Introduction to Marine Insurance

Marine insurance is a contract

whereby the insurer undertakes to
indemnify the assured, in manner
and to the extent thereby by agreed,
against marine losses, i.e. the losses
incident to marine adventure.

What is Marine Insurance?

 Marine insurance covers the loss or
damage of ships, cargo, terminals,
and any transport by which the
property is transferred, acquired, or
held between the points of origin
and the final destination. Cargo
insurance is the sub-branch of
marine insurance, though Marine
insurance also includes Onshore and
Offshore exposed property,
(container terminals, ports, oil
platforms, pipelines), Hull, Marine
Casualty, and Marine Liability. When
goods are transported by mail or
courier, shipping insurance is used
instead.

What is Marine Insurance?

Marine Insurance Market
• Lloyd’s 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 shop 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.
 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.

Marine Insurance Market

The insurance is submitted to
underwriters in a slip form.
• Name and brief details of vessels covered.
• Name of the insured.
• Name & Nature of the product.
• Packing details.
• Place of origin & destination.
• Value of vessels
• Period of cover
• Premium rate
• General Condition
• Class and type of cover
• Deduction for brokerage.
 • Marine Insurance contract
being a contact 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
Nature of Marine Insurance payable on the policy.

Contract
 • There is a marine adventure where:
1. Any ships goods or other
moveable are exposed to
maritime perils.
2. The earning or acquisition of any
freight, passage money,
commission, profit, or other
pecuniary benefit, or the
security for an advances, loan, or
disbursement, 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
Marine Insurance Act 1906 responsible for, insurable
property, by reason of maritime
The Marine Insurance Act includes, as a schedule, a standard policy (known as the perils.
“SG form“), which parties were at liberty to use if they wished. Because each term
in the policy had been tested through at least two centuries of judicial precedent
 • The perils consequent on, or
incidental to, the navigation of the
sea,
• That is to say, perils of the sea, fire,
war perils, pirates, rovers, thieves,
captures, seizures, restraints, and
detainments of the people,
jettisons, barratry, and any other
perils, either of the like kind or
which may be designated by the
policy.
• The term “perils of the seas ”refers
only to fortuitous accidents or
casualties of the seas ( heavy
weather, sinking, stranding,
collision, contract)

Maritime Perils • It does not include the ordinary

action of the winds and waves.

“Perils of the sea”

 In 1991, the London market produced a new
standard policy wording known as the MAR 91
FORM using the Institute Clauses.
• The MAR form is simply a general statement of insurance; the Institute Clauses
are used to set out the detail of the insurance cover. In practice, the policy
document usually consists of the MAR form used as a cover, with the Clauses
stapled to the inside. Typically, each clause will be stamped, with the stamp
overlapping both onto the inside cover and to other clauses; this practice is used
to avoid the substitution or removal of clauses.because marine insurance is
typically underwritten on a subscription basis

• In legal terms, liability under the policy is several and not joint, i.e., the
underwriters are all liable together, but only for their share or proportion of the
risk. If one underwriter should default, the remainder are not liable to pick his
share of the claim. Typically, marine insurance is split between the vessels and
the cargo. Insurance of the vessels is generally known as "Hull and Machinery"
(H&M). A more restricted form of cover is "Total Loss Only" (TLO), generally used
as a reinsurance, which only covers the total loss of the vessel and not any partial
loss. Cover may be on either a "voyage" or "time" basis. The "voyage" basis covers
transit between the ports set out in the policy; the "time" basis covers a period,
typically one year, and is more common.
 Types of
Marine
Insurance