by Assignment of a marine policy is the transfer of the rights, benefits, and interests of the policy from the original policyholder to another person, known as the assignee. The assignee acquires all the rights and liabilities of the original policyholder, including the right to receive the policy benefits in case of a loss or damage to the subject matter of the policy.
In marine insurance, assignment of the policy can be done either by endorsement on the policy document or by a separate deed of assignment.
The following are some of the situations where policy assignment may be required:
- Transfer of Ownership: When the ownership of the vessel or the cargo changes hands, the policyholder may assign the marine insurance policy to the new owner. The new owner becomes the assignee and is entitled to receive the policy benefits in case of a loss or damage to the subject matter of the policy.
- Mortgage: A policyholder may assign a marine insurance policy as collateral security for a loan taken by the policyholder. In this case, the lender becomes the assignee and is entitled to receive the policy benefits in case of a loss or damage to the subject matter of the policy.
- Assignment of Freight: A marine insurance policy can also be assigned to cover the freight earned by the carrier for transporting the cargo. The assignment of the policy is done to the assignee who is entitled to receive the policy benefits in case of a loss of freight.
It is important to note that assignment of a marine insurance policy should be done with the consent of the insurer, as some insurers may have specific requirements or limitations on policy assignment. The insurer may also require the assignee to meet certain conditions, such as providing proof of insurable interest in the subject matter of the policy. Failure to comply with the insurer’s requirements may result in the policy being void or terminated.
Benefit
The benefit of assigning a marine insurance policy is that it allows the original policyholder to transfer their rights and interests in the policy to another person. This can be useful in situations where the ownership of the subject matter of the policy changes hands, or when the policyholder needs to use the policy as collateral for a loan.
For example, suppose a company owns a cargo ship and takes out a marine insurance policy to cover any loss or damage to the vessel or its cargo. If the company decides to sell the ship to another party, they may assign the marine insurance policy to the new owner. The new owner then becomes the policyholder and is entitled to receive the policy benefits in case of any loss or damage to the vessel or its cargo.
Similarly, if the company needs to take out a loan to finance the purchase of a new vessel, they may assign the marine insurance policy to the lender as collateral security for the loan. The lender then becomes the policyholder and is entitled to receive the policy benefits in case of any loss or damage to the subject matter of the policy.
In both cases, assigning the marine insurance policy allows the original policyholder to transfer their risk to another party, thereby protecting themselves from potential losses. It also provides flexibility in managing their insurance coverage and can be a valuable tool in managing their business operations.
