is a type of commercial transportation insurance that has the authority to cover the transportation of merchandise and goods by the use of vessels. This insurance includes coverage for ships that are used to cross both the domestic and foreign waters, which are generally associated with the shipment.
Ocean marine insurance could cover four types of the insured’s interest: (1) the hull or the vessel itself, (2) the cargo or the goods that are carried by ship, (3) the revenue that the shipowner must receive, (4) the legal liability of the carrier or the shipper. In conclusion, ocean marine insurance coulOcean Marined provide funds whenever your cargo or your ship incur losses. However, like any other commercial property insurances, damages to the hull due to wear and tear —is a general exclusion from coverage.
Ocean Marine Insurance Coverages
This coverage could help the insured for the repair of the damages to its vessel. Hull coverage would cover losses to the ship if the damages are due to specific perils only including losses due to bad weather, losses due to colliding with other vessels or objects, and losses while the ship is berth-off on its designated places on a marina bay.
Usually, in the United States, there are provisions that a marine hull could only be covered if it is sailing within a geographic limit only. Therefore, to prevent any gap whenever a loss occurs —you should thoroughly understand your ocean marine policy.
Coverage to cargo is generally written on an open contract basis. This contract specifically includes coverage for both incoming and outgoing shipments —for the shipper’s interest. However, the shipper must expose the total value of these shipments and must pay its premium based on the value of its cargoes.
Additionally, this particular coverage has an open cargo certificate —which states that the insurance coverage could automatically be transferred to the entities who have the legal title to the cargoes —over the course of shipment from the seller to the buyer. In conclusion, coverage applies when the cargoes of the vessels procure damages or losses while in the course of transiting the goods.
Generally, freight revenue could be insured in several ways. If the shipper has an obligation to pay the freight bill of the carrier, regardless of whether the goods are not delivered, a part of the value of the cargo is declared as part of the freight and would be insured as of this value. Thus, if the freight revenue is contingent upon the delivery of the goods, the insurance provider would ensure the freight losses as part of its hull coverage.
Running Down clause or also known as liability coverage would cover the shipper or the common carrier’s legal liability due to claims following a collision. Thus, collision damages to the insured vessel itself are prohibited from this coverage, because the hull coverage would cover the costs to the insured vessel.
This particular clause could cover the shipper’s negligence to the property of the others. Also, in the protection and indemnity clause, the negligence of the insured that results in bodily injury of a third party person is applicable for coverage.
There are specific perils that ocean marine insurance could cover, specifically what they called the risks of the sea. Ocean marine insurance covers the following perils:
- Damages due to fire, enemies, rovers, pirates, and thieves;
- Jettisons or forgoing of some cargoes to lighten the load of the ship, to prevent the vessel from incurring a total loss;
- Barratry of the master mariners;
- And, any other perils that could result in misfortunes, detriment, or damages to the declared merchandise and goods, etc., or any other objects that are grounds for shipment, or any part thereof.
Although this commercial insurance was declared as, like an all-risk basis, provisions have declared to cover only the perils that are mentioned. Also, damages due to fire could only be covered if mentioned explicitly on the policy.
Furthermore, even though this clause indicates coverage for losses due to “enemies, rovers, pirates, and thieves,” the policy specifically excludes coverage losses due to war. However, if you are worrying that you might encounter a war in the future, you could purchase a war risk insurance policy from some nations through agencies of government.
Furthermore, there are modernized and revised clauses —that restrict coverage from losses that are due to poor packing of cargoes. This revised clause also considered losses that are due to the insolvency of the common carrier, as a general exclusion from coverage.
This clause of ocean marine insurance obliges the insurers of interest to share the cost of total losses —that results from saving the vessel from total destruction. However, the sacrifices that were planned voluntarily must result in a successful save of the vessel. For further illustration, if the shipper’s cargo voluntarily jettisoned or omitted some of its cargo in order to prevent the vessel from incurring total destruction. The general average clause will require all the party of interests and the insurer to pay an amount as part of the contribution to reach the cost of losses of goods that were sacrificed.