TITLE OF THE WORK: A LEGAL ANALYSIS ON

POLICIES AND PRINCIPLES OF MARINE INSURANCE

IN INDIA

SUBJECT: INSURANCE LAW

NAME OF THE CANDIDATE: MRITTIKA GHOSH

UNIVERSITY ROLL NO.: L03/LLBH/191334

UNIVERSITY REGISTRATION NO.: L03-1211-0094-19

COLLEGE ROLL NO.: 18

SEMESTER: 8TH (HONOURS)

COURSE: B.A.LL.B. (HONS.)

ACADEMIC YEAR: 2023-2024

NAME OF THE COLLEGE:

JOGESH CHANDRA CHAUDHURI LAW COLLEGE

 CONTENTS

Sr. No. Topic Page No.

1 List of Cases –

2 List of Tables –

3 Introduction 1

4 Chapter I: Definition and History of Marine Insurance 2

5 Chapter II: Features and Scope of Marine Insurance 6

6 Chapter III: Significance and Operation of Marine 9

Insurance

7 Chapter IV: Types of Marine Insurance 11

8 Chapter V: Marine Insurance Policy and Its Types 13

9 Chapter VI: Principles of Marine Insurance 17

10 Chapter VII: Latest Judgments Related to Marine 19

Insurance

11 Concluding Observations and Recommendations 22

12 Bibliography 23
 LIST OF CASES

Sr. No. Cases

1 Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd.

2 New India Assurance Co. Ltd. v. Hira Lal Ramesh Chand and Ors. and
Ratan Chand Deep Chand and Ors.
3 State of Orissa v. United India Insurance Co. Ltd.

4 Piper v. Royal Exchange Assurance

5 Mansfield v. Maitland

6 Arjandas Brijlal & Co. v. Oriental Insurance Co. Ltd.

LIST OF TABLES

Sr. No. Table

1 Figure I : Operation of Marine Insurance

2 Figure II: Types of Marine Insurance

3 Figure III: Types of Marine Insurance Policies

 A LEGAL ANALYSIS ON POLICIES AND PRINCIPLES
OF MARINE INSURANCE IN INDIA

INTRODUCTION

In the era of globalization, maritime transportation has been the spine of international
trade having more than 80 per cent of the merchandise transportation done by the sea.
But marine transport involves a lot of risk to the goods being carried and also the ship
carrying them. Thus, to facilitate trade and commerce and to mitigate the risk of
financial loss to property, they should be insured as it provides security and protection
to individuals, communities and businesses. It provides for risk sharing and encourages
businessmen to innovate and to engage in more risky businesses which ensure a higher
level of economic activity in the country. Marine insurance is thus an important
component of international trade and commerce.

Marine Insurance is one of the most important topics in the recent era. With the
globalization maritime transport is the backbone of the international trade. Marine
transport involves risk related with the “perils of the sea”. Marine insurance is an
agreement by which the insurer i.e., the insurance company agrees to indemnify the
insured i.e., the owner of a ship or cargo against risks, which are incidental to marine
adventures. Marine insurance business means the business of effecting contracts of
insurance upon vessels of any description, including cargoes, freight, goods, wares
merchandise and property of whatsoever description insured for any transit by land or
water or air or all the three. The same may include warehouse risks or similar risks in
addition or as incidental to such transit and includes any other risks which are
customarily included among risks insured against in marine insurance policies. But it
is often found in the recent times that certain fraudulent activities are being done.

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 CHAPTER I : DEFINITION AND HISTORY OF MARINE
INSURANCE

 DEFINITION OF MARINE INSURANCE:

A contract or policy of marine insurance is an arrangement whereby one person called

insurer or underwriter, agrees, according to specific terms of contract, to indemnify
another person, called insured, for the losses incurred in connection with property, such
as ship, goods or other movables, in maritime transport. The insured has to pay a
consideration which is called the Premium to the insurer.

Section 3 of the Marine Insurance Act, 19631, defines ‘marine insurance’ as

follows:

“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.”2

Marine insurance has two branches:

1. Ocean Marine Insurance.
2. Inland Marine Insurance.

Ocean marine insurance covers the perils of the sea whereas inland marine insurance is
related to the inland risks on the land.

