INDEX

SR.NO

TOPIC

PAGE NO.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

MEANING AND DEFINATION MARINE INSURANCE ACT. WHAT IS MARINE INSURANCE? WHAT IS INLAND MARINE INSURANCE? WHAT IS OCEAN MARINE INSURANCE? HOW DO I CHOOSE BEST MARITIME INSURANCE? WHO ARE THE MERCHANT MARINES? WHAT ARE THE MARINE CORPS RESERVES? WHAT DOES MARINE SURVEYOR DO? PROTECTION AND INDEMNITY WARRANTIES AND CONDITIONS MARINE INSURANCE TYPES OF MARINE INSURANCE POLICIES PRINCIPLE OF INDEMNITY IN MARINE INSURANCE COMMERCIAL GEOGRAPHY MARINE CARGO ADVANTAGES PREMIUM CALCULATION CLAIM SETTLEMENT ROLE OF UNDERWRITERS RISK INVOLES CASE STUDY BIBLIOGRAPHY

2 4 5 6 7 9 11 12 14 15 16 17 19 21 22 23 24 26 28 29 31 32 35

[1]

Introduction
Meaning & Definition: 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. An insurance policy that protects the buyer of a good being transported over water from the loss of that good. Most of the time either the buyer or the seller is required to purchase marine cargo insurance (or at least to assume the risk of transit); their specific agreement determines which one is responsible. See also: Incoterm. Cargo insurancediscussed hereis 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.

Origins of formal marine insurance Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied with intuitive estimates of the variable risk from seasons and pirates. The modern origins of marine insurance law in English law were in the law merchant, with the establishment in England in 1601 of a specialized chamber of assurance separate from the other Courts. Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging of law merchant and common law principles. The establishment of Lloyd's of London, competitor insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty lawyers, and bankers), and the growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice. The growth of the London insurance market led to the standardisation of policies and judicial precedent further developed marine insurance law. In 1906 the Marine Insurance Act was passed which codified the previous common law; it is both an extremely thorough and concise piece of work. Although the title of the Act refers to marine insurance, the general principles have been applied to all non-life insurance.
[2]

In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardised clauses for the use of marine insurance, and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication. Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a considerable freedom to contract between themselves. Marine insurance is the oldest type of insurance. Out of it grew non -marine insurance and reinsurance. It traditionally formed the majority of business underwritten at Lloyd's. Nowadays, Marine insurance is often grouped with Aviation and Transit (ie. cargo) risks, and in this form is known by the acronym 'MAT'.

[3]

Marine Insurance Act, 1906 The most important sections of this Act include: s.4: a policy without insurable interest is void. s.17: imposes a duty on the insured of uberrimae fides (as opposed to caveat emptor); ie. that questions must be answered honestly and the risk not misrepresented. s.18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance and rating of the risk. Failure to do so is known as non disclosure or concealment (there are minor differences in the two terms) and renders the insurance voidable by the insurer. s.33(3): If [a warranty] be not [exactly] complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date. s.34(2): where a warranty has been broken, it is no defence to the insured that the breach has been remedied, and the warranty complied with, prior to the loss. s.34(3): a breach of warranty may be waived (ie. ignored) by the insurer. s.39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the purpose of it (voyage policy only). s.39(5): no warranty that a vessel shall be seaworthy during the policy period (time policy). However if the assured knowingly allows an unseaworthy vessel to set sail the insurer is not liable for losses caused by unseasworthiness. s.50: a policy may be assigned. Typically, a ship owner might assign the benefit of a policy to the ship-mortgagor. ss.60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual total loss describes the physical destruction of a vessel or cargo.) s.79: deals with subrogation; ie. the rights of the insurer to stand in the shoes of an indemnified insured and recover salvage for his own benefit.

[4]

What Is Marine Insurance? Marine insurance is a type of insurance that covers boats and ships, as well as their cargo and in some instances the places where the boat or ship is docked. It has a colorful history, beginning informally in England during the 17th century. In 1906, the Marine Insurance Act was passed under British law, creating a standard operating procedure for policies that dictates the world's policies to this day. The standards set forth by the act are considered reasonable, but due to changes in technology and social standards, the act is generally seen as obsolete and is being replaced by more modern legislature. There are several varieties of insurance that can be taken out by a boat or ship owner. Marine cargo insurance covers whatever goods the boat is carrying. Inland marine insurance can be procured for floating vessels that are not ocean bound, but travel primarily on lakes, rivers and reservoirs. There are also more general policies that cover the boat itself and its passengers, liability for damages to other moving vehicles and liability during an encounter with a non moving object. These all fall under the heading of a marine insurance policy. A private ship owner who uses his large boat for pleasure cruising in a marina may wish to take out inland marine insurance, as well as specialty yacht insurance. A merchant ship sailing in politically unsure waters may find it necessary to take out cargo insurance as well as a specific war policy that protects the boat and goods in the event of unfriendly actions. Marine insurance is often available through general insurance companies, and many car insurance dealers offer discounts to those who pay for more than one policy through their company. There are also dealers who work singularly in this area and only offer marine boat insurance. Policies can be broken down to cover only the boat, only the cargo, or both; most do not include coverage of objects on the boat that are not required for the ship's operation, such as computers, cell phones, or other types of valuables. The rates of a marine insurance company vary depending upon the type of boat, size of boat, use of boat and the owner's current insurance history. Some policies may have stipulations on what they will and will not cover, and how much of the damages the owner of the boat is required to pay out of pocket. As with other types of insurance, it is almost always best to look at more than one policy before deciding on which to buy. Purchasers should be aware that the necessity for watercraft insurance varies by country and region.

