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Philippine Marine Insurance

Date post: 06-May-2015
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Presentation on Marine Insurance by law students from the Polytechnic University of the Philippines-College of Law, for Insurance Law under Commissioner Wilfredo Reyes.
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MARINE INSURANCE Facilitators: Lim, Christian Louie U. Zaragoza, Israel Jacob R.
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  • 1.Facilitators: Lim, Christian Louie U.Zaragoza, Israel Jacob R.

2. Transportation Insurance a very broad field of insurance which is concerned with the perils of property in (or incidental to) transit as opposed to property perils at a general fixed location. it does not include normal motor vehicle insurance. has two major divisions, namely:(1) ocean marine insurance; and (2) inland marine insurance. 3. Ocean Marine Insurance aninsurance against risk connected withnavigation, to which a ship, cargo, freightage, profits orother insurable interest in movable property, may beexposed during a certain voyage or a fixed period oftime. itsscope includes: ships or hulls, goods orcargoes, earnings and liabilities. 4. Inland Marine Insurance covers primarily the land or over-the-land transportation perils of property shipped by railroads, motor trucks, airplanes, and other means of transportation. It also covers risks of lake, river, or other inland waterway transportation and other waterborne perils outside of those risks that fall definitely within the ocean marine category 5. Perils of the sea vs Perils of theship perils of the sea refers to all kinds of marine casualty resulting from the violent action of the wind and waves while perils of the ship are those resulting from the natural and inevitable action of the sea. perils of the sea covers the willful misconduct of the ship master or crew while perils of the ship covers only the mere negligence, failure, or honest error of judgement of the same. 6. Perils of the sea vs Perils of theship most important difference: perils of the sea are those which are sought to be covered under an ocean marine policy while perils of the ship are not. 7. Insurable Interest the owner of a ship has in all cases an insurable interest in it. even when it has been chartered to another who agreesto pay him its value in case of loss. the insurer, however, shall be liable only for that part ofthe loss which the insured cannot recover from thecharterer. the owner of a ship hypothecated by bottomry has an insurable interest only on the excess of its value over the amount secured by bottomry. 8. Insurable Interest the owner of a ship has an insurable interest in expected freightage. one having a reasonable expectation of profits from a marine adventure has an insurable interest over such profits. the charterer of a ship has an insurable interest to the extent that he is liable to be damnified by its loss. 9. Concealment the failure to disclose any material fact or circumstance which in fact or law is within the knowledge of one party and of which the other has no actual or presumptive knowledge. information of the belief or expectation of a third person, in reference to a material fact, is material. a person insured is presumed to have knowledge of a prior loss if the information might possibly have reached him in the usual mode of communication. 10. Representations shouldpertain to amaterial fact (age, equipment, earnings, and particular condition of a vessel) if intentional avoids the policy if not intentional rescindable only from the time therepresentation becomes false. a falsity of a representation as to expectation, in the absence of fraud, is not a ground for rescission. 11. Implied Warranties seaworthiness of the ship. voyage and deviation carrying of required document of nationality or neutrality. 12. Seaworthiness the vessel is reasonably fit to perform the service, and to encounter the ordinary perils of the voyage. nature of the ship nature of the voyage nature of the service 13. Seaworthiness general rule: it is complied with if the ship is seaworthy at the time of the commencement of the risk. exception: unreasonable delay on the part of the masterin repairing the defects during the voyage. 14. Seaworthiness in case of time policies the ship should be seaworthy at the commencement of every voyage it undertakes during that time. in case of cargo policies each vessel upon which the cargo is shipped or transhipped must be seaworthy at the commence of each particular voyage. in case of voyage policies the ship must be seaworthy at the commencement of each portion. 15. Can a ship, bound to an insured voyage, change its course so as to constitute a deviation? 16. Sub-Title 1-FTHE VOYAGE AND DEVIATIONDeviation is any unexcused departure from regular course orroute of insured voyage or any other act which substantiallyalters the risk.Sec. 124. A deviation is proper:(a) When caused by circumstances over which neither themaster nor the owner of the ship has any control;(b) When necessary to comply with a warranty, or to avoid aperil, whether or not the peril is insured against;(c) When made in good faith, and upon reasonable groundsof belief in its necessity to avoid a peril; or(d) When made in good faith, for the purpose of savinghuman life or relieving another vessel in distress.Improper Deviation:Sec. 125. Every deviation not specified in the last section isimproper. 