Marine insurance is one of the oldest forms of insurance. It has developed with the
expansion of trade. It was started during the Middle Ages in Italy and then in England.
The sending of goods by the sea involves many perils; so, it was necessary to get the
goods insured.3

1
Marine Insurance Act, 1963 (Act 11 of 1963), India, available at: https://www.indiacode.nic.in/ (Visited
on May 20,2023, 08:00 AM).
2
Avtar Singh, Law of Insurance 251 (Eastern Book Company, Lucknow, 2 nd edn., 2010).
3
Dr. S.R. Myneni, Law of Insurance 277 (Asia Law House, Hyderabad, 3 rd edn., 2021).

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“Marine adventure" includes any adventure where any insurable property is exposed to
maritime perils i.e., perils consequent to navigation of the sea. It also includes 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. Marine adventure
also includes 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.

A contract of marine insurance may, by its express terms, or by usage of trade, be

extended so as to protect the assured against losses on inland waters or on any land risk
which may be incidental to any sea voyage. In modern times marine insurance business
is well organized and is carried on scientific lines.

 Marine insurance typically covers the following key areas:

1. Hull insurance: This type of coverage protects the ship or vessel itself against
physical damage or loss. It includes the ship's hull, machinery, and equipment.

2. Cargo insurance: Cargo insurance covers the goods being transported by sea against
risks such as loss, damage, or theft during transit. It provides compensation to the cargo
owners in case of any covered perils.

3. Freight insurance: Freight insurance protects the shipping company or carrier

against the risk of not receiving the expected freight charges due to circumstances like
cargo loss or damage.

4. Liability insurance: Marine liability insurance covers the legal liabilities of

shipowners, operators, and other parties involved in maritime activities. It provides
financial protection in case of damage to third-party property, bodily injury, or pollution
caused by the ship or its operations.4

4
Available at: https://www.dripcapital.com/resources/blog/marine-insurance-meaning-types-benefits
(Visited on May 20, 2023, 09:20 AM).

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  HISTORY OF THE MARINE INSURANCE

Several nations have claimed the honour of having invented this system of indemnity
but the best evidence indicates its source during the Jews banishment from France in
the latter part of the twelfth century introduced such a scheme of insurance for the
protection of their property during their removal from France. Villani, a fourteenth
century historian is the authority for this theory. The concept of this theory started in
Lombardy in 1182. The history of marine insurance can be traces back to several
centuries, where it merely was seen as a mode of securing the interests of ship or the
cargo owners, who faced various difficulties during an overseas voyage. Marine
insurance has facilitated the development of long-distance trade and as such has
influenced economic growth and progress of, in particular, seafaring nations in the early
modern period. “In the Middle Ages, contracts such as “loans on bottomry”, which were
repayable only if a voyage was successful, had served a marine insurance function.
However, marine insurance corporations had not yet emerged, and underwriting was
still carried out entirely by private individuals, frequently themselves merchants, who
underwrote specific risks on an individual. Marine insurance can be described as
mother of all insurances. It is said to have originated in England due to the frequent
movement of ships and cargos over high seas for the purpose of trade and commerce.
Marine insurance is the oldest form of insurance. Marine Insurance is not of a recent
origin and its existence can be traced back to several centuries. It has been around as
long as human existence as the main concept of Marine Insurance is that of spreading
risk.5

The first written insurance policy can be seen in on a Babylonian obelisk monument
where the code of King Hammurabi is carved. The "Hammurabi Code" was one of the
first forms of written laws. The insurance law was first codified in the year 1906. The
English Marine Insurance Act was passed in 1906 but the laws concerning it had taken
a shape much prior to the passing of this Act. The origin of maritime law can be traced
in Greek and Roman maritime loan. It is known to be the earliest and well-built kind of
insurance. Though the origin of modern marine law insurance has its traces in Lex
Mercatoria i.e. law of merchants. Edward Lloyd’s coffee shop soon became a popular

5
Available at: https://www.legalservicesindia.com/article/654/Development-Of-Laws-Relating-To-
Marine-Insurance-In-India.html (Visited on May 21, 2023, 10:00 PM).

