MARINE INSURANCE
Module III
Marine Insurance Act 1963
• Section 2 (a) Contract of Marine Insurance as
defined by Section 3
• A contract of marine insurance is an agreement
whereby insurer undertakes to indemnify the
assured, in the manner and to the extent thereby
agreed, against marine losses, that is the losses
incidental to marine adventure.
Section 2 (d) Marine Adventure
• Any adventure where insurable property is exposed
to
• Maritime perils
• Any liability towards third party
• Earnings, freight, commission, profits are endangered by
marine peril
Section 2(e) Maritime Peril
Included and Excluded Perils loses Section 55
• Perils incidental or consequent to navigation of the sea
• Fire
• War perils
• Pirates, Thieves
• Captures, Seizures, Restraints, Detention
Does not include
• ordinary wear and tear,
• ordinary leakage and breakage,
• any loss proximately caused by rats or vermin or
• for any injury to machinery not proximately caused by
maritime peril
Llyold v. Fleming (1872) LR 7 QB 299
• A policy of marine insurance is a contract of
indemnity against all losses occurring to the subject
matter of the policy from certain perils during the
adventure
• Insurable Interest: Section 7
• Reinsurance: Section 11
• Contract of Good Faith: Section19 and 20
• Double Insurance S. 34
Subject Matter of Marine Insurance
Measures of Insurable Value S. 18
• Cargo: Most important subject matter
• Cargo in process of export-import
• Goods transported through water ways to reach port city
• Goods transported to rail, road and other means of
transport
• Hull/Ship or Vessel:
• Vessel is the valuable asset which carries the cargo
from one destination to another
• Risk is involved to the ship
• Fleet Insurance
• Freight:
• Shipping services earn freight
• Paid in advance or on reaching the goods to the
destination port
• If the ship does not reach the destination port due
to sea peril it effects:
• Ship owner, he can recover the freight by obtaining
the marine insurance policy
• When freight is paid in advance:
• Owner may be loosing the cargo as well as freight
both
• Owner can include freight charges in the value of
the cargo
• Liability:
• Liability of the owner of the ship towards third party
by reason of marine perils
• If the ship collides with another ship during voyage
• Liability is transferred to the Insurer
Essential elements of Marine Insurance
• Valid contract
• Insurable interest: owners of cargo, shippers, captain
and the crew in their wages
• Warranties S. 35: It is an undertaking by the assured
that some condition shall be fulfilled or certain thing
shall be or shall not be done (Promissory Warranty)
• Implied
• Express: Warranty of good safety
• Indemnity
Implied Warranty
• Sea Worthiness: S. 41
• Ship must be sea worthy
• Fit for voyage- fully prepared and equipped
• Must not be overloaded
• Cargo properly stowed
• Fully maintained: Captain and Crew must be efficient
Implied Warranty (Contd.)
• Legality of Voyage
• Adventure shall be commenced in a reasonable time
• Venture must be lawful one
• Adventure carried out in lawful manner
• Smuggling, illegal trade of goods prohibited
• If the adventure is legal one but the member and crew
without the knowledge of the owner indulge in
smuggling, it would not amount to breach of implied
warranty
Implied Warranty (Contd.)
• Non- Deviation S. 48
• Voyage must be accurately described in the policy
and properly performed S. 47
• Change of voyage
• Ports of discharge S. 49
• Justifiable Deviation S. 51
• During War
• Necessary to save human life or aiding a ship in
distress where human life may be in danger
• Necessity for the safety of the ship (Repairs)
• Medical or Surgical aid
• Beyond the control of master of the ship
C.C.R. Fishing Ltd. v. British Reserve Insurance Co
1990
• it was held that to constitute a loss caused
by a peril of the sea, the loss must be
peculiar to a marine activity in the sense
that it could not have occurred on land and
the cause of the loss must have been
fortuitous, that is, it might be something
that might have occurred, not something
that was bound to occur.
Samuel (P) & Co. v. Dumas, (1924) All ER Rep 232
• a vessel was insured against perils of the sea
by the mortgagees of the vessel. While on a
voyage, she foundered off the coast of Spain
in clam weather.
• It was held that the insurer was not liable as
scuttling was not a peril of the sea. Scuttling
is wilful and deliberate throwing away of a
ship by those in charge of her and so is not
fortuitous.
Chinnaswami Mudaliar v. Home Ins. Co,
Madras,1981
• 25 cases of betel nuts sent from Nagapattinam port
to Penang were insured from warehouse to
warehouse.
• While the goods were waiting in the boat for
discharging into the ‘State of Madras’, the sea,
which was calm, suddenly became rough. High
swells splashed into the boat and the goods became
wet with water and were destroyed as per orders of
the Health Officer.
• It was held that the insurer was liable to indemnify
the insured.
Types of Policies
S. 24 Contract must be embodied in the policy
S. 25 What policy must specify :
• Name of the assured
• Voyage or period of time
• Sum insured
• Name of the insurer
• S. 27 Voyage and Time Policy
• Where the contract is to insure the subject- matter at and
from, or from one place to another or others, the policy is
called a “voyage policy”,
• Where the contract is to insure the subject-matter for a definite
period of time, the policy is called a “time policy”. A contract for
both voyage and time may be included in the same policy.
Types of Policies
S. 29 Valued Policy
• a policy which specifies the agreed value of the
subject- matter insured.
• Subject to the provisions of this Act, and in the
absence of fraud, the value fixed by the policy is,
as between the insurer and assured, conclusive of
the insurable value of the subject intended to be
insured, whether the loss be total or partial.
Types of Policies
S. 30 Unvalued Policy:
An unvalued policy is a policy which does not
specify the value of the subject-matter insured,
but subject to the limit of the sum insured, leaves the
insurable value to be subsequently ascertained,
