This type of insurance provides the necessary protection for trade, where marine insurance covers cargo transported by sea, land, air or rail. This insurance cover protects cargo-owners against losses their merchandise may suffer during transport or shipping caused by perils, which are included in the insurance policy.
As for the types of documents marine insurance offers, the marine insurance policy has adopted the MAR Form, which was developed by the Institute of London Underwriters. This Form includes sets of conditions that provide insurance protection for all types of marine insurance within three groups:
- A set of Institute Clauses that provide insurance coverage and protection against risks of transit (Institute Transit Clause),
- A set of Institute Clauses that provide insurance protection against war risks (Institute War Clauses)
- A set of Institute Clauses that provide insurance coverage against risks of strikes (Institute Strikes Clauses)
Procedure for Obtaining Marine Insurance Policy:
- Issuing the Insurance Policy:
Applying for a marine insurance policy can be conducted in one of two ways:
- The client asks the bank to issue a documentary credit; then the bank would notify the insurance company of the cargo details, the destination, sum insured, types of coverage and any other conditions the bank requires.
- The client insures cargo directly by submitting the necessary documents including the invoice, the bill of lading or any other document that confirms the name of the client, method of shipping, description of goods, packaging of goods, the destination and value of sum insured.
The insurance company and the importer/exporter then agree on the type of coverage and the premium to be paid.
Subsequently, the insurance company issues the insurance policy with the agreed-upon terms in three copies along with the invoice signed by the person authorized by the insurance company. The original copy, stating all terms and conditions, shall be provided to the bank.
In the case of insuring directly, the original copy with the invoice would be provided to the client. A copy would then be filed at the issuing department and the invoice sent to the accounting department of the insurance company.
- Marine Insurance Claim Procedure:
- Filing a claim: The insured notifies the insurance company (the Claims Department) by phone or in writing. Following that, a written notification of the insured losses, including initial details of the damages, the value of indemnity and details of the insurance policy.
- The required documents: All original documents pertaining to the accident should be submitted including: the insurance policy, commercial invoice, bill of lading, Certificate of Origin, packing list, customs declaration, letter of protest against the vessel’s agent and/or the airline agent or the sea carrier. The insurance company then files all these documents together under a special record for the accident.
- On-site inspection: The insurance company’s claims officer inspects the damaged goods to identify and assess the value of damages.
- Assigning a loss adjuster: A loss adjuster is required to examine damages in case the claim exceeds JOD 5,000 (as per the instructions of the Insurance Directorate – formerly the Insurance Commission).
- Reinsurance procedures: the insurance company shall notify the reinsurer and distribute the amount of compensation in line with the agreements.
- Subrogation: In case damage was caused by a third party, the insurance company seeks to recover the paid claim and distributes it in accordance with provisions of the original insurance document.
- Payment of the claim: The insurance company and the claimant approve the estimates of the claim. Then the insurance company confirms paying the claim and the insured signs a discharge stating that they have received the amount of compensation.