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place for ship owners, ship captains, and merchants, and thereby a reliable source for
the latest shipping news. Lloyd's Coffee House soon became the first marine insurance
market. It had become the meeting place for people in the shipping industry who were
wishing to insure cargoes and ships, and also those who were willing to underwrite such
ventures. Owing to these informal meetings soon the Lloyd’s coffee house became an
insurance market. The members who were participating in the insurance arrangement
eventually formed a committee as the Society of Lloyds’ and moved to the Royal
Exchange on Cornhill. The establishment of insurance companies, the growth of British
Empire and a developing infrastructure of specialists (like shipbrokers, admiralty
lawyers, surveyors, bankers, loss adjusters, general average adjusters, etc.) gave
English law a prominence in the area of Marine Insurance and it is due to this reason
that it forms the basis of almost all modern practices.6

The law on marine insurance was first codified by the Marine Insurance Act of 1906 in
England, and this Act came into force on January 1, 1907. It was proposed to clarify
and set forth the regulations associated with marine insurance agreements.

The Marine Insurance Act, in India, came into existence in 1963. As per section three
of the Act, any time the term ‘marine insurance’ is used, expressed or even extended
for the insuring of goods against loss or damage, the insurer will be at risk to bear the
charges. The insurer will consider all the certainty of goods in case of misfortune
sustained during marine ventures.

6
Available at: https://www.cargoins.com/history (Visited on May 21, 2023, 10:15 PM).

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 CHAPTER II: FEATURES AND SCOPE OF MARINE
INSURANCE

 FEATURES OF MARINE INSURANCE

1) Offer & Acceptance: It is a prerequisite to any contract. Similarly the goods under
marine (transit) insurance will be insured after the offer is accepted by the insurance
company. Example: A proposal submitted to the insurance company along with
premium on 1/4/2023 but the insurance company accepted the proposal on 15/4/2023.
The risk is covered from 15/4/2023 and any loss prior to this date will not be covered
under marine insurance.

2) Payment of premium: An owner must ensure that the premium is paid well in
advance so that the risk can be covered. If the payment is made through cheque and it
is dishonoured then the coverage of risk will not exist. It is as per section 64VB of
Insurance Act 1938- Payment of premium in advance.

3) Contract of Indemnity: Marine insurance is contract of indemnity and the insurance

company is liable only to the extent of actual loss suffered. If there is no loss there is
no liability even if there is operation of insured peril. Example: If the property under
marine (transit) insurance is insured for Rs 20 lakhs and during transit it is damaged to
the extent of Rs 10 lakhs then the insurance company will not pay more than Rs 10
lakhs.

4) Utmost good faith: The owner of goods to be transported must disclose all the
relevant information to the insurance company while insuring their goods. The marine
policy shall be voidable at the option of the insurer in the event of misrepresentation,
misdescription or non-disclosure of any material information. Example: The nature of
goods must be disclosed i.e. whether the goods are hazardous in nature or not, as
premium rate will be higher for hazardous goods.

5) Insurable Interest: The marine insurance will be valid if the person is having
insurable interest at the time of loss. The insurable interest will depend upon the nature
of sales contract. Example I: Mr A sends the goods to Mr B on FOB (Free on Board)
basis which means the insurance is to be arranged by Mr B. And if any loss arises during
transit then Mr B is entitled to get the compensation from the insurance company.

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Example II: Mr A sends the goods to Mr B on CIF (Cost, Insurance and Freight) basis
which means the insurance is to be arranged by Mr A. And if any loss arises during
transit then Mr A is entitled to get the compensation from the insurance company.

6) Contribution: If a person insures his goods with two insurance companies, then in
case of marine loss both the insurance companies will pay the loss to the owner
proportionately. Example: Goods worth Rupees 50 lakhs were insured for marine
insurance with Insurance Company A and B. In case of loss, both the insurance
companies will contribute equally.

