MARINE INSURANCE

Presented By:
Yatika Garg (MBA/10094/17)
Surbhi Jain (MBA/10095/17)
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HISTORY

 The Indian Marine Insurance Act came into operation on August 1,

1963 and is a comprehensive document containing all regulations of
marine insurance business in India.
 Prior to this Act, the insurance business was conducted on the basis of
the principles of General Contract Act and English Marine Insurance
Law.
 Marine Insurance covers the loss or damage of ships, cargo, terminals
and any transport or property by which cargo is transferred, acquired
or held between the points of origin and final destination.
 Marine Insurance has been made mandatory in export-import
business.
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Definition of Marine Insurance Business

A contract of marine insurance is defined by the Marine
Insurance Act 1963 as an ‘agreement whereby the insurer undertakes to
indemnify the assured, in the manner and to the extent there by agreed
losses incidental to marine adventure. It may cover loss or damage to
vessels, cargo or freight.’

Sec 2 (C & F) of the Marine Insurance Act, 1963

defines marine insurance and includes the movables exposed to maritime
perils.
Movables mean movable tangible property, which includes money,
valuable securities and documents etc.
Maritime Perils means the perils or dangers incidental to the navigation
of the ship at sea.
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Types of Marine Insurance

There are various types / classes of marine insurance:
 Hull Insurance
It covers physical damage to the ship or vessel. In addition it
contains a collision liability clause that covers the owner’s liability if the ship
collides with another vessel or damages its cargo.

 Cargo Insurance
It covers the shipper of goods if the goods are damaged or
lost. The policy can be written to cover a single shipment. If regular shipments
are made, an open cargo policy can be used that insures the goods automatically
when a shipment is made. The open cargo policy has no expiration date and
remains in force till it is cancelled.
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 Protection and Indemnity (P&I) insurance

It is usually written as a separate contract that provides
comprehensive liability insurance for property damage or bodily injury to third
parties. P&I insurance protects the ship owner for damage caused by ship to
piers, docks and harbor installations, damage to ship’s cargo, illness or injury to
the passenger or crew and fines and penalties.

 Freight Insurance
Freight insurance offers and provides protection to merchant
vessels’ corporations which stand a chance of losing money in the form of
freight in case the cargo is lost due to the ship meeting with an accident. It
indemnifies the ship owner from the loss of earnings if the goods are damaged
or lost and are not delivered.
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Types of Marine policy

 Voyage Policy: A voyage policy is that kind of marine insurance policy

which is valid for a particular voyage.

 Time Policy: A marine insurance policy which is valid for a specified time
period – generally valid for a year – is classified as a time policy.

 Mixed Policy: A marine insurance policy which offers a client the benefit of
both time and voyage policy is recognized as a mixed policy.

 Open (or) Unvalued Policy: In this type of marine insurance policy, the
value of the cargo and consignment is not put down in the policy
beforehand. Therefore reimbursement is done only after the loss of the cargo
and consignment is inspected and valued.
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 Valued Policy: A valued marine insurance policy is the opposite of an open

marine insurance policy. In this type of policy, the value of the cargo and
consignment is ascertained and is mentioned in the policy document
beforehand thus making clear about the value of the reimbursements in case
of any loss to the cargo and consignment.

 Port Risk Policy: This kind of marine insurance policy is taken out in order
to ensure the safety of the ship while it is stationed in a port.

 Wager Policy: A wager policy is one where there are no fixed terms for
reimbursements mentioned. If the insurance company finds the damages
worth the claim then the reimbursements are provided, else there is no
compensation offered. Also, it has to be noted that a wager policy is not a
written insurance policy and as such is not valid in a court of law.
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 Floating Policy: A marine insurance policy where only the amount of claim
is specified and all other details are omitted till the time the ship embarks on
its journey, is known as floating policy. For clients who undertake frequent
trips of cargo transportation through waters, this is the most ideal and
feasible marine insurance policy.

