MARINE CONTRACTS

VINOD T
HC16151
Introduction / History Of Marine Insurance
• Nature Of Marine Insurance Contract
• Insurance Principles
• Classes of Business
• Types Of Insurance & Reinsurance
• Organizations and Systems
• Claims
• Shipping Documents
• Rating
• Marine Underwriter
• Marine claims live case study Classes of Business
INTRODUCTION
Marine business is one of the oldest areas of insurance. The current working
environment has been created by historic case law with the 1906 Marine
Act formulating much additional regulation and securing some
standardization of definitions.
 Contrary to popular belief, Lloyds’ of London was not the first group of
people to offer a Maritime Commerce. The first form of marine insurance
dates back to the year 3000BC when Chinese merchants dispersed their
shipments amongst several vessels so as to abridge the possibility of
damage to the products. The earliest account of insurance came in the form
of ‘bottomry’, a monetary payment that protects traders from debt if
merchandise is lost or damaged. Commercial Marine Line Claims
•
•
Marine Insurance Market
•  Lloyd's a corporate established in London is the biggest centre for Marine
insurance in the world.
•  Lloyd's was a coffee house frequented by the Tradesmen, Ship owners &
others.
•  The coffee house became the meeting house for brokers, Insurers,& Ship
owners for negotiating their Business
•  At the coffee house they would discuss various aspects of the shipping
•
business including Cargo & Ship Insurance.
• Marine Insurance Market
• The market comprises insurance companies and underwriters. There is some
mutual pooling of risk by ship owners, but this is mainly confined to P&I
Clubs (Protection and Indemnity) covering liabilities of ship owners to
cargo owners and third parties. Commercial Marine Line Claims
Commercial Marine Line Claims The insurance is submitted to
underwriters in a slip form, as for all over the world Market Business
(Only in the context of Import Claims in India), showing details such
as:
• Names and brief details of vessels covered
• Name of the insured
• Name & Nature of the product
• Packing details
• Place of origin & destination
• Value of vessels
• Periods of cover
• Premium rate
• General Conditions
• Class and type of cover
• Meaning Of Marine Policy The terms & conditions on which a contract
of marine insurance is entered into between the assured and the insurer
are incorporated in document. Commercial Marine Line Claims
•
Nature Of Marine Insurance Contract Marine insurance contract being
a contract should satisfy the essential elements of a valid contract. The
essential elements of a marine insurance contract from the perspective
of Indian Contract Act includes:-
•  Offer - In the form of proposal.
•  Acceptance - Issue of cover note/policy
•  Consideration - Premium payable on the policy Commercial Marine
Line Claims
Insurance principles Applied to Marine Business
• Utmost Good Faith
• Indemnity
• Contribution
• Subrogation
• Warranties
• Commercial Marine Line Claims
Cargo Insurance
Marine Cargo Insurance provides the insurance cover in respect of •
Loss or damage to Cargo during transit by
 Rail, Road, Sea Or Air.
Thus Marine Cargo Insurance Covers the following :
 Export & Import shipment by ocean.
 Transhipments
 Consignments send Rail Road & Air
 Articles sent by Post. Commercial Marine Line Claims
• Commercial Marine Line Claims Cargo insurance usually attaches from the
times goods leave the warehouse or place of storage, continues during the
ordinary course of transit and terminates either on delivery to the final
destination or the expiry of 60 days after discharge at the final port,
whichever occurs first
• Cargo insurance normally provides indemnity against loss of or damage to
merchandise caused by fire or explosion, collision, sinking, capsizing,
jettison, washing overboard and general average sacrifice.
• General average sacrifice is the deliberate sacrifice of the property in a
marine voyage in order to prevent the total loss of both ship and cargo.
• The sacrifice could be partial, in which proportion of cargo is saved, or in
severe cases the whole consignment could be lost. Cargo Insurance
• Hull & Machinery Hull insurance omits any reference to
goods or merchandise and covers only the structure of
the ship.
• It encompasses damages to the grounding ship from
collision, etc.
• Machinery is normally covered, e.g. engine room, ets.
Marine hull and machinery insurance is for all types of
ships and vessels and their equipment, Container ships
Oil & gas tankers Bulk carriers Passenger vessels Fishing
vessels Commercial Marine Line Claims
• Liability Death or injury to passengers, crew, stevedores and
others Damage to docks etc.
• Damage to cargo Collision damage not covered by hull insurance
(25% for most countries plus excess over insured value) Oil
pollution Unrecovered general average expense Fines and other
penalties Product liability – mainly for constructions of the ships
and related parts Any other public liability Commercial Marine
Line Claims
• Marine Stock Throughout Policy STP is popularly known as “Cradle to Grave”
Coverage. to have single policy as against multiple marine and property policies
• Marine STP is the process of insuring both stock and transit/inventory exposures
under a ‘Single Policy’ to ensure seamless protection to the assured on a
worldwide basis.
• STP is suitable for organizations that source raw materials or semi finished goods
for further value addition. These organizations then store and distribute finished
goods across the world. Raw materials, Work in Progress & finished Goods that
are in transit
• All locations are covered such as assureds’ factory (ies) / jobs worker/ sub-
contractors/ Warehouses when cargoes are not in course of transit within the
meaning of Marine Insurance. Commercial Marine Line Claims
Different Causes Of Marine Losses
Theft Pilferage
Non Delivery Handling
Stowage Damage
Loss From Water Marine Perils
General Procedure Of All Marine Insurance Claim Commercial Marine Line Claims Duty
Of Insured
• Do no give clear receipt on the delivery order but to give such notice of loss or damage
• In case of containerised cargo: - Check carefully condition of
• - the containers if it was damaged or holed. - its seal if numbers is matched with the
document or if it was damaged or cut. - If it was found damage, Give such notice of loss or
damage on the delivery order.
Duty Of Insured
• Immediately contact the carriers or its representative to do survey. Immediately contact
THE INSURANCE COMPANY to do joint - survey.
• Take photographs showing details of container, its seal and numbers, its floor, wall and
roof where it was damaged and condition of the cargo. Duty Of Insured
• reporting shall not later than 7 days from the time loss or damage noticed. duty of the
Insured to give THE INSURANCE COMPANY or Its survey agent an opportunity to
inspect the damage, vessel, interview with the master and crews and other related parties.
• A Real Contamination  Vessel loads two segregated grades of cargo –gasoline and gasoil -Gasoil cargo requires a
minimum flash point of 56oC - On arrival at discharge port, gasoil is found to be off-specification for flash point
•