[5]

What Is Inland Marine Insurance? Inland marine insurance is an insurance instrument which is designed to protect property while in transit, along with high-value mobile items like silverware and tools. Despite the rather peculiar name, inland marine insurance is actually a very useful type of insurance, and it is commonly recommended to business owners, especially people who need to travel for work or people who work with high-value items. Many insurance companies offer this type of policy, and can discuss options with their clients. This type of insurance is typically purchased as a supplement to an existing insurance policy. The origins of this type of insurance allegedly started with Lloyd's of London, a venerable provider of insurance which dates back to the 17th century. Lloyd's initially insured the cargo of ships, holding policyholders responsible for whatever happened to their goods on land. Eventually, coverage expanded to include cargo after it had been offloaded, with inland marine insurance covering cargo in transit, storage, or holding, providing more complete coverage to policyholders. Today, inland marine insurance is often used by people who are nowhere near the ocean and have no intention of carrying anything by ship. Commercial insurance usually covers a specific premises. Inland marine insurance applies to the goods and property associated with someone's job, wherever they might be. When a contractor's tools are stolen out of a truck or off a work site, they would be covered by inland marine insurance. Likewise, goods damaged in transit across dry land could be covered by this type of insurance. People can also cover individual buildings and other types of property with this type of insurance. Insurance agents may recommend inland marine insurance to fill gaps in coverage, ensuring that someone is totally covered in the event of a problem. For example, many things covered by this type of insurance are specifically excluded in conventional insurance policies, like jewels, for example. Having inland marine insurance as a floater policy can protect people from losses. This type of insurance is also not restricted to commercial customers. When shopping for any kind of insurance policy, people should take note of the deductible and any restrictions on the policy. They can choose between named peril policies, in which everything covered by the policy is specifically cited by name, or all-risks insurance, in which anything excluded from the policy is specifically stated. For example, an all-risks policy might indicate that it would not cover losses caused by negligence, suggesting that it will cover everything else, from hurricanes to fires.
[6]

What Is Ocean Marine Insurance? Ocean marine insurance is insurance used to protect cargo, vessels and other items while they are being transported across the ocean. Both the vessel owner and the owner of the cargo are able to benefit from this type of insurance. Ocean marine insurance is not limited to ships, but can also cover items traveling by air and land as well. Since the cargo is being moved through international territories, this insurance is not regulated by any particular countries. There are different types of dangers that cargo may face when being transported from one country to another. Goods can be damaged while they are being loaded on or off the vessel. In addition, they can be broken en-route. People, including passengers and staff, can be injured, and the vessel itself can also be damaged. To protect against this, the vessel owner or the owner of the cargo can get different types of ocean marine insurance to compensate him in case of these damages. Many types of ocean marine insurance exist: hull insurance, cargo insurance, and protection and indemnity (P&I) insurance. Each of these types of insurance covers something different. Hull insurance covers the vessel and machinery if they get damaged. Many times the coverage will include coverage for damage caused by stranding, sinking, fire, and collision. The insurance can be written for an individual voyage or can be written to cover a period of time. Cargo insurance is used to protect the actual cargo that is being shipped. This type of ocean marine insurance can be either specific covering certain damage or all risk covering a variety of incidences. Cargo insurance can also be special or open-ended. Special insurance is bought on a transaction to transaction basis. In contrast, open-ended insurance covers the cargo from where it is picked up to where it is going and is the most common type. In order to protect the vessels owners against liability, protection and indemnity insurance can be bought. Protection and indemnity insurance is a kind of ocean marine insurance that covers liability due to damage to the cargo, death and injury to people, damage to piers, underwater cables, and other such items. Ocean marine insurers can also offer policies to cover pleasure crafts. This type of insurance can be referred to as yacht policies. Yacht policies from ocean marine insurers are usually used to cover larger vessels, while smaller vessels are mainly covered by inland marine insurers. Various policies are also available to cover miscellaneous items associated with shipping. Some of these items are piers, docks, marinas, shipyards, and repair facilities. In addition, there are some incidences that are usually excluded for
[7]

coverage under ocean marine insurance policies. Examples of such incidences are strikes, riots, acts of war, and confiscation. It is possible, however, to have these things covered by endorsements.

[8]

How Do I Choose the Best Maritime Insurance? Choosing the right maritime insurance could be crucial to protecting your investment if something were ever to happen to your personal watercraft, yacht, commercial boat or other seafaring vessel. It is important to ensure that any insurance claim will get paid. To do so, you should investigate and choose wisely from among the coverage options and from the many maritime insurance companies and agents that are available. Some things to consider include the type of maritime insurance coverage that you need, how much coverage you need and the financial strength of the insurance companies that you are considering. You also can consult with an insurance professional for advice about which type of maritime insurance would be the best for you. The first step in the purchasing process is figuring out exactly what type of maritime insurance meets your needs. Vessels for personal use can fit under various subcategories of boat insurance, such as small boat, yacht, mega -yacht, high-performance and personal watercraft such as jet skis. Insurance for commercial vessels includes coverage for cargo, commercial hull, marine liability, yacht club and dealer. Each of these insurance products suits a different need, which might or might not match your needs. For instance, cargo coverage would pay out for cargo damage or loss, whereas liability coverage would pay for marine repairs to another vessel if you are held liable for its damages. Not only do you need to know which maritime insurance product suits your needs, you should decide how much protection is required. As with any type of insurance, marine products can be bought to certain limits of how much they will pay out for a claim and at certain deductibles. This calculation is a matter of how much risk you want to be responsible for versus how valuable your boat or cargo is. If you do not like taking risks, buy the amount of insurance to cover the full value but with the lowest deductible. Of course, though, the more maritime insurance you buy, the higher its premium, or price. The appropriate insurance professional can help you make these decisions. Maritime insurance is a specialty. The best choices for both an insurance company and the agent could be those with more experience working in this particular field. These professionals most likely have sold boat or cargo insurance to clients such as yourself, and they can better gauge what would meet your needs. Whats more, experienced marine insurers and agents typically employ veteran insurance claims staff members who can best assist you if cargo loss occurs or if boat repairs are necessary.

