Final project

“A STUDY ON MARINE INSURANCE”
REPORT SUBMITTED TO
ACADEMY OF MARITIME EDUCATION AND TRAINING
(AMET)
(Declared as Deemed to be University)
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE
BACHELOR OF BUSINESS ADMINISTRATION
(SHIPPING & LOGISTICS MANAGEMENT)
BY
MALAY CHAUREY
(REG. NO: ABA15090)
UNDER THE GUIDANCE OF
Dr. M. RUBEN ANTO
ASSISTANT PROFESSOR
AMET BUSINESS SCHOOL
ACADEMY OF MARITIME EDUCATION AND TRAINING (AMET)
(Declared as Deemed to be University)
April 2018

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DECLARATION
I hereby declare that the project work entitled ―A STUDY ON MARINE
INSURANCE‖ submitted to AMET Business School under the guidance of Dr. M.
Ruben Anto, Assistant Professor, in partial fulfillment of the requirement for the award
of the degree of Bachelor of Business Administration (Shipping) is a record of original
project work done by me during the period of study in AMET (2015-18).
Date:
Place: Chennai
Signature of Student

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CERTIFICATION OF APPROVAL
This is to certify that this project entitled “A STUDY ON MARINE
INSURANCE” is bonafide research work carried out independently by Mr.
MALAY CHAUREY, Reg.No:ABA15090, a student of BBA (Shipping) of AMET
Business School, AMET, Kanathur 603112, during 2015-18 in partial fulfillment of the
requirement for the award of degree of Bachelor of Business Administration (Shipping).
Signature of Guide
Vice-Voce-examination conducted
Internal Examiner External Examiner
Director Executive Director
Date:

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ACKNOWLEDGEMENT
I take this opportunity to acknowledge son noble hearts for lending hands in the
successful completion of my project.
I would like to express my gratitude to our honorable Chancellor DR. J
RAMACHANDRAN and our vice chancellor COL. Dr. G. THIRUVASAGAM for
their kind encouragement.
I am immensely thankful to my respected guide (DR.M.RUBEN ANTO), Associate
Professor, AMET Business School, AMET University for his guidance support and
encouragement rendered to me throughout the project DR.P.DEIVASIGAMANI,
Head Of Department of AMET Business School.
I would be failing in my duty if I don't extend my gratitude to my Institutional
faculties, without their help the project would not have finalized and for the help
rendered in completing the project.
I am deeply thankful to my parents and my fellow friends for their support and
suggestion extended for the improvement of the project report.
(MALAY CHAUREY)

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CONTENTS
Title Page .................................................................................................................................1
Declaration...............................................................................................................................2
Certification Of Approval..........................................................................................................3
Acknowledgement .....................................................................................................................4
Contents ...................................................................................................................................5
Abstract..................................................................................................................................10
CHAPTER 1: INTRODUCTION.........................................................................................12
1.1 INTRODUCTION ............................................................................................................12
1.2 DIFFERENCE BETWEEN MARINE AND OTHER TYPE INSURANCE.......................12
1.3 WHY IS IT IMPORTANT? ..............................................................................................13
1.4 FUNDAMENTALS OF MARINE INSURANCE CONTRACT.......................................15
1.5 CHAPTER SUMMARY ...................................................................................................16
CHAPTER 2: INDUSTRY PROFILE .................................................................................18
CHAPTER 3: RESEARCH METHDOLOGY ....................................................................22
3.1 MEANING OF RESEARCH: ...........................................................................................22
3.2 RESEARCH OBJECTIVES..............................................................................................22
3.3 METHODOLOGY............................................................................................................22
3.3.1 Research Design.....................................................................................................22
3.3.2 Data Collection.......................................................................................................23
3.3.3 Data Analysis .........................................................................................................23
3.3.4 Reporting of Results ...............................................................................................23
3.4 LIMITATIONS.................................................................................................................24
CHAPTER 4: MARINE INSURANCE................................................................................26
4.1. INTRODUCTION ........................................................................................................26
4.2. EVOLUTION ...............................................................................................................27
4.2.1. Organization of Lloyds ....................................................................................30
4.2.2. Formation ........................................................................................................31
4.2.3. Links ...............................................................................................................31

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4.2.4. Structure..........................................................................................................32
4.2.5. The Council of Lloyd.......................................................................................32
4.3. PRINCIPLES................................................................................................................33
4.4. MEANING OF MARINE INSURANCE.......................................................................34
4.5. RISK COVERED UNDER MARINE INSURANCE.....................................................35
4.6. CHAPTER SUMMARY ...............................................................................................36
CHAPTER 5: LEGAL TERMS IN MARINE INSURANCE..............................................38
5.1. LEGAL TERMS IN MARINE INSURANCE ...............................................................38
5.2. FACTORS CONSIDERED WHEN RATING A MARINE RISK..................................38
5.2.1. The Insured......................................................................................................38
5.2.2. Interest & Packaging........................................................................................38
5.2.3. Sum Insured.....................................................................................................39
5.2.4. Basis of Valuation............................................................................................39
5.2.5. Voyage/Transit ................................................................................................39
5.2.6. Conveyance .....................................................................................................39
5.2.7. Cover Required................................................................................................40
5.2.8. Origin/Destination ...........................................................................................40
5.2.9. Extensions Required ........................................................................................40
5.2.10. Excess..............................................................................................................40
5.3. PERILS OF SEA ..........................................................................................................40
5.3.1. Categories of Perils of Sea ...............................................................................41
5.3.2. Types of perils of Sea.......................................................................................41
5.4. CLAUSES COVERED UNDER MARINE INSURANCE POLICY..............................43
5.4.1. Valuation Clause:.............................................................................................43
5.4.2. ‗At and From‘ Clause:......................................................................................44
5.4.3. Sue and Labour Clause:....................................................................................44
5.4.4. Warehouse to Warehouse Clause: ....................................................................44
5.4.5. Change of Voyage: ..........................................................................................44
5.4.6. Touch and Stay Clause:....................................................................................45
5.4.7. Inchmaree Clause:............................................................................................45
5.4.8. Memorandum Clause:......................................................................................45
5.4.9. F. C & S Clause: ..............................................................................................46

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5.4.10. Suing and labouring clause:..............................................................................46
5.4.11. F.P.A and F.A.A clause:...................................................................................46
5.4.12. Excepted peril clause: ......................................................................................46
5.4.13. Arbitration clause:............................................................................................47
5.4.14. Collision or running down clause: ....................................................................47
5.5. SALVAGE ...................................................................................................................47
5.5.1. Types of salvage ..............................................................................................48
5.6. MARINE INSURANCE POLICY.................................................................................50
5.6.1 ―Section 24 Contract must be embodied in policy ...................................................50
5.6.2 ―Section 25 What policy must specify.....................................................................50
5.6.3 Subject-Matter........................................................................................................50
5.7. TYPES OF MARINE CARGO POLICY.......................................................................51
5.7.1. Voyage Policy..................................................................................................51
5.7.2. Time Policy: ....................................................................................................51
5.7.3. Mixed Policy: ..................................................................................................51
5.7.4. Open or Un-valued Policy:...............................................................................52
5.7.5. Valued Policy ..................................................................................................52
5.7.6. Port Risk Policy:..............................................................................................52
5.7.7. Wage Policy: ...................................................................................................53
5.7.8. Floating Policy:................................................................................................53
5.7.9. Named Policy ..................................................................................................53
5.7.10. Block Policy ....................................................................................................53
5.8. CHAPTER SUMMARY ...............................................................................................54
CHAPTER 6: TYPES OF LOSSES, COVERAGE AND CLASS.......................................56
6.1. INTRODUCTION ........................................................................................................56
6.2. KINDS OF LOSSES.....................................................................................................56
6.2.1 Total Loss...............................................................................................................56
6.2.2 Average Loss..........................................................................................................58
6.3. MARINE INSURANCE NOT COVERED....................................................................59
6.4. MARINE INSURANCE COVERED ............................................................................60
6.5. INSTITUTE CLAUSES................................................................................................61
6.5.1. Marine Cargo...................................................................................................61

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6.5.2. Marine Hull .....................................................................................................62
6.6. MUTUAL PROTECTION & INDEMNITY..................................................................62
6.7. TYPES OF PROTECTION AND INDEMNITY (P&I) INSURANCE...........................63
6.7.1. Class I..............................................................................................................63
6.7.2. Class II ............................................................................................................64
7.5. CHAPTER SUMMARY:..............................................................................................64
CHAPTER 7: CLAIM HANDLING...................................................................................66
7.1. INTRODUCTION ........................................................................................................66
7.2. CLAIM HANDLING....................................................................................................67
7.2.1 Definition Of ―Claim Handling‖ .............................................................................67
7.2.2 Marine Cargo Insurance Claim Procedure:..............................................................67
7.3. INSURANCE CLAIM ..................................................................................................68
7.4. REINSURANCE ..........................................................................................................68
7.4.1. Facultative Reinsurance ...................................................................................69
7.4.2. Treaty Reinsurance ..........................................................................................69
7.5. PROCEDURE AND DOCUMENTATION FOR FILING CLAIM OF MARINE
INSURANCE ...............................................................................................................70
7.6. CHAPTER SUMMARY ...............................................................................................72
CHAPTER 8: DATA ANALYSIS .......................................................................................74
8.1 CHAPTER SUMMARY: ..................................................................................................83
CHAPTER 9 .........................................................................................................................84
CHAPTER 9: CONCLUSION .............................................................................................85
CHAPTER 10........................................................................................................................86
CHAPTER 10: SUGGESTIONS.........................................................................................87
BIBLOGRAPHY:.................................................................................................................88
REFERENCE: ......................................................................................................................88

