Professional Documents
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Marine insurance
Marine insurance
There is no legal obligation in English
Law to insure ships, goods or freight
All marine insurance contracts
agreed in the UK are governed by the
Marine insurance Act 1906
Principles of insurance
Indemnity
Insurable interest
Utmost good faith
Doctrine of proximate cause
Indemnity
Principle of Indemnity is that insurer will indemnify assured
for loss and will restore him to the position he was
immediately before loss occurred.
In life insurance, purpose is to pay a known sum of money,
with a possibility that as a result, assured will be better off
than before.
Where indemnity is the purpose, assured should not be better
off as a result of the loss, fraud will be otherwise encouraged.
Assured cannot claim more than once on the same risk with
two insurers (double insurance)
Assured cannot recoup his loss from another party after the
claim was settled. E.g. cargo owner after claiming from his
insurers cannot claim again from his carrier.
Insurable interest
The subject matter must be a
physical object exposed to peril.
Assured must have some legal
relationship (not necessarily
ownership) to the subject matter.
Assured must stand to benefit by its
preservation.
Assured must stand to lose by its loss
or damage.
Utmost good faith
Assured must disclose to the insurer before
the contract is concluded, every material
circumstance which is known to the assured
and which would influence the insurer’s
judgement in fixing the premium or whether
or not he would accept the risk.
e.g. shipowner must disclose that his ship has
failed for example a special survey.
Doctrine of proximate cause
Insurer is not liable for any loss which
is not proximately caused by a peril
insured against.
E.g. if a ship is scuttled and seawater
entering the ship sinks her, owner
may claim that the peril of seas was
the cause of his loss, but the insurer
would not be liable since scuttling is
a wilful misconduct of the assured.
Marine insurance
Types of policies
Voyage policy: port to port, ship must be
within the ports mentioned. (cargo policies)
Time policy: for a period of time, mainly 12
months, usually expiring at noon or midnight
GMT. (H&M policy)
Policies can also be either valued or
unvalued.
Warranties
Assured undertakes that some particular
thing SHALL or SHALL NOT be done
Express warranty is written in clauses e.g.
institute warranties say class maintenance
or warranty limits.
Implied warranty are not written but
implied by law e.g. seaworthiness at the
beginning of voyage, legality- drug
running or going to port under UN
embargo.
Shipowner intending to breach any
warranty must inform his underwriters.
Marine insurance
policies
Hull and machinery policy
Insurance market
London marine insurance market is
largest in the world. 1- Lloyd’s
market, 2- IUA or Companies market.
P&I clubs of which several are based
in UK.
Lloyd’s of London
Is not a company but a society of individuals
and corporate members with strict rules.
Areas: marine 17%, aviation 7%, motor 16%,
non transport 59%.
Market capacity in 2004 about 18bn.
Capital provided by about 3000 individual
members and 900 corporate members.
Lloyd’s of London