 Single Vessel Policy: This policy is suitable for small ship owner having
only one ship or having one ship in different fleets. It covers the risk of one
vessel of the insured.
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Types of Risks/ Perils covered by the Marine Insurance Policy
1. Perils of the sea
Perils of sea means any type of incident of contingent accidents or casualties at
the sea. In course of the voyage, the ship may be damaged due to sea storm, sea
pirates, tsunami and accidents of any kind. These all risks are covered by marine
insurance.

2. Fire
It is likely that fire may occur in the ship, when it is voyage. Inflammable items
such as coal, oil, electricity and others are required in larger quantity for the
operation of ship. Thus, fire may be included as risk in marine insurance.

3. Theft
The goods may be stolen during a sea voyage. Therefore, theft is one of the risks
associated with the sea transportation. For the purpose of marine insurance, the
thieves must not be the captain and his crew themselves or the people traveling
by the ship. They must be outsiders, who use force for stealing goods.
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4. War risks
War risks are also covered by modern marine insurance. The shipping companies
may have to face many risks during the war period. There may exist a risk of loss
of ship, cargo and freight due to attacks and counter defensive operations. War
risks are insurable in marine insurance.

5. Land risk
Marine insurance indemnifies the subject-matter (cargo) of the parties right from
the warehouse of the exporting country to the warehouse of the importing
country against any risk of loss. The risks of loss associated with other means of
transportation such as railways, roadways and others, warehouses, ports of both
the countries and others are included and covered under marine insurance.

6. Jettison
Jettison means throwing overboard a part of cargo or any other goods in order to
reduce the weight in the ship. Some of the cargo is deliberately thrown away
with the object of preventing the ship from further damage. Loss caused by this
method is one kind of marine risk and it can be covered under the marine
insurance policy.
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Essentials Elements or Principles of Marine Insurance

 Fundamentals of general contract
 Insurable interest
 Utmost Good Faith
 Indemnity
 Subrogation
 Contribution
 Warranties
 Causa proxima
 Assignment
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Features of A General Contract

A marine policy must fulfil all the essentials of a valid contract namely
 Offer and Acceptance
 Consideration
 Capacity
 Legal Purpose

Insurable Interest
 A person has insurable interest if he is interested in a marine
adventure inconsequence of which he may benefit by the safe arrival
of the insurable property or be prejudiced by its loss, damage or
detention.
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Utmost Good Faith

 The insured must disclose all those relevant facts to the insurer which
are likely to affect his willingness to undertake the risk.
 If either party does not disclose full facts, the other party can avoid
the contract at any time.

Contract of Indemnity
 Under this contract, the underwriter agrees to indemnify the insured
against losses by sea risk to the extent of the amount insured.
 The insured can recover only the actual loss suffered and nothing
more.
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Principle of Subrogation
 According to this principle after meeting the loss agreed, the insurer
steps into the shoes of the insured and becomes entitled to all rights
and remedies available to the insured against the insured property or
third persons.

Principle of Contribution/Double Insurance

 The doctrine of contribution applies to marine insurance.
 If the subject has been insured with more than one insurer, each
insurer has to pay only the relatable proportion of loss subject to the
maximum loss.
 The principle supports the concept that the insured cannot recover
amounts on the same property for the same peril from more than one
insurer.
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Warranties
 According to Marine Insurance Act, a warranty means a stipulation or
term, the breach of which entitles the insurers to avoid the policy
altogether and this is so even though the breach arises through
circumstances beyond the control of the warrantor.
 Warranties can be expressed (written) or implied.

Causa Proxima
 According to the Marine Insurance Act, the insurer is liable for any
loss proximately caused by a peril insured against.
 Insurer is not liable for any loss which is not proximately caused by a
peril insured against.
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Assignment Of Policy
 A marine insurance policy is assignable unless it contains terms
expressly prohibiting assignment.
 It may be assigned either before or after loss.
 A marine policy may be assigned by endorsement thereon or in any
other customary manner.
Thank you