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LIST OF FIGURE
FIGURE 1: RESEARCH DETAILS........................................................................................23
FIGURE 2: LLOYDS OF LONDON ......................................................................................30
FIGURE 3: PRINCIPLES OF MARINE INSURANCE ..........................................................33
FIGURE 4: MARINE LOSSES...............................................................................................57
FIGURE 5: HULL PREMIUM 2010-2016 SELECTED MARKETS.......................................78
FIGURE 6: CLAIM COST PER VESSEL ..............................................................................78
FIGURE 7: TOTAL LOSSES 2000-2016................................................................................79
FIGURE 8: TANKER TOTAL LOSSES 2000-2016...............................................................79
FIGURE 9: TANKER TOTAL LOSSES 2000-2016...............................................................80
FIGURE 10: TANKER TOTAL LOSSES 2000-2016 .............................................................80
FIGURE 11: CLAIM COST PER VESSEL.............................................................................81
FIGURE 12: CLAIM COST PER VESSEL.............................................................................81
FIGURE 13: CARGO PREMIUM 2008-2016 SELECTED MARKETS..................................82
LIST OF CHART
CHART 1: MARINE PREMIUM 2016...................................................................................74
CHART 2: MARINE PREMIUM 2015...................................................................................74
CHART 3: MARINE PREMIUM REGION WISE 2016 ........................................................75
CHART 4: MARINE PREMIUM REGION WISE 2015 .........................................................75
CHART 5: MARINE HULL PREMIUM REGION WISE 2015..............................................76
CHART 6: MARINE HULL PREMIUM REGION WISE 2016..............................................76
CHART 7: MARINE CARGO PREMIUM SECTOR WISE 2015...........................................77
CHART 8: MARINE PREMIUM REGION WISE 2016 .........................................................77
CHART 9: CARGO PREMIUM 2008-2016 SELECTED MARKETS ....................................82

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ABSTRACT
Marine Insurance, the oldest form of insurance, protects shipping companies
and cargo owners against the loss of a ship and/or cargo. Typically, the owner of
the cargo will be compensated for losses sustained from fire, shipwreck, and so
on, but not for losses that can be legally recovered from the carrier. Usually,
marine insurance is divided into two divisions: hull and machinery and Protection
and Indemnity.
Marine insurance is an important component of international trade and
commerce and subject to international regulations in every stage of operations. It
is governed by the Marine Insurance Act 1963 in India and guided by the various
clauses formulated by the Institute of London Underwriters (ILU) and the
international commercial terms known as ‗Incoterms‘. This paper analyses the
legal aspects the marine insurance in India and provides an overview and analysis
of the Marine Insurance Premium.
The intension of this report is to provide the details about the marine
insurance. This report is made for the good faith of future. It can be used for future
analyses as well. An attempt has been made in this report, to enlighten the readers
in a compact and concise form, different laws that are in force, thereby to provide
an in-depth knowledge of Marine Insurance.
Keywords: Marine Insurance Act 1963, Institute of London Underwriters (ILU).

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CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION
Marine insurance is the need for every ship going offshore. The need of
securing the property from the economic consequences of its loss or damage has
become a fundamental feature of modern society. Insurance provide key aspects of
society by providing security and insurance to person, communities, and businesses.
It facilitates trade and commerce, generates employment, provides risk sharing,
encourages innovations by allowing people and business to engage in more risky
business activities thereby fostering higher levels of economic activity and mobilises
domestic saving through the collection of premiums by insurance companies which
can help build a country's financial market.
Therefore marine insurance includes the vital part of monetary security so
that the danger of a mishap occurring amid the vessel is a restraining variable in the
direct of global exchange. In this sense, marine insurance is a guide to the direct of
seaborne universal exchange. Consequently, building up an effective and focused
protection market is of key significance for creating nations like India as they
coordinate into the world economy. This project investigated the legitimate parts of
the marine protection in India. In such way, it gives a diagram and examination of
the Marine Insurance Act, 1963.
1.2 DIFFERENCE BETWEEN MARINE AND OTHER TYPE
INSURANCE
We have seen that how crucial marine insurance is. Now we will look into
some of the major difference between the marine insurance and the other type of
insurance. (Note: Marine insurance is the first insurance in the world that’s the
reason it is also known as Mother of all Insurance).

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1. Insurable Interest: In marine insurance, the insurable interest needs to be
present only when of loss and need not be present when the insurance is effected,
because, in fire insurance, the insurable interest must be present at the time of taking
out the policy as well as at the time of loss.
2. Moral Hazard: In marine insurance, the possibility of moral hazard does
not exist the extent at which it is present, in fire insurance.
3. Valued Policies: The policies issued under marine insurance are generally
valued policies and the market fluctuation is avoided, but the policies issued under
fire insurance strictly adheres to the doctrine of indemnity and only the market value
of the property lost in the fire (valuable amount) will be compensated.
4. Profit: Under a marine insurance policy, the insured is also allowed a
margin of expected profit say 10% or 15% of the insured amount because, under a
fire insurance policy, such practice is not allowed normally.
5. Transfer: A marine policy can be transferred from one party
to another. But a fire insurance policy cannot be transferred without the permission
of the insurance company.
1.3 WHY IS IT IMPORTANT?
Its actual that hazard can never be killed yet the level of hazard can be fitting
safety measure connected in time. Obviously, merchants confront extraordinary
many dangers in taking care of business universally. Indeed, even settled dealer has
been confronting numerous potential down to earth issues while transporting the
products through marine course in global market. In this unique circumstance,
insurance is about the dealer‘s repugnance of hazard.
There are a wide range of things that can be potential occur amid shipment of
freight and holder on a ship. The stacking cranes could harm the holder, robbery and
theft, climate harm and other kinds of marine obstacle. These conceivable issues are
precisely why the merchant requires marine payload insurance.

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 Significance Of Marine Insurance For Cargo Owner
An agent needs to be secured for his products. Particularly in nations which
are situated on the other side of ocean, an agent may need to utilise marine wander.
Marine insurance keeps them far from stress and dread or all obligation of load
proprietor is exchanged to the hand of an insurance agency that pay to the payload
proprietor if a misfortune happens.
 Significance Of Marine Insurance For The Individual
A man needs to import product from another nation which is situated on the
other side of ocean for his business. While conveying products from ocean side,
merchandise might be harmed as a result of sinking of ship into the water. So a
specialist needs to encounter financial misfortune. As the after effects of loss, a
individual might be demoralized to participate in business. However, when one
protects his/her property in marine insurance, he does not need to confront monetary
issue since marine insurance gives pay to the safeguarded, against the loss of
property.
 Significance Of Marine Insurance For Ship-Proprietor
Expensive ship might be wrecked because of various sorts of dangers on the
marine wander. The ship-proprietor may need to involvement with bigger measures
of misfortune because of the obliteration of the ship. Marine insurance gives pay of
misfortune to the ship-proprietor. In this way, marine insurance is essential insurance
for the ship-proprietor.
 Significance Of Marine Insurance For The Government
International exchange has been expanded because of the marine insurance.
As worldwide exchange builds government likewise can get a monetary benefit. The
administration expand income by including additional salary assessment. So marine
insurance is critical for the legislature too.

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 Significance Of Marine Insurance For Freight
Freight insurance is likewise included under the marine insurance. Cargo
alludes to the income that a load deliver procures or the cash which is paid to the
ship-owner for the transportation of merchandise starting with one section then onto
the next. In the event that an agent does not pay cargo of his merchandise to the ship-
proprietor, the ship-proprietor may need to encounter monetary misfortune. In the
event that such sorts of misfortune happen, insurance agency reimburses the ship-
proprietor to marine insurance. So marine insurance is vital for the cargo.
1.4 FUNDAMENTALS OF MARINE INSURANCE CONTRACT
―Marine insurance business means the business of effecting contract of
insurance upon vessels of any description, including cargoes, freights and other
interest which may be legally insured in or relation to such vessels, cargoes and
freights, gods, wars merchandise and property whatsoever description insured for
any transit by land or water or air or all the three. The same may include warehouse
risks or similar risks in addition or as incidental to such transit and includes among
the risks insured in marine insurance policies.
Thus, insurance is a business of taking over others‘ risks, and accordingly, the
commitments that insurers undertake should be honoured as and when they fall due.
Insurers manage their risks to tolerate levels by adopting such measures as pooling
of independent risks, spreading and reinsuring large risks, exercising control over
fraudulent claims, designing suitable asset liability management etc. In order that
insurer are capable of fulfilling the promises under the contract, they charge
‗premium‘ from the assured, depending upon their estimation of degree of the risk,
and are mandated to maintain a sufficient level of capital.
In other words, the purpose of any form of insurance is to replace what has
been lost. It is not intended that assured should make a profit from his loss but that he
should merely be in worse situation than he was before the loss occurred.

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1.5 CHAPTER SUMMARY
In this chapter we saw a brief introduction about marine insurance, where we
saw how it‘s affected by other market what are the difference between marine
insurance and other insurance. Its importance relevant to the shipping industry.
Lastly we saw fundamentals of marine insurance. In further chapters we will have a
look into the various aspects of marine insurance its data analysis and many other
details about marine insurance.

