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Marine insurance
Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination. Cargo insurancediscussed hereis a sub-branch of marine insurance, though Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines); Hull; Marine Casualty; and Marine Liability.
Practice
The Marine Insurance Act includes, as a schedule, a standard policy (known as the 'SG form'), which parties were at liberty to use if they wished. Because each term in the policy had been tested through at least two centuries of judicial precedent, the policy was extremely thorough. However, it was also expressed in rather archaic terms. In 1991, the London market produced a new standard policy wording known as the MAR 91 form and using the Institute Clauses. The MAR form is simply a general statement of insurance; the Institute Clauses are used to set out the detail of the insurance cover. In practice, the policy document usually consists of the MAR form used as a cover, with the Clauses stapled to the inside. Typically each clause will be stamped, with the stamp overlapping both onto the inside cover and to other clauses; this practice is used to avoid the substitution or removal of clauses. Because marine insurance is typically underwritten on a subscription basis, the MAR form begins: We, the Underwriters, agree to bind ourselves each for his own part and not one for another [...]. In legal terms, liability under the policy is several and not joint; ie. The underwriters are all liable together, but only for their share or
Marine insurance proportion of the risk. If one underwriter should default, the remainder are not liable to pick his share of the claim. Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is generally known as 'Hull and Machinery' (H&M). A more restricted form of cover is 'Total Loss Only' (TLO), generally used as a reinsurance, which only covers the total loss of the vessel and not any partial loss. Cover may be on either a 'voyage' or 'time' basis. The 'voyage' basis covers transit between the ports set out in the policy; the 'time' basis covers a period of time, typically one year, and is more common.
Average
The term 'Average' has two meanings: (1) In marine insurance, in the case of a partial loss, or emergency repairs to the vessel, average may be declared. This covers situations, where, for example, a ship in a storm might have to jettison certain cargo to protect the ship and the remaining cargo. 'General Average' requires all parties concerned in the venture (Hull/Cargo/Freight/Bunkers) to contribute to compensate the losses caused to those whose cargo has been lost or damaged. 'Particular Average' is levied on a group of cargo owners and not all of the cargo owners. (2) In the situation where an insured has under-insured, ie. insured an item for less than it is worth, average will apply to reduce the amount payable. There are different ways of calculating average, but generally the same proportion of under-insurance will be applied to any payout due.
Marine insurance An average adjuster is a marine claims specialist responsible for adjusting and providing the general average statement. He is usually appointed by the shipowner or insurer.
Specialist Policies
Various types of specialist policy exist, including: Newbuilding risks: This covers the risk of damage to the hull whilst it is under construction. Yacht Insurance: Insurance of pleasure craft is generally known as 'yacht insurance' and includes liability coverage. Smaller vessels, such as yachts and fishing vessels, are typically underwritten on a 'binding authority' or 'lineslip' basis. War risks: Usual Hull insurance does not cover the risks of a vessel sailing into a war zone. A typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf War. War risks cover protects, at an additional premium, against the danger of loss in a war zone. The war risks areas are established by the London-based Joint War Committee, which has recently moved to include the Malacca Straits as a war risks area due to piracy [2]. If an attack is classified as a "riot" then it would be covered by war risk insurers[3] . Increased Value (IV): Increased Value cover protects the shipowner against any difference between the insured value of the vessel and the market value of the vessel. Overdue insurance: This is a form of insurance now largely obsolete due to advances in communications. It was an early form of reinsurance and was bought by an insurer when a ship was late at arriving at her destination port and there was a risk that she might have been lost (but, equally, might simply have been delayed). The overdue insurance of the Titanic was famously underwritten on the doorstep of Lloyd's. Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with coverage on an A, B, or C basis, A having the widest cover and C the most restricted. Valuable cargo is known as specie. Links: Description of cover: [4]
Marine insurance Institute Cargo Clauses: [5] Pleasurecraft & Commercial marine policy summaries: [6]
Marine insurance liability incurred by him before that date. s.34(2): where a warranty has been broken, it is no defence to the insured that the breach has been remedied, and the warranty complied with, prior to the loss. s.34(3): a breach of warranty may be waived (ie. ignored) by the insurer. s.39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the purpose of it (voyage policy only). s.39(5): no warranty that a vessel shall be seaworthy during the policy period (time policy). However if the assured knowingly allows an unseaworthy vessel to set sail the insurer is not liable for losses caused by unseasworthiness. s.50: a policy may be assigned. Typically, a shipowner might assign the benefit of a policy to the ship-mortgagor. ss.60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual total loss describes the physical destruction of a vessel or cargo.) s.79: deals with subrogation; ie. the rights of the insurer to stand in the shoes of an indemnified insured and recover salvage for his own benefit. Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording.
See also
Classification society Legal definitions of wreckage Inland marine insurance SalvageSale, Inc.
External links
UK case relating to legal definitions [8] (The No. 1 Dae Bu)
Bibliography
Birds, J. Birds' Modern Insurance Law. Sweet & Maxwell, 2004. (ISBN 0-421-87800-2) Donaldson, Ellis, Wilson (Editor), Cooke (Editor), Lowndes and Rudolf: Law of General Average and the York-Antwerp Rules. Sweet & Maxwell, 1990. (ISBN 0-420-46930-3) Wilson, DJ, Donaldson (1997). Lowndes and Rudolf: General Average and the York-Antwerp Rules. British Shipping Law Library: Sweet & Maxwell. ISBN0-421-56450-4.
Marine insurance
References
[1] [2] [3] [4] [5] [6] [7] [8] J. Franklin, The Science of Conjecture: Evidence and Probability Before Pascal (Baltimore: Johns Hopkins University Press, 2001), 273-278. http:/ / www. icc-ccs. org/ extra/ display. php http:/ / books. google. com/ books?id=w2XtGQXjDKsC& pg=PA107 http:/ / www. dtgruelle. com/ articles/ nuinsabc. html http:/ / www. allcovered. net/ AC-OM-MAIN-Cargo_Clauses. html http:/ / www. navandgen. co. uk/ navandgen/ existingcustomers/ viewdocuments/ summaryofcover. htm see also: Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. ('The Good Luck') [1991] 2 WLR 1279 and at 1294-5 http:/ / www. hmcourts-service. gov. uk/ HMCSJudgments/ View. do?id=4135
License
Creative Commons Attribution-Share Alike 3.0 Unported http:/ / creativecommons. org/ licenses/ by-sa/ 3. 0/