Presented By:Gourav Mukherjee (11DCP073)

Richa Sethi (11DCP091)

MARINE INSURANCE

Marine Insurance - Definition

Marine Insurance is: A Contract of Indemnity

for a specified consideration (premium)

for specific Risks (winds and waves not included).

Marine Insurance - Definition

Marine insurance will include the insurance of hulls, the cargo they carry, liabilities that may devolve upon ships and ship operators, known as “protection and indemnity” and also the insurance of wharves, ports and harbours, container terminals and even oil platforms and drilling rigs.

- TRAFALGAR INTERNATIONAL LTD.Insurance Brokers and Consultants

Marine Insuranc

e

Hull Insuranc

e

Cargo Insuranc

e

Freight Insuranc

e

Liability Insuranc

e

Types of Marine Insurance

Hull Insurance covers the insurance of the vessel and its equipment i.e. furniture and fittings, machinery, tools, fuel, etc. It is effected generally by the owner of the ship

Types of Marine Insurance

Hull Insurance

Cargo Insurance

Freight Insurance

Liability Insurance

Cargo Insurance includes the cargo or goods contained in the ship and the personal belongings of the crew and passengers

Types of Marine Insurance

Hull Insurance

Cargo Insurance

Freight Insurance

Liability Insurance

Freight Insurance provides protection against the loss of freight. In many cases, the owner of goods is bound to pay freight, under the terms of the contract, only when the goods are safely delivered at the port of destination.

If the ship is lost on the way or the cargo is damaged or stolen, the shipping company loses the freight. Freight insurance is taken to guard against such risk

Types of Marine Insurance

Hull Insurance

Cargo Insurance

Freight Insurance

Liability Insurance

Liability Insurance is one in which the insurer undertakes to indemnify against the loss which the insured may suffer on account of liability to a third party caused by collision of the ship and other similar hazards

Types of Marine Insurance

Hull Insurance

Cargo Insurance

Freight Insurance

Liability Insurance

Basic Risks

Perils of Sea

Fire

Jettison

Barratry

Basic Risks

Perils of Sea

Fire

Jettison

Barratry

Perils of the Sea

These include damage to the vessel or cargo by forces of waves, storms, stranding of the vessel, sinking of the vessel and collision with other vessel, etc.

Basic Risks

Perils of Sea

Fire

Jettison

Barratry

Fire

This includes damage directly due to fire or efforts to extinguish the fire.

Basic Risks

Perils of Sea

Fire

Jettison

Barratry

Jettison

It means voluntary throwing overboard of some cargo to save the ship and the rest of the cargo.

Basic Risks

Perils of Sea

Fire

Jettison

Barratry

 The term Barratry includes every wrongful act wilfully committed by the master or crew to the prejudice of the owner, or, as the case may be, the charterer.

In Maritime law, as set out within the British Marine Insurance Act of 1906, it refers to"barratrous conduct"

Types of Losses

Total Loss

Partial Loss

General Average Loss

Particular Average Loss

Types of Losses

Total Loss

Partial Loss

General Average Loss

Particular Average Loss

Total Loss

Total Loss may be either an actual total loss or a constructive total loss.

Actual Total Loss - In this type of a loss, the goods insured are destroyed or damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived.

Constructive Total Loss – This is the loss which appears to be unavoidable or because it could not be preserved from actual loss without an expenditure which would exceed their value when the expenditure had been incurred.

Types of Losses

Total Loss

Partial Loss

General Average Loss

Particular Average Loss

Partial Loss

Partial Loss is defined as a loss other than the total loss.

It may include particular average loss or general average loss.

Types of Losses

Total Loss

Partial Loss

General Average Loss

Particular Average Loss

General Average Loss

In time of general peril an extraordinary sacrifice or expenditure may be made or incurred for the purpose of preserving the properties in common. Examples of general average sacrifice are:

1. Cargo Jettisoning2. Damage caused by fire/attempt to

extinguish fire.3. Expenses of entering and leaving

the port of refuge.4. Expenses of discharging, storing

and reloading of the cargo if that be necessary for the common safety.

Types of Losses

Total Loss

Partial Loss

General Average Loss

Particular Average Loss

Particular Average Loss

A particular average loss is a partial loss of the goods insured, caused by a peril insured against, and which is not a general average loss.

While the general average loss is voluntarily undertaken for the common safety of all the parties insured, a particular average loss is fortuitous or accidental. It cannot be partially shifted to others but has to be borne by the person directly affected.

Types of Losses- Summary

Marine Loss

Total Loss

Actual Total Loss

Constructive Total Loss

Partial Loss

Particular Average

Loss

General Average

Loss

Risks Covered

Institute Cargo Clause (C)

Institute Cargo Clause (B)

Institute Cargo Clause (A)

War and SRCC Cover

Risks Covered

Institute Cargo Clause (C)

Institute Cargo Clause (B)

Institute Cargo Clause (A)

War and SRCC Cover

Fire or Explosion. Standing, grounding, sinking

or capsizing of the vessel. Overturning or derailment of

land conveyance. Collision or contact of vessel. Discharge of cargo at a port

of distress Jettison

Risks Covered

Institute Cargo Clause (C)

Institute Cargo Clause (B)

Institute Cargo Clause (A)

War and SRCC Cover

Loss or damage attributable to earthquake, volcanic eruption of lightning.

