Fire insurance is insurance coverage that guards against the risks of fire to your property and the losses that ordinarily arise thereafter. The cover extends to the repairs and replacements of the portions of the property that are damaged by the fire in your home. It is by far the most common form of insurance among homeowners and industrialists alike.
Marine insurance refers to the insurance coverage of the ships and the goods in transit. Its scope mainly stretches from the point the property is acquired to the point it is finally destined to. In many cases, this insurance touches on the cargo itself and the ships at the terminals they depart and dock into.
Fire Insurance vs Marine Insurance
The difference between Fire Insurance and Marine Insurance is that Fire insurance means to take an insurance policy to cover all losses that occurred due to fire. Marine insurance means to take an insurance policy for all the damage that occurred to ship or cargo.
Claim amount in fire insurance can be of actual loss or the sum insured whichever may be less, whereas, in marine insurance, it’s the price of the goods with expected profit.
Comparison Table Between Fire and Marine Insurance
|Parameter of Comparison||Fire Insurance||Marine Insurance|
|Purpose||Safeguards your personal products, property, home, and business from the associated dangers.||Safeguards your goods while in transit. These safeguards pertain to those damages which may arise out of the sea perils.|
|Geographical Extent||All the parties to the dispute in the case of fire insurance reside within the same geographical boundary or entity.||It is not uncommon for the insurer, transporter, and the manufacturer of the goods to reside in different countries.|
|Compensation||Fire insurance aims at restoring you to your original financial state prior to the break out of the fire hazard.||Marine insurance will usually take care of the profits would have made had the risk not arisen and damaged your merchandise.|
|Relevance||Relevant to homeowners, business people, office workers, and general property owners.||Relevant to international merchants, more so those who handle and deal in import and export trade.|
|Timeline||Once the policy is entered into, it remains effective until it is either nullified or the risk insured happens.||The policy remains in force only while the goods are in transit. As soon as the goods reach their final destination, the policy comes to an end.|
What is Fire Insurance?
As hinted above, fire insurance is a form of insurance coverage that exists to safeguard your property from any losses or damages that arise or are brought about by the fire outbreaks. While handy and relevant for all kinds of fire-related risks, this cover excludes wars, nuclear risks, and associated perils.
This form of insurance works hand in hand with home insurance. That is because it provides a mechanism through which additional cover and funding may be sought for those damages whose repair values exceed those that are set or provided for by the home insurance cover.
What is Marine Insurance?
Marine insurance is a kind of an insurance cover that exist to safeguard the cargo in transit, the vessels that ferry them, and the associated losses and damages that do arise in the course of transporting the said goods from one place to another.
It is mainly applicable to internal trade as most marine goods do get transported via the sea. It generally covers the losses that may arise in the course of transporting the goods.
These losses could include but not limited to the ships themselves, the cargo in transit, and the terminals from which the ships set out or dock into. Also, the cover stays in force only as long as the ship is in transit from the point of origin to the final destination.
Main Differences Between Fire and Marine Insurance
Fire insurance is a policy that aims to indemnify the insured in the event of fire damage to the property or home is sustained. Its marine insurance counterpart, on the other hand, exists to indemnify the importers and exporters of goods in case the same is damaged while in transit in the sea.
For an insured to receive compensation in the case of fire insurance, the insurable interest i.e. the item whose loss or damage would bring about financial loss, has to be in existence at the time the policy is entered into and the loss eventually occurs. As for marine insurance, this insurable interest need only to be present at the time of the loss, not when the policy is entered into.
The fire insurance covers those risks that arise from or are associated with fire. As such, it is narrower in scope and hence in-comprehensive in nature also. Conversely, marine insurance is broad in the sense that it covers all the risks that arise from sea perils and associated problems.
Claims and Compensation
These two forms of insurance are governed by diverse kinds of terms with regard to claims and compensation. In the case of fire insurance, the compensation comes in the form of the actual loss sustained or the amount insured, whichever is less than the other.
The marine insurance, on the other hand, attracts compensation which equals the value of the cost of goods and a further 10-15% margin to care for expected profits.
Before receiving any compensation in the case of fire insurance, the insurance company will first and foremost determine whether indeed the property owner had a hand in the outbreak of the fire. This stands in sharp contrast with the marine insurance which contains no clause with regards to the said responsibility on the part of the cargo owners or transporters.
This is the maximum amount of money you may receive in the form of compensation in the event that the loss against which you insured your property eventually arises. In the case of fire insurance, this sum cannot exceed the value of the insurable interest.
As hinted above, the sum insured in the case of marine insurance is 10-15% greater than the value of the goods in transit.
Scope and Relevance
All factors considered for fire insurance is mainly relevant for private homes, offices, hotels, and businesses. Marine insurance, on the other hand, is useful for international trade and specifically those that involve some kind of marine transportation.
If and when a dispute arises with regards to fire insurance, the arbitration of such disputes rests with the domestic or local courts of law. That is because all the parties to the disputes normally reside within the same borders.
The case is however completely different from the marine insurance as its arbitration is often handled by International tribunals owing to the international character of such an undertaking.
Frequently Asked Questions (FAQ) About Fire Insurance and Marine Insurance
What is covered under Marine Insurance?
Marine insurance covers all the damage that can occur due to the water in the form of any natural calamity like earthquake, cyclone or lightning.
It also covers any damage caused by man-made activities like theft, violence or piracy of ships. It basically covers the damage or loss that is caused to ships, terminals, cargo, or any other type of transport that is used to hold or transfer goods from one destination to another.
What is covered under Fire Insurance?
Fire damage covers any damage or loss to the property caused due to fire. This may include house or office party, household items, goods, etc.
Fire insurance assures the policyholder an amount to repair the damage caused by fire to the policy holder’s property. The amount can be used to repair the damage, reconstruction or replacement of the damaged goods. In certain circumstances, ACV or the actual cash value of the damaged goods is provided to the policyholder.
Is Fire Insurance the same as Home Insurance?
Fire insurance covers all or any damage caused by fire to a policy holder’s property. Home insurance also covers the damage caused by fire (covers any type of damage to the home property) but the claim amount is usually low for fire damage in home insurance.
To get better compensation, one must opt for fire insurance. Hence, fire insurance and home insurance are not the same.
What is not covered in Marine Insurance?
Marine insurance does not cover any damage that is caused intentionally or due to negligence. Loss or damage that is occurred because of improper packing or poor handling of goods is not considered under marine insurance.
What is not covered in Fire Insurance?
Fire insurance does not cover any loss or damage caused by the invasion, civil commotion, war, mutiny, etc. It also does not cover any damage that is caused by someone intentionally or caused due to the negligence of someone.
If there are riots going around and an arsonist put your property on fire, you cannot claim any money.
Well, now you know the differences between the fire and marine insurance. Having known these differences, we are now truly confident that you have the expertise you need to choose the most appropriate one for your course well.
Why don’t you go ahead now and insure your property or business well?
Table of Contents