7) Period of marine Insurance: The period of insurance in the policy is for the normal
time taken for a particular transit. Generally the period of open marine insurance will
not exceed one year. It can also be issued for the single transit and for specific period
but not for more than a year.

8) Deliberate Act: If goods are damaged or loss occurs during transit because of
deliberate act of an owner then that damage or loss will not be covered under the policy.

9) Claims: To get the compensation under marine insurance the owner must inform the
insurance company immediately so that the insurance company can take necessary steps
to determine the loss.7

 SCOPE OF MARINE INSURANCE

A marine insurance policy plays an imperative role by covering any person against
various losses or damages which may arise due to different kinds of perils like Man-
made calamities like theft, piracy, etc. Natural calamities like earthquake, cyclone,
lightning, etc.
In various cases, a marine insurance policy also covers expenses like forwarding costs,
reconditioning costs, survey fees, etc. Further, the policy also includes stranding or
sinking ships.

By buying a marine insurance policy, it is feasible for cargo owners to limit the liability
with regards to loss or damage of expensive goods as carried by ship. A comprehensive

7
Available at: https://nios.ac.in/media/documents/vocinsservices/m4-2f.pdf (Visited on May 22, 2023,
11:05 AM).

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marine insurance ensures that vessel operatives are completely secured, and liability is
minimum should any loss or damage happens to the cargo in transit.

Usually, people assume that marine insurance covers only sea transit. However, in
reality, a marine insurance policy covers transit by air, water, courier, registered post,
etc.; or a combination of any of them.

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CHAPTER III: SIGNIFICANCE AND OPERATION OF MARINE
INSURANCE

 SIGNIFICANCE OF MARINE INSURANCE

The importance of marine insurance has increased more than ever before in this age of
globalization. The following points highlight the importance or significance of marine
insurance.

1. Marine insurance facilitates global trade: -

The volume of trade through the sea have tremendously increased, and so has the risk
of loss at the sea. Therefore, marine insurance plays significant role in facilitating the
global trade by minimizing the risk thereof.

2. Marine insurance ensures economic prosperity: -

The volume of marine insurance business is an indicator of the economic prosperity of

a country. There is a close link between a sound marine insurance market and industrial
development.

3. Marine insurance provides peace of mind: -

Marine insurance provides peace of mind to the businessmen by meeting their financial
losses from marine risks. It helps to reduce tension and fear, and takes away anxiety
from the businessmen and managers who are in the international business. As a result,
they are able to operate their business without any tension, fear, anxiety.

4. Marine insurance improves quality of life: -

Marine insurance helps control losses that may arise from the marine risks. As a
consequence, people are encouraged to engage more in international business. This
means more investments, more jobs, more production, more income and more
consumption of goods and services which help to improve the people's quality of life.

5. Marine insurance provides social benefits: -

Marine insurance helps businessmen to recover funds from a loss. This keeps the
business going, jobs are not lost, and goods and services continue to be sold. The social
benefit of this is that people do not lose their jobs and their sources of income are intact.

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This contributes to the unhindered growth of the national economy.

 OPERATION OF MARINE INSURANCE

Marine insurance plays an important role in domestic trade as well as in

international trade. Most contracts of sale require that the goods must be
covered, either by the seller or the buyer, against loss or damage. Who is
responsible for affecting insurance on the goods, which are the subject of sale?
It depends on the terms of the sale contract. A contract of sale involves mainly
a seller and a buyer, apart from other associated parties like carriers, banks,
clearing agents, etc.8

Figure I: Operation of Marine Insurance

8
Available at: https://nios.ac.in/media/documents/vocinsservices/m4-2f.pdf (Visited on May 30, 2023,
07:30 PM).

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 CHAPTER IV: TYPES OF MARINE INSURANCE

 TYPES OF MARINE INSURANCE: -

Different types of marine insurance are as follows:

a) Hull Insurance: Hull insurance is the insurance against loss caused by damage or
destruction of waterborne craft or aircraft to the owner. It is the insurance of the ship
which includes all the articles and pieces of furniture in the ship. Hull and machinery
insurance are done to protect the ship owner and investment in the ship. It is a property
insurance which covers the ship itself, the machinery and equipment. If the ship is
damaged, the owner of the ship gets indemnity from the insurance company.

