Marine Insurance and Aviation insurance are two different types of insurance policies that provide financial protection from various unforeseen circumstances like disasters, specified loss, damage and the like.
Marine Insurance vs Aviation Insurance
The main difference between Marine Insurance and Aviation Insurance is that the former covers for losses or damages related to ships, terminals, cargos, other risks in marine services. While the latter covers for damages or losses related to aircraft operations and other related risks in the Aviation industry.
A Marine Insurance provides coverage for any damage or loss caused to ships, cargos, terminals and any other water transport with the help of which goods and assets are transferred, received and held between various points of origin and the final terminus.
An Aviation Insurance provides coverage for damages and losses related to the ownership, maintenance and operation of aircraft or other flying machines which includes hangars, airports, injury to people and cargo loss or damage.
Comparison Table Between Marine Insurance and Aviation Insurance (in Tabular Form)
| Parameter of Comparison | Marine Insurance | Aviation Insurance |
|---|---|---|
| Definition | It is a form of indemnity that covers the losses incurred due to damages caused to ships and other ocean crafts, cargos and terminal and other vessels that may be used to transfer goods from a point of origin to the final terminus. | It is a type of insurance that covers for losses incurred due to damage caused to aircraft, hangars and other related risks in the ownership and operation of an aircraft. |
| Industries served by them | Marine Industry | Aviation Industry |
| First introduced in | 4th Century BC | Early 20th Century AD |
| Significance | Protects from unforeseen disasters like turbulent weather, piracy, shipwrecks and the like. | Provides coverage for unanticipated circumstances like weather hazards, terrorist hijacks, technical failures etc. |
| What is not covered? | The loss incurred due to purposeful acts of misconduct and negligence, cargo damage due to improper packing and delays. | Losses incurred due to mechanical breakdown of engines or other pieces of equipment, , wearing out of tires and breaks, fading out of paint and electrical or mechanical breakdown. |
What is Marine Insurance?
It is a type of insurance that covers for any damage or loss caused to ships, cargos, terminals and other water transports used for transferring, acquiring or holding goods between a point origin and the final terminus.
Circumstances like turbulences in weather, piracy and trans-boundary conflicts are very recurrent in water transportation. Despite taking precautions, following laws and safety rules and regulations, one cannot defer such unforeseen circumstances.
Unfortunately, the cost of the damage related to such circumstances like loss or damage of cargos, environmental damage due to oil leak and danger to the lives of seafarers and so on are so high that one cannot meet them without incurring huge losses.
It is in this situation that a Marine Insurance can play the role of a life saviour. It provides the ship owners and transporters with the financial support that are needed to meet the possible losses caused by such unforeseen disasters.
Marine Insurances are mainly of the following types:
- Hull Insurance: It is availed for physical damages caused to the vessel especially, the hull and the torso. Owners of ships and other commercial ocean crafts are the main purchasers of this kind of insurance as it protects from losses caused by physical damages to the ships.
- Machinery Insurance: It covers all the essential pieces of machinery and claims can be made in case of operational damages which are then compensated after a surveyor examines those damages and gives approval.
- Protection & Indemnity (P&I) Insurance: It is extended by the P&I Club that serves as the mutual insurance of the ship owners. It covers the losses to the third party and risks that are otherwise not covered under any standard H&M insurance policy.
- Indemnity: Risks connected to the hiring of the vessel e.g. claims related to Cargo.
- Protection: Risks concerning ownership of ships and other ocean crafts e.g. problems related to the crew
- Freight, Demurrage &Defence Insurance (FD&D): It covers legal and other related costs required for resolving disputes that are otherwise not included in standard P&I and H&M insurance policies.
- Liability Insurance: It is availed on account of attacks on ships or collision between ships or crashing of ships.
- Freight Insurance: It protects the ship corporations against liabilities caused by freight loss due to ship accidents.
- Marine Cargo Insurance: It specifically pertains to the cargo carried by vessel and covers the loss incurred to the cargo owner due to unforeseen delays in voyages or ship accidents.
