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Marine Insurance
KAVITA SINGH
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Hull Insurance :
1. Management :

One management may be efficient in the upkeep of the vessel and the appointment of officers and
crew. Other management, through negligence, indifference and undue economy, may show a bad
record.

To treat these managements alike would be an injustice to the better managed concerns. It would
penalize efficiency and carefulness and put a premium on inefficiency and carelessness.

2. Natural Forces and Topography :

The underwriters consider the character of the route, the construction, type and the nationality of the
vessel and conditions of the contract. Some natural hazards are permanent while others are of
seasonal dangers.

References are made to storms, submerged shoals, shifting sand bars, shallow water, narrow
channels, ice, currents, tides and seaquakes while calculating the premiums to a particular route.

Dangers from an underwriting point of view are associated with the ports of departure, call or
destination. Some ports are known for insufficient depth, absence of good anchorage ground, lack of
protection against tides or tidal waves.

3. Construction, Type and Nationality of the Vessel :

The quality and fitness of the vessel to serve as a carrier on the particular route is naturally of the
utmost importance.

The underwriter wants to know the vessel with respect to its builder and owner, structural plan,
material used in construction, type of propulsion, structural strength to resist stresses and strains,
adaptability to carry various kinds of cargo and its age and physical condition.

In foreign countries, certain societies are formulated to promulgate rules for the construction of
vessels, supervising such construction and assigning a class to each vessel.

The Lloyd's Register contains information to numerous vessels of other countries, name and
nationality of the vessel, materials of construction, details of the decks, the engine and boiler
equipment of the vessel.

Periodical changes are noted down there. Nationality of the vessel is important to insurer because it
discloses the dependence of the nations upon the ocean trade.

The nationality reveals the acumanship or skillfulness of the masters and crew. The rates may vary
greatly as to the standard or commercial honor in trade, high standard and commercial ethics.
Premium rates are based on age of the vessel, propelling method body-structure, risks covered,
distance for transit and nature of the vessel, tonnage capacities, port- classification and season of
sailing.

4. Policy Conditions:

Innumerable clauses are used to limit or increase the underwriter's liability. Some policies may cover
against total loss. Some may cover partial losses. Others may relate only to general average or
particular average.

Cargo Rates:

The premium on cargo depends upon the following factors:

1. Ownership:

It may happen that two separate ownerships of the same kind of cargo, carried on the same ship and
to the same place will command different rates. Proper packing, profitable accounts and previous
refusal of insurance may determine the rate.

2. Character of the Cargo:

The difference in hazard between various kinds of commodities, different forms of the same
commodity, different shipments, and different types of packing and durability of the commodity may
influence the premium rates.

3. Hazards and Customs:

The natural forces and topography considered in the case of ship are also considered in the case of
cargo. The effect of seasons has important bearing upon commodities that are seriously affected by
cold or heat.

The season or climate at the port of destination may influence the risk. In certain season the port is
busy with a particular cargo. Varying trade customs associated with the different commercial routes
will influence cargo rates materially. The moral hazard is greater on certain routes.

4. Quality and Suitability of the Vessel used as Carrier:

The underwriters take into account the fitness of the vessel to carry the particular cargo. The
premiums are higher in the case of ship of slower speed due to longer exposure of the cargo. In case
of highly perishable goods, moving in large quantities, special types of vessels have been designed to
carry such commodities.

5. Duration of Voyage and Policy Conditions:

Insurers take into account the length of time. Sometimes, loading of the goods aboard the vessels
and protection of the goods while on the dock are considered in calculation of premium.

6. Miscellaneous Factors:

The operating efficiency or proved experience of ship may affect the risk on cargo. The methods of
handling and stowing cargo, the regularity of the service, etc., are the various factors to influence the
premium rate.