MDU-CPAS

ASSIGNMENT
OF
INSURANCE LAW

SESSION – 2020-2021

TOPIC – PERILS OF THE SEA

(MARINE INSURANCE)

Submitted to Submitted by
Dr. Naresh Kumar Tanya Chhabra
Roll no. 3591-B
B.A L.L.B (IX Sem)

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 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards

to my guide Dr. Naresh Sir for his exemplary guidance, monitoring and
constant encouragement to give shape to this assignment. The blessing,
help and guidance given by them time to time shall carry me a long way in
the journey of life on which I am about to embark.

I also take the opportunity to express a deep sense of gratitude to my

respected seniors who shared their cordial support, valuable information
and guidance, which helped me in completing the task through various
stages.

Last but not the least, I think the almighty, my parents, brother, sisters and
friends for their constant encouragement without which this assignment
would not have been possible.

Tanya Chhabra

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 TABLE OF CONTENTS

INTRODUCTION…………………………………………………………………………………... 4

MEANING OF MARINE INSURANCE…………………………………………………………… 4

DEFINITION……………………………………………………………….……..……………….... 4

IMPORTANCE OF MARINE INSURANCE…………………..………………………………….. 5

ESSENTIALS OF A VALID MARINE INSURANCE POLICY………………………………….. 6

CONTENTS………………………………………………………………………………………… 6

MARINE PERILS IN MARINE INSURANCE…….……………………………………………… 6

PERILS OF THE SEA……….…………………………………………………………………...… 7

EXAMPLES OF PERILS OF THE SEA…………………………………………………………... 7

EXCLUDED LOSS…..…………………………………………………………………………….. 9

CONCLUSION………………………………………………………………………………….…. 10

BIBLIOGRAPHY………………………………………………………………………………..… 10

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Introduction

 Insurance connected with the risks of transportation of goods, is one of the oldest and
most important forms of insurance. The value of goods shipped by the business firms
each year cost billions of rupees. These goods are exposed to damage or loss from
numerous perils associated with transportation. These goods can be protected by
Marine Insurance Contracts.
 It is an important element of the general insurance industry. It essentially provides
cover for the losses suffered due to marine perils. In India, the marine insurance is
regulated by the Indian Marine Insurance Act, 1963 which is based on the original
Marine Insurance Act, 1906 of U.K.
Meaning of Marine Insurance

 A contract of Marine Insurance can be defined as an arrangement under the insurer

undertakes to indemnify the insured in the manner and to the extent thereby agreed
against marine losses.
 Marine insurance is a contract between the insured and insurer. The insured may be
cargo owner or a ship owner or freight receiver. The insurer is known as underwriter.
The insured pays a particular sum which is called premium, in exchange for an
undertaking from the insurer to indemnify the insure against the loss or damage caused
by the sea perils.
 Marine risks are the perils of the sea eg-storm, collision, capture, seizure, sinking of
ship, etc.
Definition

 According to Sec 3 of Marine Insurance Act, 1963-

“A contract of marine insurance is an agreement whereby the insurer undertakes to
indemnify assured in the manner and to the extent thereby agreed, against marine
losses, this is to say, the losses incidental to Marine Adventure.”
 In Lloyd v. Fleming, Blackburn J. defined a policy of Marine insurance as “a contract
of indemnity against all losses occurring to the subject matter of the policy from
certain perils during the adventure.

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Importance of Marine 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 face dacoits 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 Ship-owner

 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 ship
owner .
 So, marine insurance is important insurance for ship-owner.

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 ship owner for
transportation of goods from one part to another.
 If businessman does not pay freight of his goods to the ship-owner, ship-owner
may have to experience economic loss.
 If such types of loss occur insurance company indemnifies the ship owner 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.

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  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.

Essentials of a valid Marine Insurance Policy:

1. It must fulfill all the essentials of a valid contract.

2. It must be in writing and duly stamped under the Indian Stamp Act, 1879
3. Insured must have insurable interest in the subject matter at the time of loss.
4. Time period of insurance must not be more than one year.
5. Good faith must be observed between the parties.
A Marine Policy must specify the following: (Sec 25)

1. The name of the assured, or of some person who effects the insurance on his behalf,
2. The subject matter insured and the risk insured against,
3. The voyage, or period of time, or both, as the case may be, covered by the
insurance,
4. The sum(s) insured,
5. The name(s) of the insurer(s).

Marine Perils in Marine Insurance

 Losses in marine insurance business are the result of the various perils. The marine
insurance policy does not necessarily cover all the risks.
 The insurer is liable to indemnify an insured in respect of only losses which result
from perils insured against.
 When the loss occurred is beyond the insured peril, the insured himself shall have
to bear. The onus of proof under a policy of Marine insurance is upon the insured to

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 establish that the loss was proximate, caused by an insured peril. When goods are
insured against ‘All Risks’, the onus of proof of loss is transferred to the insurer.
 The perils insured against are mentioned in the policy and the underwriter shall be
liable for damages caused by the insured perils.
 “Marine Perils means the perils consequent on”, or incidental to the navigation of
the sea, that is to say, perils of the seas, fire, war perils (enemies), pirates, rovers,
thieves, captures, seizures, restraints and detainment of princes and peoples,
jettisons, barratry and other perils, either of the like kind or which may be
designated by the policy.”

