Marine Insurance Contract

Marine Insurance Contract

• Separate statute in India – The Marine Insurance Act, 1963

• S.3 The Marine Insurance Act, 1963 defines Marine Insurance – A contract of Maine Insurance is an agreement where by
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.
• It is an insurance against loss by damage or destruction of cargo, freight or merchandise or the means or instruments of
transportation on sea.
• Marine means – belonging to or pertaining to the sea, relating to shipping or a navy.
• Cargo – Goods transported by bulk through any media.
• Freight – includes profit derivable by ship owner from employment of his ship to carry goods.

• Marine adventure – S.2 (d)

a. An insurable property is exposed to maritime perils,
b. The earning or acquisition of any freight, 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,
c. 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,

• Maritime Perils – S.2 (e)

Perils consequent on or incidental to, the navigation of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures,
restrains and detainments of princes and people, jettisons, barratry and any other perils either of the like kind, or which
may be designated by the policy.
 Nature and scope of Marine Insurance Contract

1. It is a contract of indemnity
2. It is concerned with both sea and land risks
3. Every lawful marine adventure is the subject matter of a contract of marine insurance.
4. Marine insurance is related to the property in relation to maritime perils.
5. Marine insurance contains the elements of general contract.

What can be insured ?

6. Hull insurance
7. Freight insurance
8. Cargo insurance
9. Liability insurance

Kinds of marine policies

10. Valued policy

11. Unvalued / open policy
12. Floating policy
13. Time policy
14. Voyage policy
 Voyage

• S.44 – S.51 of Act, 1963 deals with voyage

• Voyage means the whole distance between a vessel’s place of departure and her final place of arrival
• S.44 – implied condition as to commencement of risk in voyage policy.
• S.45 – alteration of port of departure
• S.46 – sailing for different destination
• S.47 – change of voyage
• S.48 – deviation
• S.49 – several ports of discharge
• S.50 – delay in voyage
• S.51 – excuses for deviation and delay.

Cases :-
1. New India Assurance Co. Ltd. V. G.N.Sainani
2. Drisol V. Bovil
3. Middle Wood V. Blakes
4. Palmer V. Marshall.
 Perils of the sea

• All the ‘Perils of the sea’ are ‘ maritime perils’ but all the ‘maritime perils’ are not ‘perils of the sea’.
• It covers everything that happens to the ship in the course of voyage by the immediate act of god without the
intervention of human agency. The purpose of the policy is to secure an indemnity against accidents which may happen
but not against events which just happen.
• Maritime perils – S.2 (e)
• Cases :-
1. Hamilton V. Pendroff
2. Sassoon V. Western Assurance Co.
3. Canada Rice Mills Ltd. V. Union Marine and General Insurance Co. Ltd.

• Examples of perils of the sea

1. Foundering at sea
2. Shipwreck
3. Stranding
4. Collision
• Excluded losses
1. Losses not regarded as perils of the sea
2. Wear and tear of ship due to winds / waves.
3. Springing leak
4. Breakage of goods
5. Inherent vice
6. Death of animals due to natural causes
7. Loss by rats and vermin
8. Loss by delay.

• Perils insured
1. Loss by fire
2. Loss by capture, seizure
3. Loss by arrest, detention
4. War risk
5. Loss by pirates and thieves
6. Barratry
7. All other perils.
 Warranties in Marine Insurance

• Meaning of Warranty – It is a condition which must be exactly complied with, whether it be material to the risk or not & if
it be not so complied with then subject to any express provision in the policy, the insurer is discharged from further
liability without any prejudice to any liability incurred by him before that breach.

• S.35 – So in Marine Insurance, it means a promissory warranty whereby the insured undertakes that some particular
thing shall or shall not be done, or some condition shall be fulfilled, or where he affirms or negatives the existence of a
particular state of facts.
Effect of breach of Warranty – S.36

 Same as breach of condition

 Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, & the
warranty complied with before loss.
 Insurer alleges breach of warranty and the burden of proof lies on him to prove the breach.
 Assured may prove that the warranty is waived or is inapplicable because of change of circumstances.
 Nowadays, there is a special clause that in case a particular warranty is breached, assured can still be covered if he pays
an additional premium.

Kinds of Warranties – S.37

1. Express
2. Implied
a. Warranties implied from an express warranty.
 S.38 – Warranty of Neutrality
 S.40 – Warranty of Good Safety

b. Warranties implied in every case of Marine Insurance

 S.41 – Seaworthiness of Ship
Case – Quebec Marine Insurance Co. V. Commercial Bank of Canada.
 S.43 – Warranty of Legality
Cases :-
Pipon V. Cope
Wilson V. Ranking.

c. No implied warranty
 S.39 – No implied warranty of nationality
 S.42 – No implied warranty that goods are seaworthy.

d. Other implied warranties

 No change in voyage
 No delay in voyage
 No deviation.
In all these cases insurer can avoid liability.
 Loss

Total Partial

Particular
Actual Constructive General Average Loss Salvage Charges
Average Loss

• S.57 – Actual Total Loss

• S.60 – Constructive Total Loss
• S.68 – Measures of indemnity of total loss’
• Case Laws :-
1. George Cohen, Sons & Co. V. Standard Marine Insurance Co. Ltd.
2. Asfar & Co. V. Blundell
3. Polurrian Steamship Co. V. Young
4. Peacock Plywood Pvt. Ltd. V. Oriental Insurance Co. Ltd.
• S.61 – Effect of constructive total loss
• S.62 – Notice of abandonment
• S.63 – Effect of abandonment
• Partial loss
1. S.64 – Particular Average Loss
2. S.66 – General Average Loss
3. S.69 – Measure of indemnity for partial loss of ship
4. S.70 – Measure of indemnity for partial loss of freight
5. S.71 – Measure of indemnity for partial loss of goods
6. S.73 – General Average Contribution
7. S.77 – Successive Losses
8. S.78 – Sue & Labour Clause