MARINE INSURANCE-NATURE AND

SCOPE(Cl.14)
BY
DR. Y. PAPA RAO
COURSE TEACHER
 INTRODUCTION
• the contract of Marine Insurance is based on the fundamental principles of
Indemnity, Insurable Interest, Utmost Good Faith, Proximate Cause,
Reinstatement, Subrogation and Contribution.
• A contract of marine insurance is a contract whereby the insurer undertakes to
indemnify the assured in the manner and the extent hereby agreed, against the marine
losses, that is to say, the losses incidental to a marine adventure.
• Case: Lloyd v. Fleming (1872): Blackburn J defined a policy of marine insurance as a
contract of indemnity against all losses occurring to the subject-matter of the policy from
certain perils during the adventure.
• 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.
 MARINE ADVENTURE
• 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.
• Marine Adventure:
• Any ship, goods or exposed to maritime perils
• The earning or acquisition of any freight, passage money, commission,
profit por other pecuniary benefits.
• Any liability to a third party may be incurred by the owner of, or
• other person interested in or responsible for such property by reason of
maritime perils.
 SLIP IN MARINE INSURANCE
• The contract of marine insurance is generally effected through the
agency of insurance brokers employed by the insured.The document,
known as "The slip, " contain information such as the name of the
ship, the date of voyage, the description of the risk, the
sum insured and the rate of premium.
• It is evidence:
• In Ionides v. Pacific Marine Insurance Co (1872)
• Blackburn said that “ as the slip is clearly a contract for marine
insurance, and is equally clearly not a policy it is by virtue of these
enactments not valid, that is, not enforceable at law or in equity, but it
may be given in evidence wherever it is , through not valid, material.
 MARINE POLICY
• The policy may be issued after the contract is concluded.
• Section 25 of the Marine Insurance Act 1963 lays down the contents
of the policy:
• Name of the assured
• Subject-matter
• Voyage or the period of time or both
• Sum insured and ds
• Name of the insurer.
CLASSIFICATION OF MARINE POLICIES
• Marine Insurance Policies may broadly be classified into five types:
• Valued Policy: Specifies the agreed value of the subject-matter insured.
• Unvalued Policy: It is also know as open policy. The insurable value of goods
or merchandise is the prime cost of the property insured.
• Floating Policy: It is generally taken by carriers, factors or where-house men
to cover their limited interest in the goods they carry or in their possession.
• Time policy: For a particular time a particular date to a particular date, the
policy is called a time policy.
• Voyage policy: Contract is to insure the subject-matter ‘at and from’ or one
place to another place.
 PERILS OF THE SEA
• Peril means a great danger.
• Peril of the Sea — refers to extraordinary forces of nature
that maritime ventures might encounter in the course of a
voyage. Some examples of these perils include stranding,
sinking, collision, heavy wave action, and high winds.
• Peril of the sea covers everything that happens to the ship in the
course of a voyage by the immediate act of God without the
intervention of human agency.
• Case: In Thames and Mersey Insurance Company v. Hamilton, Fraser
& Co (1887). It covers both types of damages.
 EXAMPLES OF PERILS OF THE SEA
• Foundering at Sea: If the ship is missing and after a reasonable time no news
has been received.
• Shipwreck: It is a loss caused by the peril of the sea when it happens by the
ship striking against the rock or driven to the shore by the violence of winds.
• Stranding: The is a peril of the sea and it happens when a ship by an
accident gets out of the ordinary course of her voyage and gets stuck up in
shallow regions of sand and receives injury.
• Collision: It may arise by the ship striking against another ship.
• Case: De vaux v. Salvador (1836). The policy generally contain a Collision
clause or a running down clause.
LOSSES NOT REGARDED AS PERILS OF
THE SEA
• Wear and Tear:
• A wear and tear exclusion is a provision in an insurance policy that
states that the normal deterioration of the insured object is not covered
by the insurance policy. If insurance covered inevitable losses,
insurers would have to raise their premiums dramatically to cover the
expenses.
• Case: Rehesa Shipping Co, SA v. Edmands,The Poppi M (1985).
• Springing a Leak: is not a peril of the sea unless it is due to an
accident.
• Breakage of Goods: Due to movement of the ship, it is not a period of the sea.
 CONTD…NOT PERILS OF SEA
• Inherent Vice: The insurer will not be liable for any loss caused due to the
defect in the goods.
• Case: Overseas Commodities Ltd v. Style. (1958)
• Death of Animals etc due to Nature's Causes:
• Loss by Rats and Vermin: If loss is caused by rats, etc, it will not be deemed to
be a peril of the sea.
• Case: Hamilton v. Pandorf (1887): Where rats gnawed a hole in a pipe and sea
water entered damaging the cargo of rice held insurer was not liable.
• Loss by Delay: The insurer of ship or goods is not liable for any loss proximately
caused by delay, although the delay is caused by a peril insured against.