Procedure involved in taking out a Marine Insurance Policy
Table of Contents
Procedure for Taking out a Marine Insurance Policy
The procedure involved in taking out a Marine Insurance policy is quite simple and straight forward. The intervention of an insurance broker is not always required, though his service may be utilized by those who do not have knowledge about marine insurance practice.
Generally, the following steps are to be adopted while taking out a marine insurance policy:
- Selection of the Company
- Selection of Agent or Broker
- Marine Declaration Form
- Assessment of the Risk
- Payment of premium
- Issue of Cover Note
- Issue of Policy
Lets see the steps briefly.
1. Selection of the Marine Insurance Company
In India, the four subsidiaries of General Insurance corporation of India such as National Insurance Co., New India Assurance Co., Oriental Insurance Co. and United India Insurance Co. and some private general insurers are authorized to undertake marine insurance business. The person, who is willing to take a marine insurance policy will have to choose any one of the above mentioned companies.
2. Selection of Agent or Broker
After having chosen a suitable company for taking marine policy, the proposer will have to decide whether to take the policy directly from the concerned company or through an agent or broker. As the proposer is not aware of all the rules and regulations relating to marine insurance, he is forced to contact a nearby agent of the marine insurance company.
The agent, who possesses a specialized knowledge about the affairs and goings in the world, will provide necessary information to the proposer to take out a marine insurance policy without any difficulty. He will assist the proposer not only in the matter of taking policy but also offer sound advice on other matters. He charges a nominal amount for his services.
3. Marine Declaration Form
Generally, a proposal form is submitted with the marine insurance company to initiate the process of insurance. But in marine insurance, instead of proposal form, a Marine Declaration Form or Requisition Form is to be submitted with the insurer.
This form requires the proposer to give all the details about the risk such as name of the insured, the number of cases, the item, the port of destination, the value of the goods (which is IPO more than the actual value), the name of the carrying vessel, the place where the claim, if any, is payable in case of damage, marks on the goods to be shipped etc.
This information may either be sent over the phone or maybe sent in writing, which is handed over to the marine insurance company either directly or through the agent.
The agent will see that the declaration requisition form is in order and will pass on to the insurer. It is to be noted that the amount for which the marine insurance is effected is the cost of the goods together with shipping expenses plus 10% or 15% added thereto for anticipated profits.
4. Assessment of the Risk
Having received the Marine Declaration Form, the officials of the insurance company will evaluate the risk to be insured. The risk insured must be found to exist in the condition as is mentioned in the declaration form. The officials then, after ascertaining the amount of risk involved, will determine the rate of premium to be paid by the insured along with the stamp fee. These calculations are made on the back side of the declaration form filled up by the insured.
5. Payment of premium
Once the declaration form is accepted, the proposer is asked to pay the required premium fixed to the insurer. The premium maybe paid either in the form of cash or cheque or any other agreed mode of payment.
6. Issue of Cover Note
As soon as the proposer has paid the required premium, the insurer will issue a Cover Note, subject to the conditions of the company’s printed policy and the relevant institute clauses, if any, to the extent of the amount mentioned.
The cover note contains information about the name of the marine insurance company, the name of the insured, amount insured, name of the vessel, port of destination, port of departure, rate of premium etc. This cover note covers the property pending preparation of the final policy. However, the cover note will become void if policy is not received prior to or within 24 hours of the issue of transport carrier’s receipts.
7. Issue of Marine Insurance Policy
Finally, the insurer will prepare a final marine insurance policy on a proper form with full details and stamps and will hand over the same to the insured.