Re Insurance in Marine Insurance Sector

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Insurance

A promise of compensation for specific potential future losses in exchange for a periodicpayment. Insurance is designed to protect the financial well-being of an individual, company orother entity in the case of unexpected loss. Some forms of insurance are required by law, whileothers are optional. Agreeing to the terms of an insurance policy creates a contract between theinsured and the insurer. In exchange for payments from the insured (called premiums), theinsurer agrees to pay the policy holder a sum ofmoney upon the occurrence of a specific event.In most cases, the policy holder pays part of the loss (called the deductible), and the insurer paysthe rest. Examples include car insurance, health insurance, disability insurance, life insurance,

and business insurance.

Insurance is a form of risk management primarily used to hedge against the riskof a contingent,uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entityto another, in exchange for payment. An insurer is a company selling the insurance; the insured,or policyholder, is the person or entity buying the insurance policy. The amount to be charged fora certain amount of insurance coverage is called the premium. Risk management, the practice ofappraising and controlling risk, has evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss inthe form of payment to the insurer in exchange for the insurer's promise to compensate

(indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract,called the insurance policy, which details the conditions and circumstances under which theinsured will be financially compensated
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CHARACTERISTICS OF INSURANCE:

1. AS A RISK DISTRIBUTING DEVICE: The device of insurance serves to distribute the risk

of economic loss among as many as possible of those who are subject to the same kind of risk.

By paying a pre-determined amount into a general fund out of which payment will be made or

economic loss of a defined type, each member constributes to a small degree toward

compensation for losses suffered by any member of the group. This broad sharing of economic

risk is the principle of risk-distribution.

2. CONTRACT OF ADHESION OR FINE PRINT RULE: Insurance is contract of adhesion

considering that most of the terms of the contract do not result from mutual negotiations between

the parties as they are prescribed by the insurer in printed form to which the insured may

adhere if he chooses but he cannot change. In case of doubt, the contract shall be interpreted

strictly against the insurer znd liberally in favor of the insured.

3. ALEATORY: The of the insurer to pay the proceeds of the insurance arises only upon the

happening of an event which is uncertain, or which is to occur at an indeterminate time.

4. CONTRACT OF INDEMNITY: The contract of insurance is a contract of indemnity. It is

the basis of all the property insurance. It means that the insured who has insurable interest over a

property is only entitle to recover the amount of actual loss sustained and the burden is upon him

to establish the amount of actual loss

a. Applicable only to property insurance except creditor insuring the life of his debtor.

b. Life insurance is not a contract of indemnity.

c. Insurance contract is not a wagering contracts.


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5. UBERRIMAE FIDES CONTRACT: A contract requiring perfect good faith. It requires the

parties to the contract of insurance to disclose any material fact, which the applicant knows, or

which he ought to know.

6. PERSONAL CONTRACT: The law presumes that the insurer considered the personal

qualifications of the insured in approving the insurance application.

7. PRINCIPLE OF SUBROGATION: The principle of subrogation is a normal incident of

indemnity property insurance as a legal effect of payment. To inures to the insurer without

formal assignment or any express stipulation to that effect in the policy. Said right is not

dependent nor grows out of any privity of contract. Payment to the insured makes the insurer an

assignee in equity.


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History of insurance

In some sense we can say that insurance appears simultaneously with the appearance of human

society. We know of two types of economies in human societies: natural or non-monetaryeconomies (using barter and trade with no centralized nor standardized set of financial

instruments) and more modern monetary economies (with markets, currency, financial

instruments and so on). The former is more primitive and the insurance in such economies entails

agreements of mutual aid. If one family's house is destroyed the neighbours are committed to

help rebuild. Granaries housed another primitive form of insurance to indemnify against famines.

Often informal or formally intrinsic to local religious customs, this type of insurance has

survived to the present day in some countries where modern money economy with its financial

instruments is not widespread.[citation needed]

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in whichinsurance is part of the financial sphere), early methods of transferring or distributing risk were

practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC,

respectively.[13] Chinese merchants travelling treacherous river rapids would redistribute their

wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians

developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and

practised by early Mediterranean sailing merchants. If a merchant received a loan to fund his

shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to

cancel the loan should the shipment be stolen or lost at sea.

Achaemenian monarchs of Ancient Persia were the first to insure their people and made itofficial by registering the insuring process in governmental notary offices. The insurance

tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of

different ethnic groups as well as others willing to take part, presented gifts to the monarch. The

most important gift was presented during a special ceremony. When a gift was worth more than

10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was

advantageous to those who presented such special gifts. For others, the presents were fairly

assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the

court was in trouble, the monarch and the court would help him. Jahez, a historian and writer,writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or

wants to construct a building, set up a feast, have his children married, etc. the one in charge of

this in the court would check the registration. If the registered amount exceeded 10,000 Derrik,

he or she would receive an amount of twice as much."[14]

A thousand years later, the inhabitants ofRhodes invented the concept of the general average.

Merchants whose goods were being shipped together would pay a proportionally divided
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premium which would be used to reimburse any merchant whose goods were deliberately

jettisoned in order to lighten the ship and save it from total loss.

The ancient Athenian "maritime loan" advanced money for voyages with repayment being

cancelled if the ship was lost. In the 4th century BC, rates for the loans differed according to safe

or dangerous times of year, implying an intuitive pricing of risk with an effect similar toinsurance.[15] The Greeks and Romans introduced the origins of health and life insurance c. 600

BCE when they created guilds called "benevolent societies" which cared for the families of

deceased members, as well as paying funeral expenses of members. Guilds in the Middle Ages

served a similar purpose. The Talmud deals with several aspects of insuring goods. Before

insurance was established in the late 17th century, "friendly societies" existed in England, in

which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of

contracts) were invented in Genoa in the 14th century, as were insurance pools backed by

pledges of landed estates. These new insurance contracts allowed insurance to be separated frominvestment, a separation of roles that first proved useful in marine insurance. Insurance became

far more sophisticated in post-Renaissance Europe, and specialized varieties developed.