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CHAPTER 2: INDUSTRY PROFILE
For many year in the marine insurance sector, the past 12 months have been
some they would willingly forget, if given the chance. The market came into 2017
struggling in many classes to achieve a rate that was deemed adequate for the risks it
was being asked to assume and on the whole failing to do so.
For the Protection & Indemnity (P&I) sector, the annual renewal date of 20
February arrived with many clubs looking to keep rates stable and return proportions
of the previous year‘s premiums to members following a period in which the claims
have been mercifully few.
However, for a large number of clubs and the London market generally, the
United Kingdom‘s decision to leave the European Union (EU) hung over their heads
as they wrestled with the decision how to react.
The loss of the UK‘s pass porting rights, which enable UK firms to do
business across the EU, has been a huge topic for insurers this year and with
negotiations proceeding at an agonisingly slow pace, clubs have been forced to bite
the bullet and spend the necessary money to set up fully-fledged subsidiaries in the
EU in order to be able to trade post-Brexit, although these plans may change.
For the liability underwriters, 2017 also saw a range of new regulations and
some adverse court rulings, including last month‘s Spanish court verdict that held the
London P&I Club and the captain of Prestige heavily liable for the economic costs of
the oil spill which occurred following the loss of the tanker.
It has cast a shadow over the sector and highlighted the tougher stance being
taken by coastal authorities following any maritime incident.
Accordingly, the chair of the International Union of Marine Insurance (IUMI) Legal
and Liability Committee, Frédéric Denèfle, cautioned against the threats that the
industry and its insurers now find themselves facing.
―In 2017 we have had to take into consideration certain legal developments
regarding ship owners‘ liability that raise serious questions about the traditional
limitation liability regime, which is a historical unchallenged legacy until recently,‖
he said. ―Legal approach is a key factor to understanding the risk impacts and
potential consequences for insurers, whatever the type of risk exposed.

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―As marine insurers, how can we operate with so many legal uncertainties
and technical innovations that are bringing new high risks?‖ He said the issue of
ship-owners liability deserves as ―much attention as possible‖ in order to provide
clarity on what is going on in shipping, as well as the ship-owners legal position,
which is challenged across the world because of the many different jurisdictions.
For the cargo market, pressure on rates continued but fears over the
aggregation risk that the new breed of mega-container ships pose have also
increased. There is a growing recognition that the volume of containers currently
concentrated in major ports across the world is reaching levels at which claims
threaten to deliver new record insured values.
While discussion over the issue raged in the first half of the year, the
combined effects of hurricanes Harvey, Irma, and Maria delivered a significant loss
to the cargo insurers to the point where underwriters are looking to future strategies
and reassessing their appetite for risk.
The latest figures for the market have done little to calm those concerns. The
total estimated cargo premium for 2016 has been put at USD15 billion, a year-on-
year drop of 6% and a 9% fall from the 2014 figures.
Last year also was the fifth consecutive year in which cargo underwriters saw
the level of claims paid out exceed the income from premiums, and chances are, with
the issues around the losses in North America and the Caribbean, that six consecutive
years of underwriting losses are on the cards.
It was a similar story for the world‘s hull insurers, who saw a 10% fall in
global premiums last year to USD7 billion.
Despite years of poor underwriting results, marine insurance is seen as an attractive
diversification option for the world‘s underwriters and, as such, there remains far
more insurance capacity in the market than the risks they seek to cover.
Insurers are looking for new ways to access the available business, and 2017
has seen the shift from west to east accelerate, with many marine insurers opening or
increasing their operations in Asia to get closer to the clients. There has been a
continued consolidation of the ownership base this year, with 40% of the world fleet
tonnage now owned by Asian companies.

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Competition is putting further stress on prices and, with the shipping sector
still on the road to recovery following the 2008 financial crisis, there is pressure on
the market from clients to support their efforts to drive cost efficiencies.
World fleet growth both slowed and declined in 2017. However, it is still about 50%
larger than in 2008. Strong investment interest in 2016 resulted in an increase in
vessel deliveries that year, with the cruise industry showing positive trends on this
basis.
While total vessel capacity has continued to grow along with the size of
vessels, the utilisation rates of the fleet are still not at a level enjoyed a decade ago
and underwriters fear the issues that will arise when vessels that have been laid up
for several years are brought back into service. Not least of those worries is the cyber
risk threat as vessels with outdated technology on the bridge are brought back into
service, with systems that may not be compatible with the latest upgrades.
Despite this bleak picture, marine underwriters have been searching for the
silver lining, with many working on new ways in which to interact with the maritime
sector and deliver efficiencies.
Insurers and brokers believe that long-term relationships and the specialist
nature of marine risks will form barriers to the entry of any new capacity and hope
that 2018 will see some of the excess capacity that cannot find a home leave the fleet.
Ideally for insurers, the next year will provide a calmer claims environment
and the potential to deliver products at a price that can be viewed as sustainable.
Whether that hope will transform into reality remains to be seen, but the market can
dare to dream.

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CHAPTER 3
RESEARCH METHODOLOGY

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CHAPTER 3: RESEARCH METHDOLOGY
3.1 MEANING OF RESEARCH:
Research in simple terms refers to search for knowledge. It is a scientific and
systematic search for information on a particular topic or issue. It is also known as
the art of scientific investigation. Several social scientists have defined research in
different ways.
3.2 RESEARCH OBJECTIVES
 To analyse the various premiums of Marine Insurance.
 To analyse the various premiums of Cargo.
 To analyse the various premium in Hull.
 Comparison of Marine Premiums.
 To analyse the losses in the Shipping Industry.
3.3 METHODOLOGY
This report presents the findings of the quantitative component of Marine
Insurance. This report provides the details about the all the relevant field of Marine
Insurance. Some of the data related with the marine insurance. Further we will see
some of the procedures of Claim handling.
3.3.1 Research Design
Research design is the based framework, which provides guidelines for the
research process. It is a map or blue print according to which the research is to be
conducted. The research design specifies the methods for data collection & data
analysis determine the source of data. Most specifically it was a kind of
―Quantitative research‖ who took care of whom, when, where, what, how and why
aspect of the investigation.

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FIGURE 1: RESEARCH DETAILS
Research : DESCRIPTIVE
Research Method : OBSERVATIONAL
Tools used : INTERNET, TELEPHONE, & STATISTIC TOOLS
Data Source : PRIMARY & SECONDARY
Data Type : QUANTITATIVE DATA
3.3.2 Data Collection
This report have many scope in the field of studying the details of marine
insurance. However similar kind of data are also available in online but this report
makes the very recent finding of marine insurance. This report data is mainly
collected by personal experience of the industry, Some of the good books as
reference, industry visit with many of the insurance companies, personal visit with
many professionals of the industry, and many other source of information.
3.3.3 Data Analysis
The data were analysed on the basis of available statistics data and in depth.
Observation is a systematic data collection approach. Researchers use all of their
senses to examine various tools statistically occurs in situations. Observation of a
field setting involves: prolonged engagement in a setting or social situation. Now
will look firstly into the comparison of premiums involved in marine insurance. I
collected data based on Pie Charts as wells as Table.
3.3.4 Reporting of Results
The results of the complete analysis of the premium were reported in many
countries reports written by many authors. On the basis of these reports, the key
findings were synthesised into the present overall quantitative report. The overall
report on the analysis are structured according to the observation from the industry.
There are many benefits of marine insurance.

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On the basis of this data analysis we came to conclusion that there were many loss
occurred in marine. Hence, taking a insurance for the unusual calamities is always
better than cure.
3.4 LIMITATIONS
 It takes into account only the practical implications of marine insurance.
 Disclosure of certain sensitive information.
 Limitation of time.
 Erroneous findings.
 Not an exact tool for forecasting.

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CHAPTER 4: MARINE INSURANCE
4.1. INTRODUCTION
This is the oldest branch of Insurance and is closely linked to the practice of
bottomry which has been referred to in the ancient records of Babylonians and the
code of Hammurabi way back in B.C.2250. Manufacturers of goods advanced their
material to traders who gave them receipts for the materials and a rate of interest was
agreed upon. If the trader was robbed during the journey, he would be freed from the
debt but if he came back, he would pay both the value of the materials and the
interest.
Marine insurance is an agreement (contract) by which the insurance company
(also known as underwriter) agrees to indemnify the owner of a ship or cargo against
risks, which are incidental to marine adventures. It also includes insurance of the risk
of loss of freight due on the cargo. Marine insurance that covers the risk of loss of
cargo by storm known as cargo insurance. The owner of the ship may insure it
against loss on account of perils of the sea. When the ship is the subject matter of
insurance, it is known as hull insurance. Further, where freight is payable by the
owner of cargo on safe delivery at the port of destination, the shipping company may
insure the risk of loss of freight if the cargo is damaged or lost. Such a marine
insurance is known as freight insurance. All marine insurance contracts are contracts
of indemnity.
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 insurance — discussed here — is 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.