[9]

Another important factor to consider is the financial strength of the maritime insurance companies youre considering. A financial rating from an accredited agency is a good indicator. If an insurance companys rating is high, it is more likely to be around when you need it to pay a claim. A less -reputable insurer, on the other hand, might offer cheaper prices but could be out of business by the time an accident occurs.

[10]

Who are the Merchant Marines? Almost every nation has a merchant marine, a fleet of ships which are usually owned and registered in that nation and fly under its flag, but are separate from the military. The merchant marine carries goods and people, and is a vital part of the national economy. In addition, many countries use their merchant marine to supplement the military in times of war, with the merchant marine transporting goods and equipment to areas where it is needed. For this reason, the merchant marine is sometimes called the merchant navy, indicating the dual role of the merchant marine. The people who staff the merchant marine are known as merchant marines, and while some have served in the military as well, most have chosen a career as merchant marines. The merchant marines are usually well trained, dedicated men and women who have ranks and procedures just like members of the military do. Many merchant marines have served during periods of war, and have been recognized and decorated for services to their home governments. Merchant marines have a system of ranks and specialties which closely correlates to that of the military. Some merchant marines specialize in a particular field, such as navigation, communications, or heavy equipment operations. Others attend a merchant marine academy to begin careers as officers. Most merchant marines intend to remain in the merchant marine for the duration of their careers, and many companies provide benefits and incentives to encourage their staff to continue serving. Most governments recognize the importance of the merchant marines to the economy and safety of the nation, and therefore supervise a Merchant Marine Academy. In the United States, the Merchant Marine Academy has been run by the government since 1943. Graduates of the academy have taken part in conflicts such as Vietnam and the Gulf War, in addition to serving as merchant marines on their home ships. In general, to be considered a member of a nation's merchant marine, a ship must fly that nation's flag. Some ships may have foreign registration, but choose to fly under the flag of another nation for various reasons. The staff may be of mixed nationalities, although generally the officers represent the nation whose flag is flown. Depending on the country, some of the merchant marines may have military training as well as nautical training. Merchant marines also rely on an extensive ground network, which includes shipyards, truck and train systems, and ground staff who manage the company. When marine insurance companies, lawyers, research companies, and a variety
[11]

of other industries related to the merchant marine are added, it represents a sizable portion of the economy, with ships being a crucial part of the transportation system.

[12]

What Are the Marine Corps Reserves? The United States Marine Corps Reserves is a component of the United States Marine Corps. This organization consists of corpsmen who perform duty one weekend each month, along with a two-week annual training period each year. They train at a military facility during these times, to prepare themselves for a call to active duty. The Marine Corps Reserves is composed primarily of prior active-duty Marines who have time remaining on their enlistment contracts, yet have served their required active-duty time. The primary function of the reserve components of the United States military is to support the active troops during a time of national emergency. This means that a Marine Corps reservist may be deployed to a war zone or mobilized state-side if needed. Members of the Marine Corps Reserve must maintain the same levels of physical fitness as that of active-duty Marines. They must also meet the requirements for height and weight established by Marine Corp regulations. They are responsible for properly maintaining and wearing their uniforms during periods of official duty. Reservists must also be properly groomed while in uniform. This means that a Marine's hair must be within regulations, unauthorized jewelry is not permitted, and males are clean-shaven. Individuals who are members of the Marine Corps Reserves receive pay and allowances for attending weekend drills and annual training periods. This amount will be based upon the service members rank and his time in service. Members are also eligible for medical and dental insurance, life insurance, and a thrift savings program. Such service personnel also have Post Exchange and commissary shopping privileges while they are members of the reserve component. When called to active duty, Marine reservists receive the same pay and benefits as their active-duty counterparts. Marine Corps Reservists receive promotions just like their active-duty counterparts. They are also eligible for retirement benefits after 20 qualifying years of service. Unlike retirement from active military service, however, reserve retirement pay is not be issued until the retiree reaches 60 years of age. Members of the United States Marine Corps Reserve play a vital role in the security and defense of America. They provide strength to deploying units who would otherwise have a lack of personnel available to perform the mission. The Marine Corps Reserves have played a huge role in many major conflicts throughout the nation's history. Many are currently serving in the Global War on

[13]

Terrorism, where some have even paid the ultimate sacrifice of perishing in battle.

[14]

What Does a Marine Surveyor Do? A marine surveyor is an individual that inspects boats, ships, and other water vessels. The job requires an evaluation of these vessels to ensure that federal and international boating requirements are met. In the case of a boating accident, the marine surveyor is often called upon by law enforcement to act as an investigator and piece together details of the accident. This individual is also frequently employed by insurance companies to examine the extent of damage to any vessel involved in an accident. An individual who works as a marine surveyor must have great oral and written communication skills. He or she has to communicate with many individuals involved in a large survey project and is required to write a detailed report on the findings of the survey. This is a job where each survey situation is potentially unique. He or she must have enough boating expertise and experience to adapt to each new situation presented. When a ship is being manufactured, a marine surveyor is brought in to monitor the development process. In addition, a yearly survey is often performed on each vessel. When a significant storm causes damage to a vessel, this individual is hired to detail the damage. A marine surveyor is also used to evaluate a vessel immediately before a sale. He or she can help buyers get top value on their purchases. A marine surveyor must have good mathematics and measuring skills because he is often hired to measure vessels for the amount of weight they can sustain. This is a crucial ability, as a vessel carrying too much cargo weight can run into great problems on the water. On the other hand, if the vessel capacity is underestimated, then there will be a lot of wasted space that could have been used for cargo. A marine surveyor is commonly called upon for salvaging purposes as well. If significant damage has been done to a vessel, then this individual can determine which parts of the vessel can be saved and reused. During an inspection, the hull is typically the first part examined to ensure the boat can be properly used on the water. Other parts of the vessel, including sea valves, rudders, and propellers, are also essential to examine. These important parts are usually evaluated in a methodical and painstaking fashion. The on board machinery and electrical equipment is tested to measure vessel response and maintain utmost safety. The job of the marine surveyor requires a lot of work and much expertise in the various aspects of a water vessel.

