Q1. Explain Marine Insurance and discuss its various clauses.

Ans1

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.

Cargo insurance—discussed here—is a sub-branch of marine insurance, though Marine

also includes Onshore and Offshore exposed property (container terminals, ports, oil
platforms, pipelines); Hull; Marine Casualty; and Marine Liability

FPA - AC (Free of Particular Average -– Limits recovery of partial losses

to those directly CAUSED BY the vessel stranding, sinking, burning, or being in
collision with another vessel.
WA if amounting to 3% (With Average with a Franchise equal to 3% of the insured
value) – Limits recovery of partial losses due to a named peril in the policy to those
reaching a Franchise (3% is usual for many commodities, but the Franchise can be any
percentage of the insured value, or any amount agreed upon by the insurance company
and the Assured).
WA Irrespective of Percentage (With Average, No Franchise) - Allows full recovery of
all partial losses due to a named peril in the policy. This clause can also be written in a
variety of ways, as above, with the words "if amounting to 3%" replaced by "irrespective
of percentage," or deleted entirely.
Clean B/L
A B/L without notation of damage exceptions to the cargo or the packing. A clean B/L is
prima facieevidence of the apparent good order and condition of the cargo when received
by and accepted for carriage by the carrier.
Blocking and Bracing
Materials (usually wood-timber) used to secure, immobilize and protect cargo by
preventing its free movement or shifting during transit.
Bumbershoot
A marine insurance policy covering multiple liability coverage’s in excess of one or more
Different underlying policies (comparable to the Commercial Liability Umbrella
covering liabilities on land). "Bumbershoot" is the English word for "Umbrella," i.e. "all
encompassing."
Certificate Of Insurance
In Marine Insurance, a document issued on behalf of an insurance company covering a
specific shipment. It states the terms and conditions of the cargo insurance and is subject
to the terms and conditions of the underlying open cargo policy. It is not a "stand-alone"
policy. It is used when evidence of insurance is required, especially by a bank issuing a
letter of credit.
Classification Societies
Organizations which survey and classify ships according to their condition for insurance
and other purposes
Contingency Insurance – Sellers interest
Backup insurance that protects a party’s interest if certain events occur, e.g. if the
Assured buys or sells cargo on terms under which the insurance is arranged by the other
party, and that insurance fails to respond to a covered loss, the Contingency Insurance
protects the Assureds interest in the shipment.
Declaration
An insurance form filled out by the Assured for reporting / declaring individual
shipments under an Open Cargo Policy. It is usually used for declaring import shipments
where evidence of insurance is not required. A multi-entry declaration is called a
bordereau.
Deductible / Deductible Average (DA)
Either a percentage of the insured value of the entire vessel or the entire cargo shipment,
or a specified dollar amount which is subtracted from the total amount of claim. It is
applied to partial loss claims, but not usually to total loss or General Average claims,
depending on the policy wording.
Force Major Clause
A clause in a contract exempting the parties from their obligations under the contract as a
result of conditions beyond their control.
General Average (G A )
An ancient principle of equity, recognized by maritime nations, pre-dating the concept of
insurance and still valid today, in which all parties involved in a sea adventure (vessel,
cargo, and freight) proportionately share losses resulting from a voluntary and successful
effort to save the entire venture from an imminent peril. There are two types of General
Average acts:

1. Voluntary Sacrifice of a part of the vessel or a part of the cargo, e.g. jettison of
property to stabilize the vessel during heavy weather.
2. Extraordinary Expense necessarily incurred for the joint benefit of vessel and cargo,
e.g. towing charges incurred to assist a disabled vessel to a port of refuge.
General Average Agreement
A guarantee by the owner of the cargo (usually the consignee) to pay that proportion of
the generalaverage contribution, salvage, or special charges owed by the shipment, and to
give information about its value so an Average Adjustment can be prepared. The vessel
owner will not release cargo for delivery to the consignee until the cargo owner signs this
average agreement or bond, which is prepared by the general average adjuster.
Inherent Vice
A loss caused by the nature of the thing insured and not the result of a fortuitous external
cause; e.g. spontaneous combustion of bulk grain.

Q2. What are the types of motor insurance policies?? Explain the features of a personal
accident policy.
Ans-2

There are two types of motor insurance policies:-

Liability Only Policy : This policy covers Third Party Liability (TPL) for bodily injury
and/or death and property damage. Personal accident cover for owner-driver is also
included. This cover is mandatory under the Motor Vehicles Act. While the insured is the
first party, the insurance company is the second party and all others are third parties.

Package (Comprehensive) Policy: This policy covers loss or damage to the vehicle
insured (Own Damage or OD) and TPL. It entitles you to claim compensation in case
your vehicle is stolen or damage. In addition, it also covers additional liabilities as
provided by the India Motor Tariff.

Key Benefits

• Individual Personal Accident Policy covers you against risks of accidents.

