MARINE INSURANCE

Lecture 15 Click to edit Master subtitle style Week 8

DEVELOPMENT
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One of the earliest forms of insurance Developed out of bottomry and respondentia bonds Standard forms used by Lloyds Marine Insurance Act 1906 Often includes aviation insurance Different terminology

TYPES OF COVER
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Hull Cargo Freight Voyage Collision

TYPES OF VESSELS COVERED

Dinghies Yachts Cargo vessels Liners Super tankers Oil rigs Fishing vessels

BASIC COVER
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Perils of the sea and other navigable waters Restraint of princes Piracy All risks

FURTHER COVER
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Pollution Hazard War and strikes clause Bursting boilers or breaking shafts accident or negligence of a third party

IMPLIED WARRANTIES
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Seaworthiness

Damaged bottom Insufficient crew

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Legality Marine Insurance Act 1906

PARTICULAR AVERAGE
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This means a partial loss Covers loss caused by:

Perils of the sea rivers lakes or other navigable waters fire, explosion violent theft jettison piracy

MEASURE OF INDEMNITY
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s.69 Marine Insurance Act 1906 Where ship has been repaired the reasonable cost of repairs less the customary deductions but not exceeding sum insured Where partially repaired cost of repairs plus reasonable depreciation subject to not exceeding cost of complete repair Not repaired - the reasonable depreciation

EXAMPLES OF ADJUSTMENTS
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Bottom end bearing fractured in generator as a result of latent defect led to damage to liner. Cost

Bearing Liner Cylinder Piston Total

5000 4000 3000 6000 18000

ADJUSTMENT
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Excess 2000 Standard policy would exclude replacing defective part Thus total amount payable is 11000

18000 - 5000 (bearing) - 2000 (Excess)

Additional perils clause would have covered bearing

TOTAL LOSS CLAIMS (SHIP)

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Institute time clauses Hulls total loss only including salvage, salvage charges and sue and labour Hull total loss, general average and 3/4ths collision including salvage etc Hulls disbursements

TYPES OF TOTAL LOSS

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Constructive total loss

Deprived of ship by insured peril Recovery would exceed value or repair exceeds value Insured entitled to abandon loss when constructive total loss Consequence is that if insured accepts notice of abandonment subject to assets and liabilities. May not accept abandonment

Abandonment

SUE AND LABOUR CLAUSES

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Covers expenses reasonably incurred by insured to save vessel and cargo Paid in excess of sum insured.

COLLISION LIABILITY
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Covers three quarters of the cost of liability

Rest paid by Protection and Indemnity associations

It is a liability policy

CARGO
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Same risks and same methods General average clause

Losses arising for the preservation of ship and cargo Follows forced sale of badly damaged cargo

Salvage loss

CARGO PARTIAL LOSS

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Where goods delivered damage measure of indemnity is

Proportion of sum fixed by policy equal to the gross sound value less damaged value at place of delivery Goods insured at 120,000; Damaged value = 80,000: Sound value = 100,000 Depreciation or proportion is 20% Apply this to 120,000 gives 24,000

Example

FREIGHT
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Profit made by a shipowners out of ships used to carry cargo, both their own and others The cargo includes all moveables Loss occurs when cargo is not deliverable

FREIGHT LOSS
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Valued and unvalued policies Indemnity is the proportion of freight lost to freight at risk applied to insured This could be subject to Measure of indemnity clause which limits freight to amount actually lost.

THE END ANY QUESTIONS