[15]

Protection and indemnity A marine policy typically covered only three-quarter of the insured's liabilities towards third parties. The typical liabilities arise in respect of collision with another ship, known as 'running down' (collision with a fixed object is an 'allusions'), and wreck removal (a wreck may serve to block a harbour, for example). In the 19th century, ship-owners banded together in mutual underwriting clubs known as Protection and Indemnity Clubs (P&I), to insure the remaining one quarter liability amongst themselves. These Clubs are still in existence today and have become the model for other specialised and uncommercial marine and non-marine mutuals, for example in relation to oil pollution and nuclear risks. Clubs work on the basis of agreeing to accept a ship owner as a member and levying an initial 'call' (premium). With the fund accumulated, reinsurance will be purchased; however, if the loss experience is unfavorable one or more 'supplementary calls' may be made. Clubs also typically try to build up reserves, but this puts them at odds with their mutual status. Because liability regimes vary throughout the world, insurers are usually careful to limit or exclude American Jones Act liability.

[16]

Warranties and conditions A peculiarity of marine insurance and insurance law generally, is the use of the terms condition and warranty. In English law, a condition typically describes a part of the contract that is fundamental to the performance of that contract, and, if breached, the non-breaching party is entitled not only to claim damages but to terminate the contract on the basis that it has been repudiated by the party in breach. By contrast, a warranty is not fundamental to the performance of the contract and breach of a warranty, whilst giving rise to a claim for damages, does not entitle the non-breaching party to terminate the contract. The meaning of these terms is reversed in insurance law. Thus, the Marine Insurance Act 1906 refers to implied warranties, one of the most important of which is that the vessel is seaworthy.

Choose The Best Marine Insurance Providers In India: Insurance Guide Marine Insurance, it must be understood covers the loss or damage of ships, cargo, terminals, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination. Its value therefore can easily be understood. It is especially critical for fishing industry for it is extremely unlikely that the sea would not turn choppy and if it so happens which invariably happens there is every likelihood that there would be huge loses both of material and of men. It is here that marine insurance comes handy as it ensures that in case of any such nasty events the loss at least of property would be borne by the insurance companies.

The popularity of marine insurance can be gauged from the fact that today there are a large number of insurance companies that provide marine insurance. However, it is advised that people do a thorough research before opting for the policy of any company. This is an extremely monumental job as there are a number of companies that offer marine insurance so it is difficult to properly research them. It is here that Jai Insurance Brokers, a highly reputed name in the field of insurance sector, swings into action. It has the list of all such reputed and credible insurance companies that provide marine insurance on its website.

[17]

Marine Insurance A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent agreed, against losses incidental to marine adventure. There is a marine adventure when any insurable property is exposed to maritime perils i.e. perils consequent to navigation of the sea. The term 'perils of the sea' refers only to Accidents or causalities of the sea, and does not include the ordinary action of the winds and waves. Besides, maritime perils include, fire, war perils, pirates, seizures and jettison, etc. There are four types of marine insurance: Hull Insurance:- covers the insurance of the vessel and its equipment i.e. furniture and fittings, machinery, tools, fuel, etc. It is affected generally by the owner of the ship.

Cargo Insurance: - includes the cargo or goods contained in the ship and the personal belongings of the crew and passengers.

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:- is one in which the insurer undertakes to indemnify against the loss which the insured may suffer on account of liability to a third party caused by collision of the ship and other similar hazards. 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.
[18]

The owner of the cargo has insurable interest in the cargo.

A creditor who has advanced money on the security of the ship or cargo has insurable interest to the extent of his loan.

The master and crew of the ship have insurable interest in respect of their wages.

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.

A trustee holding any property in trust has insurable interest in such property.

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. The insured has an insurable interest in the charges of any insurance policy which he may take.

[19]

Types of Marine Insurance Policies: 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.

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.

Mixed policy:- is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time.

Valued policy:- is a policy in which the value of the subject matter insured is agreed upon between the insurer and the insured and it is specified in the policy itself.

Open or Un-valued policy:- is the policy in which the value of the subject matter insured is not specified. Subject to the limit of the sum assured, it leaves the value of the loss to be subsequently ascertained. 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. Wagering or Honour policy:- is a policy in which the assured has no insurable interest and the underwriter is prepared to dispense with the insurable interest. Such policies are also known as 'Policy Proof of Interest (P.P.I). Marine Hull
[20]

Marine Hull insurance covers nearly everything that floats and moves, starting with rowing boat to huge ocean going tankers. It covers loss or damage to hull and machinery. The hull is the structure of the vessel. Machinery is the equipment that generates the power to move the vessel and control the lighting and temperature system such as boiler, engine, cooler and electricity generator. Just as a motor insurance policy is taken to cover the vehicles plying on the road, similarly a marine hull policy is taken to cover the vessels.

[21]

PRINCIPLE OF INDEMNITY IN MARINE INSURANCE Both Marine Cargo & Marine Hull policies are issued as Valued Policies. A valued policy is one which specifies the agreed value of the subject matter insured value. This value is the insured value. Goods which are covered under marine policies will be in the course of transit from one county to another the price of which are subject to fluctuations from time to time. The value will be the maximum at the time when the cargo reaches the destination. It is difficult to arrive at the value when the goods are in transit. Therefore agreed value policies are issued on cargoes. The agreed value includes purchase cost, freight, internal & inland transport, expenses on loading & unloading, cost of insurance, port trust charges, local agency commission, Taxes & duties. Marine hull insurance policies are also issued as valued policies. The market value of ship also fluctuates widely. The market value of a ship may not reflect its true value to the owner. A vessel may be3 old but to a ship owner it is as valuable as a new vessel from the point of freight earning capacity. The sum insured is fixed be agreement between the insurer and the insured which is arrived as a fair value.