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4.2. EVOLUTION
The oldest form of insurance was that of marine insurance. This seems to
have originated in Rhodes, to have been adopted by the commercial cities of Italy
and by the towns of the Hanseatic League between the twelfth and fourteenth
centuries, and to have been introduced into England in the sixteenth century. The law
of insurance was a branch of the law merchant and varies greatly out of harmony
with the principles of the common law. Early insurance cases were generally either
submitted to the arbitration of a merchant court or tried before a special court created
for that purpose in the first year of the seventeenth century. Only about fifty cases
had come before the common law courts up to the middle of the eighteenth century.
The business of marine insurance was in its early stages mainly conducted at Lloyd's
Coffee House in London, and it was here that much of the law and custom governing
marine insurance was developed.
Maritime insurance was the earliest well-developed kind of insurance, with
origins in the Greek and Roman maritime loan. Separate marine insurance contracts
were developed in Genoa and other Italian cities in the fourteenth century and spread
to northern Europe. Premiums varied with intuitive estimates of the variable risk
from seasons and pirates.
In the 19th century, Lloyd's and the Institute of London Underwriters (a
grouping of London company insurers) developed between them standardized
clauses for the use of marine insurance, and these have been maintained since. These
are known as the Institute Clauses because the Institute covered the cost of their
publication.
Within the overall guidance of the Marine Insurance Act and the Institute
Clauses parties retain a considerable freedom to contract between themselves.
"It is known that Lloyd's Coffee House, an inn kept by one Edward Lloyd on
Tower Street in London, was, as early as 1688, a popular resort for seafaring men
and merchants engaged in foreign trade. It became the custom among those who
gathered at Lloyd's to make their gathering an occasion for arranging their mutual
contracts of insurance against the sea.

28
In making such contracts it was the custom for the person desiring the
insurance to pass around among the company assembled a slip upon which was
written a description of the vessel and its cargo, with the name of the master and the
character of his crew, and the voyage contemplated. Those desiring to become
insurers of the ventures so described would write beneath the description on this slip
their names or initials, and opposite thereto the amount which each was willing to be
liable for as an insurer? When the total amount of insurance desired by the owner of
the vessel was thus underwritten, the contract was complete. From this practice,
among those congregating at Lloyd‗s is derived the term 'underwriters,' as now
applied to insurers. The business of insurance carried on in this informal way at
Lloyd's seems to have increased rapidly, and the commercial importance of the house
required that it should be removed to a more commodious and convenient site, which
was found on Lombard Street, whither Lloyd removed his house in 1692. Both the
importance of this coffee house in commercial circles, and the enterprise of its
proprietor, was shown by the establishment in 1696 of a newspaper, giving
information of commercial transactions and of the movement of shipping throughout
the world.
While this newspaper was shortly afterwards suppressed by reason of some
indiscretion on the part of its publisher, it was yet the progenitor of 'Lloyd's Lists,'
the publication of which was begun in 1726, and which continues up to this day as
the most important publication in the shipping and commercial world. After various
removals, Lloyd's finally found permanent quarters in the Royal Exchange, where it
is now located, and remains, probably the greatest and most important single
commercial factor in the mercantile world. Marine insurance is the oldest type of
insurance. Out of it grew non-marine insurance and reinsurance. It traditionally
formed the majority of business underwritten at Lloyd's. Nowadays, Marine
insurance is often grouped with Aviation and Transit (cargo) risks, and in this form is
known by the acronym 'MAT'.
Marine insurance dates back to the middle Ages in Europe and is considered
to be the oldest form of insurance. Generally, it is applicable to the risk associated
with the movement of goods between ports.

29
Encyclopaedia Britannica Online observes its origination in Rhodes, having
been ―‖adopted by the commercial cities of Italy and by the towns of the Hanseatic
League between the 12th and 14th centuries‖, and reaching England by the 16th
century.
Lloyd's Coffee House in London was the main location for conducting this
type of business. Much of marine insurance law and its governing custom were
developed there by seafaring men and merchants engaged in foreign trade, who
gathered to arrange ―‖their mutual contracts of insurance against the sea‖.
The person seeking insurance would pass around a slip showing a written
description of the vessel and its cargo, the name of the master and the character of his
crew and the voyage considered. Those wishing to insure the venture would write
their names and initials below that description with the amount that each was willing
to be liable for as an insurer. When the total amount of insurance sought by the
owner of the ship was thus underwritten, the contract was complete, hence the term
―underwriters now applied to insurers.
In 1696, a newspaper was established to publish information about
commercial transactions and shipping movements around the world. This initiative
gave rise to Lloyd's Lists, published since 1726, and still the most important
publication in the shipping and commercial world.
Lloyd's eventually moved to its current location of the Royal Exchange and is
still considered the greatest and most important single commercial factor in the
mercantile world.
Meanwhile, the first marine insurance company in the US was established in
the 18th century to cover American clipper ships and their cargoes. Over time, the
industry has developed into an assortment of broad property coverage‗s, split
between land risks (inland marine) and sea risks (ocean marine).
Until the 20th century, marine insurance traditionally did not cover a
substantial number of risks, bestowing responsibility on owners of property to look
after it themselves as per car accident-insurance policies.

30
Now, ship owners can apply for comprehensive coverage which protects
them against virtually all risks including ―collision and running down‖ clauses, war-
risk riders, and protection and indemnity insurance.
Ship owners carry hull insurance on their own ships and protect themselves
against claims by third parties in various ways. Should a ship or its cargo be
damaged, the matter is settled between insurance carriers.
4.2.1. Organization of Lloyds
FIGURE 2: LLOYDS OF LONDON
Lloyd's of London (also known simply as Lloyd's) is an insurance market
located in London's primary financial district, the City of London. It serves as a
partially metalized marketplace where multiple financial backers, known as
underwriters, or "members", both individuals (traditionally known as "Names") and
corporations, come together to pool and spread risk. Unlike most of its competitors in
the industry, it is not a company but it is a corporate body governed by the Lloyd's
Act of 1871 and subsequent Acts of the Parliament of the United Kingdom.
The insurance business underwritten at Lloyd's is predominantly general
insurance and reinsurance, although in 2013 there are five syndicates writing term
life assurance.
LLOYDS OF
LONDON
Lloyd's
Members
Underwriting
Syndicates
Managing
Agents
Lloyd's
Broker

31
The market has its roots in marine insurance and was founded by Edward
Lloyd at his coffee house on Tower Street in the 17th century. Today, it is based at
the Lloyd's building on Lime Street. Fidentia (Latin for "confidence") is the motto of
Lloyd's.
4.2.2. Formation
The market began in Lloyd's Coffee House, opened by Edward Lloyd in
around 1688 in Tower Street, London. This establishment was a popular place for
sailors, merchants, and ship owners, and Lloyd catered to them with reliable shipping
news. The shipping industry community frequented the place to discuss deals among
themselves, including insurance. Just after Christmas 1691, the coffee shop relocated
to Lombard Street (a blue plaque commemorates this location). This arrangement
carried on until 1774, long after Lloyd's death in 1713, when the participating
members of the insurance arrangement formed a committee and moved to the Royal
Exchange on Cornhill as The Society of Lloyd's.
4.2.3. Links
 First Instance judgment
 Appeal judgment
Lloyd's then instituted some major structural changes. Corporate members with
limited liability were permitted to join and underwrite insurance. No new "unlimited"
Names can join (although a few hundred existing ones remain). Financial
requirements for underwriting were changed, to prevent excess underwriting that was
not backed by liquid assets. Market oversight has significantly increased. Lloyd's has
rebounded and started to thrive again after the September 11 attacks, but it has not
regained its past importance as newly created companies in Bermuda captured a
large share of the reinsurance market.

32
4.2.4. Structure
Lloyd's is not an insurance company. It is an insurance market of members. As
the oldest continuously active insurance marketplace in the world, Lloyd's has
retained some unusual structures and practices that differ from all other insurance
providers today. Originally created as a non-incorporated association of subscribing
members in 1774, it was incorporated by the Lloyd's Act 1871, and it is currently
governed under the Lloyd's Acts of 1871 through to 1982.
Lloyd's itself does not underwrite insurance business, leaving that to its
members (see below). Instead the Society operates effectively as a market regulator,
setting rules under which members operate and offering centralized administrative
services to those members.
4.2.5. The Council of Lloyd
The Lloyd's Act 1982 defines the management structure and rules under which
Lloyd's operates. Under the Act, the Council of Lloyd's is responsible for the
management and supervision of the market. It is regulated by the Financial Services
Authority (FSA) under the Financial Services and Markets Act 2000.
The Council normally has six working, six external and six nominated
members. The appointment of nominated members, including that of the Chief
Executive Officer, is confirmed by the Governor of the Bank of England. The
working and external members are elected by Lloyd's members. The Chairman and
Deputy Chairmen are elected annually by the Council from among the working
members of the Council. All members are approved by the FSA.
The Council can discharge some of its functions directly by making decisions
and issuing resolutions, requirements, rules and byelaws. The Council delegates most
of its daily oversight roles, particularly relating to ensuring the market operate
successfully, to the Franchise Board.
The Franchise Board lays down guidelines for all syndicates and operates a
business planning and monitoring process to safeguard high standards of

33
underwriting and risk management, thereby improving sustainable profitability and
enhancing the financial strength of the market.
Lloyd's syndicates write a diverse range of policies, both direct insurance and
reinsurance, covering casualty, property, marine, energy, motor, aviation and many
other types of risk. Lloyd's has a unique niche in unusual, specialist business such as
kidnap and ransom, fine art, aviation, marine, and other insurances.
4.3. PRINCIPLES
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:
FIGURE 3: PRINCIPLES OF MARINE INSURANCE
a) 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.
UTMOST GOOD
FAITH
INSURABLE
INTEREST
INDEMNITY
CAUSE PROXIMA

34
b) 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.
c) 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.
d) Cause Proximal:
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.
The first known Marine Insurance agreement was executed in Genoa on 13/10/1847
and marine Insurance was legally regulated in 1869 there.
4.4. MEANING OF MARINE INSURANCE
A contract of marine insurance is an agreement whereby the insurer
undertakes to indemnify the insured, in the manner and to the extent thereby agreed,
against transit losses, that is to say losses incidental to transit. A contract of marine
insurance may by its express terms or by usage of trade be extended so as to protect

35
the insured against losses on inland waters or any land risk which may be incidental
to any sea voyage. In simple words the marine insurance includes:
A Cargo insurance which provides insurance cover in respect of loss of or
damage to goods during transit by rail, road, sea or air.
Thus cargo insurance concerns the following:
a. Export and import shipments by ocean-going vessels of all types,
b. Coastal shipments by steamers, sailing vessels, mechanized boats, etc.
c. Shipments by inland vessels or country craft, and
d. Consignments by rail, road, air and articles sent by post.
4.5. RISK COVERED UNDER MARINE INSURANCE
The marine insurance covers many risks. The types of risks covered by
modern marine insurance are as follows:
1) Perils of the sea
Perils of sea means any type of incident of contingent accidents or casualties
at the sea. In course of the voyage, the ship may be damaged due to sea storm, sea
pirates, tsunami and accidents of any kind. These all risks are covered by marine
insurance.
2) Fire
It is likely that fire may occur in the ship, when it is voyage. Inflammable
items such as coal, oil, electricity and others are required in larger quantity for the
operation of ship. Thus, fire may be included as risk in marine insurance.
3) Theft
The goods may be stolen during a sea voyage. Therefore, theft is one of the
risks associated with the sea transportation. For the purpose of marine insurance, the
thieves must not be the captain and his crew themselves or the people travelling by
the ship. They must be outsiders, who use force for stealing goods.

