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Marine insurance includes:

1) Insurance against loss or damage to:

2)Marine Protection and Indemnity


insurance

(a)
Vessels, craft, aircraft, vehicles ,goods, freights,
cargoes, merchandise, effects, disbursements, profits,
moneys, securities, choses in action, evidences of debt,
valuable papers, bottomry or respondentia interest and
all other kinds of property and interests therein, in
respect to, appertaining to or in connection with any and
all risks or PERILS OF NAVIGATION, TRANSIT OR
TRANSPORTATION OR WHILE BEING ASSEMBLED, PACKED,
CRATED, BALED, COMPRESSED OR SIMILARLY PREPARED
FOR SHIPMENT OR WHILE AWAITING SHIPMENT OR
DURING ANY DELAYS, STORAGE, TRANSHIPMENT OR
RESHIPMENT INCIDENT THERETO, including WAR RISKS,
MARINE BUILDERS RISK, AND ALL PERSONAL PROPERTY
FLOATER RISKS (follows property wherever it may be)

meaning insurance against, or against legal liability of the


insured for loss damage or expense incident to
ownership, operation, chartering, maintenance, use,
repair or construction of any vessel, craft or
instrumentality in use in ocean or island waterways,
including liability of the insured for personal injury, illness
or death or for loss or damage to the property of another
person( Section 99).

(b)
Person or property in connection with or
appertaining to marine, island marine, transit or
transportation insurance, including liability for loss or in
connection with the construction, repair, operation,
maintenance, use of the subject matter of the insurance
(BUT NOT INCLUDING LIFE INSURANCE, OR SURETY
BONDS, NOR INSURANCE AGAINST LOSS BY REASON OF
BODILY INJURY TO ANY PERSON
ARISING OUT OF THE OWNERSHIP, MAINTENANCE, USE
OF AUTOMOBILES)
(c)
Precious stones, jewels, jewelry, precious metals
whether in the course of transportation or otherwise.
(d)
Bridges, tunnels or other instrumentalities of
transportation and communications (excluding buildings,
their furniture and furnishings, fixed contents, and
supplies held in storage), piers, wharves , docks, slips,
and other aids to navigation and transportation, including
dry docks, marine railways, dams and appurtenant
facilities for the control of waterways.

NOTE that marine insurance is really TRANSPORTATION INSURANCE which is a kind of insurance
which is concerned with the perils of property in (or incidental to) transit as opposed to property
perils at a generally fixed location. BUT it does not include normal motor vehicle insurance which
is treated separately by law.
WHAT ARE THE DIVISIONS OF TRANSPORTATION INSURANCE
The divisions of transportation insurance (aka marine insurance) are:
(1) Ocean Marine Insurance
(2) Inland Marine Insurance
-pertaining primarily to sea perils of
(pertaining primarily to land or over
ships and cargoes,
land (but sometimes water)
-an insurance against risk connected
transportation perils of property
with navigation, to which a ship, cargo,
shipped by railroads, motor trucks,
freightage, profits or other insurable
airplanes and other means of
interest in movable property, may be
transportation.
exposed during certain voyage or a
fixed period of time
Scope of ocean marine insurance
These includes four basic policies or
1) ships or hulls;
scope:

2) goods or cargoes;
3) earnings such as freight, passage,
money, commissions, or profits;
4) liability (known as protection and
indemnity insurance) incurred by the
owner or any party interested in or
responsible for the insured property by
reason of maritime perils

(a) property in transit- providing


protection to property frequently
exposed to loss while in transport from
one place to another
(b) bailee liability- providing protection
to persons who have temporary
custody of goods or personal property
of others
(c) fixed transportation propertyproviding protection to fixed property
considered aids to the movement of
property, like bridges and tunnels, and
(d) floater- providing protection to
personal property (such as precious
stones, jewelry, works of art) wherever
it may be located subject always to the
territorial limits of the contract and
need not necessarily be in the course of
transportation.

NOTE also that marine insurance may be in the form of


property insurance, indemnifying the insured for loss or damage to property (Par. 1,
Section 99) or
liability insurance, protecting the insured against the consequences of legal liability for
loss or damage to property or for personal injury, illness or death of a person (Par. 2,
Section 99)
WHAT RISKS ARE INSURED AGAINST

WHAT ARE NOT COVERED

The basic risk insured against is what is


commonly known as PERILS OF THE SEA

Generally PERILS OF THE SHIP


are not covered

-all kinds of marine casualties and damages


done to the ship or goods at sea by the
violent action of the winds or waves, one that
could not be foreseen and is not attributable
to the fault of anybody.

-losses or damages that result from


(a) natural and inevitable action of
the sea (b) ordinary wear and tear
of the ship
(c) negligent failure of the ship
owner to provide the vessel with
the proper equipment to convey
the cargo under ordinary
conditions.