Some forms of insurance had developed in London by the early decades of the 17th century. For

example, the will of the English colonist Robert Hayman mentions two "policies of insurance"

taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of 100 each, one

relates to the safe arrival of Hayman's ship in Guyana and the other is in regard to "one hundred

pounds assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed and

sealed on 17 November 1628 but not proved until 1633.[16] Toward the end of the seventeenth

century, London's growing importance as a centre for trade increased demand for marineinsurance. In the late 1680s, Edward Lloyd opened a coffee house that became a popular haunt of

ship owners, merchants, and ships' captains, and thereby a reliable source of the latest shipping

news. It became the meeting place for parties wishing to insure cargoes and ships, and those

willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note

that it is an insurance market rather than a company) for marine and other specialist types of

insurance, but it operates rather differently than the more familiar kinds of insurance. Insurance

as we know it today can be traced to the Great Fire of London, which in 1666 devoured more

than 13,000 houses. The devastating effects of the fire converted the development of insurance

"from a matter of convenience into one of urgency, a change of opinion reflected in Sir

Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in

1667."[17] A number of attempted fire insurance schemes came to nothing, but in 1681 Nicholas

Barbon, and eleven associates, established England's first fire insurance company, the 'Insurance

Office for Houses', at the back of the Royal Exchange. Initially, 5,000 homes were insured by

Barbon's Insurance Office.[18]
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The first insurance company in the United States underwrote fire insurance and was formed in

Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to

popularize and make standard the practice of insurance, particularly against fire in the form of

perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of

Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire

prevention. Not only did his company warn against certain fire hazards, it refused to insure

certain buildings where the risk of fire was too great, such as all wooden houses. In the United

States, regulation of the insurance industry is highly Balkanized, with primary responsibility

assumed by individual state insurance departments. Whereas insurance markets have become

centralized nationally and internationally, state insurance commissioners operate individually,

though at times in concert through a national insurance commissioners' organization. In recent

years, some have called for a dual state and federal regulatory system (commonly referred to as

the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and

national banks.
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Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give

rise to claims are known as perils. An insurance policy will set out in detail which perils are

covered by the policy and which are not. Below are non-exhaustive lists of the many different

types of insurance that exist. A single policy may cover risks in one or more of the categories setout below. For example, vehicle insurance would typically cover both the property risk (theft or

damage to the vehicle) and the liability risk (legal claims arising from an accident). A home

insurance policy in the US typically includes coverage for damage to the home and the owner's

belongings, certain legal claims against the owner, and even a small amount of coverage for

medical expenses of guests who are injured on the owner's property.

Business insurance can take a number of different forms, such as the various kinds of

professional liability insurance, also called professional indemnity (PI), which are discussed

below under that name; and the business owner's policy (BOP), which packages into one policy

many of the kinds of coverage that a business owner needs, in a way analogous to howhomeowners' insurance packages the coverages that a homeowner needs.[19]

Auto insurance

Main article: Vehicle insurance

A wrecked vehicle in Copenhagen

Auto insurance protects the policyholder against financial loss in the event of an incident

involving a vehicle they own, such as in a traffic collision.

Coverage typically includes:

Property coverage, for damage to or theft of the car;

Liability coverage, for the legal responsibility to others for bodily injury or property damage;

Medical coverage, for the cost of treating injuries, rehabilitation and sometimes lost wages and

funeral expenses.
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Most countries, such as the United Kingdom, require drivers to buy some, but not all, of these

coverages. When a car is used as collateral for a loan the lender usually requires specific

coverage.

Home insurance

Home insurance provides coverage for damage or destruction of the policyholder's home. In

some geographical areas, the policy may exclude certain types of risks, such as flood or

earthquake, that require additional coverage. Maintenance-related issues are typically the

homeowner's responsibility. The policy may include inventory, or this can be bought as a

separate policy, especially for people who rent housing. In some countries, insurers offer a

package which may include liability and legal responsibility for injuries and property damage

caused by members of the household, including pets.[20]

Health insurance

Main articles: Health insurance and Dental insurance

Great Western Hospital, Swindon

Health insurance policies cover the cost of medical treatments. Dental insurance, like medicalinsurance protects policyholders for dental costs. In the US and Canada, dental insurance is often

part of an employer's benefits package, along with health insurance.

Accident, sickness and unemployment insurance

Workers' compensation, or employers' liability insurance, is compulsory in some countries
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Disability insurance policies provide financial support in the event of the policyholder becoming

unable to work because of disabling illness or injury. It provides monthly support to help pay

such obligations as mortgage loans and credit cards. Short-term and long-term disability policies

are available to individuals, but considering the expense, long-term policies are generally

obtained only by those with at least six-figure incomes, such as doctors, lawyers, etc. Short-term

disability insurance covers a person for a period typically up to six months, paying a stipend each

month to cover medical bills and other necessities.

Long-term disability insurance covers an individual's expenses for the long term, up until such

time as they are considered permanently disabled and thereafter. Insurance companies will often

try to encourage the person back into employment in preference to and before declaring them

unable to work at all and therefore totally disabled.

Disability overhead insurance allows business owners to cover the overhead expenses of their

business while they are unable to work.

Total permanent disability insurance provides benefits when a person is permanently disabled

and can no longer work in their profession, often taken as an adjunct to life insurance.

Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying

medical expenses incurred because of a job-related injury.

Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific property. It is a

broad spectrum of insurance that a number of other types of insurance could be classified, such

as auto, workers compensation, and some liability insurances.

Crime insurance is a form of casualty insurance that covers the policyholder against losses

arising from the criminal acts of third parties. For example, a company can obtain crime

insurance to cover losses arising from theft or embezzlement.