[22]

COMMERCIAL GEOGRAPHY Scope and relevance to marine insurance.

International trade and factors governing supply and demand.

Study of basic geographical concepts, like the Solar System, Latitudes and Longitudes, sea depth distribution, ocean currents, tides, coral reefs and islands, etc. Earthquakes and volcanic eruptions and areas prone to these catastrophes

Institute Warranties and their application.

A detailed study of the main sea routes of the world, including Suez and Panama Canal Routes and geographical and commercial factors involved.

Rail and Road Transportation - Coastal trade - Air transport.

The attributes of ports, harbors and hinterlands. Principal ports of the world including a study of conditions in each such port, Geographical location, extent of commercial importance and facilities available for handling and storing cargo etc.

Major principal commodities, conditions required for their growth and production and their traffic or movement in world trade. Commodities involved are cereals, grain and pulses, fruits, vegetables oils, beverages, spices, meat and dairy products, metals, fuel, fertilizers, etc.

A study of maritime hazards and the locations where they occur.

[23]

Marine Cargo Marine Insurance is the oldest form of insurance in the world. 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. It is this loss that is taken care of by marine cargo insurance or what is more popularly known as transit insurance. Marine Sales Turnover Policy Marine policies are generally either specific-voyage policies or declaration policies for either imports, exports, indigenous transits of raw material or finished goods, customs duty, transits from anywhere to anywhere in the world and to and from job works. While for a specific policy, the cover is issued from commencement to landing at the final destination, the other policies are generally continuous policies issued on an annual basis or for a specified period of time for an agreed value of transits based on the insureds estimate of goods movement for the specified period. It is mandatory for all transits in the agreed period to be declared.

There have been operational lapses resulting in claims getting repudiated for declarations not made or insufficient balance of Sum insured at the time of claim and many a client has been caught unaware. Discovering that a particular damaged or lost consignment was unfortunately not covered, and hence the claim not payable, can be very frustrating for an otherwise diligent Insured.

[24]

ADVANTAGES OF MARINE INSURANCE IT IS HIGHLY DESIRABLE, WHENEVER POSSIBLE, TO ARRANGE THE INSURANCE FROM THE EXPORTER'S POINT OF VIEW, BECAUSE: 1. THE EXPORT FIRM, WITH ITS SPECIALIZED KNOWLEDGE OF THE PRODUCT, IS ABLE TO ENSURE THAT THE COVERAGE MEETS ITS EXACT REQUIREMENTS, AND THAT THE COVERAGE IS WITH AN INSURANCE COMPANY OF ITS CHOICE. 2. ANY CLAIM IS PAYABLE IN THE EXPORTER'S OWN CURRENCY, THEREBY ELIMINATING THE RISK OF AN EXCHANGE LOSS. 3. IF THE GOODS ARE BEING SOLD ON CREDIT, THE EXPORTER IS FINANCIALLY AT RISK WHILE THE GOODS ARE IN TRANSIT TO THEIR FOREIGN DESTINATION. IT IS REASSURING TO KNOW, IN THIS CASE, THAT REIMBURSEMENT CAN BE SOUGHT FROM A LOCAL INSURANCE COMPANY IF SOMETHING HAPPENS TO THE GOODS. 4. IF THE EXPORTER'S BANK IS INVOLVED IN PROVIDING CREDIT, IT WILL USUALLY INSIST THAT THE EXPORTER TAKE OUT INSURANCE ON THE SHIPMENT. THE CERTIFICATE OF INSURANCE PROTECTION WILL THEN FORM PART OF THE COMMERCIAL SET OF DOCUMENTS THAT IS REQUIRED FOR EACH EXPORT SHIPMENT. 5. CLAIMS ARE USUALLY SETTLED FASTER IF THE EXPORTER HAS ARRANGED THE INSURANCE WITH ITS OWN MARINE UNDERWRITER. 6. IF THE EXPORTER RELIES ON THE FOREIGN IMPORTER TO ARRANGE FOR THE INSURANCE, AS HE MAY HAVE TO WHEN SELLING F.A.S. OR F.O.B., HE FACES VARIOUS RISKS, SUCH AS: (A)THE FOREIGN IMPORTER MAY HAVE NEGLECTED TO INSURE THE GOODS. THEN, IF THE IMPORTER REFUSES TO ACCEPT THEM ON THE GROUNDS THAT THEY ARE DAMAGED, THE EXPORTER WILL HAVE HIS GOODS SITTING IN A FOREIGN PORT WITH NO INSURANCE PROTECTION.
[25]

(B)THE INSURANCE ARRANGED BY THE FOREIGN IMPORTER MAY ONLY BE FOR THEIR BENEFITS. EVEN IF THE GOODS THAT ARE DAMAGED OR DESTROYED ARE SOLD BY THE EXPORTER ON CREDIT. THE IMPORTER WILL BE THE ONE TO RECEIVE COMPENSATION. (C)HOWEVER JUSTIFIABLE THE INSURANCE CLAIM, IT IS MUCH MORE DIFFICULT FOR THE EXPORTER, BECAUSE OF THE DISTANCE AND LANGUAGE PROBLEMS, TO SECURE COMPENSATION FROM ABROAD THAN FROM THE INSURANCE COMPANY AT HOME. 7. ONE METHOD IS FOR THE EXPORTER TO DEAL DIRECTLY WITH A MARINE INSURANCE COMPANY. IN THIS CASE, THE EXPORT FIRM SPECIFIES ITS NEEDS AND THE COMPANY PREPARES SUITABLE COVERAGE.

