Marine Insurance

Presented by :
Sahu Farnandis,
2nd Year LL.M. (Business Law)
Madhusudan Law University, Cuttack, Odisha
 Marine Insurance and its Evolution

● Marine Insurance- A type of Insurance Contract that acts as a financial safety net for those
engaged in the maritime trades.
● The early traces of Marine Insurance can be dated back to 13th and 14th Century in states
of Italy where merchants faced constant risks from piracy, storms and shipwrecks. To
mitigate these risks, they adopted informal agreements where individuals where a group of
merchants would come together to share this burden of financial losses.
● The 16th and 17th centuries witnessed the formalization of marine insurance with the
development of written policies. These policies outlined the terms of coverage, risks
insured against, and the premium to be paid.
● This period also saw the establishment of legal frameworks governing marine insurance.
The concept of "good faith" emerged, requiring both parties to act honestly and disclose all
relevant information.
 Marine Insurance in India
● Meanwhile in India there are no evident records of any such arrangements regarding the
maritime insurance even though the scriptures and folktales mention Indian maritime
business pompously.
● But post arrival of European trading companies, particularly the British East India
Company (BEIC) marked a turning point.
● In the Colonial Rule, the BEIC, facing risks associated with maritime trade, likely adopted
marine insurance practices similar to those prevalent in Europe.
● But these practices due to its expensive premiums did not favour the Indian merchants
hence, these merchants relied mostly on traditional risk sharing methods
● But the Post Independence Era proved to be a blessing on the Indian Maritime Industry.
● The Marine Insurance Act, 1963 was enacted providing a legal framework specifically to
this sector.
 Marine Insurance Act, 1963
This Act has drawn similar lines from its predecessor, The English Marine Insurance Act, 1906. It
defines a marine insurance contract as an agreement whereby the insurer undertakes to
indemnify the assured (policyholder) in the manner and to the extent agreed upon, against
marine losses.
Coming to the act,
In Section 3, Marine Insurance is defined as “A contract of marine insurance is an agreement
whereby the insurer undertakes to indemnify the assured, in the manner and to the extent
thereby agreed, against marine losses, that is to say, the losses incidental to marine
adventure.”
Its applicability is clearly mentioned in Section 4(2), Where a ship in course of building, or the
launch of a ship, or any adventure analogous to a marine adventure, is covered by a policy in
the form of a marine policy, the provisions of this Act, in so far as applicable, shall apply
thereto; but, except as by this section provided, nothing in this Act shall alter or affect any rule
of law applicable to any contract of insurance other than a contract of marine insurance as by
this Act defined.
 Key Terms in Marine Insurance Act, 1963
Marine Adventure- Defined under section 2(d) of the Marine Insurance Act, 1963, marine adventure
includes:

1. Any insurable property which is exposed to maritime perils;

2. The earnings or acquisition of any freight, passage money, commission, profit or other pecuniary
benefit, or the security for any advances, loans, or disbursements is endangered by the exposure of
insurable property to maritime perils;
3. Any liability to a third party may be incurred by the owner of, or other person interested in or
responsible for, insurable property by reason of maritime perils.
Continued…
Maritime Perils- In Section 2(e) it is defined as “means the perils consequent on, or
incidental to, the navigation of the sea, that is to say, perils of the seas, fire, war
perils, pirates, rovers, thieves, captures, seizures, restraints and detainments of
princes and peoples, jettisons, barratry and any other perils which are either of the
like kind or may be designated by the policy”
Types of Marine Insurance
HULL INSURANCE- Hull insurance is a type of marine insurance that covers physical damage to the ship, including its
machinery and equipment. This policy typically covers risks such as collision, grounding, fire, and theft. Hull insurance is
essential for ship owners as it helps them to recover the cost of repairs or replacement of the ship in case of any damage.

CARGO INSURANCE- Cargo insurance is a type of marine insurance that covers the loss or damage of goods transported by
sea. This policy covers risks such as theft, damage due to mishandling, and loss due to natural disasters. Cargo insurance is
essential for cargo owners as it helps them to recover the cost of the lost or damaged goods. Cargo Insurance is that where
the owners of cargo, which is to be transported by sea, usually cover their financial exposure against loss of, or damage to
cargo for declared value.

FREIGHT INSURANCE- Freight insurance is a type of marine insurance that covers the loss of freight revenue due to the loss
or damage of goods during transportation. This policy covers risks such as delay, loss, or damage of goods. Freight insurance
is essential for freight forwarders and shipping companies as it helps them to recover the revenue lost due to the loss or
damage of goods.

LIABILITY INSURANCE- Also known as P&I Insurance, i.e. Protection and Indemnity Insurance. Liability insurance is a type of
marine insurance that covers the legal liability of ship owners and other parties involved in maritime trade. This policy covers
risks such as collision, pollution, and injury or death of crew members. Liability insurance is essential for ship owners and
other parties involved in maritime trade as it helps them to cover the legal costs and compensation in case of any liability.
 Essential Elements of Marine Insurance Contract
● Valid Contract
● Uberrimae Fidei (Utmost Good Faith)
● Insurable Interest
● Warranties
● Indemnity
● Subrogation
 Policies in Marine Insurance
● Valued Policy- It is a policy which specifies the agreed value of the
subject-matter insured. In a valued policy, the value mentioned is conclusive
between the parties, unless there is a fraud whether be loss be total or partial.
● Unvalued Policy- It is also known as Open Policy sometimes. In mercantile
usage the term open policy is generally used to describe floating policies; but
in law and under the statutes an open policy is denoted to describe only an
unvalued policy.
● Floating Policy- This type of policies are generally taken by carriers, factors or
warehousemen to cover their limited interests in the goods they carry or in
their possession, when he does not know by which ship his goods will be
dispatched. Such kind of policies are taken in general terms and the particulars
as filled by subsequent declarations.
 Continued…

● Voyage Policy- Where the contract is to insure the subject-matter at and from,
or from one place to another or others, the policy is called a "voyage policy".
● Time Policy- It is a policy where a ship is insured for a particular time, Where
the contract is to insure the subject-matter for a definite period of time, the
policy is called a "time policy”. A time policy which is made for any time
exceeding twelve months is invalid.
● It may be noted that both time and voyage policy can be included in one
policy. Such policies are termed as mixed policy.
Thank
You….