Marine Insurance in India

Prof: Amina Momin

Aakanksha
Mayur
Jyoti Pise
Nasir Nabisaheb
Junaid Shaikh 9149
 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
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.
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 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
 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
 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
 Losses
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
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
 PSU’s Business Class breakdown* (2006)

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Source: Lloyds report on General Insurance in India : 2006
 Private Company’s Business Class breakdown*
(2006)

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Source: Lloyds report on General Insurance in India : 2006
 Marine Cargo* absolute growth and market share
– Top five players (2005 vs. 2006)

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Source: Lloyds report on General Insurance in India : 2006
 Marine Hull* absolute growth and market share –
Top four players (2005 vs. 2006)

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Source: Lloyds report on General Insurance in India : 2006
Thank You