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Marine Insurance Overview & Principles

Marine insurance covers risks associated with international trade and transportation of goods by sea. It insures importers for safe delivery of goods and shipping companies for vessel safety. There are many potential dangers during ocean transport that marine insurance mitigates. It has two branches - ocean marine for sea perils and inland marine for overland risks. Marine insurance is one of the oldest forms of insurance, developing with expanded trade by sea to protect goods from the many perils involved in ocean shipment.

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219 views2 pages

Marine Insurance Overview & Principles

Marine insurance covers risks associated with international trade and transportation of goods by sea. It insures importers for safe delivery of goods and shipping companies for vessel safety. There are many potential dangers during ocean transport that marine insurance mitigates. It has two branches - ocean marine for sea perils and inland marine for overland risks. Marine insurance is one of the oldest forms of insurance, developing with expanded trade by sea to protect goods from the many perils involved in ocean shipment.

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kp93singh
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Marine insurance is concerned with overseas trade.

International trade involves transportation of goods from


one country to another country by ships. There are many dangers during the transshipment. The persons who
are importing the goods will like to ensure the safe arrival of their goods. The shipping company wants the
safety of the ship. So marine insurance insures the coverage of all types of risks which occur during the transit.
Marine insurance may be called a contract whereby the insurer undertakes to indemnify the insured in a
manner and to the extent thereby agreed upon against marine losses.
Marine insurance has two branches:
1. Ocean Marine Insurance.
2. Inland Marine Insurance.
Ocean marine insurance covers the perils of the sea whereas inland marine insurance is related to the inland
risks on the land.
Marine insurance is one of the oldest forms of insurance. It has developed with the expansion of trade. It was
started during the middle ages in Italy and then in England. The sending of goods by the sea involves many
perils; so it was necessary to get the goods insured. In modern times marine insurance business is well
organized and is carried on scientific lines.
Principles of Marine Insurance
The principles of all types of insurance are generally the same and they have been discussed earlier, in detail.
Some of the principles related to marine insurance are given as under:
I. Utmost good faith:
The marine contract is based on utmost good faith on the part of the parties. The burden of this principle is
more on the insured than on the underwriter. The insured should give full information about the subject to the
insured. He should not withhold any information. If a party does act in good faith, the other party is at liberty to
cancel the contract.

II. Insurable Interest:
Insurable interest means that the insured should have interest in the subject when it is to be insured. He should
be benefited by the safe arrival of commodities and he should be prejudiced by loss or damage of goods. The
insured may not have an insurable interest at the time of acquiring a marine insurance policy, but he should
have a reasonable, expectation of acquiring such interest. The insured must have insurable interest at the time
of loss or damage, otherwise he will not be able to claim compensation.

III. Indemnity:
This principle means that the insured will be compensated only to the extent of loss suffered. He will not be
allowed to earn profit from marine insurance. The underwriter provides to compensate the insured in cash and
not to replace the cargo or the ship. The money value of the subject-matter is decided at the time of taking up
the policy. Sometimes the value is calculated at the time of loss also.

IV. Cause Proxima:
This is a Latin word which means the nearest or proximate cause. It helps is deciding the actual cause of loss
when a number of causes have contributed to the loss. The immediate cause of loss should be determined to fix
the responsibility of the insurer. The remote cause for a loss is not important in determining the liability. If the
proximate cause is insured against, the insurer will indemnify the loss.

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