[26]

HOW IS PREMIUM CALCULATED THE MARINE INSURANCE ACT 1906 (MIA) MAKES IT CLEAR IN SECTION 52 THAT IT IS THE CONCURRENT DUTY OF THE ASSURED OR HIS AGENT TO PAY THE PREMIUM AND FOR THE INSURER TO ISSUE THE POLICY. THE POLICY FORM USED BY MOST INSURERS STATES THAT INSURERS AGREE TO FULFILL THEIR OBLIGATIONS IN CONSIDERATION OF THE PAYMENT OF THE PREMIUM. IN REALITY THE PREMIUM IS SELDOM PAID AT THE TIME OF COMMENCEMENT OF COVER, WHICH MEANS THAT COVER IS GRANTED AGAINST THE PROMISE OF PAYMENT. INDEED THE FIRST SCHEDULE TO THE ACT GIVES A MODEL POLICY FORM THAT USES THE PHRASE CONFESSING OURSELVES PAID AS THOUGH ACKNOWLEDGING THE ACTUAL UNPAID STATE AT THE INCEPTION OF COVER. THE TERM UNLESS OTHERWISE AGREED IN SECTION 52 ALLOWS INSURERS TO DEFER THE PAYMENT OF PREMIUM. WHEN A BROKER IS INVOLVED IN PLACING THE INSURANCE IT IS HE AND NOT THE ASSURED WHO IS RESPONSIBLE TO THE INSURER FOR THE PAYMENT OF PREMIUM. HOWEVER THE INSURERS ARE RESPONSIBLE DIRECTLY TO THE ASSURED FOR THE PAYMENT OF CLAIMS AND FOR ANY RETURN OF PREMIUMS, (MIA SECTION 53). TO PROTECT THE BROKER FROM NON-PAYMENT THE ACT ALLOWS A LIEN UPON THE POLICY AGAINST OUTSTANDING DEBT, (MIA SECTION 53.2). IN PRACTICE PREMIUM IS CALCULATED BY APPLYING A RATE PERCENT TO THE SUM INSURED. THE INSURER, TAKING INTO CONSIDERATION ALL THE RISK ASPECTS OF THE PARTICULAR SENDING ARRIVES AT THE RATE %. THE SUSCEPTIBILITY OF THE GOODS FOR THEFT OR DAMAGE IS A MAJOR CONSIDERATION AS INDEED IS THE QUALITY OF PACKING, THE METHOD OF CARRIAGE THE DESTINATION AND OF COURSE THE CLAIMS HISTORY. THE INSURERS SKILL (SOME WOULD SAY HIS SECOND SKILL BEHIND HIS SPEED AND ACCURACY OF CLAIMS SETTLEMENT) IS TO APPLY A FAIR AND REASONABLE RATE FOR THE RISK IN HAND THAT, TO HIS KNOWLEDGE, WILL PROVIDE SUFFICIENT TO MEET THE COST OF CLAIMS, THE EXPENSE OF INSURING AND LEAVE SOMETHING FOR PROFIT.
[27]

THE INSURER OF AN OPEN POLICY HAS AN OPTION. DEPENDING UPON THE ASSUREDS REQUIREMENTS, HE CAN CHARGE PREMIUM AT REGULAR INTERVALS, USUALLY MONTHLY. THIS IS EITHER IN ACCORDANCE WITH DECLARATIONS/CERTIFICATES RECEIVED DURING THE LAST 30 DAYS, OR BY TAKING A DEPOSIT PREMIUM USUALLY BASED UPON THE ESTIMATED ANNUAL SENDINGS OF THE ASSURED TO BE ADJUSTED AT THE YEARS END AGAINST A DECLARATION OF THE ACTUAL VALUE OF GOODS AT RISK.

THE ADVANTAGE OF CHARGING PREMIUM MONTHLY IS THAT THE INSURER CAN SEE AT REGULAR INTERVALS PRECISELY THE PATTERN OF TRADE AND HAVE A MORE UP TO DATE APPRECIATION OF THE RISK HE IS INSURING. THE DISADVANTAGE IS THAT BY CHARGING MONTHLY HE IS REQUIRED TO OPEN HIS BOOKS 12 TIMES A YEAR IN ORDER TO DEBIT PREMIUM WITH THE RESULTANT EXPENSE OF ADMINISTRATION. THE ADVANTAGE OF THE ANNUAL DEPOSIT AND ADJUSTMENT METHOD IS THAT ADMINISTRATION COSTS ARE MINIMIZED BUT AT THE COST OF LOSING THE REGULAR INDIVIDUAL DETAIL OF SENDING. THEREFORE SOME RISKS ARE BETTER SUITED TO ONE WAY THAN THE OTHER.

[28]