• It not only provides compensation to the family in case of the accidental death of
the insured but also takes on the onus of providing the insured with compensation
in case of injury, whether temporary or permanent.
• The sum insured increases by 5% for each completed claim-free year of
insurance, subject to a maximum of a 50% increase.
• This policy can also be expanded to cover actual medical expenses arising out of
the accident

Next Steps

Policy Coverage
Individual Personal Accident Policy will cover against:

• Accidental Death – On the accidental death of the insured person, we will pay
the family the capital sum insured.
• Permanent Total Disability – In the event of permanent total disability due to an
accident, we will also pay the capital sum insured.
• Permanent Partial Disability – In case of a partial disability due to an accident,
a specified percentage of the sum insured will be paid. To know the specific
percentage of the sum assured that will be paid,
• Temporary Total Disability – If you are totally disabled by an accident for a
limited period of time, the policy will pay you 1% of the capital sum insured per
week, not exceeding Rs 5,000 per week.

Ans3
The suit is not maintainable as the defense given by bank is relating to time barring is
purely applicable in this case further the insurance company was informed from time to
time basis regarding payments through half yearly statements ,which ultimately leaves
the fact that the negligence was there on the insurance companies part not on the banks
side.
Q4. Introduction of the subject matter being discussed and the principle enunciated in the
Law
Ans4-The subject matter is related to the negotiable instrument act 1881
Negotiable Instruments are money/cash equivalents. These can be converted into liquid
cash subject to certain conditions. They play an important role in the economy in
settlement of debts and claims. The transactions involving the Negotiable Instruments in
our country are regulated by law and the framework of the Statute which governs the
transaction of these instruments is known as The Negotiable Instruments Act. This act
was framed in our country in the year 1881 when the British ruled our country. Prior to
1881 the transactions governing Negotiable Instruments were regulated under the cover
of Indian Contract Act 1872. This act has been amended as many as 23 times to meet the

As per Section 6 "A cheque is a bill of exchange drawn on a specified banker and not
expressed to be payable otherwise than on demand." After 2002 amendment cheque
includes " the electronic image of a truncated cheque and a cheque in the electronic
form." In terms of Explanation I,

(a) " 'a cheque in the electronic form' means a cheque which contains the exact mirror
image of a paper cheque, and is generated, written and signed in a secure system ensuring
the minimum safety standards with the use of digital signature (with or without
biometrics signature) and asymmetric crypto system;

(b) “ 'a truncated cheque' means a cheque which is truncated during the course of a
clearing cycle, either by the clearing house or by the bank whether paying or receiving
payment, immediately on generation of an electronic image for transmission, substituting
the further physical movement of the cheque in writing."

The principal indicates that once the cheque is presented in the bank bearing the
authorized signatures it can not be stopped from payment until some request is presented
in bank for stopping of payment by the account holder, in the given case no action can be
taken against the bank as there was no mistake or fraud from the banks side as per the
N.I. Act 1881 .The bank has only honored the cheque bearing the authorized signatures

Q5. Enumerate the facts of the decided case on the point.

Ans5
Even if the cheques were found to be forged there was a formal acceptance of payment
from the side on insurance company as they had provided authority to cheque bearing the
signature of managing director to be paid on behalf of insurance company.

2-There was no negligence on part of bank because bank had informed the insurance
company from time to time regarding payments through monthly statements and half
yearly accounts

3-There was no attempt made by insurance company to check the status of cheque book
which was in the custody of account officer which should be done at the time of audits.

4-Every suit is time barred one can not claim for such issues after a long period which is
four years in this case
Q6. Explain the decision pronounced by the Court of Law in each of the decided cases
including some of the recent cases decided by Supreme Court/High Court.
Ans6-
In the case titled New India Assurance Company versus Kamla reported in
(2001-1) P.L.R. 831, it was held by the Hon’ble Supreme Court as under: -

(i) Motor Vehicles Act 1988 (59 of 1988) Section 149- Driving License
Cannot get its forgery outfit striped off merely on account of same
Officer renewing the same with or without knowing it to be forged
.
(ii) Liability of Insurance Company- When a valid insurance policy has
Been issued in respect of a vehicle as evidenced by a certificate of
Insurance, the burden is on the insurer to pay the third parties, whether
Or not there has been any breach or violation of the policy conditions.
But the amount so paid by the insurer to third parties can be allowed to
Be recovered from the insured if as per the policy conditions, the
Insurer had no liability to pay such sum to the insured.

(iii) Amount paid by Insurance Company- Now the Claims Tribunal has
to decide the next question whether the insurance company is entitled
to recover that amount from the owner of the vehicle on account of the
vehicle being driven by a person who had no valid licence to drive the
vehicle-For that purpose, we remit the case to the Claims Tribunal.

(iv) Policy of Insurance- If the insurance company succeeds in

establishing that there was a breach of the policy condition the claims
Tribunal shall direct the insured to pay that amount to the insurer-In
default, the insurer shall be allowed to recover that amount from the
insured person.

(v) Driving License- Contention that insured made all due enquiries and
believed bonafide that the driver employed by him had a valid driving
license, in which case there was no breach of the policy condition- As
we have not decided on that contention, it is open to the insured to
raise it before the Claims Tribunal.

In the above given case the point of consideration was whether the driver was having a
valid license or not and it was discovered that the driver was having a valid license and
on the above grounds the insurance company was ordered to pay the claims