a contract of indemnity. The insured can, in the event of loss recover the actual amount of loss from the insurer. Under no circumstances, the insured is allowed to make profit out of the marine insurance contract. But cargo policies provide commercial indemnity rather than strict indemnity.
The insurers promise to indemnify the insured “in the manner and to the extent agreed.” In case of ‘Hull Policy’, the amount insured is fixed at a level above the current market value; (ii) Similar to life and fire insurance, the contract of marine insurance is a contract of utmost good faith. Both the insured and insurer must disclose everything, which is in their knowledge and can affect the insurance contract. The insured is duty-bound to accurately disclose all facts which include the nature of shipment and the risk of damage it is exposed to; (iii) Insurable interest must exist at the time of loss but not necessary at the time when the policy was taken; (iv) The principle of causa proxima will apply to it. The insurance company will be liable to pay only if that particular or nearest cause is covered by the policy.
For example, if a loss is caused by several reasons then nearest cause of loss will be considered.