Political risk insurance is a form of casualty insurance that can be taken out by businesses with

operations in countries in which there is a risk that revolution or other political conditions could

result in a loss.
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Life

Life insurance provides a monetary benefit to a decedent's family or other designated

beneficiary, and may specifically provide for income to an insured person's family, burial,funeral and other final expenses. Life insurance policies often allow the option of having the

proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

Annuities provide a stream of payments and are generally classified as insurance because they

are issued by insurance companies, are regulated as insurance, and require the same kinds of

actuarial and investment management expertise that life insurance requires. Annuities and

pensions that pay a benefit for life are sometimes regarded as insurance against the possibility

that a retiree will outlive his or her financial resources. In that sense, they are the complement of

life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by the insured if the

policy is surrendered or which may be borrowed against. Some policies, such as annuities and

endowment policies, are financial instruments to accumulate or liquidate wealth when it is

needed.

In many countries, such as the US and the UK, the tax law provides that the interest on this cash

value is not taxable under certain circumstances. This leads to widespread use of life insurance as

a tax-efficient method ofsaving as well as protection in the event of early death.

In the US, the tax on interest income on life insurance policies and annuities is generally

deferred. However, in some cases the benefit derived from tax deferral may be offset by a lowreturn. This depends upon the insuring company, the type of policy and other variables

(mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k)

plans, Roth IRAs) may be better alternatives for value accumulation.

Burial insurance

Burial insurance is a very old type of life insurance which is paid out upon death to cover final

expenses, such as the cost of a funeral. The Greeks and Romans introduced burial insurance circa

600 AD when they organized guilds called "benevolent societies" which cared for the surviving

families and paid funeral expenses of members upon death. Guilds in the Middle Ages served asimilar purpose, as did friendly societies during Victorian times.
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Property

This tornado damage to an Illinois home would be considered an "Act of God" for insurance

purposes

Property insurance provides protection against risks to property, such as fire, theft or weather

damage. This may include specialized forms of insurance such as fire insurance, flood insurance,

earthquake insurance, home insurance, inland marine insurance or boiler insurance. The term

property insurance may, like casualty insurance, be used as a broad category of various subtypes

of insurance, some of which are listed below:

US Airways Flight 1549 was written offafter ditching into the Hudson River

Aviation insurance protects aircraft hulls and spares, and associated liability risks, such as

passenger and third-party liability. Airports may also appear under this subcategory, including air

traffic control and refuelling operations for international airports through to smaller domestic

exposures.

Boiler insurance (also known as boiler and machinery insurance, or equipment breakdown

insurance) insures against accidental physical damage to boilers, equipment or machinery.

Builder's risk insurance insures against the risk of physical loss or damage to property during

construction. Builder's risk insurance is typically written on an "all risk" basis covering damage

arising from any cause (including the negligence of the insured) not otherwise expressly
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excluded. Builder's risk insurance is coverage that protects a person's or organization's insurable

interest in materials, fixtures and/or equipment being used in the construction or renovation of a

building or structure should those items sustain physical loss or damage from an insured

peril.[21]

Crop insurance may be purchased by farmers to reduce or manage various risks associated withgrowing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost

damage, insects, or disease.[22]

Earthquake insurance is a form of property insurance that pays the policyholder in the event of

an earthquake that causes damage to the property. Most ordinary home insurance policies do not

cover earthquake damage. Earthquake insurance policies generally feature a high deductible.

Rates depend on location and hence the likelihood of an earthquake, as well as the construction

of the home.

Fidelity bond is a form of casualty insurance that covers policyholders for losses incurred as aresult of fraudulent acts by specified individuals. It usually insures a business for losses caused

by the dishonest acts of its employees.

Hurricane Katrina caused over $80 billion of storm and flood damage

Flood insurance protects against property loss due to flooding. Many insurers in the US do not

provide flood insurance in some parts of the country. In response to this, the federal government

created the National Flood Insurance Program which serves as the insurer of last resort.

Home insurance, also commonly called hazard insurance, or homeowners insurance (often

abbreviated in the real estate industry as HOI), is the type of property insurance that covers

private homes, as outlined above.

Landlord insurance covers residential and commercial properties which are rented to others.

Most homeowners' insurance covers only owner-occupied homes.
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Fire aboard MV Hyundai Fortune

Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on

inland waterways, and of cargo in transit, regardless of the method of transit. When the owner of

the cargo and the carrier are separate corporations, marine cargo insurance typically compensates

the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be

recovered from the carrier or the carrier's insurance. Many marine insurance underwriters willinclude "time element" coverage in such policies, which extends the indemnity to cover loss of

profit and other business expenses attributable to the delay caused by a covered loss.

Supplemental natural disaster insurance covers specified expenses after a natural disaster renders

the policyholder's home uninhabitable. Periodic payments are made directly to the insured until

the home is rebuilt or a specified time period has elapsed.

Surety bond insurance is a three-party insurance guaranteeing the performance of the principal.

The demand for terrorism insurance surged after 9/11

Terrorism insurance provides protection against any loss or damage caused by terrorist activities.In the US in the wake of9/11, the Terrorism Risk Insurance Act 2002 (TRIA) set up a federal

Program providing a transparent system of shared public and private compensation for insured

losses resulting from acts of terrorism. The program was extended until the end of 2014 by the

Terrorism Risk Insurance Program Reauthorization Act 2007 (TRIPRA).
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MARINE INSURANCE

Meaning and definition

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport orcargo by which property is transferred, acquired, or held between the points of origin and finaldestination.

Cargo insurancediscussed hereis a sub-branch of marine insurance, though Marine alsoincludes Onshore and Offshore exposed property (container terminals, ports, oil platforms,pipelines); Hull; Marine Casualty; and Marine Liability.

