CHAPTER 14

There are six (6) major classes of insurance:

1. Marine insurance
2. Fire insurance
3. Casualty insurance
4. Suretyship
5. Life insurance
6. Macroinsurance
Persons who have insurable interest in marine insurance
1. Shipowner over the value of the vessel; except the vessel has been chartered and the
charterer agreed to pay the shipowner the value of the vessel in case of loss. In such
case, the shipowner insurable interest is only up to the amount not recoverable from the
charterer. (Sec. 102)
Marine Insurance:
1. Insurable interest;
2. Perils of the Sea;
3. Perils of the ship;
4. All risks policy;
5. Seaworthiness;
6. Barratry is any willful misconduct in the part of the master or crew in pursuance of some
unlawful or fraudulent purpose without the consent of the owner and to the prejudice of the
interest of the owner
7. General and Particular average;
8. Loss and abandonment.
Coverage of Marine Insurance
1. Insurance against loss of or damage to:
1. Marine protection and indemnity insurance.
a. Vessel, craft, aircraft, vehicles, goods, freight, cargoes, merchandise, effects, disbursement, profits,
moneys, securities, choses in action, instruments of debts, valuable papers, bottomry, and
respondentia interests and all other kinds of property and interests therein in connection with any
risk or perils of navigation, transit or transportation, or while being assembled, packed, crated,
baled, compressed or similarly prepared for shipment, or during any delays, storage, transhipment,
or reshipment incident thereto, including war risks, marine builders risks, and all personal property
floaters risks;
b. Person or property in connection with marine, inland marine, transit or transportation insurance,
including liability for loss of or damage in connection with the construction, repair, operation,
maintenance or use of the subject matter of such insurance;
c. Precious stones, jewels, jewelry, precious metals, whether in course of transportation or otherwise;
and
d. Bridges, tunnels and other instrumentalities of transportation and communication (excluding
buildings, their furniture and furnishings, fixed contents and supplies held in storage); piers,
wharves, docks and slips, and other aids to navigation and transportation, including dry docks and
marine railways, dams and appurtenant facilities for the control of waterways.
Insurance against legal liability of the insured for loss, damage, or expense incident to
ownership, operation, chartering, maintenance, use, repair, lor construction of any vessel,
craft or instrumentality in use of ocean or inland waterways, including liability of the
insured for personal injury, illness or death or for loss of or damage to the property of
another person.
The following warranties are implied in marine insurance:
1) That the ship is seaworthy to make the voyage and/or to take in certain cargoes
2) That the ship shall not deviate from the voyage insured;
3) That the ship shall carry the necessary documents to show nationality or neutrality and
that it will not carry any document which will cast reasonable suspicion thereon;
4) That the ship shall not carry contraband, especially if it is making a voyage through
belligerent waters.
PERIL OF THE SHIP VS. PERIL OF THE SEA
(1998 Bar Question)
A marine insurance policy on a cargo states that “the insurer shall be liable for losses
incident to perils of the sea.” During the voyage, seawater entered the compartment where
the cargo was stored due to the defective drainpipe of the ship. The insured filed an action
on the policy for recovery of the damages caused to the cargo. May the insured recover
damages?
No. The proximate cause of the damage to the cargo insured was the defective drainpipe of
the ship. This is peril of the ship, and not peril of the sea. The defect in the drainpipe was
the result of the ordinary use of the ship. To recover under a marine insurance policy, the
proximate cause of the loss or damage must be peril of the sea.