Marine Insurance: Overview • Nature and Scope of Marine Insurance

Contract What is Maritime Perils? The Perils of the Sea

The concept of Marine Adventure

Definition of Marine Insurance Contract

A Slip in Marine Insurance

Rules In India Regarding Marine Insurance

• Classification of Marine Policies Valued Policy Unvalued Policy

Floating Policy

Time Policy

Voyage Policy

Marine Insurance: Overview

Voyage – Deviation

Types of Marine Insurance

Hull Insurance

Cargo Insurance

Fright Insurance

Liability Insurance

Warranties in Marine insurance

Definition

Effects of Breach of a Warranty

Types of Warranty (3types)

Marine Insurance: Overview

Loss

Perils insured in a Marine Policy Kinds of Losses

Payment of Claims

Nature and Scope of Marine Insurance

Contract

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The Marine Insurance is regulated under The Indian

Marine Insurance Act, 1963 (enforced on 1st August,

1963) which is based on the original ‘Marine

Insurance Act, 1906 of U.K.

Marine Insurance has been made mandatory in

export and import business

The document containing the contract of insurance

is known as the ‘Marine Policy’ or ‘Sea Policy’

It essentially provides cover for the losses suffered

due to Marine Perils.

Nature and Scope of Marine Insurance

Contract

Maritime Perils

“Maritime Perils" means the perils consequent on,

or incidental to, the navigation of the

sea, that is to say, perils of the seas, fire, war

perils, pirates, rovers, thieves, captures,

seizures, restraints and detainments of princes

and peoples, jettisons, barratry and any

other perils

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Above definition is taken from Section 2 (e) under The Marine Insurance Act, 1963

Nature and Scope of Marine Insurance

Contract The Perils of the Sea

A Peril of the Sea may be defined as to cover

everything that happens to the ship in the course of

voyage by the immediate act of God without the

intervention of human agency

Examples

Foundering at Sea

Shipwreck

Stranding

Collision

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Nature and Scope of Marine Insurance

Contract

Losses not regarded as Perils of the Sea

(Excluded Losses)

Wear and Tear

Breakage of Goods

Inherent Vice (defects in goods)

Death of Animals etc due to nature’s causes

Loss by Rats and Vermin

Loss by Delay *

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* As per Section 55 (2) (b) of the English Marine Insurance Act

Nature and Scope of Marine Insurance

Contract

A contract of marine insurance under Section 3 of The Marine Insurance Act, 1963 is defined as –

“A contract of Marine Insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incidental to marine adventure.”

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Nature and Scope of Marine Insurance

Contract

The Marine Adventure

In a contract of marine insurance, what is insured is not the property exposed to peril but only the risk or adventure of the assured.

The Statute therefore states that every lawful marine adventure may be the subject matter of a contract of marine insurance

To be continued in next slide..

“Marine Adventure" includes any adventure where –

(i) any insurable property is exposed to maritime perils;

(ii) the earnings or acquisition of any freight, passage money, commission, profit or other pecuniary benefit, or the security for any advances, loans, or disbursements is endangered by the exposure of insurable property to maritime perils;

(iii) any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property by reason of maritime perils; ____________________________________________________________________

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Above definition is taken from Section 2 (d) under The Marine Insurance Act, 1963

Nature and Scope of Marine Insurance

Contract

A Slip in Marine Insurance

A Slip or Cover Note is an informal note or memorandum which is drawn at the time when the contract is entered into.

A Slip itself act as a contract of Insurance. It is a complete and final draft/agreement between the parties in Insurance.

A slip acts as Evidence. It is admissible only to prove the agreement since in practice the slip is never stamped.

Rules under The Marine Insurance Law

Act, 1963

The contract of Marine insurance acts as an evidence for which it has to be stamped under The Indian Stamp Act, 1899 [1]

The Policy must be signed by the insurer himself [2]

The Subject matter must be designated with reasonable certainty [3]

The nature and extent of the interest of the assured need not be specified [4]

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[1] Rule under Section – 24 of Indian Act

[2] Taken from the English Act Section – 24 (1)

[3] & [4] Under Section – 28 of Indian Act

Rules under The Marine Insurance Law

Act, 1963 The content of marine policy: [5]

A marine policy must specify: i. the name of the assured or the person who effects the

insurance; ii. the subject matter insured and the risk insured

against; iii. the voyage or the period of time or both iv. the sum or sums insured; and v. the name of the insurer of insurers. ^

The Schedule attached to the Act gives the form in which the policy should be made and also provides the ‘rules for construction of policy’. [6]

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[5] Under Section – 25 of Indian Act ^ The Indian Act Section – 26; [6] Under Section – 32 of Indian Act

Classification of Marine Policy

Valued Policy

Under this policy the value of loss to be compensated is fixed and remains constant

throughout the risk except where there is fraud

and excessive over – valuation

Unvalued Policy

Under this policy the Value is not determined at

the time of commencement of risk but is left to be

valued when the loss takes place.

Classification of Marine Policy

Floating Policy

This policy describes the general terms and leaves the amount of each shipment and other particulars to be declared later on. The declaration is made in order of dispatch of shipment.

Time Policy

Under this policy, the subject – matter is insured for a definite period of time. The Policy is generally taken for one year although it may be for less than one year.

Example: From 06:00 hrs of 1st April, 2009 to 06:00 hrs of 30th September, 2009

Classification of Marine Policy

Voyage Policy

The policy is issued to cover a particular voyage from one port to another and from one place to

another. The policy mentions the port of departure

and the port of destination between which the risks

are generally underwritten.

Note: A Marine Insurance Policy may be a

combination of different policies. It is also

called as Mixed Policy. For e.g., Voyage policy

with Time policy

Voyage - Deviation

A ship must follow the course specified in a

voyage. If no course is specified, the ship must

follow the usual course for the voyage

Deviation discharges the underwriters from all

liability for subsequent loss (even though it may

not increase the risk) unless it is caused by

circumstances beyond control or is justified on

certain very limited grounds

Unreasonable delay may also amount to deviation

Types of Marine Insurance

Hull Insurance

Cargo Insurance

Fright Insurance

Liability Insurance

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Warranties in Marine

Insurance Express Warranties

Implied Warranties

No Implied Warranty

Warranties in Marine

Insurance Express Warranties

Express warranties are those warranties which

are expressly included or incorporated in the

policy by reference

Warranties in Marine Insurance

Implied Warranties

These are not mentioned at all but are tactically understood by the parties as express warranties

Examples:

Seaworthiness of ship (includes ‘cargo -

worthiness’)

Legality of venture

Non - deviation

Perils insured in a Marine Policy:

Loss by Fire

Loss by Capture, Seizure or Taking at Sea

Loss by Arrest, Detention

War Risk

Loss Caused by Pirates and Thieves

Barratry

Losses

Losses

Kinds of Losses

Total Loss

Actual Loss

Constructive Loss

Partial Loss

Partial can either be actual loss or

constructive loss

Payment of Claims

Notice of Claim

Documents Required for Claim:

i. Policy or certificate of Insurance

ii. Bill of Lading – Determines the scope of the

contract of carriage

iii. Invoice of bill stating terms and conditions of sale

iv. Copy of protest

v. Certificate of Survey

vi. Letter of Subrogation

subrogation form.pdfsubrogation form.pdfsubrogation form.pdfsubrogation form.pdfsubrogation form.pdf