CLAIM SETTLEMENT MARINE INSURANCE CLAIM SETTLEMENT PROCEDURE

INTIMATION OF LOSS/DAMAGE TO NEAREST OFFICE OF INSURER WITH POLICY PARTICULARS. APPOINTMENT OF SURVEYOR OR CLAIM REPRESENTATIVE IN AGREEMENT WITH THE INSURER TO DETERMINE THE NATURE, CAUSE AND EXTENT OF LOSS/DAMAGE. IN CASE OF LOSS/DAMAGE OCCURS IN TRANSIT, A MONETARY CLAIM SHOULD BE LODGED WITH THE CARRIER WITHIN THE TIME LIMIT TO PROTECT RECOVERY RIGHTS. IF THE LOSS/DAMAGE TO GOODS IS APPARENT THEN THE CARRIER OR ITS REPRESENTATIVE SHOULD BE ASKED TO SURVEY THE LOSS OR JOINT SURVEY WITH INSURERS SURVEYOR. IF THE LOSS IS NOT APPARENT THEN CLAIM IN WRITING SHOULD BE LODGED ON SEA CARRIER WITHIN 3 DAYS OF DELIVERY FROM THE VESSEL IF LOSS/DAMAGE TAKES PLACE IN THE CUSTODY OF PORT OR WAREHOUSE OR INLAND CARRIER, CLAIM AGAINST LOSS/DAMAGED TO BE LODGED AGAINST THE CONCERNED PARTY LOSS MINIMIZATION, SEGREGATION OF DAMAGED AND SOUND CARGO OR ARRANGE RECONDITIONING WHERE EVER POSSIBLE, ARRANGING SALE IF GOODS MAY DETERIORATE FURTHER THE CLAIMANT MUST SHOW THAT LOSS OR DAMAGE HAS OCCURRED IN THE POLICY PERIOD (DURING TRANSIT INSURED), AND MUST DEMONSTRATE AN INSURABLE INTEREST IN THE GOODS AT THE TIME OF LOSS THE SURVEYOR INFORMS THE APPROXIMATE VALUE OF LOSS INCURRED INSURER OF THE

THE CLAIM PROCEDURE TAKES FROM ONE TO THREE WEEKS.

[29]

ROLE OF UNDERWRITERS THE WORD UNDERWRITING REFERS TO PROTECTING BY WAY OF INSURANCE. MARINE UNDERWRITING REFERS TO PROVIDING MARINE INSURANCE TO THE NECESSARY CLIENTS. IN TODAYS HIGHLY COMPLEX MARINE BUSINESS, IT IS VERY IMPORTANT TO HAVE MARINE UNDERWRITING SERVICE.

THE PERSON WHO PROVIDES MARINE UNDERWRITING IS KNOWN AS A MARINE UNDERWRITER. THESE ARE PROFESSIONALS WHOSE MAIN EXPERTISE IS TO ENSURE THAT THEIR CLIENT IS PROTECTED BY UNFORESEEN LOSSES AND CASUALTIES. MARINE UNDERWRITING IS A VERY TRICKY CONCEPT. THIS IS BECAUSE THERE ARE MANY DIFFERENT DIMENSIONS TO IT. THE LOSS TO THE BODY OR HULL OF THE SHIP AND THE CARGO IT CONTAINED, THE REASONS OR THE CAUSES OF THE LOSS, THE PLACE WHERE THE LOSS OCCURRED AND MOST IMPORTANTLY THE AMOUNT THAT NEEDS TO BE SETTLED ARE THE MAIN AREAS THAT A MARINE UNDERWRITER NEEDS TO FOCUS ON. IT IS A WELLKNOWN FACT THAT INSURANCE CLAIMS ARE VERY UNCERTAIN AND THERE NEEDS TO BE A COMPLETE KNOWLEDGE OF ALL THE ELEMENTS INVOLVED BEFORE PLACING A CLAIM FOR COMPENSATION PURPOSES.

A MARINE UNDERWRITER THEREFORE NEEDS TO BE AWARE OF NOT JUST RULES AND REGULATIONS OF THE COUNTRY TO WHICH THE SHIP BELONGS BUT ALSO ABOUT OTHER COUNTRIES WHERE POTENTIAL INCIDENTS COULD OCCUR. TO EXPLAIN IT SIMPLE TERMS, THE MARITIME RULES AND REGULATIONS OF ALL COUNTRIES NEEDS TO BE NOTED DOWN BY A MARINE UNDERWRITER SO THAT CLIENTS DO NOT FACE ANY PROBLEMS REGARDING THE SETTLEMENT OF THE CLAIM. IN ORDER TO MAKE THE PROCESS OF MARINE UNDERWRITING SIMPLE AND FEASIBLE, MANY PROFESSIONAL MARINE UNDERWRITING COMPANIES HAVE BEEN SET UP IN MANY
[30]

COUNTRIES. THESE COMPANIES HIRE PROFESSIONAL MARINE UNDERWRITERS TO MAKE THE CLIENTS GET MORE RELIABILITY AND BENEFIT. SOME OF THE FAMOUS COMPANIES INCLUDE THE CHUBB GROUP AND THE UNITED MARINE UNDERWRITERS FIRM.

ADDITIONALLY, IT HAS TO BE NOTED THAT IN SOME COUNTRIES THERE ARE ASSOCIATIONS OF MARINE UNDERWRITERS SET UP IN ORDER TO GAIN MORE EXPOSURE AND EXPERIENCE THROUGH A GROUP EFFORT. SUCH ASSOCIATIONS ARE MAJORLY PRESENT IN COUNTRIES LIKE THE UNITED STATES. EXAMPLES OF SUCH MARINE UNDERWRITING ASSOCIATIONS WOULD BE THE ASSOCIATION OF MARINE UNDERWRITERS (THIS IS BASED IN SAN FRANCISCO) AND THE AMERICAN INSTITUTE OF MARINE UNDERWRITERS, ALSO KNOWN AS THE AIMU (THIS IS AN ASSOCIATION BASED THROUGHOUT THE NATION).

THESE ORGANISATIONS ENSURE THAT THE PROFESSION OF MARINE UNDERWRITING GETS MORE KNOWLEDGE ON A MORE REGULAR BASIS AND THAT THE PROFESSIONALS ENGAGED IN MARINE UNDERWRITING GET TO LEARN MORE. IT IS A VERY INTERACTIVE CONCEPT AND THE SUCCESS OF SUCH ORGANISATIONS PROVES THE SCOPE AND SPREAD OF MARINE UNDERWRITING. MARINE UNDERWRITING IS NOT A NEW PROFESSION. IT IS A PROFESSION THAT HAS EXISTED FROM THE VERY PAST THOUGH THE PROFESSION IS A RELATIVELY UNKNOWN ONE. FOR PEOPLE WHO ASPIRE TO BE PROFESSIONALS AND EXPERTS IN VARIED AND UNIQUE AREAS, A CAREER OF BEING A MARINE UNDERWRITER IS SOMETHING THAT COULD OFFER THEM UNIQUENESS AND COMPLETE SATISFACTION.

