MARINE INSURANCE

Marine Insurance is the oldest form of insurance in the world. It has developed with the expansion of trade. It was started during the middle ages in Italy and then in England. In modern times marine insurance business is well organized and is carried on scientific lines. Though the name indicates that the policy covers the transit of goods only by waterways, it is not so. It covers transportation of goods by rail, road, air as well as couriers. During this entire process of transportation, storage, loading and unloading, the goods are exposed to a large number of perils. Goods are often lost or damaged due to the operation of these hazards and there is a financial loss to the exporter/ importer. The shipping company wants the
safety of the ship. So marine insurance insures the coverage of all types of risks which occur during the transit.

It is this loss that is taken care of by marine cargo insurance or what is more popularly known as transit insurance.
Marine insurance may be called a contract whereby the insurer undertakes to indemnify the insured in a manner and to the extent thereby agreed upon against marine losses. Marine insurance has two branches: 1. Ocean Marine Insurance. 2. Inland Marine Insurance. Ocean marine insurance covers the perils of the sea whereas inland marine insurance is related to the inland risks on the land.

IMPORTANCE of marine insurance : In the commercial age of today marine insurance has become most important insurance in the field of insurance. The importance of marine insurance is describe below in detail. 1. Importance Of Marine Insurance For The Individual A person has to import goods from another country which is located on the other side of sea for his business. While carrying goods from other side of sea businessman may have to facedacoits or goods may be damaged because of sinking of ship into the water. So businessman has to experience economic loss. By the result of loss person may be discouraged to engage in business. But when one insures his/her property in marine insurance does not have to face with economic

problem because marine insurance provides compensation to the insured against the loss of property. 2. Importance Of marine Insurance For Shipowner Expensive ship may be destroyed due to different types of risks on the marine venture. Shipowner may have to experience with larger amounts of loss due to the destruction of the ship. Marine insurance provides compensation of loss to the shipowner . So, marine insurance is important insurance for shipowner. 3. Importance Of Marine Insurance For Freight Freight insurance is also included under the marine insurance. Freight refers to the revenue that a cargo ship earns or the money which is paid to the shipowner for transportation of goods from one part to another. If businessman does not pay freight of his goods to the shipowner, shipowner may have to experience economic loss. If such types of loss occurs insurance company indemnifies the shipowner to marine insurance. So marine insurance is very important for the freight. 4. Importance Of Marine Insurance For Cargo Owner A businessman wants to be secured for his goods. Especially countries which are located on the other side of sea , businessman may have to use marine venture. Marine insurance keeps them away from worry and fear or all responsibility of cargo owner is transferred to the hand of insurance company that provides compensation to the cargo owner if loss occurs. 5. Importance Of Marine Insurance For The Government International trade has been increased due to the marine insurance. As international trade increases government also can receive economic profit. Government increases revenue by including extra income tax. So marine insurance is important for the government also.

The subject of Marine Insurance is very wide and encompassing, which is why there is a definite categorization of various types of marine insurance and different types of marine insurance policies. As per the needs, requirements and specifications of the transporter, an appropriate type or types of marine insurance can be narrowed down and selected to be put into operation. The types of marine insurance available for the benefit of a client are many and all of them are feasible in their own way. Depending on the nature and scope of a clients business, he can opt for the best marine insurance plan and enjoy the advantage of having marine insurance. There are four types of marine insurance:

1)Hull Insurance:- Hull insurance mainly caters to the torso and hull of the vessel

along with all the articles and pieces of furniture in the ship. This type of marine insurance is mainly taken out by the owner of the ship in order to avoid any loss to the ship in case of any mishaps occurring.
Cargo Insurance:- Cargo insurance caters specifically to the cargo of the ship and also pertains to the belongings of a ships voyagers. Freight Insurance:- provides protection against the loss of freight. In many cases, the owner of goods is bound to pay freight, under the terms of the contract, only when the goods are safely delivered at the port of destination. If the ship is lost on the way or the cargo is damaged or stolen, the shipping company loses the freight. Freight insurance is taken to guard against such risk.

