A Comprehensive Guide to Warranties in Marine Insurance

New Delhi [India], August 22: Marine insurance is a contract between the insured and the insurer, under which both parties must fulfil their obligations for the contract to remain in force. Warranties are one such assurance on the part of the insured, which he must fulfil to receive the compensation under the marine insurance policy.

Both the insured and the insurer must have a clear understanding of various aspects of the insurance contracts to ensure that neither of them falls short of their obligations. Here is a comprehensive guide on what warranties are.

What Are the Warranties in Marine Insurance?

Warranties are guarantees or assurances provided by the insured. They are promises and commitments that an insured makes related to the condition or use of the insured vessel or ship.

If the insured fails to comply with the warranties or breaches them, the insurer can refuse to pay out the claim under the freight insurance. Under marine insurance, the warranties may either be implied or expressed. Let us know both types of warranties in detail below.

Types of Warranties

Implied Warranties

Implied warranties are inherent promises that are deemed to be a part of the insurance contract. While they are not explicitly stated, they are fundamental and automatically applicable and must be adhered to by the insured.

1. Seaworthiness: It implies that the vessel or ship must be fit at the commencement of the journey. It must be free from any kind of incompetence or faults before the voyage.

2. No concealment: The insured must be truthful and transparent. He must not conceal any material facts or misrepresent any information that may affect the risk.

3. Legal voyage: It is assumed that the voyage undertaken by the insured is legal and that there is no engagement in any illegal activities during the journey.

4. Warranty of insurable interest: It means that the insured must have an insurable interest in the subject matter of insurance. And that any loss or damage to the subject matter will affect him financially.

5. Warranty of good faith: It means that both parties will act in good faith and be truthful throughout the contract.

Express Warranties

Express warranties are those that are stated or expressed in the insurance document. These warranties are mentioned in the insurance document, which is agreed and signed by both parties.

1. Cargo description The nature and description should be accurate and true. Any discrepancy or deviation can lead to a breach of warranty.

2. Voyage warranties: The route of the voyage or journey must be disclosed correctly. If there is any deviation in the route and damage or loss occurs, it may not be compensated due to a breach of warranty.

3. Notification warranty: This requires the insured to notify the insurer about any changes or developments in the voyage, etc., that occur within the specified time range.

4. Usage and purpose: The usage and purpose of the vessel must be clearly communicated while entering the insurance contract.

5. Regulation compliance warranty: The insured must promise to comply with the regulations and laws during the course of the voyage.

6. Qualification of the crew: The insured must make sure that the vessel's crew meets the qualification requirements and has the skills to undertake the voyage.

Importance of Warranties

• Risk alleviation: Warranties help the insured mitigate the risks associated with the voyage, as he can understand that any deviation from the warranties can lead to a breach of contract, and he may not get compensation.

• Legal boundaries: Warranties, whether expressed or implied, create legal boundaries for both parties, helping them to understand their role and the outcomes that will follow.

• Ease of claim settlement: When the insured knows his responsibilities, it makes the claim settlement process simpler. There are fewer chances of disputes and legal battles as the rights and responsibilities are clear.

• Regulation compliance: Warranties lay down the obligations of the insured, which must be complied with to meet the requirements of the national and international maritime regulations.

TATA AIG Marine Insurance: Your Chance for a Worry-Free Maritime Business

Warranties are an assurance that the insured gives the insurer and are of two types: implied and expressed. Compliance with both types is crucial to receiving compensation in case of a loss.

Just like warranties play a crucial role in marine insurance, choosing the right insurance provider to get the desired coverage is also of paramount importance. And if you are also looking for the right insurer, then TATA AIG is the answer.

They provide comprehensive insurance cover for your cargo and vessel, ensuring you are protected from huge financial losses. With affordable premiums and simple claim processes, their marine insurance is suitable for all those involved in the maritime business.