What is time policy in marine insurance?

PNN

New Delhi [India], October 7: You run a successful import-export business, and a large shipment of valuable goods is set to sail across international waters. However, the unpredictability of the sea lingers in your mind. What if a storm damages the cargo? What if your ship faces an accident? To safeguard your business, you opt for marine insurance--specifically, a time policy that provides coverage for a set period. But what exactly is a time policy and how does it work? Let's discuss.

What is the time policy in marine insurance?

Marine insurance protects against risks and potential financial losses like damage to ships, cargo and other property involved in international or domestic transportation. Whereas, a time policy in marine insurance defines the specific duration for which the insured remains covered under the terms of the agreement. Some of the key features of time policy coverage are detailed below:

General inclusions

The time policy extends coverage in the following scenario:

- Protects against losses resulting from a change in the agreed route or destination due to unforeseen circumstances.

- Covers losses during the temporary suspension of transit due to port strikes or adverse weather conditions affecting safe passage.

- If your vessel suffers structural damage or engine failure, this coverage helps pay for repairs or replacements.

- If your ship causes damage to another vessel, port or third party, this coverage helps you pay for legal claims, settlements and compensation.

- If your vessel is wrecked or needs emergency salvage operations, this coverage pays for the costs of removing debris and recovering valuable parts.

Voyage cover

Under the time policy, the insurer covers the voyage for a specific duration, usually one year. Unlike a standard voyage policy, which is a single transit insurance and covers only a particular trip, a time policy insures the 'n' number of trips within a policy period.

For example, you own a shipping company and have insured your vessel under a time policy for one year. During this period, your ship is scheduled for multiple trips--Mumbai to Dubai, Dubai to Singapore and back. Your ship encounters a storm and gets damaged while sailing from Dubai to Singapore. Since your time policy is active, the insurer will compensate you, regardless of whether it was your first or fifth journey within the insured period.

Continuance clause

The Continuance Clause extends coverage beyond the initial policy period, particularly when the insured vessel is still on its voyage when the policy expires.

Suppose you have insured your cargo for a three-month voyage across the Atlantic. However, during the journey, your cargo ship encounters a storm that delays its arrival by two weeks. In this situation, the continuance clause ensures that your goods are safely unloaded at the port. If the cargo sustains any damage, the insurer will compensate the losses up to the limit specified in the policy.

Who needs a time policy?

A time policy is beneficial for:

- Shipowners who use their vessels for multiple trips throughout the year.

- Cargo transporters who manage frequent shipments.

- Businesses engaged in regular import/export via sea routes.

- Logistics companies that rely on maritime transport.

How to raise a claim under a time policy in marine insurance?

You can raise a claim for time policy using the steps outlined below:

- Step 1: Inform your insurance company immediately after the loss or damage occurs.

- Step 2: Submit a written claim with relevant documents, including the policy number, voyage details and cargo or vessel information.

- Step 3: The insurer will appoint a licensed marine surveyor to inspect the damage, who will verify policy coverage and submit a report.

- Step 4: Submit necessary documents such as:

*Insurance Policy Copy

* Bill of Lading or Shipping Invoice

* Surveyor's Report

* Repair Bills or Loss Estimates

- Step 5: The insurer will review the claim, surveyor's findings and submitted documents.

- Step 6: The insurer will compensate based on policy terms upon approval. The amount is transferred to the insured party.

Common exclusions of time policy in marine insurance

Some scenarios where the time policy coverage does not apply are:

- If your vessel is not deemed fit for the voyage at the start, losses due to this condition will not be covered.

- Insurance generally does not cover losses caused solely by delays caused by missed opportunities or contractual penalties due to late delivery.

- Damage or loss from war, civil unrest or labour strikes are typically excluded.

- Losses resulting from illegal acts, such as smuggling or unlawful trade, are not covered.

- The policy does not cover damage or loss caused by nuclear weapons or nuclear reactions.

- Your insurance provider can reject claims if you knowingly violate shipping agreements, such as failing to follow approved routes or mis-declaring cargo.

- The insurance policy will not cover the loss if customs or government authorities seize, detain or confiscate your ship or cargo due to legal violations.

Conclusion

A time policy in marine insurance offers comprehensive coverage over a specified period, safeguarding against various risks like accidents, route deviations and transit interruptions. It benefits businesses with multiple voyages by ensuring continuous protection, including salvage operations and legal liabilities. However, it is important to assess the exclusions carefully, ensuring you're not caught off guard by risks that fall outside the policy's scope. By aligning the policy with your business needs and fully understanding the coverage limits, you can ensure that your maritime operations are well-protected and your business remains secure in the event of an unexpected incident at sea.

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