36
4) War risks
The shipping companies may have to face many risks during the war period.
There may exist a risk of loss of ship, cargo and freight due to attacks and counter
defensive operations. War risks are insurable in marine insurance.
5) Land risk
Marine insurance indemnifies the subject-matter (cargo) of the parties right
from the godown of the exporting country to the godown of the importing country
against any risk of loss. The risks of loss associated with other means of
transportation such as railways, roadways and others, warehouses, ports of both the
countries and others are included and covered under marine insurance.
6) Jettison
Jettison means throwing overboard a part of cargo or any other goods in order
to reduce the weight in the ship. Some of the cargo is deliberately thrown away with
the object of preventing the ship from further damage. Loss caused by this method is
one kind of marine risk and it can be covered under the marine insurance policy.
4.6. CHAPTER SUMMARY
In this chapter we saw the depth study of evolution of marine insurance. Lloyds
problem how he collaborate the industry. We have seen Principles of Marine
Insurance under which 6 categories were there. We have also seen the meaning of
Marine Insurance. Risk covered under the marine insurance. Later we will move
ahead with the legal terms involved in the marine insurance.

37
CHAPTER 5
LEGAL TERMS IN MARINE INSURANCE

38
CHAPTER 5: LEGAL TERMS IN MARINE INSURANCE
5.1. LEGAL TERMS IN MARINE INSURANCE
Marine Insurance covers the insurance of goods being moved via air, sea and
can be extended to include cover for land transportation from warehouse of origin to
the warehouse of delivery. Vessels involved span from Aircraft, Ships, trailers and
trains and may also be covered.
Unlike other classes of Insurance, Marine risk is a moving risk. In order to
properly rate the risks involved, questions relating to the nature of cargo, its
packaging, the quantity and value, mode of transit, the length of the transit/voyage
must be properly addressed. With this in mind, the Marine and Aviation committee
has provided some guidelines;
5.2. FACTORS CONSIDERED WHEN RATING A MARINE RISK
5.2.1. The Insured
What is known about the Insured? This is simply an inquiry into the proposers
past record and claims experience. Some clients are more likely to submit inflated
claims then others. This is normally termed as "Moral Hazard". Also considered is
the subject matter that is to be insured and the proposer‘s perception of risk and
insurance.
5.2.2. Interest & Packaging
Interest is a term used by Marine to refer to the type of cargo. Many
underwriters are quoting similar rates regardless of the cargo involved. This is
wrong. Depending on attractiveness to thieves or susceptibility to damage, rates
quoted may vary greatly. A consignment of expensive watches should attract a much
higher rate than that of steel bars. Glass sheets should similarly be rated higher that
tin plate for an equivalent cover. Packing of the cargo is also material. Cargoes in
FCL (Full Container Load) attract discounted rates.

39
5.2.3. Sum Insured
Facing two quotations of a similar nature but different sum insured, the
underwriter is bound to quote a lesser rate on the higher sum Insured. With a high
Sum Insured the premium so generated may be able to support a partial loss on the
insured cargo. The other reason for lower rates on consignments with very large sum
insured is the interest they generate in the market. With many insurers quoting for
them, the final placing rates are usually quite low.
5.2.4. Basis of Valuation
In simple terms, this refers to the formula used in arriving at the Sum Insured.
The Supplier‘s invoice will be in some foreign currency say Dollars, Sterling
Pounds. Euros, Yens etc however the Sum Insured in most cases will be in our own
local currency. BOV is vital in that it also becomes the basis of settlement. It may
be FOB, C&F, C&F Plus VAT Plus Duty and at times with a 10% to 20 % margin
uplift. The Duty, VAT and loading element may be rated separately at a lower rate as
they become due only on arrival of cargo in our country.
5.2.5. Voyage/Transit
The voyage here refers to the sea journey while the transit refers to the land
journey. Consider the length of the journey: Cargo from Durban in South Africa to
Mombasa should be rated lower than that from the USA or the Far East. Similarly
the transit that ends in Nairobi should be rated more favourably than that going all
the way to Kisumu. Conditions of the Voyage or Transit: Turbulent waters,
conditions of roads, known pirate routes, routes known for highway robbery should
influence the rating.
5.2.6. Conveyance
In Marine this refers to the mode of transit. Is it by Sea freight, Air freight, Rail
or Road. Air freight is largely safer and quicker than sea freight and thus attracts
lower rates. Similarly Rail transport has lower losses than Road transit and thus
looked at more favourably by underwriters.

40
5.2.7. Cover Required
There are different covers provided under ICC (A), ICC (B) & ICC(C)
schedules. Depending on the cover required, the rating could be quite different. As a
rule of the thumb, if ICC (A) were to be rated say at 100 % of the book rate, the ICC
(B) will attract 50% - 60% of the same rate while ICC(C) will fetch 25% - 35%.
5.2.8. Origin/Destination
Rates are also influenced by the destination e.g. Somalia or Sudan or if the
country of origin is Haiti or Afghanistan etc due to perceived elevated risk in these
areas.
5.2.9. Extensions Required
Marine cover extensions normally required are: Storage, deferred unpacking
(Concealed Losses), Transit extension, Transhipment. All these extensions will
attract additional premiums.
5.2.10. Excess
The size of the excess may be increased or decreased on clients request. This
will affect the rate used. For instance, some clients may complain that the technical
rate charged is high in which case as the underwriter you may ask them to bear a
higher excess in exchange for a reduction in the rate.
5.3. PERILS OF SEA
Perils of sea refer to the natural accidents peculiar to the sea. It can be maritime
accidents and dangers such as storms, waves, wind, collision of the vessel, fire,
smoke and noxious fumes; sinking, flooding and capsizing, loss of propulsion or
steering, and any other hazards resulting from the unique environment of the sea.
Other than inevitable perils or accidents upon the sea are not excused, whether, there
is a bill of lading containing the expression of peril of the sea.

41
It also includes accidents caused as a result of stranding, striking a submerged
object, or encountering heavy weather or other unusual forces of nature.
5.3.1. Categories of Perils of Sea
a) Foundering at Sea: If a ship is found to be missing for duration of time and
there is no news about the missing ship, it would be considered as foundering
at sea. Here, the loss would be assumed as caused by the perils of the sea.
b) Ship wreckage: In a case where the ship collides against a hill or rock and is
driven to the shore by the violent winds, it would be considered as shipwreck.
c) Stranding: In a situation where a ship got out of the action after an accident
and struck up in a shallow region of sands, it would be called stranding.
d) Collision: In a case, where the ship collides with another ship, it will be
considered as a collision.
5.3.2. Types of perils of Sea
a) Perils of Sea
Under perils of sea, ordinary action of the winds and waves, ordinary wear
and tear to the vessel, inherent risk of the cargo is not included. The underwriter may
be liable for losses caused by Perils of the sea; he is not necessarily liable for perils
on sea.
Perils of the sea refer to fortuitous accidents or casualties of the sea. If the
loss arising out of any of the perils of the sea insured is attributable to the fraud or
wilful misconduct of the assured, the underwriter is acquitted from the liability under
the policy.
b) Fire
In olden times fire was the biggest maritime perils, but recently it has been
under control to a greater extent. Damage resulting from fire and smoke is included
under fire-peril.

42
The water used for extinguishing fire may cause damage to the insured goods.
So, this peril is also insurable. The damage due to spontaneous combustion may be
maritime peril and be insured against.
Damage done due to lightning, explosion and fire originating from negligence
of the crew is recoverable from underwriters. The losses which are not included in
the standard policy can be covered by having special clauses and paying extra-
premium.
c) Man-of-War
This is die vessel which is authorized by nations for the purpose of defence or
attack in the event of hostilities. Any damage to the goods or ships arising out of
collision against a man-of-war is insurable.
d) Enemies
Tile ships belonging to the foe (enemy) may cause loss to the insured and is
re-underwritten by the marine policy. This policy extends to all the persons of the
enemy country and to their hostile acts provided such acts form part of the enemy
actions.
e) Pirates, Rovers, Thieves
The perils on account of pirates, rovers and thieves were common in olden
times, but it has been reduced considerably these days. These, acts are generally
committed for the pursuit of individual gain by the persons beyond the jurisdiction of
a state. The term ‗thieves‘ does not mean clandestine theft or a theft committed by
anyone of the crew or officers or passengers.
f) Jettison
Jettison means voluntary throwing away of the cargo or part of a vessel‘s
equipment for the lightening or relieving the ship for common safety. The aim of the
intentional throwing away of the goods or property is to relieve the vessel from some
imminent peril. Accidental falling of things does not constitute jettison. The own
inherent-vice of cargo is also not included in the jettison.