Origins of formal marine insurance

Maritime insurance was the earliest well-developed kind ofinsurance, with origins in the Greekand Roman maritime loan. Separate marine insurance contracts were developed in Genoa andother Italian cities in the fourteenth century and spread to northern Europe. Premiums variedwith intuitive estimates of the variable risk from seasons and pirates.[1]

The modern origins of marine insurance law in English law were in the law merchant, with theestablishment in England in 1601 of a specialized chamber of assurance separate from the otherCourts. Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging oflaw merchant and common law principles. The establishment ofLloyd's of London, competitorinsurance companies, a developing infrastructure of specialists (such as shipbrokers, admiraltylawyers, and bankers), and the growth of the British Empire gave English law a prominence inthis area which it largely maintains and forms the basis of almost all modern practice. Thegrowth of the London insurance market led to the standardization of policies and judicialprecedent further developed marine insurance law. In 1906 the Marine Insurance Act was passedwhich codified the previous common law; it is both an extremely thorough and concise piece of

work. Although the title of the Act refers to marine insurance, the general principles have beenapplied to all non-life insurance.

In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of Londoncompany insurers) developed between them standardized clauses for the use of marine insurance,and these have been maintained since. These are known as the Institute Clauses because theInstitute covered the cost of their publication.
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Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain aconsiderable freedom to contract between themselves.

Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance andreinsurance. It traditionally formed the majority of business underwritten at Lloyd's. Nowadays,

Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form isknown by the acronym "MAT".

Practice

The Marine Insurance Act includes, as a schedule, a standard policy (known as the "SG form"),which parties were at liberty to use if they wished. Because each term in the policy had beentested through at least two centuries of judicial precedent, the policy was extremely thorough.However, it was also expressed in rather archaic terms. In 1991, the London market produced a

new standard policy wording known as the MAR 91 form and using the Institute Clauses. TheMAR form is simply a general statement of insurance; the Institute Clauses are used to set outthe detail of the insurance cover. In practice, the policy document usually consists of the MARform used as a cover, with the Clauses stapled to the inside. Typically each clause will bestamped, with the stamp overlapping both onto the inside cover and to other clauses; this practiceis used to avoid the substitution or removal of clauses.

Because marine insurance is typically underwritten on a subscription basis, the MAR formbegins: We, the Underwriters, agree to bind ourselves each for his own part and not one foranother [...]. In legal terms, liability under the policy isseveral and notjoint, i.e., theunderwriters are all liable together, but only for their share or proportion of the risk. If one

underwriter should default, the remainder are not liable to pick his share of the claim.

Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels isgenerally known as "Hull and Machinery" (H&M). A more restricted form of cover is "TotalLoss Only" (TLO), generally used as a reinsurance, which only covers the total loss of the vesseland not any partial loss.

Cover may be on either a "voyage" or "time" basis. The "voyage" basis covers transit betweenthe ports set out in the policy; the "time" basis covers a period of time, typically one year, and ismore common.
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Protection and indemnity

A marine policy typically covered only three-quarter of the insured's liabilities towards thirdparties. The typical liabilities arise in respect of collision with another ship, known as "runningdown" (collision with a fixed object is an "harbour"), and wreck removal (a wreck may serve to

block a harbour, for example).

In the 19th century, shipowners banded together in mutual underwriting clubs known asProtection and Indemnity Clubs (P&I), to insure the remaining one-quarter liability amongstthemselves. These Clubs are still in existence today and have become the model for otherspecialized and noncommercial marine and non-marine mutuals, for example in relation to oilpollution and nuclear risks.

Clubs work on the basis of agreeing to accept a shipowner as a member and levying an initial"call" (premium). With the fund accumulated, reinsurance will be purchased; however, if the lossexperience is unfavourable one or more "supplementary calls" may be made. Clubs also typically

try to build up reserves, but this puts them at odds with their mutual status.

Because liability regimes vary throughout the world, insurers are usually careful to limit orexclude American Jones Act liability.

Actual total loss and constructive total loss

These two terms are used to differentiate the degree of proof where a vessel or cargo has beenlost. An actual total loss occurs where the damages or cost of repair clearly equal or exceed thevalue of the property. A constructive total loss is a situation where the cost of repairs plus the

cost of salvage equal or exceed the value.

The use of these terms is contingent on there being property remaining to assess damages, whichis not always possible in losses to ships at sea or in total theft situations. In this respect, marineinsurance differs from non-marine insurance, where the insured is required to prove his loss.Traditionally, in law, marine insurance was seen as an insurance of "the adventure", with insurershaving a stake and an interest in the vessel and/or the cargo rather than simply an interest in thefinancial consequences of the subject-matter's survival.
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CLASSES OF MARINE INSURANCE

Cargo insurance

Salient Features

AN OVERVIEW OF RISKS TO WHICH THE CARGO IS EXPOSED DURINGTRANSPORTATION

Standard risks of transport

Exceptional risks of transport (war, strike or similar)

Scope of Cover

When these risks occur, they may result in either total loss or partial losses. Partial losses can beof two types viz. : -

1. Particular Average - The term Particular Average refers to physical damage and loss as wellas to any loss in weight or quantity suffered by the insured goods during transit.

2. GENERAL AVERAGE - General Average is a risk specific to marine transport. Therefore,if a vessel is in danger and the only way to prevent the vessel from striking is to throw onepersons cargo overboard, then the rest of the cargo owners and the vessel owner will make upthe loss to that person in proportion to the value of their goods in relation to the total amountsaved.

3. RISKS OF WAR, STRIKE, ETC.

Duration of Cover

1. The risk attaches from the time the goods leave the warehouse or place of storage at theplace named in the policy for commencement of transit and continues during ordinary courseof transit.

2. The first possibility of termination is upon delivery to the consignees or other final place ofstorage. The Policy also terminates at any intermediate point if the goods come into thecontrol of the assured for storage other than in ordinary course of transit, for allocation or forre-distribution. A time limit of 60 days is provided to allow completion the final leg of thetransit after discharge from overside the overseas vessel at the final port of discharge.


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Exclusions

The Insititute Cargo Clauses incorporates a set of exclusions under Clause4,5 and 6 clausesthat should be highlighted at this point.