- include losses as are of extraordinary in


nature or arise from some overwhelming
power which cannot be guarded against by
ordinary exertion exertion of human skill or
prudence

-ordinary wear and tear of the


voyage and from injuries suffered
by the vessel in consequence of
her not being sea worthy

Examples: shipwrecks, foundering, stranding,


collision, including the jettisoning of cargo if
made for the purpose of saving the vessel)
although it also includes FIRE, ENEMIES,

Example: (a) Insurance upon a


cargo of rice, when sea water
entered the compartment where

PIRATES, THIEVES, JETTISON, SURPRISALS,


TAKING AT SEA, ARRESTS, RESTRAINTS,
DETAINMENTS OF KINGS, PRINCESS AND
PEOPLE OF WHAT NATION, CONDITION OR
QUALITY, BARRATRY OF THE MASTER AND ALL
OTHER PERILS LOSSES, MISFORTUNES THAT
HAVE OR SHALL COME TO HURT, DETRIMENT
OR DAMAGE OF THE SAID GOODS,
MERCHANDISE, SHIP OR ANY PART THEREOF.

the rice was found through a


defective steel pipe (b) The insured
loaded logs unto a barge. The logs
are covered by insurance. The
barge sank due to improper loading
and leaks because the barge was
not provided with tarpaulins that
could have prevented the barge
from retaining sea water splashing
into it during the voyage.

WHO MUST CHECK ON THE SEA WORTHINESS OF A VESSEL


Since there is an implied warranty of
it becomes the obligation of the
seaworthiness,
cargo owner or
the insured
to look for a reliable common carrier
which keeps it vessels seaworthy. The
insured may have no control on the
vessel but has full control in the choice
of common carrier.

WHAT PERILS ARE INSURED IN AN ALL RISKS POLICY ?


It is to be construed as creating a special insurance and extending to all risks than are usually
contemplated and will cover all losses except such that may arise from intentional fraud,
intentional misconduct, or that otherwise excluded. It may include all losses whether
arising from a marine peril or not, to include pilferage during a war (Filipino Merchants Insurance
Co. vs. CA, 179 SCRA 638).
GR: All riks
XPT:
1) Intentional Fraud,
2) Intentional Misconduct
3) Otherwise exluded
DEFINITION OF OTHER TERMS
BARRATRY (WiFi CP)
is a willful act of the master and crew
in pursuance of some fraudulent or unlawful purpose
without the consent of the owner and
to the prejudice of his interest.
Example: burning of the ship or unlawfully selling the cargo.
INCHMAREE CLAUSE (PC NEL)
THIS IS ALSO AS KNOWN IN MARINE INSURANCE AS THE NEGLIGENCE CLAUS.
a provision in marine insurance that
it shall cover loss or damage to the hull or MACHINERY
THRU THE NEGLIGENCE OF THE MASTER, CHARTERERS, MARINERS, ENGINEERS, or PILOTS
THRU EXPLOSION, BURSTING OF BOILERS, BREAKAGE OF SHAFTS OR

THROUGH ANY LATENT DEFECT IN THE HULL OR MACHINERY NOT RESULTING FROM WANT OF
DUE DILIGENCE.
ALL RISKS CLAUSE- (loss other than Wifi)
one that covers any loss other than a willful and fraudulent act of the insured and
avoids putting upon the insured the burden of establishing that the loss was due to a peril within
the policys coverage, whether arising from a marine peril or not PROVIDED the risk is not
excluded.
WHAT CONSTITUTES INSURABLE INTEREST IN OCEAN MARINE INSURANCE
A. Insurable interest of the owner of the vessel
1.
The owner of a 2.
The
insurable 3.
The OWNER OF A
vessel has insurable interest of the owner of a VESSEL
ALSO
HAS
interest in the vessel, ship hypothecated by INSURABLE INTEREST IN
and such shall continue bottomry is only the EXPECTED
even if the vessel has excess of its value FREIGHTAGE,
WHICH
been chartered by one over
the
amount ACCORDING
TO
THE
who covenants to pay the secured by bottomry ORDINARY COURSE OF
owner the value of the (Section 101)
THINGS HE WOULD HAVE
vessel upon loss BUT, in
EARNED BUT FOR THE
case of loss, the insurer is BOTTOMRY/RESPONDENTI INTERVENTION
OF
A
liable only for the part of A
PERIL INSURED AGAINST
the loss which the insured
OR
OTHER
PERIL
(BOTTOMRY) is a loan
cannot recover from the
INCIDENT
TO
THE
payable only if the vessel
from
the
charterer
VOYAGE. ( Section 103)
given as security for said
(Section 100)
loan arrives safely at port
FREIGHTAGE DEFINED are
from contemplated
-Owner has insurable
the benefits derived by
voyage or
interest even if he
the owner from
charters it to 3rd person
(a) chartering of the ship
(RESPONDENTIA).
who promise to pay in
a loan payable only upon (b) its employment for
case of loss
the carriage of his own
the safe arrival in port of
goods or those of others
-Owner may insure the
the goods given as
(Section 102)
vessel for its full value
security
but
-Insurer is only
These CONTRACTS ARE IN IT EXISTS
a) In case of a charter
liable for the
THE NATURE OF A
party when the ship has
amount that
MORTGAGE as the owner
broken on the chartered
cannot be
borrows money for the
rd
voyage
recovered from 3
use, equipment or repair
person who agrees of the vessel for a definite (b) if a price is to be paid
for the carriage of goods,
to pay him in case
term with the ship as
when they are actually on
of loss
security with maritime or
board or there is contract
extraordinary interest on
account of the risks borne to put them on board
Ex.
AND the vessel and goods
by the lender, it being
Value of vessel P10M
are ready for the
stipulated that if the ship
X owner of ship charters
be lost during the voyage specified voyage (Section
it to Y.
or within a limited period, 104).
Y agrees to pay for its
the lender also loses his
value in case of loss.
money (NOTE THAT THE

