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MARINE INSURANCE

Voyage

The course of the voyage shall be determined in the following order:
1. The course agreed upon by the parties.
2. If nothing was agreed upon, one which conforms to the course of sailing fixed by
mercantile usage. ( Sec 123 of Insurance Code )
3. If there no mercantile usage, one which a master of ordinary skill and discretion would
find to be the most natural, direct and advantageous. (Sec 124 of Insurance Code )
Deviation

SEC. 125. Deviation is a departure from the course of the voyage insured, mentioned in the last
two (2) sections, or an unreasonable delay in pursuing the voyage or the commencement of an
entirely different voyage

Deviation is
1. a departure from the course of voyage mentioned in section 123 and section 124 of the
Insurance code.
2. An unreasonable delay in pursuing the voyage
3. or the commencement of an entirely different voyage.


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Kinds of Deviation

1. Proper

SEC. 126. A deviation is proper:
(a) When caused by circumstances over which neither the master nor the owner of the ship
has any control;
(b) When necessary to comply with a warranty, or to avoid a peril, whether or not the peril is
insured against;
(c) When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a
peril; or
(d) When made in good faith, for the purpose of saving human life or relieving another vessel
in distress.
Eg. Where the ship is compelled to head for another port by stress of weather.

The cases contemplated by paragraph c and d of SEC. 126 of the Insurance Code
expressly require that good faith.



2. Improper deviation

SEC. 127. Every deviation not specified in the last section is improper.



Importance of classifying deviation into proper and improper

SEC. 128. An insurer is not liable for any loss happening to the thing insured subsequent to an
improper deviation.
The insurer is not exonerated from liability for loss happening after proper deviation.
Deviation from the source of the voyage will not vitiate a policy of marine insurance if
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the deviation is justified or caused by actual necessity which is equal in importance to
such deviation.



Loss

SEC. 129. A loss may be either total or partial.
SEC. 130. Every loss which is not total is partial.
SEC. 131. A total loss may be either actual or constructive.
Kind of Loss


1. Total
When the loss is total, the underwriter is liable for whole of amount insured.

a. actual

SEC. 132. An actual total loss is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the purpose for which
he held it; or
(d) Any other event which effectively deprives the owner of the possession, at the port of
destination, of the thing insured.
An actual total loss exists when the subject matter of the insurance is wholly
destroyed or lost or when it is so damaged as no longer to exist in its original
character.
The complete physical destruction of the subject matter as in the case of fire is not
essential to constitute actual loss.
Such a loss may exist where the form and specie of the thing is destroyed although
the materials of which it consisted still exist.

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b. constructive

SEC. 133. A constructive total loss is one which gives to a person insured a right to abandon,
under Section 141.

A constructive total loss, or, as it is sometimes called, a technical total loss, is one in
which the loss, although not actually total is of such character that the insured is
entitled, if he think fit, to treat it as a total by abandonment.

Important Distinction between between actual and constructive total loss
In cases of actual loss, no abandonment is necessary; but if the loss is merely
constructively total, an abandonment becomes necessary ; but if the loss is merely
constructively total, an abandonment becomes necessary in order to recover as for total
loss.

Presumption of Actual Loss

SEC. 134. An actual loss may be presumed from the continued absence of a ship without being
heard of. The length of time which is sufficient to raise this presumption depends on the
circumstances of the case.

Where a vessel is not heard of at all within a reasonobale time after sailing or for a
reasonable time after sailing, or for a reasonable time after she was last seen, she will be
presumed to have been lost form a peril insured against.

2. Partial

SEC. 130. Every loss which is not total is partial.

AVERAGE


SEC. 138. Where it has been agreed that an insurance upon a particular thing, or class of
things, shall be free from particular average, a marine insurer is not liable for any particular
average loss not depriving the insured of the possession, at the port of destination, of the
whole of such thing, or class of things, even though it becomes entirely worthless; but such
insurer is liable for his proportion of all general average loss assessed upon the thing insured.
Any extraordinary or accidental expense incurred during the voyage for
the preservation of the vessel , cargo, or both, and all damages to the vessel and cargo
from the time it is loaded and the voyage commenced until it ends and the cargo unloaded.
GENERAL PARTICULAR


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Rights of the insured in case of general average

GENERAL RULE:
The insured may either hold the insurer directly liable for the whole of the insured value
of the property sacri ficed for the general benefit, subrogating him to his own
right of contribution or demand contribution from the other interested parties as soon
as the vessel arrives at her destination

EXCEPTIONS:
1. after the separation of interests l iable to contribution
2. When the i nsured has negl ected or wai ved his ri ght to contribution

FPA Clause (Free From Particular Average)

A clause agreed upon in a policy of marine insurance in which it is stated that the
insurer shall not be liable for a parti cular average, such i nsurer shall be free there
from, but he shall continue to be liabl e for his proportion of all general average
losses assessed upon the thing insured.