Professional Documents
Culture Documents
Marine Insurance
Marine Insurance
BACKGROUND
What is Insurance?
Insurance
company
Indemnity for
loss suffered
HISTORICAL BACKGROUND OF MI
In ancient India and Babylon
Loans
Protection for maritime adventure was done through
loans on the security of a vessel or cargo.
Known as bottomry (when the secured property was a
vessel) and respondentia (when the secured property
was cargo)
If the vessel/cargo arrived safely, the loan was repayable
at a high rate of interest.
In the event of total loss of the vessel/cargo, the borrower
was excused from the obligation to repay the loan.
Lloyds of London
MEANING
INSURER / UNDERWRITER
ASSURED/INSURED
INSURABLE INTEREST
PREMIUM
PERIL
Contracts of nonindemnity or
contingency insurance
The underwriter
The underwriter agrees to
undertakes to pay
pay a fixed sum of
indemnity to the extent money on the happening
of loss.
of an insured risk.
The assured has to prove The assured does not
loss suffered before
have to prove loss.
making a claim.
The assured will be
covered once the
contingency/incident
stated in the contract
occurred.
e.g. Marine insurance
e.g. Life insurance
House-hold insurance
Health insurance
SOURCES OF MARINE
INSURANCE
CONTRACT
Freedom of contract to the parties.( parties are free to
negotiate whatever terms in the policy that they seem fit)
However, in practice standard institute clauses are
normally used.
e.g. International Hull Clauses 2003.
THE DOCTRINE OF
UTMOST GOOD FAITH
i. Duty of full
disclosure
ii. Duty to abstain from
misrepresentation
1. Assured
2. Broker
3. Insurer
I. Duty of Disclosure
Every material circumstances known to insured and to
insurer/broker must be disclosed.
What are material facts/circumstances that need to be
disclosed?
The facts / circumstances are material if it would
influence a prudent insurer
in considering the proposed insurance either to take / reject the
risk
in determining premium.
Physical hazard
Risk presented by attributes/qualities of the insured
property.
e.g.
Age and construction of the ship
The voyage that the ship is undertaking
The nature of the cargo that is being carried
PREVIOUS CONVICTION
Previous conviction of the assured is material because it
increase the likelihood of fraud or exaggerated claims.
The fact that the assured is under investigation or has been
charged for a crime which he did not commit is a material
fact.
The Dora
A previous conviction of the skipper of a yacht unknown to
the insurer. The insurer can avoid
the policy.
MARINE INSURANCE
RISKS
Wilful misconduct
Delay
Ordinary wear and tear
Contractual exclusion
Inherent vice
Fire
Elements:
Ignition
Combustion
Cannot be claimed under fire:
Damage caused by mere heating/over heating
Case:
Tempus Shipping Co Ltd v Dreyfus & Co Ltd
Mere heating which has not arrived at the stage of
ignition is not within the definition of fire.
Theft
Elements;
Theft must be violent
Committed by persons from outside the
vessel (stevedore, pilot)
Piracy
1. Piracy is robbery for personal gain
2. Violence is an essential element for
piracy
3. Piracy could be committed either by
outsiders or passengers
MAIN TYPES OF
MARINE INSURANCE
Cargo Insurance
Cargo insurance covers the interest of shippers,
consignees, distributors, and others in goods.
This insurance covers loss and/or damage during the
movement of cargo from one port/ country to another.
Mode of transport can be by sea, air or within land.
Coverage can be provided for all risks or on a named
peril basis.
Coverage can either be effected by the buyer or the seller depending on the
contract of sales.
There are different types of recognised Sale Contracts, the most common
affecting Marine Insurance are:
RISKS
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
Yes
No
pollution,
wreck removal (Costs incidental to the raising, removal, destruction, and
liabilities incurred by a member as a result of the raising, removal or
destruction)