[31]

RISKS INVOLVED IN MARINE INSURANCE EXCLUSIONS:1. LOSS OR DAMAGE TO THE WILLFUL MISCONDUCT OF THE ASSURED. 2. ORDINARY LEAKAGE, BREAKAGE, WEAR AND TEAR AND LOSS IN WEIGHT OR VOLUME. 3. INSUFFICIENCY IN PACKING. 4. LOSS OR DAMAGE CAUSED BY INHERENT NATURE OF THE SUBJECT MATTER. 5. LOSS OR DAMAGE PROXIMATELY CAUSED BY DELAY IN TRANSIT 6. LOSS OR DAMAGE ARISING FROM INSOLVENCY OR FINANCIAL DEFAULT OF OWNERS, MANAGERS, OPERATORS ETC. 7. NEUCLEAR PERILS. 8. MALICIOUS DAMAGE. ALL THE COVERS ARE ALSO SUBJECTED TO THE WAR & STRIKE/RIOT/CIVIL COMMOTION RISK.

[32]

CASE STUDY
THE PROBLEM A EUROPEAN CLIENT WAS USING OUR LOGISTICS SERVICES BUT WAS INSURED BY A GENERIC COMPANY LIABILITY POLICY THAT COVERED THEIR WHOLE COMPANY. THEY HAD A RELATIVELY MINOR TRAFFIC ACCIDENT NEAR THEIR DESTINATION PORT IN CHINA. THEY NEEDED ASSISTANCE TO CHECK THE CARGO, REVIEW DOCUMENTATION WITH LOCAL AUTHORITIES AND ENSURE THE SAFE ONWARD JOURNEY OF THE CARGO. WHILST ATTEMPTING TO PROCESS THE CLAIM THEY CAME ACROSS THE FOLLOWING PROBLEMS: THERE WERE DELAYS AND INCREASED COSTS WHILST CLAIM INFORMATION WAS COLLATED AND ACTIONED OVER DIFFERENT TIME ZONES.

AS THE POLICY WAS HELD IN EUROPE ALL AUTHORISATIONS HAD TO COME DIRECTLY FROM OUR CLIENT.

THE CLAIM WAS MINOR BUT THE COMPANY HAD A MINIMUM EXCESS FEE PAYABLE OF 5,000 EUROS.

DUE TO POOR COMMUNICATION, FURTHER DELAYS AND COSTS WERE ENCOUNTERED IN ARRANGING LOCAL SUPPORT IN CHINA.

[33]

THE SOLUTION
WHILST THERE IS UNCERTAINTY, RISK MANAGEMENT USING TRANS OCEANS MARINE CARGO TRANSIT INSURANCE, IS A STRUCTURED APPROACH TO MANAGING RISK RELATED TO A PARTICULAR THREAT, WHETHER IT IS PHYSICAL, FINANCIAL OR LEGAL, SPECIFICALLY TAILORED FOR FLEXITANK SHIPMENTS. WHEN INSURED WITH TRANS OCEAN WE ARE ABLE TO ACT AS IF WE OWN THE CARGO, ENSURING PROMPT ACTION AND AUTHORISATIONS ARE GIVEN TO MINIMISE DAMAGE AND GIVE OUR CUSTOMER PEACE OF MIND. FOLLOWING THESE EVENTS OUR CLIENT CONSEQUENTLY ARRANGED MCTI THROUGH US, GIVING THEM PEACE OF MIND AS WELL AS ACCESS TO THE FOLLOWING BENEFITS: PROMPT ACTION AND COMMUNICATION THROUGH OUR GLOBAL AND MULTI LINGUAL NETWORK.

AS AUTHORISATION IS SANCTIONED BY TRANS OCEAN PERSONNEL AT THE POINT OF THE PROBLEM, IMMEDIATE INSPECTION AND REPORTS CAN TAKE PLACE.

ZERO EXCESS PAYMENTS.

SUPPORT IF REQUIRED FROM OUR REGIONALLY BASED EMERGENCY RESPONSE TEAMS.

ALL CLAIMS ARE HANDLED AND PROCESSED BY OUR INSURANCE TEAM, ENSURING THE RESOURCES OF OUR CLIENTS ARE NOT OVER COMPROMISED.

A TECHNICAL REVIEW AND REPORT TO SEE IF THE SITUATION COULD HAVE BEEN AVOIDED OR THE SUPPLY CHAIN IMPROVED FOR FUTURE SHIPMENTS.
[34]

WHILST WE HOPE THAT OUR CUSTOMERS DO NOT ENCOUNTER SUCH PROBLEMS, THIS IS A PRACTICAL SOLUTION TO THE ELEMENTS THAT REMAIN BEYOND OUR DIRECT CONTROL. PROVIDING A TAILORED PACKAGE SPECIFICALLY FOR END TO END FLEXI TANK SHIPMENTS.

COMPANIES OFFERING MARINE INSURANCE 1. THE ORIENTAL INSURANCE COMPANY LIMITED OFFICIAL WEBSITE www.orientalinsurance.org.in

2. UNITED INDIA INSURANCE COMPANY LIMITED OFFICIAL WEBSITE www.uiic.co.in

[35]

BIBLIOGRAPHY
ALL THE INFORMATION RELATED TO MARINE INSURANCE IS TAKEN FROM FOLLOWING SEARCH ENGINS. 1) 2) 3) 4) www.yahoo.com www.google.co.in www.scribd.com www.wikipedia.com

[36]