Principle Exclusions

i) Willful misconduct of the Assured Even if the loss I proximately caused y an insured peril itis excluded if it is attributable to the willful misconduct(deliberate damage) of the Assured.

ii) Ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear Examples oflosses excluded within this category would include evaporation, natural shrinkage.

iii) Inadequate sufficiency or unsuitability of packing or preparation of packing of the subject

matter insured it is the duty of the insured it act as if uninsured. Clearly if goods are sentinsufficiently packed to withstand the normal handling anticipated during transit, then anyloss that arises there from should not be for insurers to pay.

iv) Inherent vice or nature of the subject matter insured Examples of excluded loss wouldinclude blowing of tins containing foodstuffs or spontaneous combustion of a cargo liable toself heating.

v) Delay The insurer is not responsible for any loss, damage or expense proximately caused bydelay although the delay can be caused by a peril insured against. Losses through delay couldinclude loss of market or deterioration in respect of perishable goods which would not be

recoverable even if the cause of the delay was peril insured such as a collision.

vi) Insolvency or financial default of Carriers- This exclusion clause was introduced todiscourage Assureds from shipping their goods on vessels whose owners, managers,charterers or operators might be in financial distress. In practice the clause would exclude alltypes of claims for recovery and forwarding of goods arising from the abandonment of aninsured voyage where the proximate cause was the financial distress of one of theaforementioned parties.

vii) Unseaworthiness and Unfitness exclusion This only applies where the assured or theiragents are privy to this information prior to loading.

viii) War and Strikes, Riots and Civil Commotions These risks are excluded under A, B and Cclauses but can be written back into the policy.


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War Risks

Coverage provided by war risks clauses do not operate during the entire course of transit. Marine

underwriters only offer cover for war risks whilst waterborne or airborne, for which they chargea relatively small premium.

There is no war risk covers for any of the goods up to the time they are loaded onto the ship andthe cover terminates immediately after the goods discharged at the destination port. A relaxationof the water borne only coverage is allowed immediately after the goods are discharged at thedestination port. A relaxation of the water borne only coverage is allowed whilst the goods arebeing transshipped at an intermediate port but this is subject to restrictions both in location andtime. Whilst the goods are being transshipped at an intermediate port but this is subject torestrictions both in location and time.

Strike Risks

Unlike War risk cover, coverage for STRIKES risks continues throughout the transit. Cover is

limited to PHYSICAL LOSS or DAMAGE to the cargo caused by STRIKES, LOCKED OUTWORKMEN, PERSONS TAKING PART IN LOCAL DISTURBANCES, RIOTS and CIVILCOMMOTIONS, TERRORISTS or any PERSON acting from a POLITICAL MOTIVE.


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HULL AND MACHINERY

Marine Hull and Machinery

For Indemnity Sections:

In case of any event leading to a claim under the Policy arising out of an Insured event, Insuredevent shall be intimated to Claims Manager / Underwriter.While Intimation of claim, Insured has to provide relevant information which includes Policyand Loss details.Based on the details provided Claim will appoint the Surveyor.

Appointment of Surveyor

The current process is that for all Marine H&M Losses an appropriate Loss Adjuster/Surveyor isto be appointed.

Professional loss adjustment in case of a fire claim is critical for reaching a clear decision in theclaim.

This requires that when a Surveyor is considered for appointment the following factors should belooked at:

Date and Time of Occurrence The nature of loss The geographical location of the loss Approximate amount of loss The Surveyors credentials, which would comprise of:

o His qualificationso His experienceo The quantum of loss assessed by him in earlier surveyso His Certification by IRDA

There are a few other critical things to be kept in mind here:

A specialist may be required to help the Surveyor while ascertaining the cause of fire. If there is confusion on any aspect of the claim including the cause of fire, a qualified

Consultant should be appointed. His appointment letter must clearly state the reason forhis appointment and what do we ant him to look into. The time lines for submitting the

report must also be agreed upon, as Adjustment must not be delayed due to pendancy ofthe investigation report.


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Surveyors Responsibilities:

The Surveyor must issue an ILA or initial loss assessment, as soon as his preliminaryassessment is over.

He should continue to advice about revision in reserve as his adjustment progresses, till afirm figure is arrived at.

He must submit he reports and photographs both in hard copies and soft copies.Supporting documents will have to be scanned.

He should clearly establish coverage. He must clearly establish Cause of loss. Loss Adjustment should be done in clear financial terms, with attachments certified by a

CA if financial statements are involved. Salvage value. The Surveyor should also determine loss minimization possibilities, by involving experts

from India/Abroad. If so agreed, with the insurers, he will co ordinate the activities ofthese specialists, so as to ensure that maximum equipment is made serviceable again.

Processing of Claim: The documents generally required for processing of claims are:

Policy/Underwriting documents. Survey Report with Photographs Claim Intimation letter by the insured with respect to the claim. Log book All Applicable valid Certificates

Apart from above Standard documents some other documents based on the nature of claimas under:

In addition to copies of the relevant insurance policies, the following documents andinformation may be required to accompany a claim put forward against insurers. If anadjustment is prepared, the adjuster will extract information from the documents andincorporate it in the adjustment, but insurers are still entitled to see the originaldocuments and vouchers if they so wish.

It will be noted from the list below that certain items require the endorsement of theunderwriters' surveyor as being fair and reasonable. This endorsement may be to theeffect that the amount concerns repairs attributable to the damage noted, or may be for

cost only where reservations exist as to whether the work incorporated in the account isrelevant to the repairs in question. The endorsement will be obtained either by theowners' superintendent at the time of survey/repairs, or through subsequentcorrespondence entered into by the average adjuster with the surveyors in question.


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(A) General

Deck and engine room log books covering the casualty, and, if possible, the repairperiod(s). Master's and/or chief engineer's detailed report and/or note of protest, asrelevant.

Underwriters' surveyor's report and account (if settled by ship-owners and not directly byunderwriters).

Classification Society surveyor's report and account. Owners' superintendent's report andaccount.

Receipted accounts for repairs and/or any spare parts supplied by ship-owners, inconnection with repairs, endorsed by underwriters' surveyor as being fair and reasonable.