Liability Insurance : Liability insurance is that type of marine insurance where compensation is sought to be provided to any liability occurring on account of a ship crashing or colliding and on account of any other induced attacks.

In addition to these types of marine insurance, there are also various types of marine insurance policies which are offered to the clients by insurance companies so as to provide the clients with flexibility while choosing a marine insurance policy. The availability of a wide array of marine insurance policies gives a client a wide arena to choose from, thus enabling him to get the best deal for his ship and cargo. The different types of marine insurance policies are detailed below:

Types of Marine Insurance Policies:(1)Voyage policy:- is a policy in which the subject matter is insured for a particular voyage irrespective of the time involved in it. In this case the risk attaches only when the ship starts on the voyage. (2)Time policy:- is a policy in which the subject matter is insured for a definite period of time. The ship may pursue any course it likes, the policy would cover all the risks from perils of the sea for the stated period of time. A time policy cannot be for a period exceeding one year, but it may contain a 'continuation clause'. The 'continuation clause' means that if the voyage is not completed within the specified period, the risk shall be covered until the voyage is completed, or till the arrival of the ship at the port of call. (3)mixed policy:- is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time. (4)Valued policy:- Under its terms the agreed value of the subject matter of insurance is mentioned in the policy itself. In case of cargo this value means the cost of goods plus freight and

shipping charges plus 10% to 15% margin for anticipated profit. The said value may be more than the actual value of goods.

(5)Open or Un-valued policy:. Where the value of the subject matter of insurance is not declared but left to be ascertained and proved later it is called unvalued policy. (6)Floating policy:- is a policy which only mentions the amount for which the insurance is taken out and leaves the name of the ship(s) and other particulars to be defined by subsequent declarations. Such policies are very useful to merchants who regularly despatch goods through ships. (7)Wagering or Honour policy:- Where the assured has no insurable interest in the subject matter of insurance that is know as wager policy. As this policy has no legal effect so it cannot be taken to a court of law. If underwrite refuses to accept the claim the policy holder cannot take any legal action against him. It is, therefore, also called as gambling policy.

(8.) Blanket policy

Under the condition of the blanket policy the maximum limit of the required amount of protection is estimated which is purchased in lump sum. The amount of premium is usually paid in advance. This policy describes the nature of goods insured, specific route, ports and places of the voyages and covers all the risk accordingly.

(9). Port risk policy

This policy covers all the risk of a vessel while it is standing at a port for particular period of time.

(10) Builder's risk policy

This policy is issued for more than one year. This covers the risk of damage to vessels from the time its construction commences until its trail is completed.

In a contract of marine insurance,the insured must have insurable interest in the subject matter insured at the time of the loss. Insurable interest is not required to be present at the time of taking the policy. Under marine insurance, the following persons are deemed to have insurable interest:The owner of the ship has an insurable interest in the ship. (1)The owner of the cargo has insurable interest in the cargo. (2)A creditor who has advanced money on the security of the ship or cargo has insurable interest to the extent of his loan. (3)The master and crew of the ship have insurable interest in respect of their wages.