X may still insure it for


P10M (full value)
In case of loss
Y only paid P4M
X can only recover P6 M
from insurer
The liability of the insurer
is subsidiary to that of
the charterer (Y)
After payment, Insurer is
given the right of
subrogation against Y in
case the loss arose out of
breach of contract.

LENDER HAS INSURABLE


INTEREST TO THE EXTENT
OF LOAN)
Example: The owner of
the vessel valued at PHP
300,000 as security for a
loan of PHP 200,000.00.
His insurable interest is
the excess of the value of
the vessel over the loan
or PHP 100,000.00. If the
vessel is lost, the owner
does not have to pay the
loan of PHP 200,000.00.

B) PERSONS/ PARTIES OTHER THAN THE OWNER WHO HAS INSURABLE INTEREST
1.) One who has an interest in the thing from which profits are expected to proceed, has
insurable interest on the profits (Section 105). (Insurable interest in expected profits)
Example: owner of cargo transported on a vessel not only has insurable interest on the
cargo but also on the expected profits from a future sale.
2.) The charterer of a ship has insurable interest to the extent that he is liable to be damnified
by its loss (Section 106). (Insurable interest of the charterer)
Example: A charters Bs vessel on condition that A would pay B in case of loss the amount
of PHP 300,000.00. A has insurable interest to the extent of PHP 300,000.00.
Concealment

NOTE: that the rules on concealment in marine insurance are stricter as it is sufficient that the
insured is in POSSESSION OF THE MATERIAL FACT, ALTHOUGH HE IS UNAWARE OF IT.
Example: If an agent fails to notify principal of the loss of the cargo and the latter, after the
loss but ignorant thereof, secured insurance lost or not lost, the insurance will be void due to
concealment.
PRESUMPTION OF A PRIOR LOSS
Insured in marine insurance is presumed to have knowledge, AT THE TIME OF INSURING, of a
prior loss, if INFORMATION MIGHT POSSIBLY HAVE REACHED HIM IN THE USUAL MODE OF
TRANSMISSION AND AT THE USUAL RATE OF COMMUNICATION (Section 109)
EFFECT OF CONCEALMENT
WHILE CONCEALMENT AS A RULE ENTITLES THE INJURED PARTY TO RESCIND, the rule must
yield to Section 110 as it does not vitiate the contract but merely exonerates the insurer
FROM A LOSS RESULTING FROM THE RISKS
CONCEALED as related to
(a) the national character of the insured
(b) the liability of the thing insured to capture and detention
(c) the liability to seizure from breach of foreign laws of trade (d) the want of the necessary
documents
(e) the use of false/simulated documents. Example: The vessel is seized due to lack of
documents, the insurer is exonerated. If the vessel is lost due to a storm, the insurer is liable
despite concealment of lack of documents.
DISTINGUISHING ORDINARY CONCEALMENT FROM THAT IN MARINE INSURANCE
ORDINARY CONCEALMENT
CONCEALMENT IN MARINE INSURANCE
In ordinary insurance, opinion or belief of a
in marine insurance, belief or expectation of
3rd person or own judgment of the insured is
a 3rd person in reference to a material fact is
not material and need not be
material and has to be communicated.
communicated (Section 35)
In ordinary insurance, a causal connection
in marine insurance the concealment of any
between the fact concealed and cause of
of the matters stated in Section 110 merely
loss is not necessary for the insurer to
exonerates the insurer from loss, if the loss
rescind,
results from the fact concealed

Representations

Implied Warranties

Voyage and Deviation

Loss

Abandonment