17. Is it necessary for a ship to be completely destroyed for the insured to be entitled to whole insurance? 18. Sub-Title 1-G LOSSSec. 127. A loss may be either total or partial.Sec. 129. A total loss may be either actual or constructive.Actual Total Loss exist when the subject matter of the insurance is wholly destroyed or lost or when it is so damaged as no longer to exist in its original character.Constructive Total Loss (or technical total loss) is one which the loss, although not actually total, is of such character that the insured is entitled, if he thinks fit, to treat it as total by abandonment. 19. Will the insurer still be liable if the insured cargo bereshipped to another? 20. Sub-Title 1-G LOSSLiability in case of Reshipment:Sec. 133. When a ship is prevented, at an intermediateport, from completing the voyage, by the perils insuredagainst, the liability of the marine insurer on the cargocontinues after they are thus reshipped.Note: Liability here includes damages, expense of discharging, storage, reshipment, extra freightage and all other expenses incurred in saving the cargo reshipped. (Sec.134) 21. Can a cargo owner claim from others if his cargo was sacrificed to save other cargoes? 22. Sub-Title 1-GLOSSGeneral Averages:Include damages and expenses which are deliberatelycaused by the master of the vessel in order to save thevessel, her cargo or both for real and known risk.Principle of General Average Contribution (GAC):The owners of the other interests benefited by a sacrificemust contribute proportionately to the loss incurred.Example: Case of jettison. 23. Sub-Title 1-G LOSSRequisites to the right to claim GAC: (1) common danger; (2) deliberate sacrifice; (3) done for common safety; (4) made by the master; (5) not caused by fault of the one asking for GAC; (6) successful; and (7) necessary. 24. Sub-Title 1-G LOSSLiabilities for GAC (Sec.136)Insurers:Amount of the insurance Proportion of x General Average = GAL for w/c the Total amount of the Loss (GAL)insurer is liablevalue involvedBenefited Owner1 :Amt of owners saved cargoProportion of x General Average = GAL for w/c the Total amount of the Loss (GAL)owner1 is liablevalue involved 25. Sub-Title 1-GLOSSExample:A owns a vessel worth P8M insured against absolutetotal lost only with Y co. It became necessary tojettison Bs cargo worth P1M. As a result the vessel wassaved, along with Cs and Ds cargo worth (P600,000)and P400,000 resp. How much is the liability of each?8M 0.6MY:x(1M ) 800 ,000 C:x(1M )60,000 10 M10 M 0.8M 1MD:x(1M ) 80,000 B:x(1M ) 100 ,000 10 M10 M 26. Sub-Title 1-G LOSSLiabilities for GAC(Recall that) Insurers:Amount of the insuranceGeneralProportion ofxAverage=GAL for w/c Total amount of theLoss (GAL)the insurer isvalue involvedliableIf not insured for the whole value (Sec.164): Proportion ofAmount of the insurance general average Limit of liabilityxloss assessed=of insurerValue of the thingupon the thing insuredinsured 27. Sub-Title 1-GLOSSExample(previous problem):A owns a vessel worth P8M insured against absolute totallost only with Y co. It became necessary to jettison Bscargo worth P1M. As a result the vessel was saved, alongwith Cs and Ds cargo worth (P600,000) and P400,000 resp.How much is the insurer Y co. liable if the vessel is insuredfor P4M only?8MY is originally liable for:x(1M ) P800 ,00010 MBut since the vessel is insured for P4M only,4M x(800 ,000 )P 200 ,0008Mand the rest is to be bourn by the insured. 28. Can a cargo owner abandon his insured cargo to the insurer and ask him to pay for the whole insurance? 29. Sub-Title 1-HABANDONMENTAbandonment is an act of an insured in notifying the insurer that owing to the damage done to the subject of the insurance, he elects to take the amount of the insurance in the place of the subject thereof, the remnant of which he cedes to the insurer.Note: In the Philippines, the insured may not abandon the thing insured unless the loss or damage is more than of its value as indicated in Section 139. 30. Sub-Title 1-H ABANDONMENTRequisites for Valid Abandonment: (1) actual relinquishment(Sec. 138); (2) constructive total lost(Sec. 139); (3) total and absolute(Sec. 140); (4) reasonable time(Sec. 141); (5) factual(Sec. 142); (6) oral or written notice(Sec. 143); and (7) explicit and specific as to the cause(Sec. 144). 31. Sub-Title 1-IMEASURE OF INDEMNITYAmount of Recovery:(Partial) LossAmount ofx Amount of = Value of thing insured insurancerecoveryProfits Separately insured: Value of property loss Amount ofx Amount of =Value of the whole profitrecoveryproperty 32. Sub-Title 1-IMEASURE OF INDEMNITYExample:Goods valued at P500,000 insured for P400,000 incurredloss to the extent of P250,000. P200,000Amount of recoveryx( P400,000) P160,000 P500,000Say in the above problem, the profits are separatelyinsured at P100,000.P 200,000Amount of recoveryx( P100,000) P 40,000P500,000 33. Sub-Title 1-I MEASURE OF INDEMNITYInsured against Partial Loss:Market price in Market price in sound statedamaged state Amount ofx Amount of =insurancerecovery Market price in sound stateGoods valued at P1.5M was insured for P1M. At the destination the market price is only P1.2M due to partial damage incurred instead of P2M if in sound state.P 2M P1.2Amt of recovery x( P1M )P 400,000 P 2M


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