•  It is known that is possible for gasoline vapours to contaminate a higher flash material via a vessel’s common inert gas
system
•

•  During attendance onboard the vessel for re-sampling, it was noted that the required double valve segregation between
cargo tanks containing different grades was not in place
•

•  Suggests that a vapour phase contamination may have occurred

•

•  Typically, contamination investigations will begin from a testing point of view with certain specification testing being
performed under joint witnessed conditions.
•

•  To confirm whether the cargo is off- specification.

•

•  Flash Point is defined as the lowest temperature at which the application of an ignition source causes the vapour of a
sample to ignite and the flame to propagate across the surface of the liquid under the specified conditions of test
•

•  A joint analysis took place where samples from throughout the cargo movement were tested for flash point
•

•  Flash point testing indicated load port samples acceptable, but pre- discharge samples were off- specification
•

• For certain contamination problems, routine analysis is not sufficient to establish the source/cause of the contamination •
Joint testing confirms that gasoil is off-specification for flash point at discharge, but was on- spec
• Review of documentation does not suggest any other source for contamination e.g from previous cargoes Commercial
• Samples of gasoline and gasoil cargoes carried by the vessel are tested by GCMS 1. Gas Chromatography is a means of
separating and detecting compounds in a mixture
• Mass spectrometry is a means of identifying the individual compounds that have been separated