Marine Insurance

Friday, 15 December 2017 9:06 PM

- A marine risk note is not an insurance policy. It is only an acknowledgement

or declaration of the insurer confirming the specific shipment covered by its
marine open policy, the evaluation of the cargo and the chargeable premium.
- Every marine insurance upon a ship or freight, or freightage

Implied Warranties in Marine Insurance:

1. That the ship is seaworthy
2. Will not deviate from the agreed voyage unless deviation is proper
3. Will not engage in illegal venture
4. Warranty of possession of necessary documents
5. Presence of insurable interest

Insurable Interest:
1. Shipowner
a. Value of the vessel
b. Over expected freightage
2. Cargo Owner/ Shipowner
a. Cargo and expected profits
3. Charterer
a. Over the vessel up to the extent of his liability to the shipowner
b. Expected profits or freightage
c. Own cargo or client's cargo

Concealment (Although concealed, but did not cause the loss will not vitiate the
contract):
1. National character of the insured;
2. Liability of the insured thing to capture or seizure
3. Liability to seizure from breach of foreign laws
4. Want of necessary documents
5. Use of false or simulated papers

Deviation
Insurer not liable when:
1. A departure from the course of the voyage;
2. Unreasonable delay in pursuing the voyage
3. Commencement of an entirely different voyage
Deviation
Insurer not liable when:
1. A departure from the course of the voyage;
2. Unreasonable delay in pursuing the voyage
3. Commencement of an entirely different voyage

When Deviation is Proper:

1. Master or ship owner has no control
2. To comply with a warranty
3. In good faith to avoid a peril, whether or not the peril is insured against;
4. In good faith to save human life or relieving another vessel in distress.

General or Particular Average:

The insurer of the vessel or cargo that are saved is liable for general average
contribution and not for particular average. Only the insurer of the damaged cargo
or vessel is liable for particular average if covered by the policy.

Unless in answer to the queries of the other, neither party to the contract of
insurance is bound to communicate information on the following matters:
1. Those which the other knows;
2. Those which in the exercise of ordinary care, the other ought to know, and of
which the former has no reason to suppose him ignorant
3. Those of which the other waives communication
4. Excluded by a warranty or not material
5. Excepted

Abandonment- act of the insured by which, after constructive total loss, he

declares the relinquishment to the insurer of his interest in the thing insured.

Grounds:
1. If more than 3/4 thereof in value is actually lost, or would have to be
expended to recover it from the peril;
2. If it is injured to such an extent as to reduce its value to more than 3/4;
3. If the thing insured is a ship and the contemplated voyage cannot be lawfully
performed without incurring either an expense to the insured of more than
3/4 of the value of the thing abandoned or a risk, which a prudent man would
not take under the circumstances; or
4. If the thing insured is a cargo or freightage, and the voyage cannot be
performed, nor another ship procured by the master, within a reasonable
time and with reasonable diligence, to forward the cargo, without incurring
the like expenses or risks mentioned immediately above: BUT, the freightage
cannot also be abandoned unless the ship is also abandoned.
 not take under the circumstances; or
4. If the thing insured is a cargo or freightage, and the voyage cannot be
performed, nor another ship procured by the master, within a reasonable
time and with reasonable diligence, to forward the cargo, without incurring
the like expenses or risks mentioned immediately above: BUT, the freightage
cannot also be abandoned unless the ship is also abandoned.

Rules for Abandonment:

1. Give notice to the insurer, either in writing, or orally. If orally, a notice must
follow within 7 days.
2. Must be absolute;
3. Made within a reasonable time after receipt of reliable information of the
loss;
4. Explicitly specify the cause of abandonment.

Legal Effects of Abandonment:

1. Becomes ineffectual when there is no loss, or the information is incorrect.
2. Equivalent to a transfer by the insured if his interest to the insurer with all the
chances of recovery and indemnity.
3. Rights of the insured are not prejudiced by the fact that the insurer refuses to
accept the abandonment.
4. On accepted abandonment of a ship, the freightage earned previous to the
loss belongs to the insured. Subsequently earned belongs to the insurer.

Not bound to Communicate:

1. Those which the other knows;
2. Those which in the exercise of ordinary care, the other ought to know, and of
which the former has no reason to suppose him ignorant;
3. Those of which the other waives communication;
4. Those which prove or tend to prove the existence of a risk excluded by a
warranty, and which are not otherwise material;
5. Those which relate to a risk excepted from the policy and which are not
otherwise material.

The underwriter is not an agent of the insurer since he only solicited business, and
his knowledge is not that of the insurer.
The eventual falsity of a representation as to expectation does not, in the absence
of fraud, avoid a contract of marine insurance.