Owners and transporters of vessels, ships and other ocean crafts can avail marine insurance coverage according to their needs such as the size of the vessel or ship or the routes taken.
What is Aviation Insurance?
It is a form of insurance that covers the losses incurred from property damage, cargo loss or any kind of injury to the people.
In today’s fast-paced world, air travel has become an unavoidable part of life. But unfortunately, air travel is not without risks. Turbulences in weather, hijacks and failure in technical operations of the aircraft are some of the life-threatening dangers related to aviation.
Therefore, it is important to avail an all-encompassing Aviation Insurance Policy to deal with such unforeseen circumstances.
Some of the most favoured Aviation insurance policies are as mentioned below:
- In-flight Insurance: This is the most expensive insurance policy as it covers the damages caused to the aircraft when it is in the middle of a journey and such damages are very recurrent.
- Ground Risk Hull Insurance in motion: It covers the damages caused to the aircraft when it is in motion. But such motions do not include takeoff or landing.
- Ground Risk Hull Insurance not in motion: It covers for the damages caused to the aircraft when not in motion like damages caused by natural hazards, fire, collisions and the like.
- Passenger Liability Insurance: This insurance policy has been made mandatory by the government for commercial flights as it provides coverage to the passengers who face injury or death in a flight.
- Public Liability Insurance: Also known as third party liability, it covers the damages caused to the property and assets of third parties like cars, houses and other aircraft and so on by the accident of an aircraft.
- Combined Single Limit (CSL): It is a flexible insurance policy that provides both passenger and public liability insurance within a single coverage.
- Aviation Personnel Accident: It is provided to the members of the crew to protect them from all kinds of mishap like injuries, death etc that may happen in a flight.
An Aviation Insurance can be availed not only by Aviation companies but also by flying clubs and those with rented aircraft.
Main Differences Between Marine Insurance and Aviation Insurance
- The main difference between a Marine and an Aviation Insurance is that the former protects the owners of ships and vessels from the unanticipated losses that are related to marine operations. While the latter protects the Aviation Corporations, flying clubs and even those who have rented an aircraft from the unforeseen losses that may be incurred due to the risks involved in Aviation.
- As evident from their names, they serve two different sectors of the transport industry. While the risks related to the operations of water transports are covered by a Marine Insurance, an Aviation Insurance covers the risks concerning the operations of air transports.
- A Marine Insurance is necessary to deal with the damages caused to ships, vessels, cargos and terminals by unanticipated disasters like turbulent weather, shipwrecks, attack from pirates and the like.
- Conversely, an Aviation Insurance is essential for dealing with unforeseen circumstances like a technical failure in an aircraft, weather hazards, hijacks and danger to the lives of passengers and crew members and so on.
- As a well developed financial coverage, Marine Insurances are much older than Aviation Insurances. The former dates back to the times of the Greek city-states and the Roman Empire where sea or marine loans, bill of exchanges and commenda contracts were extended to the merchants travelling in the Mediterranean Sea. In contrast to that, Aviation Insurances were introduced only in the early twentieth century.
- A Marine Insurance does not cover for losses incurred due to deliberate acts of misconduct and negligence, delays and cargo damage due to improper packing. While losses incurred due to electrical or mechanical breakdown, wearing out of tires and breaks, fading out of paint and mechanical breakdown of engines or other types of equipment are not covered by an Aviation Insurance.
Conclusion
Both Marine and Aviation Insurance are essential financial safeguards that protect from unforeseen liabilities, disasters, accidents or damages in two different sectors of the transport industry. A Marine Insurance provides armour to the ship owners and transporters that help the latter in withstanding all forms of unforeseen disasters and liabilities. Similarly, an Aviation Insurance helps in facing all forms of challenges in Aviation industry without any consternation.
References
- https://www.cii.co.uk/media/6559355/hkd_iti_syllabus_2015_v1.pdf
- https://scholar.smu.edu/cgi/viewcontent.cgi?article=3664&context=jalc