5 Differences between marine insurance and fire insurance
Although marine and fire insurance are basically contracts of indemnity and are issued for a short period, say one year or for a specific voyage, the following differences are to be noted:
1. Insurable Interest: In marine insurance, the insurable interest should be present only at the time of loss and need not be present when the insurance is effected, whereas in fire insurance, the insurable interest must be present at the time of taking out the policy as well as at the time of loss.
2. Moral Hazard: In marine insurance, the possibility of moral hazard does not exist as much as in fire insurance.
3. Valued Policies: The policies issued under marine insurance are generally valued policies and the market fluctuation is avoided; but the policies issued under fire insurance strictly adheres to the doctrine of indemnity and only the market value of property lost in fire (valuable amount) will be compensated.
4. Profit: Under a marine insurance policy, the insured is also allowed a margin of expected profits say 10% or 15% of the insured amount, whereas under a fire insurance policy, such practice is not allowed ordinarily.
5. Transfer: A marine policy can be freely transferred from one party to another. But a fire insurance policy cannot be transferred without the permission of the insurance company.