THE MARINE INSURANCE ACT, ______. ARRANGEMENT OF SECTIONS. ______. SECTIONS. 1. Short title and commencement. 2. Definitions. Full text containing the act, Marine Insurance Act, , with all the sections, schedules, short title, enactment date, and footnotes. The various provinces also have insurance statutes of general application which purport to apply to marine insurance. The B.C. statute is the Insurance Act.
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The modern origins of marine insurance law in English law were in the law . Marine Insurance Act in India and guided by the various. 41). Document Generated: Changes to legislation: There are currently no known outstanding effects for the Marine Insurance Act (See end of. Act Info: Preamble1 - MARINE INSURANCE ACT, Section1 - Short title and commencement. Section2 - Definitions. Section3 - Marine insurance defined.
The provision in marine insurance that — the third party can be insured by the owner to extent protection against the goods or other property, while the third party is making maritime transportation also the protection is extended to losses against inland water, land risk, and sea voyage.
Fire: Explosions caused by fire, loss due to direct fire or smoke or steam also the loss incurred due to the effort made to extinguish a fire is covered. Barratry: This kind of insurance covers only the misconduct that can happen in ships such as theft, wrongful conversion, breach of trust with dishonest intent and international casting of vessels.
Jettison: This the risk that covers to articles that are thrown away from the board to lighten the ship at the time of emergency.
The Marine Insurance Act, 1963
Assailing thieves: This refers to the forcible tanking or clandestine theft of mere pilferage. Hull Insurance Hull Insurance policy pertains to the ship being in the hand of its builders.
It is a most highly favorable policy as it gives assurance in every aspect excluding defects and destruction by war.
The Hull insurance has a clause favorable against; i Fire and collision ii Loss due to machinery, accidents in loading and unloading cargos iii Consequence due to negligent navigation and iv Defects in vessels and accidents causing problems in defects. Cargo Insurance Cargo insurance covers only the particular cargo and goods in the particular voyage. The cargo and the goods within which is transported from one destination to another through all such medium such as air, water, road or registered post can be proclaimed in the case of a loss against cargo insurance.
Freight Insurance Freight insurance provides protection to policyholder against freight money loss, which is caused due to unavoidable peril. In most of the case the goods owners can proclaim freight only on safe delivery of goods to the destination place, in such a case, if the ship got lost or the cargo within is damaged or stolen, the owner will incur freight loss.
N order to protect from such a kind of loss freight insurance is proclaimed. Liability Insurance Liability insurance is one in which the insurer accepts to assure against the loss which the insured may suffer from liability to a third party caused by the collision of the ship and other similar hazards.
Marine Policies I. Voyage Policy It is a policy in which the subject matter is insured for a particular voyage irrespective of the time involved in it Dr.
Here the risk attaches only when the ship starts on the voyage. Time policy In this, the subject-matter is insured for a definite period of time, the policy covers all the risk from perils of the sea for a subject for the definite period of time.
Mixed policy It is the combination of voyage and time policies. It covers particular voyage over a specified period of time. Valued policy It is a policy in which the value f the subject matter is insured. Here the insurer and the insured will agree upon the value to be ensured based the risk and cost of the property.
Open or un-valued policy It is the policy in which the value of the subject-matter insured is not specified.
Subject to the value of the limit of the sum of the assured, it leaves the value of the loss to be subsequently ascertained. Floating policy The policy only mentions the amount for which the insurance is taken out and leaves the other details to be defined in the subsequent declaration. Builders risk policy This policy cover or one year or more than one year, its policy covers the risk of damage to the vessels from the time of construction to commence to until the trail is completed.
Port risk policy The policy covers all the risk of vessels while it is standing at the port. Total Loss of Vessels Only : This is the minimal coverage package in marine insurance, which covers only the loss of cargo resulting from total loss of vessels.
Total Loss Only : This covers the total loss of insured cargo whether or not the total vessel is lost. A With Average : This covers risk against stranded, fire, collisions and sunk. Here the insurance company pays all the damage incurred fully.
Wali, Type of coverage II. Characteristic of the commodity involved III. Origin, destination, and voyage IV. Carrier Used V. Transshipment if any VI. Effect of trade loss VII.
Packaging VIII. Attitude towards third party recoveries IX. Attitude towards claim by assured X. Shipping and delivery practices XI. Assured experience of foreign trader 4. Thereby it is a good rule of thumb for an exporter to insure proper type of coverage generally accepted in his trade.
In order to make best utilization of insurance, it is not just the coverage of risk also the underwriters should be analyzed, considering; company quoting lowest rate, company that has a background of promptly settling as mentioned in contract and insurance companies that are specialized in particular commodities will always serves better.
Marine insurance is a component that mitigates the risk associated with money and risk related misfortune to the property. Insurance provides a plan to spread risk to the ship proprietors or the cargo owner against misfortune or harm that the ship or freight might endure in travel because of mischance and incidents in the way of financial indemnity.
