Warranties are an integral part of marine insurance policies. They are specific guarantees/assurances or undertakings by the insured (policyholder) that are important from the agreement's point of view. Policyholders need to strictly adhere to these warranties to ensure the validity of the insurance coverage. Failure to adhere to these warranties may result in the claim's rejection. Two key aspects in warranties to consider are voyage deviation in marine insurance, and the assignment of policy warranties.
Voyage deviation refers to any significant modification or changes in the course of a vessel's voyage which is not as per the agreed-upon terms and conditions of the insurance policy. When a vessel deviates from its originally planned route, it can significantly affect its risk profile, and ultimately, the insurance coverage.
It is crucial for policyholders to understand that any changes to their agreed-upon route, even if they seem reasonable, have the potential to cancel their insurance coverage. Insurers make coverage decisions based on the information provided during the policy's underwriting process, so any unreported changes to the journey may result in denied claims.
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Assignment of policy warranties is another important aspect of marine insurance that policyholders need to understand. When there is a change in ownership or interest, it may be necessary to assign a policy warranty. If the party who is insured decides to sell their vessel or cargo to a different party, it may be necessary to transfer the policy warranty to the new owner to maintain the continued effectiveness of the insurance coverage.
It is important to assign policy warranties correctly, and it involves informing the insurer and receiving their consent for the assignment. Failure to assign the policy appropriately may result in the new owner or party of interest not being covered, leaving the marine assets vulnerable to potential risks without insurance coverage.
A marine insurance policy typically covers the following general conditions and warranties:
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Rusting, oxidation, discolouration and corrosion are excluded unless caused by ICC(B) perils
Institute Replacement clause
Pair and set clause
Second-hand Replacement clause
Excluding Mechanical, Electrical and Electronic derangement except due to ICC (B)/ITC (B) perils.
Over-Dimensional Cargo Survey Warranty
Losses resulting from adulteration, contamination, and quality deterioration are excluded
Ensuring protection of goods from water damage during transportation in closed wagons or trucks covered with a waterproof material such as tarpaulin
Ensuring compliance with warranties is important for marine insurance policyholders to adequately safeguard their marine assets, and overall, the shipping business, in the event of unforeseen incidents.
Any deviation from the agreed-upon voyage without proper communication to the insurer may result in damages or losses that are not covered by the policy, potentially causing significant financial implications for businesses involved in marine activities.
Equally concerning is the failure to adhere to policy warranties related to the assignment of interest, which could leave the new owner or party without the necessary insurance protection, exposing them to significant risks.
For effective navigation of the intricacies involved in marine insurance warranties, it is recommended to seek the assistance of experienced insurance advisors who have specialised in marine insurance. These knowledgeable professionals can provide you with guidance on the specific terms and conditions of your policy and help ensure compliance with warranties.
Marine insurance warranties, including those related to voyage deviation and the assignment of policy warranties, are fundamental to the integrity of marine insurance contracts. Failure to adhere to these warranties may have severe consequences, and result in risks and danger to marine assets in event of emergencies.
At ICICI Lombard, we help policyholders understand these essential aspects of marine insurance warranties and connect them with expert advisors for timely advice to help ensure their marine insurance policies are effective, and to provide them with the required coverage.
Click here to secure your shipping business with the right type of marine insurance coverage and warranties today!
- Marine Insurance
- Product Code: 2005
- Product UIN: IRDAN115P0011V01200102