An Indian flag cargo ship sank near Yemen’s coast after a missile attack. However, all 14 crew members survived safely. After this incident, questions emerged about ship insurance claims. Many people wonder whether companies need underwater wreckage proof for compensation.
Marine insurance acts as a safety shield for global shipping. International trade depends heavily on sea routes worldwide. Every day, thousands of cargo ships transport valuable goods across continents.
However, sea journeys carry several risks. Storms, missile attacks, drone attacks, collisions, engine failures, and fires can damage ships. Therefore, marine insurance helps reduce financial losses from such unexpected disasters.
How Insurance Companies Decide Compensation After Ship Loss
A company does not immediately issue payment after receiving a sinking report. Instead, technical experts and independent marine surveyors investigate the incident. The team examines the accident location, damage level, and reasons behind the disaster.
Furthermore, insurers study several factors before deciding compensation. These include the ship’s insured value, age-related depreciation, technical condition, and policy terms.
If the ship faces complete destruction, insurers provide the full insured value. However, partial damage receives compensation according to the loss percentage.
Hull Insurance and Cargo Insurance Work Separately
Marine protection uses two separate insurance systems for ships and goods. Hull insurance covers the ship’s physical structure and important equipment.
This policy protects the vessel body, main engine, heavy machinery, navigation system, and electronic devices. Therefore, ship owners receive compensation through hull insurance after major damage.
Meanwhile, traders use cargo insurance for goods placed inside ships. If cargo gets destroyed, buyers or sellers claim losses through their individual cargo policies.
P&I Insurance Covers Environmental and Third-Party Risks
A sunken cargo ship creates risks beyond financial damage for owners. Fuel leakage can cause serious marine pollution after sinking incidents.
Therefore, Protection and Indemnity (P&I) clubs manage additional liability coverage worldwide. These organisations support ship owners during major emergencies.
Moreover, P&I insurance covers oil spill control, cleaning operations, and emergency treatment costs for crew members.
Ship Wreckage Is Not Required For Every Insurance Claim
Many people believe owners must recover ship wreckage before receiving insurance money. However, marine insurance rules do not require owners to remove wreckage from the sea. Instead, owners provide accident evidence through digital records. These include black box details, Voyage Data Recorder (VDR) information, and final GPS coordinates.
Additionally, under the Nairobi International Convention, dangerous wreckage requires proper action. If a sunken ship threatens marine traffic or the environment, P&I insurance covers removal or marking expenses.
