This document provides an overview of marine insurance and key concepts related to business risk management. It defines marine insurance as a contract where the insurer agrees to indemnify the insured for losses from marine adventures. Some key points covered include the meaning and purpose of marine insurance policies, principles like utmost good faith and insurable interest, types of policies and clauses, insured perils and exclusions, losses like total/partial/average losses, and warranties. The document also compares the different levels of coverage under the Institute Cargo Clauses A, B and C.

1. Business
Risk
Management
(marine
insurance)

2. Meaning of marine insurance
 Marineinsurance is a contract
whereby the insurer undertakes to
indemnify the assured, in manner
and to the extent thereby by agreed,
against marine losses, i.e. the losses
incident to marine adventure

3.  Contract of Insurance
 Insurer & Insured
 Premium
 Policy
 Perils Insured Against
 Insurance against Wagering

4. Why Marine Insurance should be done?
Once the goods are moved out from the warehouse of the seller, they are no
more in the custody of the seller or the buyer. They are rather in the hands of a
third party called the carrier. During the transit loss can arise from:
Fire, explosion
Contact with water
Breakage
Accident
Derailment of conveyance
Theft
Pilferage
Non-delivery
Exposure to these risks and the fact that the goods are in possession of a
third party enhances the chances of loss.
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5. Principles governing the
contract of insurance
 Principle of utmost good faith
 Principle of insurable interest
 Principle of indemnity
 Causa proxima

6. Marine Policy
 Meaning :-
 The terms and conditions on which a
contract of marine insurance is entered
into between the assured and the
insurer are incorporated in a document.
 It must be signed by or on behalf of
the insurer [Sec.26(1)].
 It must be duly stamped under the
Stamp Act, 1899.

7.  It 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

8. Types of Marine Policies
Some important types of policies are:
I. Voyage Policy :-
 Where the contract is to insure the subject-
matter at and from or from one place to
another or others [Sec.27(1)].
II. Time Policy :-
 Where the contract is to insure the subject-
matter for a definite period of time
[Sec.27(1)].
 It can’t be for a period more than a year
[Sec.27(2)].
 It may, however, contain a ‘continuation
clause’.

9. iii. Floating Policy :-
 It only mentions the amount for which
the insurance is taken out, and leaves
the name of the ship or ships and
other particulars to be defined by
subsequent declarations, which will be
declared by the assured by
endorsement on the policy or in other
customary manner.

10. WARRANTIES IN A CONTRACT OF
MARINE INSURANCE
 The term warranty in case of
MARINE INSURANCE ACT means
that the assured undertakes that
some particular thing shall or shall
not be done , or that some
stipulation shall be fulfilled , or that
a particular state of facts does or
does not exist.

11. Types of warranty
 Expressed warranty
– Date on which the ship will sail
– Place and manner of loading
– Statement that the cargo is lawful
merchandise
 Implied Warranty
– Seaworthiness of the ship
– Legality of the voyage
– Proper documentation
– Clauses of marine insurance act

12. LOSSES
Unless the policy otherwise provides, the
insurer is liable for any losses
proximately caused by a peril insured
against.
Further unless the policy otherwise
provides, the insurer is not liable :-
1.If the loss is not caused by a peril
insured against.
2. If the loss is caused by delay, which is
caused by a peril insured against.

13. 3. If the loss is caused by the ordinary wear
& tear, ordinary leakage or breakage.
A loss may be either total or partial. Any loss
other than
Total is partial loss.
TOTAL LOSS
A Total loss may be either :-
1.An Actual total loss
2. A Constructive total loss.

14. 1.ACTUAL TOTAL LOSS :- An actual total loss
occurs
(a) Where the subject matter is actually
destroyed or irreparably damaged.
(b) Where the subject matter ceases to be a
thing of the kind insured.
(c) Where the assured is irretrievably
deprived of the of the subject matter.

15. 2. CONSTRUCTIVE TOTAL LOSS :- A constructive total
loss
occurs where the subject matter insured is reasonably
abandoned because its actual total loss appears to be
unavoidable.
In particular there is a constructive total loss :- In the
case of damage to goods, the cost of repairing the
goods will exceed their value after arrival.