Accounts covering any dry docking and general expenses relating to the repairs. Theseaccounts should also similarly be endorsed by underwriters' surveyor.

Accounts for all incidental expenses paid at the port of repair, e.g. port charges,watchmen, communications expenses, agency, etc.

Details of fuel and engine room stores consumed during the repair period, together withthe cost of replacement.

If any owners' repairs are effected concurrently with the damage repairs, it will assist theadjuster if the accounts for these repairs are also provided.

Copies of faxes/e-mails sent and details of long-distance calls made in connection withthe casualty, together with their costs.

Details of dates of payment of all accounts.

(B) When vessel has been in collision

Details of steps taken to establish the liability for the collisions and the eventualsettlement made between the two parties.

If a recovery has been attempted against the colliding vessel, a detailed copy of the claimput forward and all the items allowed from the claim by the owners of the colliding vesseltogether with accounts covering legal costs.

A detailed copy of any claim received from the other vessel, together with details ofwhich items included in the claim have been agreed.

Details of efforts to limit liability of applicable.

(C) Where a vessel is removed for repairs

The reason for the removal. Deck and engine room log extracts covering the removal passage or details of:

o The last port prior to the repair port, and the first port thereafter.o Details of the dates of arrival/departure at the relevant ports.

Details of whether a new cargo or charter was booked on the removal to the repair port,together with information concerning the freight earned thereon, and also derail as to anynew cargo booked to be loaded following completion of repairs.


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Accounts for the outward port charges at the last port prior to the repair port, the inwardand outward port charges at the repair port, and, if the vessel returns to the port fromwhich she originally moved, the inward port charges at that port.

Portage bill showing the wages of the officers and crew covering the period during theremoval to the repair port, and also for the return passage if the vessel returns to her

original port. The cost of maintenance for the officers and crew should also be stated. Details of fuel and stores used during the removal indicated under (5) above, and the cost

of their replacement. Accounts for temporary repairs if they were effected solely to enable the vessel to move

to the repair port. Details of owners' repairs, if any, effected at the repair port together with the costs

thereof.

General average - documents/information requiredThe documents required in cases of general average vary considerably according to the nature of

the casualty. The following are selected to cover the majority of cases.

(A) Resort to a port of refuge

Log extracts and reports from the master or other parties showing the dates and timeswhen the vessel deviated, arrived at a port of refuge, left port of refuge and regained herposition.

Any survey reports, whether held on behalf of underwriters, owners, the ClassificationSociety, or in the general interest dealing with the vessel's resort to the port of refugeand/or any repairs affected there.

Details of any repairs effected at the port or refuge, stating whether they were temporaryor permanent repairs, and also how much of the repair account represents the excess costsof overtime worked by repairers.

Details of any shifting or discharge of cargo at the port of refuge, stating whether suchshifting or discharge was necessary either in order to allow repairs necessary for the safeprosecution of the voyage, or for the common safety or for re-stowage. If any costs havebeen incurred in this respect, the accounts covering such expenses, storage whilst ashore,and insurance during the storage period to be supplied.

Agent's general account covering the detention period at port of refuge together withsupporting vouchers.

Portage bill giving details of wages and allowances paid to crew of vessel during theresort to the port of refuge.

The daily rate of maintenance paid in respect of the crew of the vessel. Details of fee and expenses paid to any owners' superintendent/surveyor employed at the

port of refuge. Details of fuel and stores consumed in deviating to the port of refuge, while detained

there, and in regaining position, together with details of the cost of their replacement. Copies of faxes/e-mails sent and details of long distance calls made in connection with

the casualty together with their costs. All accounts should be marked with the date on which they were paid by owners.


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(B) In respect of ship

If the vessel has been on fire:o Survey reports showing division of damage between fire and efforts to extinguish

the fire.(The same division should also be made in surveys of any similar damageto cargo.)o Accounts for repairs to the vessel should also be divided in this way.o Accounts for any fire-fighting costs: refilling extinguishers, CO2 bottles, etc.

If the vessel has been aground:o Survey report dividing the damage found between that caused by grounding and

that caused by re-floating.o Repair accounts should be similarly divided.o If the vessel has been re-floated with tugs, details of the Salvage Award and

relevant legal costs, or if the salvage services have been rendered under contract,a copy of the salvage contract and the relevant accounts.

oAccounts for any costs incurred lightening the vessel (e.g. lighterage).

(C) In respect of cargo

Manifest of the cargo on board at the time of the accident. Copy of the bills of lading showing the front and reverse sides. Details of the outturn of cargo delivered. Any reports of survey on the cargo held directly following the casualty or at the port(s) of

destination. General average security documents furnished by cargo interests (i.e. average bonds and

general average guarantees). Counterfoils of any general average deposit receipts issued. Copy of the commercial invoice(s) covering the particular consignment(s).

(D) In respect of freight/time charterers' bunkers

Details of the chartering situation of the vessel and copies of the charter parties. If freight was at risk, a copy of the settled freight account will be required together with

copies of all accounts covering the cost of earning the freight subsequent to the accident. Details of any bunkers owned by time charterers remaining on board the vessel at the

termination of the adventure. Off-hire statement.


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Salvage:

Salvage if any should be disposed of at an early date to realize maximum value and to avoid anyfurther deterioration, due to atmospheric conditions.

LIABILTY

There are many different types of insurance policies available, but liability insurance is one ofthe most popular because it costs much less than many other options. For example, in regard toauto insurance policies, liability insurance costs far less than full coverage. The reason for this isbecause full coverage insurance must pay for both your vehicle and any other vehicle involved ina collision, as well as property damage and medical expenses due to injuries to you or another

party.

On the other hand, liability insurance is only responsible for the other party's losses. Your personand your property are unprotected, but liability insurance protects you from being heldresponsible for the other party's damages.

There are different types of liability insurance, including general liability, which works in muchthe same way as auto liability insurance, but covers businesses. General liability protects acompany from third party claims. Aside from general liability, there is also D & O liability,employer liability, and professional liability insurance.