43
g) Barratry
Barratry includes every wrongful act wilfully committed by the master or
crew the prejudice of the owner. The act of barratry must be committed without the
knowledge of the owner.
The theft, the setting fire to ship, fraudulent selling of vessel and cargo
without the connivance of the ship-owner are the various examples of the barratry.
The insurer, if barratry insured, is liable for losses arising out of barratry.
h) Restraints and Detainments
The preventions free use of a port by the government of the country is called
restraints. It may cause interruption and possible loss of voyages involving such ports
and sacrifice of cargo.
The term ‗detainments‘ covers losses resulting from the detention of a vessel
and its cargo by blockage or possibly quarantine regulation or other interference by
the police power of a nation while a vessel is in port.
5.4. CLAUSES COVERED UNDER MARINE INSURANCE
POLICY
A marine insurance policy may have a number of clauses. These clauses may
be general for all types of policies, or may be special to cover certain agreed points.
A policy should cover all types of things so that it may avoid misunderstanding or
avoid disputes at a later stage.
Some of the clauses covered in a marine insurance policy are given as under:
5.4.1. Valuation Clause:
The value of the subject is given in the clause. The value is agreed upon
between both the parties. In case of loss or damage, the compensation will not
exceed the amount given in the policy. If the value of the policy is to be decided at
the time of loss, then this column is left blank.

44
5.4.2. „At and From‟ Clause:
This clause refers to the time when risk commences. According to this clause
the risk coverage starts when the ship is lying at the port of its departure and from the
time it leaves the port. If insurance policy states the words, ‗at and from Madras‘, it
means the risk is covered when the ship is at Madras port and also when it leaves this
port. This clause applies to Hull and Freight Insurance.
5.4.3. Sue and Labour Clause:
This clause enables the insured and the insurer in trying to save the subject-
matter of insurance from any type of loss. If the insured spends some money in an
attempt to save the goods from an impending loss, he can recover this amount from
the insurer. The act of saving the subject-matter on minimising loss does not amount
to deviation and the contract will not be void.
5.4.4. Warehouse to Warehouse Clause:
This clause covers the risk from the warehouse of the shipper or consignor to
the warehouse at the destination. If the cargo is to be brought from the hinterland to
the port, one marine policy will cover the risk at land and also at sea. The risk of
taking goods to the port from sender‘s warehouse to the arrival of goods at the
receiver‘s warehouse is covered. This clause saves the shipper from lot of troubles
and he is sure of the safe arrival of the subject matter not only at the port but also at
the warehouse.
5.4.5. Change of Voyage:
The details of the voyage are mentioned in the policy. The ports of departure
and arrival are mentioned in the policy. The route to be followed by the ship is also
given. In case of any deviation, the insurer will be relieved of his liability. If the ship
changes its original route and follows same route later on, it will be taken as

45
deviation. The insurer will not be liable to indemnify the loss if the original route is
changed.
5.4.6. Touch and Stay Clause:
The ship should go and stay only at those ports which are mentioned in the
policy. In case the ports are not mentioned, then the ship should take the customary
route and stay at the port coming on that route only. If the ship goes to any other
port, it will amount to deviation. The calling at ports must be for justifiable reasons.
5.4.7. Inchmaree Clause:
Under this clause any loss caused by the negligence of the master or a crew
member is also covered. The damage caused to the cargo in loading and unloading
operations is also recoverable. This clause was inserted after a famous case involving
a ship named ‗Inchmaree‘ in 1857. This ship was damaged by the negligence of the
crew and the insured could not get the claim for damages because it was not covered
under the ‗perils of the sea‘. Later on, underwriters included this clause in Marine
Insurance.
5.4.8. Memorandum Clause:
Sometimes perishable goods are the subject-matter of insurance. The
memorandum clause is used to save the insurer from paying small losses of
perishable goods. Under this clause the insurer is not liable for partial losses. In
certain commodities this loss is allowed up to 50%. However, if there is a general
loss or the ship is stranded, the insurer will be liable to pay the loss.

46
5.4.9. F. C & S Clause:
Free from capture or seizure of the vessel is the expansion for F. C R S
clause. If this clause is inserted in the marine insurance policy, then the insurance
company will not be liable for the capture or seizure of the vessel. For example,
sometimes, the ship or vessel may be detained at the port for paying dues to the port
authorities or any loans outstanding to banking company.
5.4.10. Suing and labouring clause:
If the insured undertakes such acts by which the loss incurred is reduced, the
expenses incurred towards such act can be recovered from the insurer if this clause is
inserted. However, this clause will be applicable only when the damage is caused by
such risks which are covered by the marine insurance company.
5.4.11. F.P.A and F.A.A clause:
F.P.A refers to exemption of the insurance company from paying any
compensation other than the loss incurred by a general average sacrifice. F.P A is
Free from particular average clause. Similarly, if the insurance company wants to get
away from both particular and general average, it can mention so in the policy.
F.A.A clause means free from all average clauses. Thus, the insurance company is
exempted from both particular and general average loss.
5.4.12. Excepted peril clause:
Certain risks may be excluded from the coverage of insurance such as risks
from pirates or pilferage at the port. So, the insertion of this clause exempts certain
risks by the insurance company.

47
5.4.13. Arbitration clause:
This clause provides an opportunity for the insurance company and the
insured to settle their disputes through arbitration procedure whereby a common
person will settle the dispute according to the provisions of the Arbitration Act of the
concerned country.
5.4.14. Collision or running down clause:
This clause will cover if ships collide with each other. Normally, the ship
responsible for collision is supposed to compensate the other ship for the damage
suffered. But the insertion of this clause will enable the insurance company to
compensate three fourths the loss suffered by the insured.
5.4.15. Continuation clause:
This clause is mainly to override the time policy. Under the time policy,
marine insurance will cover a sea voyage undertaken by the ship up to a particular
period after the expiry of which the insurer is not supposed to cover any risk. But the
continuation clause will enable the insurance company to cover the ship and cargo
till the voyage is completed. But an additional premium is paid for the insertion of
this clause.
5.5. SALVAGE
Marine salvage is the process of recovering a ship and its cargo after a
shipwreck or other maritime casualty. Salvage may encompass towing, re-floating a
vessel, or effecting repairs to a ship. Today, protecting the coastal environment from
spillage of oil or other contaminants is a high priority.

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Before the invention of radio, salvage services would be given to a stricken
vessel by any ship that happened to be passing by, nowadays most salvage is carried
out by specialist salvage firms with dedicated crew and equipment.
5.5.1. Types of salvage
5.5.1.1. Offshore Salvage
These operations encompass stranded or sunken ships in open waters and are
often too challenging as the ships would be exposed to sea waves and weather. The
procedure may take months as the hostility of the nature could hinder the workflow
with frequent intervals between work-shifts for the attributes of unusual tides or
inclement weather. Hurried and rapid accomplishment of the task is requisite for
which, in addition to regular stable work force and salvage tugs and vessels, portable
diving facilities should also be implemented at the work area transported by small
boats or helicopter.
5.5.1.2. Harbour Salvage
This is not as much as same as the offshore salvage since being less
challenging for the operations cover stranded or sunken ships in sheltered water and
are unhindered by the natural conditions like intemperate weather or waves and
currents. Unless it‘s too necessary to clear out the passage for navigation there is not
much need to hasten the process. Also harbour salvage is not much time consuming,
hence the pace can be adjusted in accordance with the requirements of labour
resources like man power and heavy equipments like cranes, construction tenders,
dredges and barges.
5.5.1.3. Cargo Salvage
This is even more important, sometimes, than salvaging the ship itself, as the
cargo onboard may pose an imminent threat to the marine environment. The priority
is to get rid of any hazardous element and save any expensive material as much as
possible before it gets dumped in the water, beyond further repair.

49
5.5.1.4. Equipment Salvage
Another focus is on salvaging large machinery components like engines,
turbines, driving systems by dissecting, disassembling or destructing the hull if these
equipments survive the intrusion of seawater.
5.5.1.5. Ship Wreck Salvage
This is a low priority task than the above mentioned salvage operations. The
objective is to disembarrass the water area of hazardous or unsightly substances
using the most practical and cheapest method possible. One of the most common
methods is to cut the hull into very small sections and refloat the parts and scuttle it
in deeper waters. Recognizing and correcting potential hazards and safeguarding the
environment by removing them prior to the disposal of the wreck is indispensable in
ship wreck salvage operations.
5.5.1.6. Clearance salvage
These operations are carried out as the aftermath of catastrophic events like
Hurricane, Tsunami, and War etc. In clearance salvage a number of ship wrecks are
scavenged or removed co-ordinately to clear out the passage in a harbour or
waterway that can be blocked for navigation by multiple obstructions with ships‘
varying degrees of damage due to events like fire, collision, or explosions etc.
5.5.1.7. Afloat Salvage
When a ship is damaged but still floats in the water the salvage operation is
called afloat salvage. This doesn‘t take a toll of challenging exertions as the work
involve damage controlling and primary repairing tasks like the hull welding,
stabilizing by rebalancing ballast tanks and shifting cargo and structural bracing.

