Marine insurance is an agreement by which the insurance company or under writer agree the indemnify the owner of the ship or the cargo against the risk involved in marine cargo and ship, it covers alarge number of risks such as sinking of ship, burning of ship, sea dacoitee loss from stromy wind etc.
Characteristics of marine insurance
- Cosideration
- insured is under obligation to pay certain amount periodically to the insurer in consideration for accepting the risk.
- coverage of insurance
- In marine insurance , cargo, ship and freight(transport) can be insured.
- mode of insurance
- The insurance may be for single journey or number of journey or for specific period of time.
- Condition for compensation
- The insured is compensated only when the loss is occured to the ship or cargo, It also include third party insurance.
Scope of marine insurance
Cargo insurance,
- The term cargo refers to goods carried in a ship in course of shipment, the insurance which cover the risk such as fire and other perils, any loss incurred to cargo during transportation from one court to another court is indemnified by the insurance company.
Freight insurance
Freight refers to payment recieve for the transportation of goods, means this insurance protect the goods from damage, theft, losses when or while they are transporting.
Dedicated freight corridor (DFC)
Example: Making new railways tracks only for transportation of goods, The policy is taken by freight receiver to protect freight purchase. If the ship fails to reach the destination due to marine perils, the freight receiver losses the freight , hence the freight insurance is a remedy to avoid a risks.
Hull insurance
It is insurance of ship against the risks of sea transportation, A ship may be exposed to various risk such as: sinking, burning, colonialism, explosion, etc.
The marine insurance act, 1963
Marine insurance defined in section 3 marine insurance act
Section 3 Definition of marine, Insurer-> insured Indemnifies by loss from incidental to marine adventure.
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.
Mixed sea and land risk section 4, marine act
Section 4, Mixed sea and land risks :- Example ,Any goods destined for Delhi to london then it will go from delhi to Mumbai then Mumbai to london by ship and by road or rail.
- (1) A contract of marine insurance may, by its express terms, or by usage of trade, be extended so as to protect the assured against losses on inland waters or on any land risk which may be incidental to any sea voyage.
- (2) Where a ship in course of building or the launch of a ship, or any adventure analogous to a marine adventure, is covered by a policy in the form of a marine policy,
- the provisions of this Act, in so far as applicable, shall apply thereto, but except as by this section provided, nothing in this Act shall alter or
- affect any rule of law applicable to any contract of insurance other than a contract of marine insurance as by this Act defined.
Explanation.—“An adventure analogous to a marine adventure” includes an adventure where any ship, goods or other movables are exposed to perils incidental to local or inland transit.
Section 5 marine act, Lawful marine adventure
Subject to the provisions of this Act, every lawful marine adventure may be the subject of a contract of marine insurance.
- lawful marine adventure.
- example: OPM or human trafficking.
Avoidance of wagering contract, section 6 marine insurance act
- Avoidance of wagering contracts, presence of insurable interest in insurance contract i.e actual loss.
- example: Indian wins- not insurable interest but win or loss – will be that insurable interest amount of win and loss.
- Contract by wag of wager is void, your ship safely will go from one port to other is wagering agreement, Your ship if got damaged then I will pay that amount to your i.e marine insurance.
- There should be insurable interest
- If there is written interest or no interest i.e wagering agreement there should be further interest not only in policy interest like -10,00,000 policy , it should be interest of 15,000,00 or 20,00,000.
- Insurer must get a premium without given premium that will be wagering agreement.
- Every contract of marine insurance by way of wagering is void.
Provided that, where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer.
Insurable interest Section 7 marine insurance act
- Insurable interest defined
- insured have an insurable interest, a person who have, legal or equitable relation to the property ( both the parties involved have insurable interest).
Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure.
Reinsurance section 11 marine insurance act
- (1) The insurer under a contract of marine insurance has an insurable interest in his risk, and may reinsure in respect of it.
- (2) Unless the policy otherwise provides, the original assured has no right or interest in respect of such reinsurance.
Insurance is uberrimae fidei Section 19 marine insurance act
- Insurance is uberrima fides, means utmost good faith.
- If there is not a proper disclosure it can be avoided.
A contract of marine insurance is a contract based upon the utmost good faith, and if the utmost good faith be not observed by either party, the contract may be avoided by the other party.
Disclosure by assured, section 20 marine insurance act
- Disclosure by assured
- disclose all the material circumstance which is known to him.
- example: how old the ship, quality company everything should be disclosed because to fix the ordinary course of business because it presumed that he known and he should or ought to know.
- material circumstance
- the thing substance where the premium is decided or fix and decided matter insurer going to take that risk or not.
- following circumstance need not to disclose in absence of inquiry, when insurer does not ask directly.
- circumstances which dismissed the risk which decreases the risk.
- example: new ship, route is clear no pirates.
- which presumed to be known to insurer, if he asked insured have to disclose then.
- insurer himself waved off the information.
- superfluous( not so necessary)
- If the circumstance is not disclosed it may be material or not be in case a question of fact.
- circumstance
- it include any communication made to, or information received by the assured.
Section 21 Marine insurance act, Disclosure by agent effecting insurance
Circumstances which need not be disclosed, where an insurance is effected for the assured by an agent, the agent must disclose to the insurer.
Representations pending negotiation of contract Section 22 marine insurance act
Section 22 Representations pending negotiation of contract Contract must be embedded in policy the policy should be in detail. And before the contract is conclude must be true, If it be untrue the insurer may avoid the Contract.
Section 25 Marine insurance act, policy must specified
- what policy must specified
- name of assured
- subject matter insured and risk insured against,
- cargo, ship, freight, etc.
- voyage or period of time,
- sum or sums insured,
- name of insurer or insurers.
Signature of insurer Section 26 marine insurance act
- signature of insurer
- marine policy must be signed by or on behalf of the insurer.
- where policy is subscribed by or on behalf of 2 or more insurer, each subscription, unless the contrary be expressed.
Voyage and time policies, Section 27 marine insurance act
- voyage and time policies
- time policies are for 12 months not more than 12 month.
- it should be renewed by passing or next per year.
- the contract is to insured the subject matter gor a definite period of time is called time policy,
- the contract is to insure the subject matter at and from or from one place to another or other is called ” voyage policy”.
- Section 28
- designation and subject matter, the subject matter should be told very clearly.