This type of marine insurance is usually, taken out by the owner of the ship in order to
avoid any loss of the ship in case of any mishaps occurring.

b) Cargo Insurance: The goods sent through waterway is known as cargo. Cargo
insurance is also called marine cargo insurance. It covers physical damage or loss of
your goods while in transit by land, sea, and air. It also offers considerable opportunities
and cost advantages if managed correctly. It is insured by the owner and insurance of
goods shipped through waterways is known as cargo insurance. If the cargo is ruined,
the owner gets the indemnity from the insurance company.

c) Marine Liability Insurance: Liability insurance is that type of marine insurance

where compensation is bought to provide any liability occurring on account of a ship
crashing or colliding. In the course of the marine adventure, one ship may collide with
another ship. The goods of another ship may lose. Marine insurance provides the
compensation of such liabilities nowadays if insurance has made insurance of such
liabilities. A crew member traveling with expensive items, such as laptop computers,
gold watches etc. should make sure that he has such items separately insured.

d) Freight Insurance: To transfer the goods from one port to another, the amount paid
to the owner of the ship is called freight. The payment of such freight can be made in
two ways: either in advance or after the ship reaches its destination safely. Freight
insurance offers and provides protection to merchant vessels’ corporations. It stands for
the chance of losing money in the form of freight, in case the cargo is lost due to the
ship meeting in an accident. This type of marine insurance solves the problem of

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companies losing money because of a few unprecedented events and accidents
occurring.9

Figure II :Types of Marine Insurance

 WHO ARE ENTITLED TO MARINE INSURANCE?

The following are entitled to Marine insurance-

1. Individual person(s).
2. Bank or any financial institution.
3. Exporters.
4. Importers.
5. Ship Owners.
6. Ship Builders.
7. Ship Repairers

 WHO ARE NOT ENTITLED TO MARINE INSURANCE?

The following are not entitled to Marine insurance

1. Carriers/Transporters.
2. Clearing and Forwarding Agents.
3. Stevedores.
4. Freight forwarders.
5. Commission Agent.

9
Available at: https://www.latestlaws.com/wp-content/uploads/2018/07/All-about-Marine-Insurance-
Law-in-India.pdf (Visited on June 1, 2023, 02:30 PM)

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 CHAPTER V: MARINE INSURANCE POLICY AND ITS TYPES

 Marine Insurance Policy

Marine insurance is an agreement between the insurer and insured where the insurer
undertakes to indemnify the insured under Section 3 of the Marine Insurance Act, 1963.
Marine insurance covers the loss or damage of ships, terminals, cargo, and any transport
by which goods are transferred, acquired, or held between the points of origin and the
final destination.

Marine insurance plays an important role in any kind of shipping business by

safeguarding against the risk of damage or loss to cargo, ships, or any transport by
which the goods or property is transferred, acquired, or held between the points of
origin and the final destination. There are various types of marine insurance policies in
India that can suit different needs and requirements.10

 Types of Marine Insurance policies (based on the structure of the

contract):-

A ‘policy is a document that embodies the terms and conditions of the contract of
insurance’. It essentially is a written form of agreement between the insurance company
and the person insured. It generally contains the provisions regarding the coverage area,
the limitations of insurance policies, etc. Thus, the different types of policies available
under marine insurance are –

 Open policy – An open policy, also called a floating policy, provides

coverage for an indefinite number of transit journeys during the subsistence
of the policy. This is especially beneficial for the companies which are
involved in high-volume trade, as they are saved from taking an insurance
policy on each transit journey. It covers all the transit journeys of the insured
until the policy is canceled or until the last of the payment is realized,
whichever is earlier.

10
Available at: https://www.paybima.com/blog/miscellaneous/what-are-the-special-features-of-marine-
insurance-policy/ (Visited on June 2, 2023, 04:00 PM).

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 Voyage policy – A voyage policy works on the same lines as the marine
cargo insurance. Under this policy, the insurance company agrees to cover
the losses or damages caused to the cargo during a specific voyage. It expires
when the vessel reaches its destination, irrespective of the time it takes to
reach there. Usually, it is bought by small exporters who ship their goods by
sea only on some occasions.