Washing overboard. Loss or damage to the goods

caused by entry of sea, lake or river into vessel, container or van etc.

Total loss of any package lost overboard or dropped whilst loading on to or unloading from vessel.

Risks Covered

Institute Cargo Clause (C)

Institute Cargo Clause (B)

Institute Cargo Clause (A)

War and SRCC Cover

By paying extra following can be including in Clause (B):- Theft, pilferage or non-

delivery. Rain water damage. Hook, oil, mud, acid and

damage by other cargo. Heating and sweating. Leakage.

Risks Covered

Institute Cargo Clause (C)

Institute Cargo Clause (B)

Institute Cargo Clause (A)

War and SRCC Cover

All risks except war, strike, riots or civil commotion

Risks Covered

Institute Cargo Clause (C)

Institute Cargo Clause (B)

Institute Cargo Clause (A)

War and SRCC Cover

Cover for war, strike, riots or civil commotion along with any of the above clauses

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour policy

Marine Insurance Policies

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Voyage Policy is a policy in which the subject matter is insured for a particular voyage irrespective of the time involved in it. In this case the risk attaches only when the ship starts on the voyage.

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Time Policy is a policy in which the subject matter is insured for a definite period of time. The ship may pursue any course it likes, the policy would cover all the risks from perils of the sea for the stated period of time. • A time policy cannot be for a period exceeding one year, but it may contain a 'continuation clause'.

• The 'continuation clause' means that if the voyage is not completed within the specified period, the risk shall be covered until the voyage is completed, or till the arrival of the ship at the port of call.

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Mixed policy is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time.

Mixed policy = Voyage Policy + Time Policy

Valued policy is a policy in which the value of the subject matter insured is agreed upon between the insurer and the insured and it is specified in the policy itself.

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Open or Un-valued policy is the policy in which the value of the subject matter insured is not specified.

Subject to the limit of the sum assured, it leaves the value of the loss to be subsequently ascertained.

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Floating Policy is a policy which only mentions the amount for which the insurance is taken out and leaves the name of the ship(s) and other particulars to be defined by subsequent declarations.

Such policies are very useful to merchants who regularly despatch goods through ships.

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Wagering or Honour Policy is a policy in which the assured has no insurable interest and the underwriter is prepared to dispense with the insurable interest.

Such policies are also known as ‘Policy Proof of Interest’(P.P.I).

Marine Insurance Policies

Voyage Policy

Time Policy

Mixed Policy

Valued Policy

Open or Un-Valued Policy

Floating Policy

Wagering or Honour Policy

Contents of the Policy The name of the assured or of

some person who affects the

insurance on his behalf.

The subject matter insured

and risk insured against.

The voyage or period of time

both.

The sum or sums insured.

The name or names of

insurer or insurers.

Risks Not Covered

Loss, damage or expense caused by delay and inherent vice or nature of the subject matter.

Loss, damage or expense caused by willful misconduct of the insured.

Ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear of subject matter insured.

Insufficiency or unsuitability of packing. Deliberate damage to or deliberate destruction of goods. Loss due to insolvency or financial default of the owners,

managers, charters or operators of the vessel, Loss or damage arising from nuclear weapon or other

radioactive force.

Warehouse to Warehouse Clause

Warehouse to Warehouse clause states that the goods are insured from the time they leave the warehouse of the exporter and remains in force till the goods reach the goods reach the destination and are stored in a warehouse there.

But on the ship reaching the destination, if the goods cannot be taken delivery of due to reason beyond the control of the consignee, the insurance will be valid for 60 days from the date of arrival of the ship after which it expires.

Warehouse to Warehouse Clause

Thus the insurance will expire on the goods being placed in a godown in the importer’s country or on expiry of 60 days from the date of arrival of the ship whichever is earlier.

The period of 60 days is allowed only in cases where the delay is beyond the control of the importer.

Give a notice of loss to the insurance company immediately.

Take all steps to minimize the loss, preserve all rights against third parties.

Arrange for survey by ship surveyors if the packages show any outward sign of damage.

Arrange for insurance survey by the insurance company in other cases.

Prefer claims with shipping companies and other parties where required.

Submit insurance policy, copy bill of lading, invoice, packing list and claim bill.

Claim Procedure

Types of Marine Insurance- Hull, Cargo, Freight and Liability

Risks Covered- Institute Cargo Clause (C), Institute Cargo Clause (B), Institute Cargo Clause (A), War and SRCC Cover

Basic Risks- Perils of Sea, Fire, Jettison and Barratry

Marine Insurance Policies- Voyage, Time, Mixed, Valued, Open or Un-Valued, Floating and Wagering or Honour Policy

To Summarize

Marine Hull Insurance

Premium RatingThe normal basis of valuation for ocean/air consignment will be CIF + incidentals up to a percentage which is agreed upon at the inception of the policy ( normally this is 10 %)

United India Insurance

Marine Hull InsuranceFor example, Insurance Amount- $40,000Cover Percent- 110% (10% included for

recovery charges for the claims)Total Amount= 110%*40,000= $44,000

United India Insurance