16. LOSSES

17. Partial Loss
 Sec 56 of Marine Insurance Act 1963
provides that any loss other than
total loss is a partial loss.

18. Particular Average Loss
 Defines it as partial loss of the
subject matter insured, caused by a
peril insured against, and which is
not a general average loss.
 Ex- damage to the ship by running
aground, damage to the cargo by fire
etc.,

19. Particular average loss
 The three things under risk
during the course of voyage
are:-
1. Ship.
2. Cargo
3. The freight( compensation paid
for the transportation of goods)

20. Cont……………
 As a general rule ,any loss to these interest
sustained must be borne by that interest
alone.
 It gives no right of contribution from the
other parties interested in the adventure.
 So, particular average losses are those in
which damage is caused by accident in the
marine adventure by the peril of sea.

21. General average loss
Where extraordinary sacrifices are
made at the time of peril for the
benefit of the whole adventure.
 Voluntary and accidental
 Adventure must be imperiled, sacrifice in
anticipation not recognized
 Objective must be the preservation of
adventure
 Loss of market is indirect loss hence not
allowed in GAL.

22. Extent of Cover
 SinceJanuary 1982, the British
Insurance Market adopted new forms
of cover for all cargo insurance, and
these forms known as Institute
Cargo Clauses (A), (B), (C) were
adopted in India from 1st April 1983.

23. Marine Policy For Overseas
Shipments
Institute Cargo Clause
 Basic Cover - ICC (C)
 Inter Mediate Cover - ICC (B)
 All Risk Cover - ICC (A)
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24. Comparison between the institute cargo clauses (A), (B) & (C)
A comparative analysis of the institute Cargo Clauses (A), (B) & (C)
Type of risks
Covered () not covered () A B C
Loss / damage reasonably attributable to:
1. Fire or explosion   
2. Vessel/Craft being stranded, grounded, sunk or
capsized.   
3. Overturning/derailment of land conveyance.  

4. Collision or contact of vessel, craft or conveyance
With any external object other then water.   
5. Discharge of cargo at a port of distress   
6. Earthquake, volcanic eruption, lightning   
7. General average and salvage charges incurred to
avoid loss from any cause except those excluded   
8. General average sacrifice   

25. A B C
9. Jettison   
10. Washing overboard   
11. Entry of sea, lake or river water into the vessel,
craft, hold, conveyance, container, lift van or
place of storage.   
12. Rainwater damage   
13. Total loss of any package lost overboard or
dropped whilst loading or unloading from
vessel or craft.   
14. Piracy.   
15. Deliberate damage or destruction by wrongful act
of any person or persons, (i.e. by malicious acts)   
(Can be covered by malicious Damage Clause for
I.C.C (B) and (C) upon payment or extra premium)
16. In the event of frustration of the voyage resulting
from a risk covered, extra charges incurred in
unloading, storing and forwarding to destination   

26. A B C
17. Reasonable charges for averting or minimizing loss
recoverable under this insurance and also those
incurred, to pursue recovery rights against carriers,
bailees or third parties.   
18. Other or extraneous perils all involving a fortuity
and from external causes, for example:
 Damage as a result of shifting in heavy weather   
 Improper stowage   
 Rough handling   
 Breakage, leakage, denting, scratching, crushing,
 crumpling, chipping   x
 Heating sweating   
 rust,   
 Hook and sling damage   
 Contact with mud, oils and acids, damage by
 other cargo   
 Shortage, theft, pilferage, non-delivery   
 Other loss/damage caused fortuitously and from

27. A B C
19. liability under “Both to blame collision”   

28. COMMON EXCLUSIONS
 Loss, damage or expenses attributable to willful misconduct of
the assured
 Ordinary or inevitable losses
 Loss, damage or expense caused by inherent vice or nature of
the subject matter insured
 Loss/damage due to insufficient, unsuitable or defective packing
(including stowage)
 Loss/damage or expenses proximately caused by delay even if
the delay is caused by a peril insured against
 Loss damage or expenses arising from insolvency .
 Loss damage due to un seaworthiness of the vessel or craft,
container, lift van employed for carrying the insured matter.
 Wars, strikes and civil commotions unless covered under
separate endorsements.

29. Thank You…!