 Time policy – A time policy, as the name suggests, is issued for a fixed
period of time. The vessel may make any number of voyages during this
period. Generally, the insurance company issues this policy for one year,
however, the period may vary depending on the agreement between both
parties.

 Mixed policy – A mixed policy is a combination or a mix of voyage and

time policies. The insurance company, while issuing this policy, agrees to
cover the loss or damage to the ship for a particular voyage till a particular
period of time.

 Single vessel policy – A single vessel policy insures only a single ship of
the insured.

 Fleet policy – The person insured has an option of either insuring a single
ship by a policy, or of insuring several ships under one policy. If he chooses
the latter option, he undertakes a ‘Fleet Policy’, under which a fleet of ships
is insured under a single policy.

 Unvalued policy – Every insurance policy is either an unvalued or a valued

policy. Under an unvalued policy, the insurance company does not assign a
value to the thing insured (the vessel or the cargo), at the time of
underwriting the policy. The valuation of the property is done only after the
claim of insurance has been filed. However, for a successful claim, the true
value of the property has to be proved by the insured by way of invoices or
estimates, before the valuation.

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  Valued policy – In a valued policy, the insured property is given a specific
value when the policy is issued, and before any claims are made. When the
claim is made by the insured, a pre-estimated or the specified amount is
given, which does not depend on the amount of loss incurred by the insured.
The depreciation of the property also does not affect the amount of claim,
under a valued policy.

 Block policy – A block policy is an all risks policy. Unless a contrary

intention is expressed by the insurer, it essentially covers all the risks to
which the goods are exposed when they are in transit, bailment, and on the
premises of the third party. There are two popular types of block policy
– furrier’s block policy, and jeweller’s block policy since fur and jewellery
are two high-value commodities that are exposed to a greater threat of theft.

 Port-risk policy – A port-risk policy covers ships that are either docked or
are undergoing repair works at the port. It is an all-risk policy that covers all
the risks unless otherwise agreed between the parties. It provides coverage
for physical damages to the vessel as well as protection and indemnity but
excludes any liability arising on account of the crew and cargo.
 Named policy – A named policy is one in which the name or names of the
ships is mentioned in the contract of insurance.
 Wager policy – A wager policy protects from loss of the property of which
the insured does not have legal proof of possession. This means, when the
insured is not able to prove an insurable interest in the property, the insurance
company may issue a wager policy to him. Under it, the whole claim of the
insured is subject to the discretion of the insurer and the merits of the claim
made. It is not a written policy as it is issued in contravention of the law.
 Blanket Policy – In this policy, the owner has to pay the maximum
protection amount at the time of buying the policy.11

11
Myneni, supra note 3, at 302.

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 Figure III: Types of Marine Insurance
Policies

 Some of the Perils Covered Under Marine Insurance Policy Are:-

1. Fire and explosion

2. Perils of the sea

3. Jettison

4. Breakage

5. Accident

6. Theft

7. Barratry

8. Non-delivery

9. Pilferage

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 CHAPTER VI: PRINCIPLES OF MARINE INSURANCE

 PRINCIPLES OF MARINE INSURANCE

Marine insurance contracts are governed by the Indian Contract Act 1872, the Insurance
Act 1938 and largely by the Marine insurance Act, 196312.The Marine insurance
contract has some essential elements which are also called the fundamental principles
of marine insurance. Those are as follows-

1. Indemnity: -

This principle means that the insured will be compensated only to the extent of loss
suffered. He will not be allowed to earn profit from marine insurance. The underwriter
provides to compensate the insured in cash and not to replace the cargo or the ship. The
money value of the subject-matter is decided at the time of taking up the policy.
Sometimes the value is calculated at the time of loss also.

2. Cause Proxima: -

This is a Latin word which means the nearest or proximate cause. It helps is deciding
the actual cause of loss when a number of causes have contributed to the loss. The
immediate cause of loss should be determined to fix the responsibility of the insurer.
The remote cause for a loss is not important in determining the liability. If the proximate
cause is insured against, the insurer will indemnify the loss.

