Types of Marine

Insurance

Parwinder Singh
6752

Introduction
In one form or another, we all owninsurance. Whether
it's auto, medical, liability, disability or life, insurance
serves as an excellent risk-management and wealthpreservation tool. Having the right kind of insurance is a
critical component of any good financial plan. While
most of us own insurance, many of us don't understand
what it is or how it works.

Definition of Marine Insurance

Marine insurance is a contract whereby the
insurer undertakes to indemnify the
assured, in manner and to the extent
thereby by agreed, against marine losses,
i.e. the losses incident to marine adventure

HISTORY OF MARINE
INSURANCE
Marine Insurance is not of recent origin. Its existence can be
traced back to several centuries. Questions concerning it have
naturally been coming up for a number of years and the law
concerning it had taken a definite shape much prior to 1906
when the English Marine Insurance Act was passed with a view
to codify that law.
Contrary to popular belief, Lloyds of London was not the first
group of people to offer insurance for maritime commerce. The
first form of marine insurance dates back to the year 3000 BC
when Chinese merchants dispersed their shipments amongst
several vessels so as to abridge the possibility of damage to the
product(s).

Cont..

Since independence Indian shipping had undergone a

considerable expansion, and it became mandatory for an
Indian legislation consistent with Indian conditions, for
the smooth development of Indian marine insurance.

But, as in the case of its English counterpart, the Indian

Act embodies only some and not all of the legal principles
and rules of marine insurance, and its language is so
extremely concise and general that its full import and
meaning can scarcely be understood without referring to
the existing law which it was intended to express or to
the decided cases from which that law was evolved.
In India the law of marine insurance has been put in a
statutory form since 1963.

Types of Marine Insurance

Hull Insurance

Cargo
Insurance
Protection and
indemnity
Insurance

Hull Insurance
Hull and machinery
insurance is to protect the
ship owners investment in
the ship. It is basically a
property insurance which
covers the ship itself, the
machinery and equipment.
Furthermore, the insurance
covers some liabilities,
normally collision liability
with another ship and
sometimes also liability for
colliding with other objects
than another ship.

Claims include

Total loss of the ship

Damage to the ship, engines and equipment
Explosions and fire
Groundings damage to the ship, salvage of
the ship and possible contribution in general
average
Collisions damage sustained to the ship and
sometimes also liability towards the other ship.
Striking other objects damage inicted to own
ship and sometimes also liability towards the
owners of the other object.

Cargo Insurance
Cargo insurance (also called marine cargo
insurance) covers physical damage to, or
loss of your goods while in transit by land,
sea and air and offers considerable
opportunities and cost advantages if
managed correctly.

Types of cargo insurance

Open Cover
This is the most usual type of cargo insurance, where a
policy is drawn up to cover a number of consignments. The
policy can be either for a specific value that requires renewal
once the insured amount is exhausted or an permanently open
policy that will be drawn up for an agreed period, allowing any
number of shipments during this time.

Specific (Voyage) Policy

Although not the norm for cargo insurance, you may from
time to time need to approach an insurance company (or
broker, or other intermediary) to request an insurance policy
for a particular consignment. This is usually referred to as
Voyage Policy as the insurance covers only that specific
shipment.

Contingency insurance
As an exporter you may often sell goods on terms
where your customer (as the importer) is responsible
for insuring (or at least bearing the risk of damage of
or loss to) the goods, for example under FOB and CFR
Incoterms 2000. In these cases you are exposed to the
risk of damage to the goods while in transit and your
customer refusing to accept them. In the worse case
your customer may not have insured the goods.

Claims include:

THE CARGO TRANSPORTED BY SEA IS SUBJECT

TO MANIFOLD RISKS SUCH AS:
_LOSS OR DAMAGE AT THE PORT AND
_ LOSS OR DAMAGE DURING THE VOYAGE.
- MARINE CARGO INSURANCE PROVIDES THE
INSURANCE COVER IN RESPECT OF:LOSS OF OR
DAMAGE TO CARGO

Why Should Cargo Be Insured?

There are many different things that can potential
happen during shipment of cargo and container on a
ship. The loading cranes could damage the containers,
theft and piracy, weather damage, as well as potentially
losing the cargo overboard or other marine disasters. All
of these possible issues are exactly why you need
marine cargo insurance. Your goods need to be
protected, and if you are a company transporting goods
this way, then you need to protect your company from
these potential issues of loss.

Protection and indemnity

Protection and Indemnity insurance, or P&I as it is
usually called, is a ship owner's insurance cover for legal
liabilities to third parties. Third parties are any person,
apart from the ship-owner himself, who may have a legal or
contractual claim against the ship. P&I insurance is usually
arranged by entering the ship in a mutual insurance
association, usually referred to as a club. Ship-owners are
members of such clubs. Legal liability is decided in
accordance with the laws of the country where an accident
takes place. The P&I insurance cover for contractual liability
is agreed at the time the owner requests insurance cover
from the club and is usually in accordance with the owners
responsibility under crew
contracts or special terms
relating to the trading pattern of the vessel.

Other P&I Covered Risks

Other risks covered include liability for stowaways,
liability for oil pollution and other types of pollution and
legal liability for wreck removal if the ship sinks and is
blocking free navigation for other vessels. In short, P&I
insurance is a very comprehensive type of insurance
cover which makes it easier for a ship owner or charterer
to trade in international shipping transportation. P&I is as
important to a prudent ship owner as his Hull and
Machinery insurance cover.

Loss Of Crew Members

Personal Effects
P&I insurance also covers the owners liability for
loss of crew belongings in cases of shipwreck or fire
on board. The cover only applies to items which are
deemed to be reasonable for any crew member to
have with him on board. A crew member travelling
with unusually expensive items, such as laptop
computers, gold watches etc should make sure that
he has such items separately insured.