(4)If the subject matter of insurance is mortgaged, the mortgagor has insurable interest in the full value thereof, and the mortgagee has insurable interest in respect of any sum due to him. (5)A trustee holding any property in trust has insurable interest in such property. (6)In case of advance freight the person advancing the freight has an insurable interest in so far as such freight is repayable in case of loss. (7)The insured has an insurable interest in the charges of any insurance policy which he may take. h
How to save on your marine insurance
Marine insurance is a great addition to protect the investments make in your boat or vessel. Its a great feeling to know you are potentially saving hundreds of dollars each year in insurance expenses and there are many different ways to save money with marine insurance. 1. Shop around Finding out which type of insurance program is best for your boat and your needs is key to saving money. Then shop around to see which company can offer you the lowest marine insurance. 2. Take boat safety classes Marine education can get you a long way when it comes to insurance discounts. Taking a class is a great way to learn more about proper water safety for your vessel and passengers. Enrol in a boat safety course today to increase your nautical knowledge and qualify for deals on your marine insurance. 3. Theft deterrents Adding deterrent devices to your vessel to protect it from vandalism and theft will lower your risks. You can select from traditional burglar alarm systems, low-jack bars, padlocks, and even microchips that can be scanned and digitally traced with global positioning. 4. Increase your excess Increasing your marine insurance excess can save you lots of money on your premium costs. Keep in mind that when you increase your excess you increase your out-of-pocket expenses at the time of an insurance claim. Only increase at a rate you can afford in case of an accident or loss. 5. Keep a clean record Driving safely may lead to long term rewards and discounts over time. Just as your drivers license can be traced electronically by the police, your PWC license will show your violation history when researched. Never, ever drive under the influence. 6. Fire safety Safeguarding your vessel with automatic fire extinguishers and other fire retardants will help reduce any potential fire damage if it should ever occur. When you have protected your water vehicle against fire, marine insurance companies may be willing to reward your efforts with a discount. 7. Proper maintenance Properly caring and preserving your vessel can lead to far less common damages that can increase your insurance rates. Early detection can often prevent a major expense. Routine maintenance check-ups and a

little care will go a long way with vessels and avoid having insurance claims with may increase your premium. 8. Buy new Newer boat owners may benefit from marine insurance savings because they are at a lower risk for problems. It is also known that people tend to take greater care and pride in newer property since they have made such a recent investment.

Principles of Marine Insurance The principles of all types of insurance are generally the same and they have been discussed earlier, in detail. Some of the principles related to marine insurance are given as under: I. Utmost good faith: The marine contract is based on utmost good faith on the part of the parties. The burden of this principle is more on the insured than on the underwriter. The insured should give full information about the subject to the insured. He should not withhold any information. If a party does act in good faith, the other party is at liberty to cancel the contract. II. Insurable Interest: Insurable interest means that the insured should have interest in the subject when it is to be insured. He should be benefited by the safe arrival of commodities and he should be prejudiced by loss or damage of goods. The insured may not have an insurable interest at the time of acquiring a marine insurance policy, but he should have a reasonable, expectation of acquiring such interest. The insured must have insurable interest at the time of loss or damage, otherwise he will not be able to claim compensation. III. Indemnity: This principle means that the insured will be compensated only to the extent of loss suffered. He will not be allowed to earn profit from marine insurance. The underwriter provides to compensate the insured in cash and not to replace the cargo or the ship. The money value of the subject-matter is decided at the time of taking up the policy. Sometimes the value is calculated at the time of loss also. IV. Cause Proxima:

This is a Latin word which means the nearest or proximate cause. It helps is deciding the actual cause of loss when a number of causes have contributed to the loss. The immediate cause of loss should be determined to fix the responsibility of the insurer. The remote cause for a loss is not important in determining the liability. If the proximate cause is insured against, the insurer will indemnify the loss.

CLAIM PROCEDURE In Marine Insurance claims, all the documents of the claim is to be submitted to the insurance company. The documents should be submitted in original. Wherever original documents are not available second copy / printed copy may be accepted but photocopies are not acceptable. The documents are to be submitted preferably in one lot and within reasonable time limit of occurrence of the claim and under all circumstances before claim becomes time barred against carrier etc. The following is a list of claim documents, which is generally required for any marine claim. The insurance company may ask depending upon the nature of claim other additional documents. OCEAN TRANSIT: Basic Documents Required:

Claim Form duly filled in & signed. Original Policy/Certificate. Short Landing Certificate/Landed But Missing Cargo/Damage Certificate (as applicable). Suppliers Invoice Packing List. Quadruplicate copy of Bill of Entry. Steamer Survey report in original.(if arranged) Copy of Claim Notice served on Carrier/Port authorities along with postal acknowledgement card. Copy of correspondence with the carrier/Port authorities/Customs authorities. Copies of Correspondence exchanged with the suppliers (reply from suppliers is a must)in connection with short packing (if applicable). Lost Overboard Certificate from the Port Trust countersigned by the master of the vessel or steamer agents (in respect of Loss Over Board /Sling Losses). Original Repair Bills with receipt/Proforma Invoice for value of items lost/damaged. Copy of Application filed with Customs for refund of Duty (if applicable). Photographs if arranged. Letter of Subrogation cum special power of Attorney.

B. INLAND TRANSIT (RAIL)

 Claim Form duly filled in & signed. Original Policy /Certificate. Open delivery Certificate or copy of application for open delivery, Reply received from the Railways refusing open delivery, Copy of the letter of protest sent to Railways with the acknowledgement thereto and certified extract of the remarks made in the station delivery or complaints book. Suppliers Invoice. Packing List. Copy of Claim Notice served on Railway along with postal acknowledgement card. Copy of correspondence with the Railways. Copies of Correspondence exchanged with the suppliers(reply from suppliers is a must) in connection with short packing (if applicable) Original Railway Receipt. Original Non Delivery Certificate (for Non Delivery Claims Original Repair Bills with receipt/Proforma Invoice for value of items lost/damaged. Photographs if arranged. Letter of Subrogation cum special power of Attorney.

Cargo claims procedure

Insurers rarely take over ownership of cargo which is lost or damaged. The cargo remains the property of either the exporter or the importer, depending on the terms of the contract of sale. If you are going to submit an insurance claim, you have an obligation to minimise any financial loss that arises from loss or damage to your property. If you do not do this, you may be prejudicing your insurance claim. Summary for ALL claims: * You should inspect cargo on arrival * You must hold the transport operators liable for any loss or damage * Act swiftly - the cargo remains your property Contacts: For Export Claims: Ensure a surveyor is appointed for an independent evaluation. For Import Claims : Contact Vero Marine.

Procedure: [1] You should always inspect cargo for loss or damage on arrival. Failure to do so creates difficulties in proving that damage occurred in transit. If your cargo arrives in a container, the external surfaces should be inspected for damage, or any leakage. [2] Do not give a clean receipt to the delivering carrier unless you can immediately inspect the cargo and you have found it undamaged. When there is any doubt, you should mark any documentation with "Received in Apparent Good Order and Condition". Never accept the carrier's drivers explanation that the cargo was received by the carrier in a damaged condition. Use the Initial Notice of Claim form to assist in lodging a claim on the carrier. [3] As soon as you are aware of a potential loss / claim, you must give notice to all transport operators / third parties involved. [4] For export claims: A full list of survey agents can be found here for claims agents. For import claims, contact Vero Marine. You have a legal obligation to act swiftly. Failure to do so can prejudice your insurance claim. [5] You must take all steps to avoid / minimise any further physical or financial loss. The cargo remains your property. The surveyor is only there to record and advise, not to take control. Any delays caused by your inaction may affect your insurance claim. [6] This is the documentation usually required when presenting a claim: * Bill of Lading / Air Waybill * Commercial Invoice * Insurance Certificate * Copy of notice of claim lodged against carrier * Documentation relating to out-turn / receipt of goods * Local Carriers Waybill, where applicable * Copy of temperature records, where available * Invoices to confirm salvage / sale price, where applicable * Copy of instructions to carrier regarding carriage temperature, where applicable For a marine insurance claim to be paid, insurers require BOTH evidence of physical damage to cargo, and complete documentation. [7] Once all required documentation is to hand, the loss can be established by the surveyor. The surveyor will report in full to Vero Marine or our overseas agents. [8] Settlement is made by Vero Marine, (usually by TT). Once you have provided all

the information requested by Vero Marine and the surveyor, you should provide your bank details.