3. Principle of Subrogation: -

According to the principle of subrogation, when the loss is already met, the insurer steps
into the shoes of the insured person, and is entitled to all the remedies and rights which are
available to the insured against either the third party or the insured party itself. In the marine
policy the insurer must have paid the claim before they are entitled to rights of
subrogation.

12
Marine Insurance Act, supra note 1

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 4. Principle of Contribution or Right of Contribution: -

Contribution is the right of an insurance company who has paid a loss under a policy to
recover a proportionate amount from other insurance company who are liable for the
loss. In marine insurance where the assured is over insured and the insurance company
as more than his proportion of loss insurance company to get the right for contribution
against the other insurance company. In practice double insurance in marine insurance
is rare.

5. Insurable Interest: -

This principle can be equated with the common phrase of 'skin in the game.' It means
that the insurer must have some interest in the safe arrival of the goods at the end of the
transit cycle. If the goods arrive on time and undamaged, the insured entity stands to
benefit, and if they do not reach at their stipulated time in their described condition, the
same entity stands to bear a loss. If the insured entity's loss or gain is not immediately
borne, it should at least reasonably expect to bear or attain it soon. This way, the
insurance cover protects the 'interests' of the insured entity.13

13
Available at: https://securenow.in/insuropedia/five-principles-marine-insurance-policy/ (Visited on
June 4, 2023, 03:25 PM)

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 CHAPTER VII: LATEST JUDGMENTS RELATED TO MARINE
INSURANCE

1. Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd.14

This Court held that where the policy contained a wider term of risk coverage, the
decision in Bihar Supply Syndicate will not apply. In Peacock Plywood, the extended
warranty clause in the insurance policy specifically extended the coverage to include
the risks of theft, pilferage and non-delivery. In view of it, this Court held that a claim
by way of constructive total loss on account of a ship being stranded on sea on account
of its unseaworthiness was maintainable, although the goods themselves were not
damaged. In that case when the ship carrying the goods got stranded at a port due to its
unseaworthiness, the assured took steps to recover the value of the cargo with a view
to minimize its total loss due to non-delivery, but found that the cost of recovering and
getting the cargo back to the destination port would be more than the value of the goods.

Therefore, the assured effected sale of the insured goods at the port where ship was
stranded. Insurer was found liable to pay the insured value of the goods (less the amount
actually recovered by such sale.15

2. New India Assurance Co. Ltd. v. Hira Lal Ramesh Chand and Ors. and
Ratan Chand Deep Chand and Ors.16

It has been observed that it could not be said that such insurance cover was available
only in regard in maritime perils. Such policy covers risk arising even after termination
of navigation till the goods reach the consignee’s warehouse. Sixty days limit would be
applicable after discharge of the cargo at the final port. No risk would attach if the cargo
did not reach the consignee’s warehouse or place of storage within 60 days of discharge
at the final port. In the claim against the insurer there was no averment or evidence that
the consignments were lost or damaged. Nor it was averred that delivery was demanded

14
2006 (12) SCC 673
15
Available at: https://www.latestlaws.com/wp-content/uploads/2018/07/All-about-Marine-Insurance-
Law-in-India.pdf (Visited on June 5, 2023, 05:30 PM)
16
AIR 2008 SC 2620

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and was refused. There was the allegation that the consignments were wrongly
delivered within the stipulated period of 60 days. Liability of insurer came to an end.17

3. State of Orissa v. United India Insurance Co. Ltd.18

In this case, it has been observed that indemnity as applicable in marine insurance must
not be an indemnity as contemplated by the Indian Contract Act, as the loss in such a
contract is covered by the contract itself and such loss need not necessarily be caused
to the assured by the conduct of the insurer or by the conduct of any other person.19

4. Piper v. Royal Exchange Assurance20

In this case, it has been observed that an owner of a ship is interested in its safety. A
buyer of a ship becomes interested only when the property has passed to him. As long
as the property is with the seller, the buyer does not have any insurable interest in the
ship. However, a mortgagee of a ship has an interest in it.21