D & O liability stands for "directors and officers" liability and is intended to cover the acts oromissions of those in the director or officer position. An entire company should not be heldliable for the statements, actions, failure to act, or other mistakes that are the responsibility of anofficer or director.

MINISTRY OF LAW AND JUSTICE
http://www.wisegeek.com/what-is-property-damage.htmhttp://www.wisegeek.com/what-is-professional-liability-insurance.htmhttp://www.wisegeek.com/what-is-professional-liability-insurance.htmhttp://www.wisegeek.com/what-is-property-damage.htm


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(Legislative Department)

New Delhi, the 23rd January, 1991 Magha, 3, 1912 (Saka)

The following Act of Parliament received the assent of the President on the 22nd January, 1991,

and is hereby published for general information:-

An Act to provide for public liability- insurance for the purpose of providing immediate relief tothe persons affected by accident occurring while handling any hazardous substance and formatters connected therewith or incidental thereto.

BE it enacted by Parliament in the forty-first Year of The Republic of India as follows:-

1. (1) This Act may be called the Public Liability Insurance Act, 1991.

(2) It shall come into force on such date as the Central Government may, b) notification, appoint.

2. In this Act, unless the context otherwise requires.-

1[(a) "accident" means an accident involving a fortuitous, sudden or unintentional occurrence

while handling any hazardous substance resulting in continuous, intermittent or repeated

exposure to death, of or injury to, any person or damage to any property but does not include

an accident by reason only of war or radio-activity;]

(b) "Collector means the Collector having jurisdictin over the area in which the accident

occurs;

(c) "handling", in relation to any hazardous substance, means the manufacture, processing,

treatment, package, storage, transportation by vehicle, use, collection, destruction,

conversion, offering for sale, transfer or the like of such hazardous substance;

(d)"hazardous substance" means any substance or preparation which is defined as hazardous

substance under the Environment (Protection) Act, 1986 (29 of 1986), and exceeding such

quantity as may be specified, by notification, by the Central Government;

(e) "insurance" means insurance against liability under sub-section (I) of section A:

(f) "notification" means a notification published in the official Gazette;


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2[(g) "owner" means a person who owns, or has control over handling any hazardous

substance at the time of accident and includes,-

(i) in the case of firm, any of its partners;

(ii) in the case of an association, any of its members; and

(iii) in the case or a company, any of its directors, managers, secretaries or other officers who

is directly in charge of, and is responsible to the company for the conduct of the business of

the company;]

(h) "prescribed" means prescribed by rules made under this Act;

3[(ha) "Relief Fund" means the Environmental Relief Fund establishment under section 7A ]

(i) "rules" means rules made under this Act;

(ii) "vehicle" means any mode of surface transport other than railways.

3. (1) Where death or injury to any person (other than a workman) or damage to any property hasresulted from an accident, the owner shall-be liable to give such relief as is specified in Schedulefor such death, injury or damage.

(2) In any claim for relief under sub-section (I) (hereinafter referred to in this Act as claim forrelief), the claimant shall not be required to plead and establish that the death, injury or damagein respect of which the claim has been made was due to any wrongful act, neglect or default ofany person.

Explanation.-For the purpose of this section,-

(i) "workman" has the meaning assigned to it in the Workmens Compensation Act, 1923 (8 of1923);

(ii) "injury" includes permanent total or permanent partial disability or sickness resulting out ofan accident.

4. (1) Every owner shall take out, before he starts handling any hazardous substance, one or moreinsurance policies providing for contracts of insurance thereby he is insured against liability togive relief under sub-section (1) of section 3;


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Provided that ally owner handling any hazardous substance immediately before thecommencement of this Act shall take out such insurance policy or policies as soon as may be andin any case within a period of one year from such commencement.

(2) Every owner shall get the insurance policy, referred to in subsection (1), renewed from time

to time before the expiry of the period of validity thereof so that the insurance policies mayremain in force throughout the period during which such handling is continued.

4[(2A) No insurance policy taken out by an owner shall be for a amount less than the amount ofthe paid-up capital of the under taking handling any hazardous substance and owned orcontrolled by that owner and more than the amount, not exceeding fifty crore rupees, as may beprescribed.

Explanation.- "Paid-up capital" in this sub-section means, in the case of an owner not being acompany, the market value of all assets and stocks of the undertaking on the date of contracts ofinsurance.

(2B) The liability of the insurer under one insurance policy shall not exceed the amount specifiedin the terms of the contract of insurance in that insurance policy.

(2C) Every owner shall also, together with the amount of premium, pay to the insurer, for beingcredited to the Relief Fund established under section 7A, such further amount, not exceeding theamount of premium, as may be prescribed.

(2D) The insurer shall remit the further amount received from the owner under sub-section (2C)to the Relief Fund in such manner and within such period as may be prescribed and where theinsurer fails to so remit the further amount, such amount shall be recoverable from insurer as

arrears of land revenue or of public demand.]

(3)The Central Government may, by notification, exempt from the operation of sub-section (1)any owner, namely:-

(a) the Central Government;

(b) any State Government,

(c) any corporation owned or controlled by the Central Government or a StateGovernment; or

(d) any local authority:

Provided that no such order shall be made in relation to such owner unless a fund hasbeen established and is maintained by that owner in accordance with the rules made inthis behalf for meeting any liability under sub-section (I) of section 3.


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5. Whenever it comes to the notice of the Collector that an accident has occurred at any placewithin his jurisdiction, he shall verify the occurrence of such accident and cause publicity to begiven in such manner as he deems fit for inviting applications under sub-section (1) of section 6

6. (1) An application for claim {or relief may be made-

a) by the person who has sustained thc injury;

(b) by the owner of the property to which thc damage has been caused;

(c) where death has resulted from the accident, by all or any of the legal representatives of thcdeceased; or

(d) by any agent duly authorised by such person or owner of such property or all or any Of thelegal representatives of the deceased, as the case may be:

Provided that where all thc legal representatives of the deceased have not joined in any suchapplication for relief, the application shall be made on behalf of or for the benefit of all the legalrepresentatives of the deceased and the legal representatives who have not so joined shall beimpleaded as respondents to the application.

