Marine Insurance is the oldest known type. It is a contract of indemnity in which the underwriter agrees to compensate the insured against specified perils in consideration of a certain premium. Some writers define marine insurance. “It is a contract of indemnity whereby the assure undertakes to indemnify the insured in a manner and to the extent thereby agreed against the loss caused in connection with a marine adventure.” It is primarily concerned with the loss imposed by some maritime perils. Temple man has defined these types of insurance as “A contract of indemnity whereby the insurer undertakes to indemnify the insured against perils insured.”
A policy is generally taken in order to obtain protection against the risk included in the clause.
The growth of international trade has been greatly helped by shifting risk to the company. A ship sailing in the sea faces some misfortune. Marine Insurance is a device to reduce or eliminate sea perils. So industrials and exporters may devote their full attention towards the promotion of business which may increase the export activates.
Three Insurance of Property
Hull Insurance
This is affected by the ship-owner on the actual vessel and its machinery. It covers all the perils of the sea, i.e. storm, stranding, collision, fire and it arranges on an annual basis.
Cargo Insurance
This policy is arranged for goods or merchandise carried by ship. This is taken for the duration of a voyage or for other purposes. It provides coverage against all risks including strike and war risks.
Freight Insurance
The term Freight is used for the cost of transporting the goods. It may also be referred to as the hire of a vessel. If the freight has been pre-paid, this is generally added to the value of the goods insured under the policy. A shipowner is entitled to it only when the goods safely arrive at the port of distinction. If the goods are destroyed or the ship does not reach the destination, the shipping company would lose the income.
Essentials of The Valid Marine Insurance Contract
Contract of Indemnity
As It is a contract of indemnity, so insured cannot claim before he suffers loss; In the absence of the loss, the entire amount paid as premium will be possessed by the underwriting as profit.
Insurable Interest
The assured must have an insurable interest in the subject matter. Its absence will make the insurance policy as gambling. It must be present at the time of the loss and need not exist when the policy is effected.
Fair Dealing
It is an important essential of the contract that the insured must disclose all the material facts concerning the risk insured. The contract becomes void in case of concealing any fact.
Sea Worthiness
It is one of the clauses of an implied warranty that the ship must be in a fit condition in order to encounter the ordinary perils of the voyage being insured. The condition of the seaworthiness must be satisfied before the commencement of the ‘voyage.
Non Deviation
The ship must follow the proper route which is usually specified in the policy. Any departure by a ship from such course is called a deviation. The deviation is, however, allowed in unavoidable circumstances.
Legality of the Venture
The object of the voyage must be lawful. For example, a policy to cover the risk of smuggling and trading with an enemy in time of war is void. In case of default, the underwriter is discharged from his liability.
Condition of the Cargo
The cargo must be in sound condition and properly packed.
General Consideration
- The ship must carry the necessary documents to establish her nationality.
- The parties must be competent to contract and it should be made by the free consent of the parties.
- The agreement must be supported by valuable consideration.
- The contract must be embodied in a policy.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.
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