5. Mansfield v. Maitland22

In this case, it has been observed that where the freight has been paid in advance, the
consigner who has paid the freight in advance gets an insurable interest to the extent of
the advance freight, but, provided that such freight is not refundable to him in the event
of loss. His freight must be at risk and there is no risk if in the event of any loss of
goods, the ship owner will be bound to return the freight money. Thus, where an
advance freight was paid as a kind of loan to the carrier, the consigner had no insurable
interest in such payment.23

17
Myneni, supra note 3, at 279
18
AIR 1997 SC 2671
19
Myneni, supra note 3, at 280
20
(1932) 44 LIL Rep. 103
21
Myneni, supra note 3, at 284
22
(1821) 4 B & AlD 582
23
Myneni, supra note 3, at 286

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 6. Arjandas Brijlal & Co. v. Oriental Insurance Co. Ltd.24

Where goods were destroyed by a storm by noon and the cover note was issued between
5:50 and 6 p.m., it was held to be not merely a breach of uberrimae fidel principle but
a positive fraud. The insured and officers of the insurance seemed to have conspired.
They were fully aware of the cyclone storm like conditions during the day at the port.
There could be no claim in the circumstances. 25

24
AIR 2007 (NOC) 1272 (NCC)
25
Myneni, supra note 3, at 289

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 CONCLUDING OBSERVATIONS AND RECOMMENDATIONS

Marine insurance is a mechanism that helps to mitigate the risks of financial loss to the
property such as ship, goods or other movables, in maritime transport, on the payment
of premium by the assured to the insurer. Insurer provides risk cover to the ship-owners
or the cargo-owners against loss or damage that the ship or cargo may suffer in transit
due to accidents and mishaps in the nature of a financial indemnity. The insurance
company undertakes to make good the loss to the maximum value as agreed with the
insured perils or risks. Loss is payable only when it has been proximately caused by the
insured peril. Marine insurance protects shipping companies and transporters from
financial losses due to cargo loss. The marine insurance is governed by the national
legal regimes. In India, Marine Insurance Act 1963, regulates various aspects of marine
insurance.

Marine insurance covers a host of damages that the cargo may face during transit. But
it does not compensate for any intentional loss or financial collapse. Policies are often
flexible; it can be customised according to the needs.

However, the fact that divergent national legal regimes exist in the conduct of marine
insurance business, has certain consequences for the parties to contract, particularly the
assured, who will have difficulty in understanding the coverage of foreign insurance
market. Without the uniformity in the national marine insurance legal regimes, the
international conduct of marine insurance, particularly from the assureds’ perspective,
would be severely impeded. Hence, given the international character of marine
insurance, there is a need for harmonization of the legal regimes governing the rights
and obligation of the parties to the insurance contract involving international transport
and trade.

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 BIBLIOGRAPHY

 STATUTE:

 Marine Insurance Act, 1963 (Act 11 of 1963).

 BOOKS:

 Myneni S.R.: Law of Insurance,

Asia Law House, Hyderabad, 3rd edn., 2021.

 Singh Avtar: Law of Insurance

Eastern Book Company, Lucknow, 2nd edn., 2010.

 WEBSITES:

 https://www.indiacode.nic.in/
 https://www.dripcapital.com/resources/blog/marine-insurance-
meaning-types-benefits
 https://www.legalservicesindia.com/article/654/Development-Of-
Laws-Relating-To-Marine-Insurance-In-India.html
 https://www.cargoins.com/history
 https://nios.ac.in/media/documents/vocinsservices/m4-2f.pdf
 https://nios.ac.in/media/documents/vocinsservices/m4-2f.pdf
 https://www.latestlaws.com/wp-content/uploads/2018/07/All-about-
Marine-Insurance-Law-in-India.pdf
 https://www.paybima.com/blog/miscellaneous/what-are-the-special-
features-of-marine-insurance-policy/
 https://securenow.in/insuropedia/five-principles-marine-insurance-
policy/
 https://www.latestlaws.com/wp-content/uploads/2018/07/All-about-
Marine-Insurance-Law-in-India.pdf

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