The essentials and types of a valid marine insurance policy are discussed in detail as follows :
Essentials of a valid marine insurance policy are :
1. A marine insurance policy must fulfill all the essentials of a valid contract, namely, agreement, competent parties, free consent, lawful consideration, and a lawful object.
2. It must be in writing and duly stamped.
3. The insured must have an insurable interest in the subject matter insured at the time when loss occurs.
4. It must not provide cover for more than twelve months at a time.
5. The contract of marine insurance is a contract uberrimae fidei i.e., a contract based on the utmost good faith of the parties. The insured must disclose all the relevant information to the insurer which is likely to affect his willingness to undertake the risk.
Types of marine insurance policy
The various types of policies as contained in the marine insurance act, 1963 are discussed below:
1. Voyage policy :
It is a policy which covers a particular voyage. Where the contract is to insure the subject-matter “at and from” or from “one port to another”, the policy is called a voyage policy. In such a policy, the time that the voyage will take is not taken into account at all.
2. Time policy :
It is a policy which covers a specified period of time. Where the contract is to insure the subject-matter for a definite period of time, the policy is called a “time policy”. A time policy made for any time exceeding 12 months shall be invalid. It may however contain a “continuation clause” providing that if at the end of the period the ship is at sea, the policy will continue till the safe arrival of the ship at the port of destination and for a reasonable a time thereafter.
3. Voyage-cum-time policy :
It is a combination of a ‘voyage’ and ‘time’ policy. Where both the policies viz; voyage and time policies, are included in the same instrument, the policy is called voyage-cum-time policy. It is a policy which covers the risk during a particular voyage for a specified period.
4. Valued policy :
It is policy which mentions the value of the subject-matter of insurance. In the absence of fraud, the value fixed by the policy is regarded as conclusive of the value of the subject-matter, as between the insurer and the assured, whether the loss be partial or total. But the value in the policy will not be conclusive when determining a constructive total loss. (section-29)
5. Unvalued policy :
It is a policy which does not specify the value of the subject-matter insured, but subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained. Such value had to be ascertained according to the provisions of section 18 of the act. It is also known as an open policy.
6. Floating policy :
It is a policy which describes the insurance in general terms and leaves the name of the ship or ships and other particulars are left to be defined by subsequent declaration. The subsequent declaration or declarations may be made by endorsement on the policy or in other customary manner. If there is no provision to the contrary in the policy, the declarations have to be made in the order of dispatch or shipments. In the case of goods, the declaration must comprise all consignments within the terms of the policy and the value of the goods or other property must be honestly stated. If the declaration of value is not made after notice of loss or arrival, the policy must be treated as an unvalued policy as regards the subject-matter of that declaration.
7. Wagering policy :
It is a policy which is issued when the assured has no insurable interest in the subject assured and has no expectation of acquiring such interest at the time of the contract. If the policy contains such words as “policy proof of interest” – “P.P.I.” or “Interest or no interest” or “without benefit or salvage to the insurer”, such a policy is a wager policy. Such a policy is void and valueless in a court of law, but such policies continue to be common. These are invariably honored by the underwriters. (section 6)