Marine Insurance Act, 1963
It is common for marine insurance agencies to compete with the offerings provided by local insurers. These specialist agencies often fill market gaps by providing cover for hard-to-place or obscure marine insurance risks that would otherwise be difficult or impossible to find insurance cover for. These agencies can become quite large and eventually become market makers. They operate best when their day to day management is independent of the insurers who provide them with the capital to underwrite risks on their behalf.
Practice[ edit ] 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 , the London market produced a new standard policy wording known as the MAR 91 form 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. In legal terms, liability under the policy is several and not joint , i. 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. 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, typically one year, and is more common.
Protection and indemnity[ edit ] Main article: Protection and indemnity insurance A marine policy typically covered only three-quarter of the insured's liabilities towards third parties Institute Time Clauses Hulls 1. The typical liabilities arise in respect of collision with another ship, known as "running down" collision with a fixed object is a "allision" , and wreck removal a wreck may serve to block a harbour, for example.
These Clubs are still in existence today and have become the model for other specialized and noncommercial marine and non-marine mutuals, for example in relation to oil pollution and nuclear risks. Clubs work on the basis of agreeing to accept a shipowner as a member and levying an initial "call" premium.
With the fund accumulated, reinsurance will be downloadd; however, if the loss experience is unfavourable one or more "supplementary calls" may be made. Clubs also typically try to build up reserves, but this puts them at odds with their mutual status.
Because liability regimes vary throughout the world, insurers are usually careful to limit or exclude American Jones Act liability.
Actual total loss and constructive total loss[ edit ] Main article: Total loss These two terms are used to differentiate the degree of proof where a vessel or cargo has been lost. An actual total loss occurs where the damages or cost of repair clearly equal or exceed the value of the property. A constructive total loss is a situation where the cost of repairs plus the cost of salvage equal or exceed the value. The use of these terms is contingent on there being property remaining to assess damages, which is not always possible in losses to ships at sea or in total theft situations.
In this respect, marine insurance differs from non-marine insurance, where the insured is required to prove his loss. The term "constructive total loss" was also used by the United States Navy during World War II to describe naval vessels that were damaged to such an extent that they were beyond economical repair.
This was most often applied to destroyer -type ships in , the last year of the war, many which were damaged by kamikazes. By this time enough ships were available for the war that some could be disposed of if severely damaged. In order for General Average to be properly declared, 1 there must be an event which is beyond the shipowners control, which imperils the entire adventure; 2 there must be a voluntary sacrifice, 3 there must be something saved.
The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in damages. They share the expense in proportion to the 'value at risk" in the adventure.
The Marine Insurance Act, 1963
Average — is the situation where an insured has under-insured, i. An average adjuster is a marine claims specialist responsible for adjusting and providing the general average statement. An Average Adjuster in North America is a 'member of the association of Average Adjusters' To insure the fairness of the adjustment a General Average adjuster is appointed by the shipowner and paid by the insurer.
Excess, deductible, retention, co-insurance, and franchise[ edit ] An excess is the amount payable by the insured and is usually expressed as the first amount falling due, up to a ceiling, in the event of a loss. An excess may or may not be applied. It may be expressed in either monetary or percentage terms. An excess is typically used to discourage moral hazard and to remove small claims , which are disproportionately expensive to handle.
The term "excess" signifies the "deductible" or "retention".
A co-insurance, which typically governs non-proportional treaty reinsurance, is an excess expressed as a proportion of a claim in percentage terms and applied to the entirety of a claim.
The penalty is based on a percentage stated within the policy and the amount under reported.
Tonners and chinamen[ edit ] These are both obsolete forms of early reinsurance. Both are technically unlawful, as not having insurable interest , and so were unenforceable in law. Policies were typically marked P. Policy is Proof of Interest.
Their use continued into the s before they were banned by Lloyd's, the main market, by which time, they had become nothing more than crude bets. A "tonner" was simply a "policy" setting out the global gross tonnage loss for a year.
If that loss was reached or exceeded, the policy paid out. A "chinaman" applied the same principle but in reverse: thus, if the limit was not reached, the policy paid out.
Specialist policies[ edit ] Various specialist policies exist, including: Newbuilding risks: This covers the risk of damage to the hull while it is under construction.
In the event of loss or damage, this type of insurance  will pay for the true value of the shipment, rather than only the legal amount that the carrier is liable for. 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.A contract of marine insurance may, by its express terms, or by usage of trade, be extended to protect the assured against losses on inland waters or on any land risk which may be incidental to any sea voyage. Actual total loss and constructive total loss[ edit ] Main article: Total loss These two terms are used to differentiate the degree of proof where a vessel or cargo has been lost.
This is the minimal coverage package in marine insurance, which covers only the loss of cargo resulting from total loss of vessels. India stepped into insurance sector during the year ; the first Indian insurance company was Indian Mercantile Insurance Company Ltd in Bombay. He is currently interning with LatestLaws.
Marine Insurance which is also known as perils also includes an assurance to acquisition of money, passage money, commission, pecuniary benefit, security against advance, loans and profit. In the event of loss or damage, this type of insurance  will pay for the true value of the shipment, rather than only the legal amount that the carrier is liable for.
The Lloyd's Open Form, once agreed, allows salvage attempts to begin immediately. Interviewed by Femina Vinod Janodia.