Lecture 15 - Marine Insurance

7/31/2019 Lecture 15 - Marine Insurance

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MARINE INSURANCE

Lecture 15Week 8


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DEVELOPMENT

n One of the earliest forms of insurancen Developed out of bottomry and

respondentia bondsn Standard forms used by Lloydsn Marine Insurance Act 1906n Often includes aviation insurancen Different terminology


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TYPES OF COVER

n Hulln Cargon Freightn Voyagen Collision


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TYPES OF VESSELS COVERED

Dinghies Yachts Cargo vessels Liners Super tankers

Oil rigs Fishing vessels


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BASIC COVER

n Perils of the sea and other navigablewaters

n Restraint of princesn Piracyn All risks


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FURTHER COVER

n Pollution Hazardn War and strikes clausen Bursting boilers or breaking shaftsn accident or negligence of a third party


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IMPLIED WARRANTIES

n Seaworthiness Damaged bottom Insufficient crew

n Legalityn Marine Insurance Act 1906


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PARTICULAR AVERAGE

n This means a partial lossn Covers loss caused by:

Perils of the sea rivers lakes or othernavigable waters

fire, explosion violent theft jettison piracy


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MEASURE OF INDEMNITY

n s.69 Marine Insurance Act 1906n Where ship has been repaired the

reasonable cost of repairs less thecustomary deductions but notexceeding sum insured

n Where partially repaired cost of repairsplus reasonable depreciation subject tonot exceeding cost of complete repair

n Not repaired - the reasonable

depreciation


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EXAMPLES OF ADJUSTMENTSn

Bottom end bearing fractured ingenerator as a result of latent defect ledto damage to liner.

n

Cost Bearing 5000 Liner 4000 Cylinder 3000 Piston 6000 Total 18000


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ADJUSTMENT

n Excess 2000n Standard policy would exclude replacing

defective partn Thus total amount payable is 11000

18000 - 5000 (bearing) - 2000(Excess)

n Additional perils clause would havecovered bearing


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TOTAL LOSS CLAIMS (SHIP)

n Institute time clausesn Hulls total loss only including salvage,

salvage charges and sue and labourn Hull total loss, general average and

3/4ths collision including salvage etcn Hulls disbursements


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TYPES OF TOTAL LOSSn Constructive total loss

Deprived of ship by insured peril Recovery would exceed value or repair exceeds value

n Abandonment Insured entitled to abandon loss when

constructive total loss Consequence is that if insured accepts

notice of abandonment subject to assetsand liabilities. May not acceptabandonment


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SUE AND LABOUR CLAUSES

n Covers expenses reasonably incurred byinsured to save vessel and cargo

n Paid in excess of sum insured.


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COLLISION LIABILITY

n Covers three quarters of the cost of liability

Rest paid by Protection and Indemnityassociations

n It is a liability policy


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CARGO

n Same risks and same methodsn General average clause

Losses arising for the preservation of shipand cargo

n Salvage loss Follows forced sale of badly damaged

cargo


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CARGO PARTIAL LOSSn Where goods delivered damage

measure of indemnity is Proportion of sum fixed by policy equal to the gross sound value less

damaged value at place of deliveryn Example

Goods insured at 120,000; Damaged

value = 80,000: Sound value = 100,000 Depreciation or proportion is 20% Apply this to 120,000 gives 24,000


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FREIGHT

n Profit made by a shipowners out of ships used to carry cargo, both theirown and others

n The cargo includes all moveablesn Loss occurs when cargo is not

deliverable


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FREIGHT LOSS

n Valued and unvalued policiesn Indemnity is the proportion of freight

lost to freight at risk applied to insuredn This could be subject to Measure of

indemnity clause which limits freight toamount actually lost.


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THE END

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Lecture 15 - Marine Insurance

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