Marine insurance is the oldest form of Insurance. It is closely related to import and export trade overseas. It is an insurance against the perils of the sea which are likely to occur during sea transport. Marine risks generally related to the ship or cargo and the traders and owners of the ship always like to ensure the safe arrival of the ships and cargo. Marine insurance covers a lot of risks such as sinking, burning of ships, accident, collision of ships, jettison, barratry, piracy, explosion, sea dacoits, stormy winds causing losses to the ship and cargo and many other perils of the sea. Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination. Marine insurance is a type of insurance that covers boats and ships, as well as their cargo and in some instances the places where the boat or ship is docked.t has a colorful history, beginning informally in England during the 17th century. In 1906, the Marine Insurance Act was passed under British law, creating a standard operating procedure for policies that dictates the world’s policies to this day. The standards set forth by the act are considered reasonable, but due to changes in technology and social standards, the act is generally seen as obsolete and is being replaced by more modern legislature.
According to section 2(13) A of the Insurance Act 1938 a marine insurance defined as the following. “Marine insurance business means the business of effecting contracts of insurance upon vessels of any description, including cargos, freights and other interests which may be legally insured in or in relation to such vessels, cargoes, freights goods, wares, merchandise and property of whatever description insured for any transit by land or water or both, and whether or not including warehouse risks or similar risks in addition or as accidental to such transit and includes any other risks customarily included among the risks insured against in marine insurance policies.”
According to Arnold marine insurance is a contract whereby one party for an agreed consideration, undertakes to indemnify the other against loss arising from certain perils and sea risks to which a shipment and other interest in a marine adventure may be exposed during a certain voyage or a certain time.
Subject matter of marine insurance
Marine hull insurance, cargo, freight and liability are the subject matter of marine insurance.
Marine Hull Insurance:
This pertains to insurance of ocean going steamers and other vessels. “Hull” refers to the body or frame of the ship. Machinery is the equipment that generates the power to move the vessel and control the lighting and temperature system such as boiler, engine, cooler and electricity generator. Hull insurance provides the cover for the hull and machinery as well as in respect of materials and outfit and stores and provisions for the officers and crew. In addition cover for liabilities is included.
Marine Cargo Insurance:
This being cargo insurance, it provides cover for various transit perils in respect of goods and or merchandise in transit from one place to another by sea, air, road or registered post. Transit or Marine risks or perils are covered under Marine Insurance. Marine insurance plays a pivotal role in Import, Export and internal trade. Trade involves movement of goods from one place to another place. Goods while in transit are liable to be lost or damaged through one or other of various perils from the time it leaves the warehouse of the supplier till it is received at the final warehouse of the consignee. Goods while in transit are generally exposure of perils leading to total loss or damage. The loss or damage suffered due to these perils is to be transferred to the Insurer in lieu of the premium, as these are included in the Marine cover. It has coverage of loss or damage caused by war, civil war, revolution, rebellion, insurrection or civil strife or any hostile act, capture, seizure, arrest, restraint detainment, general average and salvage charges Strikes, riots etc.
Freight is the charge payable for the carriage of cargoes. If the vessel is a chartered one, the money is to be paid for the use of the vessel. In case the cargo or ship gets destroyed, the shipping company will also lose the freight on the carriage of cargo. If the cargo owner pays freight for the goods shipped at the time of shipment and the goods do not reach the destination, he loses the fright. The policy covers such risk is called freight insurance.
Features of marine insurance
The following are the important features of marine insurance contract.
- In this type of insurance cargo, ship and fright is to be insured.
- There is a contract between insurer and insured.
- The insured is liable to pay a certain amount to the insurer as premium for the insurance.
- Insurance can be taken for a single journey or number of journeys during a period of time.
- The insurer guarantees to indemnity the loss incurred by the insured from sea perils.
- .Marine insurance can be taken against losses incurred in inland also.
- It also includes third party insurance.
KINDS OF MARINE POLICIES
The document containing the terms and conditions of the contract is called the Marine Policy. It must contain the names of the assured and the insurer or insurers. The subject-matter insured and the risk covered the voyage or period of time or both and the sums insured. It must be duly signed by the insurer and stamped under the Stamp Act. 1899. The Marine Insurance Act deals with the following types of policies:
When the contract is to insure the subject matter at and from one place to another, the policy is called a “Voyage policy”. In this case the risk attaches only when the ship starts on the voyage.
Where the subject-matter is insured for a definite period of time, it is called a “Time Policy. The ship may pursue any course it likes; the policy would cover all the risks from perils of the sea for the stated period of time. A time policy cannot be for period exceeding one year, but it may contain a continuation clause.
It is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time.
It is a policy, which specifies the agreed value of the subject matter insured. If there is no fraud or misrepresentation, the value in a valued policy is conclusive as between the insurer and the insured, whether the loss is partial or total.
Open or Un-valued Policy
In this policy the value of the subject-matter insured is not specified. Subject to the limit of the sum assured, it leaves the value of the loss to be subsequently ascertained.
The practice of taking out floating policies has come in vogue because of the difficulty of knowing by which ship or ships the goods are to be shipped. Such a policy therefore only mentions the amount for which the insurance is taken out and leaves the name of the ship(s) and other particulars to be defined by subsequent declarations.