(2) Every application under sub-section (I) shall be made to the Collector and shall be in suchform, contain such particulars and shall be accompanied by such documents as may beprescribed.

(3) No application for relief shall be entertained unless it is made within five years of theoccurrence of the accident.

7. (1) On receipt of an application under sub-section (I) of section 6, the Collector shall aftergiving notice of the application to the owner and after giving the parties an opportunity of beingheard, hold an inquiry into the claim or, each of he claims, and may make an award determiningthe amount of relief which appears to him to be just and specifying thc person or persons towhom such amount of relief shall be paid.

(2) The Collector shall arrange to deliver copies of the award to the parties concernedexpenditiously and in any case within a period of fifteen days from the date of thc award.

5 [(3) When an award is made under this section,-

(a) the insurer, who is required to pay any amount in terms of such award and to theextend specified in sub-section (2B) of section 4, shall, within a period of thirty days ofthe date of announcement of the award, deposit that amount in such manner as theCollector may direct;


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(b) the Collector shall arrange to pay from the Relief Fund, in terms of such award and inaccordance with the scheme made under section 7A, to the person or persons referred toin sub-section (I) such amount in such manner as may be specified in that scheme;

(c) the owner shall, within such period, deposit such amount in such manner as the

Collector may direct.]

(4) In holding any inquiry under sub-section (1), the Collector may, subject to any rules made inthis behalf, follow such summary procedure as he thinks fit.

(5) The Collector shall have all the powers of Civil Court for the purpose of taking evidence onoath and of enforcing the attendance of witnesses and of compelling the discovery andproduction of documents and material objects and for such other purposes as may be prescribed;and the Collector shall be deemed to be a Civil Court for all the purposes of section 195 andChapter XX\I of the Code of Criminal Procedure, 1973 (2 of 1974).

(6) Where the insurer or the owner against whom the award is made under sub-section (I) fails todeposit the amount of such award within the period specified under sub-section (3), such amountshall be recoverable from the owner, or as the case may be, the insurer as arrears of land revenueor of public demand.

(7) A claim for relief in respect of death of, or injury to, any person or damage to any propertyshall be disposed of as expeditiously as possible and every endeavour shall be made to dispose ofsuch claim within three months of the receipt of the application for relief under sub-section (I) ofsection 6.

6 [(8) Where an owner is likely to remove or dispose of his property with a view to evading

payment by him of the amount of award, the Collector may, in accordance with the provisionscontained in rules I to 4 of Order XXXIX of the First Schedule to the Code of Civil Procedure,1908, (5 of 1908), grant a temporary injuction to restrain such act.]

7 [7A. (I) the Central Government may, by notification in the official Gazette, establish a fund tobc known as the Environment Relief Fund.

(2) The Relief Fund shall bc utilised for paying, in accordance with the provisions of this Act andthe scheme, relief under the award made by the Collector under section 7.

(3) The Central Government may, by notification in the Official Gazette, make a scheme

specifying the authority in which the relief fund shall vest, the manner in which the Fund shall beadministered the form and the manner in which money shall be drawn from the Relief Fund andfor all other matters connected with or incidental to thc administration of the Relief Fund and thepayment of relief therefrom.]

8. (1) Thc right to claim relief under sub-section (I) of section 3 in respect of death of, or injuryto, any person or damage to any property shall be in addition to any other right to claimcompensation in respect thereof under any other law for the time being in force.


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(2) Notwithstanding anything contained in sub-section (1), where in respect of death of, or injuryto, any person or damage to any property, the owner, liable to give claim for relief, is also liableto pay compensation under any other law, the amount of such compensation shall be reduced bythc amount of relief paid under this Act.

9. Any person authorised by the Central Government may, for the purposes of ascertainingwhether any requirements of this Act or of any rule or of any direction given under this Act havebeen compiled with, require any owner to submit to that person such information as that personmay reasonably think necessary.

10. Any person, authorised by thc Central Government in this behalf, shall have a right to enter,at all reasonable times with such assistance as he considers necessary, any place, premises orvehicle, where hazardous substance is handled for the purpose of determining whether anyprovisions of this Act or of any rule or of any direction given under this Act is being or has beencompiled with and such owner is bound to render all assistance to such person.

11. (1) If a person, authorised by the Central Government in this behalf, has reason to believethat handling of any hazardous substance is taking place in any place premises or vehicle, incontravention of sub-section (I) of section 4, he may enter into and search such place, premisesor vehicle for such handling of hazardous substance.

(2) Where, as a result Of any search under sub-section (I) any handling of hazardous substancehas been found in relation to which contravention of sub-section (I) of section 4 has taken place,he may sieze such hazardous substance and other things which, in his opinion, will be useful for,or relevant to, any proceeding under this Act:

Provided that where it is not practicable to seize any such substance or thing he may serve on the

owner an order that the owner shall not remove, part with, or otherwise deal with, the hazardoussubstance and such other things except with the previous permission of that person.

(3) He may, if he has reason to believe that it is expedient so to do to prevent an accident disposeof the hazardous substance seized under sub-section (2) immediately in such manner as he maydeem fit.

(4) All expenses incurred by him in the disposal of hazardous substances under sub-section (3)shall be recoverable from the owner as arrears of land revenue or of public demand.

12. Notwithstanding anything contained in any other law but subject to the provisions of this

Act, the Central Government may, in exercise of its powers and performance of its functionsunder this Act, issue such directions in writing as it may deem fit for the purposes of this Act toany owner or any person, officer, authority or agency and such owner, person, officer, authorityor agency shall be bound to comply with such directions.

Explanation.-For the removal of doubts, it is hereby declared that the power to issue directionsunder this section includes the power to direct-


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a. prohibition or regulation of the handling of any hazardous substance; orb. stoppage or r

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