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MARINE INSURANCE

By: ATTY. LISSA BELLE M. VILLANUEVA JD LLM

SCOPE
I. Definition of terms:
a. marine insurance
b. insurable interest
II. Insured Perils
III. Standard Contract
IV. Types of Marine Insurance Policies
V. Abandonment
VI. P & I Club

MARINE INSURANCE
a contract whereby the insurer
undertakes to indemnify the assured,
in manner and to the extent thereby
agreed, against marine losses, that is
to say, the losses incident to marine
adventure (S.1)
The Marine Insurance Act (MIA) of
1906 of United Kingdom (UK) codifies
the law and practice in marine
insurance at that time.

INSURABLE INTEREST

benefit from its existence; prejudice


from its destruction: Lucena v
Craufurd (1806)

Anyone who will benefit from the


existence of the subject matter
insured or will be prejudiced by its
destruction has insurable interest in
the subject matter.

INSURED PERILS

Risks
attendant
in
a
marine
adventure including war, damage
caused by force majeure, etc

losses on inland waters or land risks


incidental to any sea voyage are
covered (S.2)

A ship in the course of building or the


launch of a ship is covered as it is
analogous to a marine adventure

INSURED PERILS

Perils of the sea does not include action of


winds and wave, refers only to the fortuitous
accidents or casualties of the seas
Peril of the ship a loss which, in the ordinary
course of events, results from the natural and
inevitable action of the sea, from ordinary
wear and tear of the ship, or from the
negligent failure of the ships owner to
provide the vessel with proper equipment to
convey the cargo under ordinary conditions
All other perils, losses, misfortune these
pertain only to perils similar to those already
mentioned in the policy

STANDARD CONTRACT

new standard Insurance Policy contract


established since January 1, 1982
Format is as follows:

Articles 1 3: risks covered


Articles 4 7: excluded risks
Articles 8 10: duration of cover
Articles 11 14: Claims
Articles 15 Benefit of Insurance
Articles 16 & 17: Mitigation of loss
Articles 18: Reasonable dispatch
Article 19: Applicable law and practice

TYPES OF POLICIES

Valued and unvalued


Voyage, Time or Mixed
Floating / Open
Blanket
Increased Value

VALUED AND UNVALUED

Valued policies: amount is specified and


conclusive (unless fraudulent): s 27(3). Profits
anticipated by buyer are included (eg 10 or 15%
to invoice, shipping and insurance charges).
Also, valued policies (s 27) are applicable to
both total and partial loss. Value of a part shall
be proportional to total insured value (s 73(1)).
Unvalued / Open policies: merely state the
maximum limit of the sum insured and the
insurable value is determined subsequently: s
28. To be proved by production of invoices,
vouchers, other evidence.
Prime cost of
property + expenses incidental to shipping +
charges of insurance on the whole: s 16(3).
Anticipated profits excluded.

VOYAGE, TIME OR MIXED

Voyage: to insure subject-matter at and


from or from one place to another or others.
Ship must be seaworthy at commencement of
voyage: s 39.
Time: for a definite period of time. Usually
there is a continuation clause (ship at sea
or on distress, or at a port of refuge, held
covered at a pro rata monthly premium with
notice to underwriters)
Mixed: Both (eg 12 months from end of
voyage to the Gulf).
Condition of
seaworthiness (above) still applies and insurer
liable only if within currency AND period.

FLOATING / OPEN

Floating policies: stating general


conditions. Usually the time (12 months)
and destinations specified. Also the
maximum amount insured under the policy
is stated (eg 100,000USD for all
consignments).
Assured declares each consignment when
shipped. Name of ship and other
particulars defined by subsequent
declaration (endorsed on the policy): s 29.
Assured given a book of declaration forms.
NB: Floating policy is NOT a time policy it
is an aggregation of voyage policies.

FLOATING / OPEN

Open Cover:
together with issue of
insurance certificate. Used for recurrent
shipments. More flexible than floating policy.
Open cover (like the slip) is NOT an insurance
policy only an undertaking to issue a floating
or specific policy.
Incorporates Institute Standard Conditions for
Open Covers.
Open Cover may be limited in time OR
permanent (cf floating policy limited to 12
months). If permanent, it has a clause to allow
cancellation by notice within a stated time.
Specifies maximum limit of insurers liability
per bottom + a location clause (cf floating
policy).

BLANKET / INCREASED VALUE

Blanket policies: If small value OR


voyage is short. No need to advise
re individual shipment and a lump
sum premium (not different rates) is
paid for all shipments
Sometimes, an increased value
policy is taken out because of rising
market during transit of goods. This
is for the sellers own benefit.

LOSS

Actual Total Loss: where loss is


clear

Constructive Total Loss: where


the repair of the damaged property
is no longer commercially feasible
or sensible

ABANDONMENT

Assured electing to abandon the subjectmatter insured to the insurer must give
notice of abandonment in writing or
orally or in both ways - immediately
after
knowledge
of
the
reliable
information and reasonable inquiries.
Acceptance by insurer may be express
or implied (mere silence not enough).
Once accepted, irrevocable. It amounts
to admission of liability by insurer for the
loss.

ABANDONMENT

Notice need not be served if no benefit to


the insurer by serving (when information
known to assured or actual total loss). May
also be waived by insurer.
The cause of action still arises on date of
the casualty NOT date of serving notice:
(The Kyriaki [1993] 1 Lloyds Rep 137)
Insurer takes over the interest of assured in
whatever may remain of subject-matter and
all proprietary rights incidental thereto.

P & I CLUB

Protection and Indemnity Club formed by ship


owners to mutually indemnify the liabilities of
each other for damage which the traditional
insurance market is not willing to cover
marine protection and indemnity insurance
means insurance against or against legal
liability of the insured for loss, damage, or
expense incident to ownership, operation,
chartering,
maintenance,
use,
repair
or
construction
of
any
vessel,
craft
or
instrumentality in use in ocean or inland
waterways, including liability of the insured for
personal injury, illness or death or for loss of or
damage to the property of another person

End of Topic.
Questions?