Perils of the Sea:

 Chalmer observes that ‘it is unsafe to attempt a complete definition of the

expression peril of the sea’.
 Broadly speaking, a peril of the sea may be defined to cover everything that
happens to the ship in course of a voyage by the immediate act of God without the
intervention of human agency.
 Perils of the sea refer to fortuitous accidents or casualties of the sea. If the loss
arising out of any of the perils of the sea insured is attributable to the fraud or
willful misconduct of the assured, the underwriter is acquitted from the liability
under the policy.
 Under perils of the sea, the ordinary action of the winds and waves, ordinary wear,
and tear to the vessel, the inherent risk of the cargo is not included.
 The burden of proving a loss by perils of the sea lies on the insured.
 The reason for placing the burden of proof on the ship owner in such a case is that
they are likely to have all the relevant information.

Examples of Perils of the Sea-

1. Foundering at Sea (Sinking) –
If the ship is missing and after a reasonable time no news has been received, the
loss may be presumed to be by the perils of the sea.

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 2. Ship wreck (Destruction of Ship) –
It is loss caused by the perils of the sea when it happens by the ship striking against
the rock or driven to the shore by the violence of winds.
The shipwreck may occur in various ways eg- ship may be so shattered that it
becomes a mere collection of planks or it is unable to navigate except at a great
cost.

3. Stranding –
It happens when a ship by an accident gets out of the ordinary course of her voyage
and gets struck up in shallow regions of sand and received injury.

4. Collision –
It is regarded as a peril of the sea and it may arise by the ship striking against
another ship or any other subject matter.

5. Loss by fire –
If fire is caused on board, the ship and if the goods or ship is damage, the insurance
company will be liable.
But it will not include the loss caused by the inherent vice of the subject matter
insured.
It covers also a fire voluntarily caused in order to avoid capture by an enemy.

6. Loss by capture, seizure –

The term capture will include not only taking by an enemy but by revenue and
statutory suthorities.

7. Loss by arrest and detention –

Loss due to any restraint by political or executive acts generally called restraint of
Princes, kings, etc. will be included under the marine policy.
But does not include loss by mob in a riot or arrest by a judicial process or
embargo, i.e., order of the government prohibiting a ship or goods from a port.

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Excluded Loss -
1. Wear and Tear –
The term is used to denotes the natural decay and deterioration which invariably
happens to a ship or any portion due to the action of the winds and waves.
In case of ship, it means decay of the body of the ship and its accessory eg-splitting
(break) of a sail, breakage of rope or cable and in case of cargo of perishable nature
like fruits, vegetable, weakness and defects.

2. Springing a leak –
If a ship develop a leak, it is not a peril of the sea unless it is due to an accident.

3. Breaking of goods –
If the goods are broken or damaged during the voyage due to movement of the ship
it is not included under perils of the sea.
If it is due to violent action of waves and consequent laboring of the ship, it is a
peril of the sea.

4. Inherent vice –
The insurer will not be liable for any loss caused due to the defect in the goods etc,
if the fruits become rotten or wine becomes bad due to inherent decomposition.

5. Death of animals due to nature’s cause –

If death of animals happen due to any natural cause, it is covered under perils of the
sea.

6. Loss by rats and vermin –

If loss is caused by rats, etc, it will not be deemed to be peril of the sea.
Hamilton v. Pandorf, where the rats make a hole in a pipe and sea water entered
damaging the cargo of rice and there was no negligence on the port of the carrier, it
was held that the insurer was not liable.

7. Loss by decay –
If any loss caused due to decay it will be excluded loss and if that delay is
unreasonable then insurance company will not liable to pay such loss.

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Conclusion:
 The purpose of marine insurance has been to enable the ship owner and the buyer and
seller of goods to operate their respective business while relieving themselves, at least
partly, of the burdensome financial consequences of their property’s being lost or
damaged as a result of the various risks of the high seas.
 Thus, in other words, marine insurance adds the necessary element of financial
security so that the risk of an accident occurring during the transport is not an
inhibiting factor in the conduct of international trade. The importance of marine
insurance, both to assureds, in terms of the security it provides and its cost element in
the overall economics of running a ship or transporting goods, and to countries,
particularly developing countries, in its impact on their balance of payments position,
cannot be overemphasized.
 It is well known that in India, until the coming into operation of the Indian Act of
1963, the courts used to follow the principles of English law and decisions based on
such principles as well as the provisions of the English Act, viz. the Marine Insurance
Act, 1906.
 The Indian law is a direct take- off from its English counter part, and so, whenever it is
not self evident, case law spanning over two centuries is to be looked into to arrive at
the true position.
 Moreover, the Marine Insurance Act itself being a codification of previous case law,
an appreciation of past authorities is not only an essential requirement to the
understanding of the legal concepts generally, but also of paramount importance when
wishing to gain an insight into the very constitution of the sections within the Act.

Bibliography

 Wikipedia
 http://howtoexportimport.com/TYPES-OF-MARINE-INSURANCE-POLICIES-
486.aspx
 www.slideshare.net/anon27/types-of-marine-insurance-contracts
 http://www.marineinsight.com/marine/different-types-of-marine-insurance-marine-
insurance-policies/
 www.admiraltylaw.com/UBC%20Law332/marine_insurance-outline.pdf

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