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5.6. MARINE INSURANCE POLICY
Central Government Ministry Of Law, Justice And Parliamentary Affairs ― The
Policy‖ as follows in,
5.6.1 “Section 24 Contract must be embodied in policy
A contract of marine insurance shall not be admitted in evidence unless it is
embodied in a marine policy in accordance with this Act. The policy may be
executed and issued either at the time when the contract is concluded, or afterwards.
5.6.2 “Section 25 What policy must specify.
A marine policy must specify—
1. The name of the assured, or of some person who effects the insurance on his
behalf;
2. The subject-matter insured and the risk insured against;
3. The voyage, or period of time, or both, as the case may be, covered by the
insurance;
4. The sum or sums insured;
5. The name or names of the insurer or insurers.
5.6.3 Subject-Matter
The topic guaranteed must be assigned in a marine approach with sensible
certainty Section 28(1) The nature and extent of the interest of the assured in the
subject-matter insured need not be specified in the policy. Section28(3) Where the
policy designates the subject-matter insured in general terms, it shall be construed to
apply to the interest intended by the assured to be covered. Section28(4) In the
application of this section regard shall be had to any usage regulating the designation
of the subject-matter insured.

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5.7. TYPES OF MARINE CARGO POLICY
5.7.1. Voyage Policy
This policy gives more importance to the voyage. A voyage policy is that
kind of marine insurance policy which is valid for a particular voyage. It covers the
risk from the port of departure up to the port of destination. This type of policy is
considered more useful for cargo. The insurance company should give indemnity for
loss/ damage of any property of the insured during the period of the voyage.
The liability of the insurer continues during landing and re-shipping of the
goods. The policy ends when the ship reaches the port of arrival. This type of policy
is purchased generally for cargo. Under this policy "from" and " to" has a great
importance.
5.7.2. Time Policy:
The policy which is issued for a fixed period of time is known as time
policy. A marine insurance policy is valid for a specified time period generally
valid for a year. All the marine perils during that period are insured. This type of
policy is suitable for full insurance.
The policy is generally taken for one year although it may be for less than
one year. But there is no restriction to make this type of policy for less than one
year. This policy is more commonly used for hull insurance than for the cargo
insurance. The ship is insured for a fixed period irrespective of voyages. The policy
is generally issued for one year. For example, a period of time from 12 march 2015
to 11th December 2015. This policy is effective for this period.
5.7.3. Mixed Policy:
The joint form of voyage policy and time policy is called mixed policy. In
this policy, the elements of voyage policy and of time policy are combined . The
reference is made certain period after completion of the voyage.

52
The meaning of the mixed policy is that a new policy takes birth from the
combination of the fundamental things of time and the place policy. Generally, this
policy is used for ship insurance. For example, mixed policy is the policy which
states the ship should reach from 1st December 2015, from Paris to October 2015 in
New York. Policy expires whichever is met first.
5.7.4. Open or Un-valued Policy:
In this type of marine insurance policy, the value of the cargo and
consignment is not put down in the policy beforehand. The value thus left to be
decided later on is called the unvalued or open policy. The insurable value of the
policy includes the price of the insured's property, investment price, incidental
expenditure and all the expenditure as well. The unvalued policy is not used in
practice so much. This policy is used only in freight insurance.
5.7.5. Valued Policy
The opposite of an open marine insurance policy is a valued policy. In this
type of policy, the value of the cargo and consignment is ascertained and mentioned
in the policy document beforehand, thus, making clear about the value of the
reimbursements in case of any loss to the cargo and consignment. Under this policy,
the value of the policy is decided at the time of contract. Generally, the insured
amount in this type of policy includes the price of cargo, ship, freight and
approximate profit. Thus the value which is mentioned in the policy is the insured
amount.
5.7.6. Port Risk Policy:
The Port Risk Policy is taken out in order to ensure the safety of the ship while
it is stationed in a port. It covers the risks when a ship is anchored in a port. It is an
ocean marine insurance designed to protect a vessel that is portside for a long period
of time. Coverage terminates as soon as the vessel leaves port.

53
5.7.7. Wage Policy:
A wage policy is one where there are no fixed terms of reimbursements
mentioned. This is a policy held by a person who does not have any insurable interest
in the insured subject. He simply bets or gambles with the underwriter. The policy is
not enforced by law.
5.7.8. Floating Policy:
The floating policy is also called declaration policy. This policy is useful for
the merchant who delivers cargo regularly. When a person ships goods regularly in a
particular geographical area, he will have to purchase a marine policy every time. It
involves a lot of time and formalities. He purchases a policy for a lump sum amount
without mentioning the value of goods and name of the ship etc. It is the agreement
between the insurer and insured that the insured declares a number of goods on the
basis of shipment documents.
5.7.9. Named Policy
The policy which is issued by mentioning the name of the ship and price of the
cargo is called named policy. This type of policy has been receiving popularity in
marine insurance.
5.7.10. Block Policy
It is the policy which takes the risk in the block that is from sea route and land
route. It does not only protect from the risk of the marine route but also covers the
risk occurred on the land too. It takes the risk of transportation from the place of the
seller to the place of the buyer. It is very useful policy to the landlocked countries.

54
5.8. CHAPTER SUMMARY
In this chapter we have seen the various legal terms related with the marine
insurance. We have seen factors to be consider for the marine insurance policy. Perils
of sea brief defining and various types of clauses involved in marine insurance. At
last we saw some of the salvage its definition and its types. Further chapter we will
have a look into kinds of losses coverage and the clauses for the cargo as well as
ship.

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CHAPTER 6
TYPES OF LOSSES, COVERAGE AND CLASS

56
CHAPTER 6: TYPES OF LOSSES, COVERAGE AND
CLASS
6.1. INTRODUCTION
Till now we have an idea about marine insurance, its evolution, types of marine
insurance policy, its coverage and now we are moving to see the various types of
losses cover under marine insurance, Various types of coverage given by the marine
insurance and we will also have a look into various clauses and we will also P&I
insurance, types of P&I insurance, TT clubs. Mutual protection & Indemnity.
6.2. KINDS OF LOSSES
Misfortune is the premise of a claim for harms under the terms of a insurance
arrangement. Sorts of secured misfortune can be separated by business versus
individual insurance, at that point by Line Of Business(LOB), at that point promote
by the kind of misfortune (TOL). A few terms utilised as a part of the protection
business, for types of misfortune don‘t really relate to the depictions utilised by
laymen. In the manner, standard insurance approaches with couple of special cases
have a define earlier.
Some of the major kinds of losses are discussed below:
6.2.1 Total Loss
 Under Section 56 of Marine Insurance Act 1963 which explain the details of
Partial/Average and Total loss defined as.
 A loss may be either total or partial. Any loss other than a total loss, as
hereinafter defined, is a partial loss.
 A total loss may be either an actual total loss, or a constructive total loss.
 Unless a different intention appears form the terms of the policy, an insurance
against total loss includes a constructive, as well as an actual, total loss.

57
 Where the assured brings a suit for a total loss and the evidence proves only a
partial loss, he may, unless the policy otherwise provides, recover for a partial
loss.
 Where goods reach their destination in specie, but by reason of obliteration of
marks, or otherwise, they are incapable of identification, the loss, if any, is
partial and not total.
FIGURE 4: MARINE LOSSES
 Under Section 57 of Marine Insurance Act 1963 which explains the details of
Actual total loss defined as.
 Where the subject-matter insured is destroyed, or so damaged as to cease to be
a thing of the kind insured, or where the assured is irretrievably deprived
thereof, there is an actual total loss.
 In the case of an actual total loss no notice of abandonment need be given.

58
 Under Section 60 of Marine Insurance Act 1963 which explains the details
of Constructive total loss defined as.
 Subject to any express provision in the policy, there is a constructive total loss
where the subject-matter insured is reasonably abandoned on account of its
actual total loss appearing to be unavoidable, or because it could not be
preserved from actual total loss without an expenditure which would exceed its
value when the expenditure had been incurred.
 In particular, there is a constructive total loss—
a) In the case of damage to a ship, where she is so damaged by a peril insured
against that the cost of repairing the damage would exceed the value of the
ship when repaired. In estimating the cost of repairs, no deduction is to be
made in respect of general average contributions to those repairs payable
by other interests, but account is to be taken of the expense of future
salvage operations and of any future general average contributions to
which the ship would be liable if repaired; or
b) In the case of damage to goods, where the cost of repairing the damage
and forwarding the goods to their destination would exceed their value on
arrival.
6.2.2 Average Loss
Particular average loss defined as.
 A particular average loss is a partial loss of the subject-matter insured,
caused by a peril insured against, and which is not a general average loss.
 Expenses incurred by or on behalf of the assured for the safety or
preservation of the subject-matter insured, other than general average and
salvage charges, are called particular charges. Particular charges are not
included in particular average.

59
General Average Loss defined as.
 A general average loss is a loss caused by or directly consequential on a
general average act. It includes a general average expenditure as well as a
general average sacrifice.
 There is a general average act where any extraordinary sacrifice or expenditure
is voluntarily and reasonably made or incurred in time of peril for the purpose
of preserving the property imperilled in the common adventure.
 Where there is a general average loss, the party on whom it falls is entitled,
subject to the conditions imposed by maritime law, to a rateable contribution
from the other parties interested, and such contribution is called a general
average contribution.
 Subject to any express provision in the policy, where the assured has incurred a
general average expenditure, he may recover from the insurer in respect of the
proportion of the loss which falls upon him; and, in the case of a general
average sacrifice, he may recover from the insurer in respect of the whole loss
without having enforced his right of contribution from the other parties liable
to contribute.
6.3. MARINE INSURANCE NOT COVERED
1. Loss or damage attributed to wilful misconduct of the insured - If the
misconduct is intentional then our insurance provider can‘t do anything about it.
2. Insufficiency or unsuitability of packaging of the cargo insured - When the
packaging quality of the cargo is not up to the mark that is why it is excluded
from the basic insurance coverage.
3. Loss or damage due to any financial default or insolvency of the ship-owner
etc - Any damage due to bankruptcy, insolvency, financial default etc. isn‘t
covered by insurance providers.

