You are on page 1of 2

EORUPA ACADEMY

Q. No. 27 (a): What is Marine Insurance? Explain the different types of Marine Insurance.

M A R I N E

I N S U R A N C E

INTRODUCTION: Insurance is the oldest types of insurance dating over 5000 years back. It was originally meant for giving insurance coverage to the loss of ships and cargo at sea. In more recent times, it has been split up into two major forms of transportation coverage. 1) OCEAN MARINE INSURANCE: It is a highly specialized business. The insurance companies cover practically all perils of shipments on the high seas. In the ocean marine insurance, the coverage is provided for ship and its contents. 2) INLAND MARINE INSURANCE: An inland marine insurance policy provides coverage to losses caused by fire theft to goods being transported by rail, trucks, airplanes, and steamers. DEFINITION: Marine Insurance Act 1906 of England define marine insurance agreement as a: Contract where by the insurer undertake to indemnify the assured, in a manner and to the extend that there by agreed marine losses that is to say losses incident to marine adventure. TEMPLEMAN DEFINE: Contract of indemnity whereby the insure undertakes to compensate the insured against perils insured. Alan Issacs is of the view that: Marine Insurance the insurance of ships or the cargo against specified courses of loss or damage that might be encountered at sea.

PRINCIPLES OR ESSENTIALS OF MARINE INSURANCE:


Following are the essentials of marine insurance:-1) Utmost Good Faith: The contract of marine insurance depends upon the principle of utmost good faith. The insured and the insurer must exercise utmost good faith in the Negotiations leading up to the formation of the contract. The insured should disclose all the facts regarding the goods. It is worthwhile to mention here if the insured conceals by thing then contract becoming invalid. 2) Contract of Indemnity: Marine insurance is a contract of indemnity. The insured cannot claim unless he suffers a loss. If there is no loss, there is no claim. 3) Insurable Interest: The assured must have insurable interest in the property. It must be present at any time of loss and need not exist when the policy is affected e.g. any ship goods, or other movables are exposed to marine perils, such property is referred to as insurable property. In marine insurance, the insurable interest must exist at the time of the loss. 4) Good Packing: The cargo must be packed properly and in a good manner, cargo should be in sound condition.

Prepared By: H.ABDUL REHMAN

0321-6485593

EORUPA ACADEMY
5) Proper Rout: The ship must adopted proper rout, which is specified in the marine policy. If a ship does not adopts the proper route which is specified in the marine policy then it is called deviation change of rout is only allowed when the condition are unfavorable. 6) Legality of Voyage: The object of the voyage must be lawful e.g. a policy to cover the risk of smuggling is invalid. 7) Good Condition of Ships: The ship must be in a good condition. The ship may be able to face the ordinary sea perils. 8) Competent Parties: The parties must be competent to make contract and contract should also be supported by a valuable consideration. TYPES OF MARINE POLICY: The main types of marine policies based on variety of risk s covered are as under: a) Time Policy: This is a policy which the subject matter insured for a specified period of time say from April 1999 to Dec. 25 1999. b) Voyage Policy: This policy is meant to insure that subject matter of particular voyage say from Karachi to London. c) Mixed Policy: This policy is meant to cover the subject matter on a particular voyage and for a specified period of time say from Karachi to London for a period of 4 months. d) Valued Policy: In this policy, the value of the goods insured is agreed upon between the insurer and the insured and is written in the policy. e) Unvalued Policy: A policy, which does not indicate the value of the subject matter, is called open or unvalued policy. The value is assessed when the loss actually takes place. f) Composite Policy: It is the policy, which is taken for a certain amount but on the beginning of the policy. The premium is paid on the whole of it. The adjustment is made at the end of the term of the policy. g) Blanket Policy: It is the policy, which is taken for a certain amount but on the beginning of the policy. The premium is paid on the whole of it. The adjustment is made at the end of the term of the policy. h) Floating Policy: It is a policy, which is used by the cargo owners. They insure the shipment expected to be made during a; certain period by one policy. When the goods are loaded and the ship is on sea, an actual value of the shipment is declared and the actual value of policy is reduced or increased by that amount. i) Port Policy: It is a policy to cover the vessel when it is anchored in a port. j) Fleet Insurance Policy: It is designed to insure a whole fleet of steamers of liner of a company.

Prepared By: H.ABDUL REHMAN

0321-6485593