Insurance

Marine Insurance

The contract of marine insurance is generally effected through the agency of insurance brokers employed by the insured. The broker prepares a brief memorandum of the risks to be covered and takes it to a number of individual insurers, called underwriters, each of whom initial the note for the amount he is prepared to underwrite. 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. "The Slip" is in practice a complete and final contract. However, a contract of marine insurance must be embodied in a marine policy in accordance with the Act.

Kinds Of Marine Policies

The document containing the terms and conditions of the contract is called the Marine Policy. It must contain the names of the assured and the insurer or insurers. The subject-matter insured and the risk covered the voyage or period of time or both and the sums insured. It must be duly signed by the insurer and stamped under the Stamp Act, 1899. The Marine Insurance Act deals with the following types of policies:

1. Voyage Policy

   When the contract is to insure the subject matter at and from one place to another, the policy is called a "Voyage policy". In this case the risk attaches only when the ship starts on the voyage.

2. Time Policy

   Where the subject -matter is insured for a definite period of time, it is called a "Time Policy. The ship may pursue any course it likes; the policy would cover all the risks from perils of the sea for the sated period of time. A time policy cannot be for a period exceeding one year, but it may contain a continuation clause.

3. Mixed Policy

   It is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time.

4. Valued Policy

   It is a policy, which specifies the agreed value of the subject-matter insured. If there is no fraud or mis-representation, the value in a valued policy is conclusive as between the insurer and the insured, whether the loss is partial or total.

5. Open or Un-valued Policy

   In this policy the value of the subject-matter insured is not specified. Subject to the limit of the sum assured, it leaves the value of the loss to be subsequently ascertained.

6. Floating Policy

   The practice of taking out floating policies has come in vogue because of the difficulty of knowing by which ship or ships the goods are to be shipped. Such a policy therefore only mentions the amount for which the insurance is taken out and leaves the name of the ship(s) and other particulars to be defined by subsequent declarations.

A warranty in a contract of marine insurance is substantially the same as a condition in a contract of sale of goods. It gives the aggrieved party the right to avoid the contract. A warranty may be express or implied. These are discussed below in brief:

1. Express warranties

   An express warranty is one, which is expressly stated in the policy of insurance it must be included in or written upon the policy. There is no limit to the number of express warranties, but those generally included in a marine policy are that the ship is seaworthy on a particular day, that the ship will sail on a specified day, that the ship will proceed to its destination without any deviation and that the ship is neutral and will remain so during the voyage.

2. Implied Warranties

   Implied warranties are conditions not incorporated in a policy but assumed to have been included in the policy by law, custom or general agreement. These warranties are:

   • Seaworthiness: A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the sea or the adventure insured. This warranty attaches only up to the time of the sailing of the ship. In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure. In a voyage policy where the voyage is to be performed in stage, the ship must be seaworthy at the commencement of each stage, it must be fit to encounter the ordinary perils of the part and if the voyage policy is on goods, it must be fit to carry the goods to the destinations contemplated by the policy:
   • Legality of the Voyage: There is an implied warranty that the adventure insured is a lawful one and that the adventure shall be carried out in a lawful manner.
   • Non -deviation: The warranty that the ship shall not deviate from its prescribed. Usual or the customary route is also an implied warranty. The risk does not attach if the places of departure or destination of the ship are hanged, or if the ship takes the ports of call by an order different from the one mentioned in the policy. The insurer is discharged from his liability as from the time of deviation, and also if there is unreasonable delay are excused under certain circumstances.

Assignment Of Policy

A marine policy is assignable by endorsement, or in any other customary manner, and the assignee can sue on it in his own name subject to any defence which would have been available against the person who effected the policy. The assignment may be made either before or after the loss, but an assured who has parted with or lost his interest in the subject-matter insured cannot assign.