60
4. Ordinary leakage or wear and tear of the goods insured - These situations
aren‘t covered because of the obvious reasons. A marine insurance plan adds an
extra layer of security but some damages pierce this layer and aren‘t covered in
the basic insurance plan.
5. Loss caused due to delay of the cargo - The reason behind the delay can be
anything. If the loss is caused due to the delay of the cargo, it isn‘t covered in an
insurance plan.
6.4. MARINE INSURANCE COVERED
The marine insurance plan covers any damages or losses to the insured
property due to the factors mentioned below.
1. Fire or explosion, stranding, sinking etc - One can‘t predict these situations in
advance. Fire or explosion, sinking, stranding are common issues faced during a
cargo journey. A marine insurance plan is formulated to take care of such dire
situations.
2. Collision, overturning or derailment of land conveyance - Sometimes, no
matter how hard the captain tries, he can‘t take control of unfavourable damage
causing situations. Having a marine insurance plan neutralizes the risk of
damages caused by collision, overturning or derailment of land conveyance.
3. Discharge of cargo at port of distress - If a cargo is a discharged from a port of
disturbance or distress, it threatens the safety of the cargo. This is the reason
why it is included in the basic insurance coverage.
4. General average sacrifice salvage charges - A marine insurance plan provides
coverage for general average sacrifice salvage charges.
5. Expenses such as survey fees, forwarding expenses, reconditioning costs and
sue charges - These expenses are unexpected at times which leaves you with
little time to pay for these expenses. This is why having a marine insurance plan
is of great help.
6. Jettison or washing overboard - Situations of jettison and washing overboard
are included in a marine insurance plan.

61
7. Earthquake or lightning - A marine insurance plan provides you coverage
from natural calamities such as earthquake or lightning.
8. Total loss of package lost overboard or dropped in loading or unloading- No
matter how irksome a package loss can be, every time you can‘t create a
foolproof plan to prevent this situation when our package is being transported in
a cargo. This is why it is included in a basic marine insurance plan.
6.5. INSTITUTE CLAUSES
Ship and Good Policy Introduced two types of clauses under which cargo and
hull get the coverage. Major classification of S.G Policy are as follow:-
6.5.1.Marine Cargo
 Institute Cargo Clause A.
It offers the wide coverage as it covers all the perils. It provides maximum
secure. And this policy is bit costlier than any other policy.
 Institute Cargo Clause B.
Though, this cover is similar to ‗C‘, it offers the following additional covers:
 Lightning, Volcanic eruption, Earthquake
 Washing Overboard
 Entry of river or sea water into the vessel, Conveyance, lift van or place of
shortage.
 Total loss of any package while loading or unloading from vessel or craft
 (This will offers the medium type of coverage and the price is also at the
certain level it‘s not that much cheap or costlier).
 Institute Cargo Clause C.
It covers loss or damage caused due to:
 Fire or explosion
 Discharge of cargo at a point of distress and loss or damage caused by jettison.
 It is the very cheapest cover for cargo. It will cover very limited parts only.

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6.5.2. Marine Hull
 Institute Time Clause Hulls (Basic) :This is the basic policy introduce in the
year 1983 this is the benchmark for all the other policies.
 Institute Time Clause Hulls Total Loss: This will includes the basic hull
policy as well as the total loss assurance.
 Institute Time Clause Hulls Total, Particular, and General Average Loss:
This policy will cover the 3/4th
of the liability.
 Institute Time Clause Hulls Disbursement Policy: This policy will cover the
total loss of the ship. It could be claim only if the total loss is occurred.
 Institute Time Clause Port Risk: This policy introduced in the year 1985. It
will also cover wreck removal of the ship as well as the P&I coverage.
 Institute Time Clause Voyage Policy: This policy is issued if the ship is
going from one point to another.
 Institute Time Clause Freight Cover: This policy will cover the basic
freight/cargo carried by the ship.
 Institute Time Clause War Cover: This policy will cover the risk of war.
Only two countries are providing currently i.e. India and London.
6.6. MUTUAL PROTECTION & INDEMNITY
Farshad Haer, in his paper ‗Protection and Indemnity Club‘ explains:
―Security and repayment protection, all the more ordinarily known as ‗P&I‘
Protection, is a type of shared oceanic protection given by a P&I Club. Though a
marine insurance agency gives ‗frame and hardware‘ cover for ship-owners, and load
cover for payload proprietors, a P&I club gives cover to open- finished dangers that
customary backup plans hesitant to guarantee.
Common P&I cover incorporates:
a) A bearer‘s outsider dangers for harm caused to freight amid carriage.
b) War dangers and
c) Risk of ecological harm, for example oil spills and contamination.

63
In the UK, both customary financiers and P&I clubs are liable to the Marine
Insurance Act 1906.
A P&I club is a common protection affiliation that gives hazard pooling, data
and portrayal for its individuals. Dissimilar to a marine insurance agency, which
reports to its shareholders, a P&I club reports just to its individuals. Initially, P&I
Club individuals were commonly ship-owners, transport administration or death
charterers , however more as of late cargo forwarders and distribution centre
administration have possessed the capacity to join. Though the guaranteed pays a
premium to a guarantor for cover which goes on for a specific time (say, a year, or a
voyage), a P&I Club part rather pays a ‗call‘. This is an aggregate of cash that is put
into the Club‘s pool, a sort of ‗kitty‘.
In the event that, towards the finish of the year, there are still supports in the
pool, every part will pay a lessened ‗call‘ the next year: however in the event that the
Club has made a noteworthy payout (say, after an oil spills) club individual will
promptly need to pay a further ‗call‘ to recharge the pool.
6.7. TYPES OF PROTECTION AND INDEMNITY (P&I)
INSURANCE
Each P&I Club establishes its own set of rules although these differ between
clubs, the overall pattern is more or less the same. There will be two classes for the
protection and indemnity insurance. Now will have a look into the various types of
cover followed:
6.7.1. Class I
a) Liabilities for loss of life , personal injury and illness.
b) Repatriation expenses in respect of crew.
c) Expenses incurred in sending abroad substitute for crew who have died or being
taken ill.
d) Liabilities in respect of the loss of crew‘s effects.
e) Shipwreck unemployment indemnity.

64
f) Diversion expenses (charges incurred for the purpose of landing or disposing of
stowaways or refugees).
g) Collision liability (the one-forth not covered under the marine Hull policy).
h) Liability in respect of damage to fixed and floating objects.
i) Liability for damages to vessels other than by collision.
j) Liability under towage contracts.
k) Liability for loss or shortage of cargo or other property.
l) War risk.
m) Liability for damage to, or responsibility in respect of cargo or other property.
n) Removal of wreck.
o) Quarantine expenses.
p) Unrecoverable general average contributions.
q) Ship‘s proportion of general average recoverable under the marine hull policy.
r) Fines imposed upon the ship-owner
6.7.2. Class II
Class II cover or freight, demurrage and defence generally available from
within the P&I club against the payment of a separate premium or from an
independent but related Defence Club. Firstly, legal advice is provided and secondly
cover is provided in respect of disputes in which no other insure should properly bear
the ship owner‘s legal costs, such as disputes with hull and war risk underwriters,
under charter parties (such as speed and consumption, freight or hire claims and, of
course, demurrage), with agents, over repairs, and in connection with new buildings.
7.5. CHAPTER SUMMARY:
Till now we have saw various types of losses involved in marine insurance,
various types of policies available for cargo as well as hull. So we have some
understanding that how the marine insurance industry is working. Next Chapter we
will be dealing with the procedures of claim handling, reinsurance of the companies.

66
CHAPTER 7: CLAIM HANDLING
7.1. INTRODUCTION
An insurance claim is an application for benefits given by an insurance
agency. With this application you are approaching the M.I. Company for taking the
claim for the hazard that occurs. Once the company receives claim they will check
for the circumstance occur with the insured and further decides to pay for the
calamity or not.
As soon as we file a claim request with nearby insurer representative, He/she
will observe the case and explore the particular points of our protection assert and
will go about as the go between for our transactions with the principle back up plans.
Much of the time perceived expert with good knowledge about the claims
procedures.
At times after we record our insurance claim, the insurer may convey an agent
called an adjuster or appraiser. His occupation is to access our protection claim and
make sense of it appraisals are sensible. Insurance agencies do this to forestall
conceivable contemptibility by temporary workers who may display expanded
evaluations.
These are the various reasons an insurer may not acknowledge a claim.
Obviously, they won‘t pay if our premium have not been completely kept up. If there
should be an occurrence of a car crash when another insurance agency has officially
consented to pay for harms, our claim will be can‘t as it will if our claim falls into a
region that is not particularly canvassed in your strategy. On the off chance that the
explanation behind your claim is remissness or an unavoidable ―Demonstration of
God‖ instalment will be withheld.
At the point when insurance agency has agency has evaluated the
circumstances and consents to pay your claim, it will end up being a compensation
out.

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