Marine cargo insurance covers things as they move from one place to another. The word "marine" makes you think of the sea, and that's exactly what the people who wrote the Marine Insurance Act of 1906 (MIA) had in mind. Even though the Act's first parts talk about "marine losses," "marine adventures," and "maritime perils," marine insurance departments also cover property that is moved by planes, cars, and trains. Many transits, especially international ones, need two or more kinds of transportation, and the Act allows for that.
So, marine cargo insurance is a type of property insurance that protects goods while they are in transit against loss or damage caused by risks related to travel by sea, air, land, and inland waterways. The Act doesn't say anything about pure land-based transits or air travel. So, to make sure the Act applies to all types of transportation, there is usually a clause in the policy document that says it is valid in all situations.
"Maritime perils" refers to risks that come with or are caused by transporting goods by sea. It covers perils of the sea (like sinking, getting stuck, colliding, etc.), fire, war perils, pirates, thieves, being captured, thrown overboard, and washing overboard, as well as "any other perils either of the same kind or that may be named by the policy."
With this last sentence, insurers can choose to include other risks in their policies, like those that are specific to other types of transportation, like crashing, derailing, and flipping over. But it should be said that the normal movement of wind and waves is not thought to be a danger of the sea.
So, what exactly is the "property" that marine cargo insurance covers? The Act calls it the insured subject-matter. Essentially, it can be anything that is being moved from one place to another. Most of the time, it's raw materials and parts that are going in or finished products that are going out.
The genre for this kind of property is "Goods and or Merchandise," which means that it is about things that are sold. You can also insure your own equipment, such as machinery, office furniture, samples, engineers' tools, and materials for an exhibition. Almost everything has moved, and because of this, a marine cargo policy can cover almost anything that has moved.
Who can get cargo on ships insured?
Section 5 of the Marine Insurance Act of 1906 (MIA) says that anyone with an insurable interest can get a marine policy to cover that interest. This raises the question, "Who has a risk that can be insured?" The Act goes on to say that a person is "interested" in an adventure if he or she has a legal or fair connection to it that means he or she may benefit from the safe arrival of the property or be hurt by its loss.
Think about a person who makes things and sells them. He can get insurance on those goods until he gets paid for them, even if they are on their way away from him. Up until the point of payment, he stands to gain if the adventure goes well or lose if it doesn't. So, he meets the requirements to get his interest covered by a marine cargo policy.
In the same way, his buyer also has an insurable interest, or more accurately, an expectation of getting one, so he or she can also get marine insurance. The Act says that an assured (not an insured) must be interested in the thing that is insured at the time of loss, but he doesn't have to be interested when the insurance is taken out (MIA section 6).
So, if something gets broken while it's in transit, you have to look at the terms of sale or purchase to figure out who had the insurable interest at the time of loss.
Besides the buyer and seller, other parties with an interest can also buy insurance up to the level of their insurable interest. For example, shipping and forwarding agents, carriers, and other bailees who were given the property to care for and hold, as well as charterers and other ship hirers, will all be interested in the adventure because they could be sued for failing to deliver.
The Act is interesting because it talks about insurers who have a stake in the success or failure of an adventure because of their policy. This means they can insure (or in their case, re-insure) their insurable interest (MIA section 9).
If there is neither an insurable interest nor a reasonable expectation of getting one, the marine insurance is seen as a gambling or betting contract and is therefore ruled to be invalid (MIA section 4).
How and why does one party give a marine policy to another?
"Assignment" is the word used to describe this process.
When an exporter sells goods overseas, he can either leave it up to the buyer or himself to arrange insurance, or he can buy insurance that covers the whole trip, but the benefits go to the buyer when the insurable interest moves from him to him.
Under some terms of sale, like Cost Insurance and Freight, the seller agrees to pay for cargo insurance that the buyer or anyone else with an insurable interest in the goods can claim directly from the insurance company. The seller also gives the buyer an insurance policy or certificate so that the buyer can make a claim.
This is different from most other property insurances, where the owner stays the same for the whole time the property is covered. Claim money is given to the person listed on the policy. But the marine policy has to allow for changes in ownership when goods, which are covered by the policy, are bought and sold.
Because of this, a marine policy can be given to someone else unless it says otherwise (Marine Insurance Act of 1906, Section 50).
There are two more pieces of information on the insurance certificate. First, it gives the name and address of the insurance company's claims representative in the country of destination. Second, the policyholder will sign the certificate, usually on the back, so that the certificate can be used by the buyer.
This means that if the goods are lost or damaged in transit, the buyer can get paid as if he were the original assured. From the insurance company's point of view, this means that claims are paid to people in other countries who are not the named assured.
So, not only does it prove that a message was sent under an Open policy, but it also acts as a title document that lets the person who owns the original version get paid. It also tells the insurance company what they need to know to figure out the policy rate and charge the premium.
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