The document discusses marine risk management, outlining the processes for identifying, evaluating, and mitigating potential losses in maritime operations. It explains the principles of marine insurance, including hull and machinery insurance, and details the roles of insurance brokers and underwriters, while differentiating between total and partial losses. Additionally, it covers the concepts of general average and salvage within maritime law, illustrating how costs and risks are shared or mitigated during maritime ventures.

1. SHIP OPERATIONS and MANAGEMENT
MODULE 3 AND 4
MARINE INSUARNCE AND CHARTERING
NITHIN JOSHUVA
SIT

2. • What is marine risk management?
• Risk management is the continuing process to identify,
analyze, evaluate, and treat loss exposures and monitor
risk control and financial resources to mitigate the
adverse effects of loss.
• Maritime risk management ensures that safety measures
are in place and that vessels operate within acceptable
risk limits, reducing the likelihood of accidents and their
potential impact

3. • example of maritime risk?
• Onboard fires, cyber attacks and the risk that distracted
captains will run vessels aground are all leading to
increased cargo marine losses.
• Fire, explosion, or 'perils of the sea' risks such as
grounding, stranding, sinking, and capsizing, would be
major risks for vessels. In some locations, war, strikes,
piracy, or ice damage also pose risks.

4. 10/09/2024
Insurance
• What is Insurance ?
Risk-transfer mechanism that ensures full or partial financial
compensation for the loss or damage caused by event(s) beyond the
control of the insured party. Under an insurance contract, a party
(the insurer) indemnifies the other party (the insured) against a
specified amount of loss, occurring from specified eventualities
within a specified period, provided a fee called premium is paid.
Marine insurance is a contract whereby one party, for a stipulated
premium, undertakes to indemnify the other against certain perils
or sea risks, to which his ship, freight, or cargo, or some of them
may be exposed, during a certain voyage, or a fixed period of time.

5. 10/09/2024
• Origin of Marine Insurance – Origin in Greek and Roman maritime loan.
• Marine insurance contracts were developed in Genoa and other Italian cities in
the fourteenth century.
• 1680 - Edward Lloyd opened a coffee house on Tower Street in London, the first
marine insurance market. London Insurance Market growth led to the
standardization of policies and judicial precedent further developed into the
marine insurance law.
• In 1906 the Marine Insurance Act codified the previous common law; it is both an
extremely thorough and concise piece of work.
• “Marine Perils means the perils consequent on”, or incidental to the navigation of
the sea, that is to say, perils of the seas, fire, war perils (enemies), pirates, rovers,
thieves, captures, seizures, restraints and detainment of princes and peoples,

6. 10/09/2024
Hull And Machinery Insurance
• Hull and machinery insurance is a type of ocean marine insurance, which
protects the insured vessel or fleet against -
 physical damage caused by a peril of the sea or other covered
 perils while the vessel is in transit over water. Covered by the Marine
Insurance Act of 1906.
 Hull and machinery insurance policies can be written to cover a single
vessel or the whole fleet of a ship owner
 This insuance covers :
 Costs of repairing physical loss or damage to a vessel.
 Reimbursement following total loss of a vessel (Actual and
Constructive)
 Expenses to prevent loss (Sue & Labour,Salvage and GA contributions)
 Collision Liability (if a running down clause is applicable)
 Expenses associated with claims ( survey fees etc.).

8. • 5 Principles of Marine Insurance
• principles of marine insurance include six principles. But the
principle of good faith is considered an essential mandate
commonly agreed among all the parties involved. It states
that when two parties, the insured and the insurer, agree, all
the cargo details shall be provided with utmost honesty.
• Indemnity: This principle differentiates the marine insurance
policy from a speculative product for capital markets. For
instance, a put or call contract can be used in the capital
markets for making profits. However, there are various types
of marine insurance plans specifically designed to protect
against losses. Hence, the payable claims will never exceed
the loss incurred by the insured entity.

9. • Insurable Interest: This principle can be equated with the common
phrase of 'skin in the game.' It means that the insurer must have some
interest in the safe arrival of the goods at the end of the transit cycle. If
the goods arrive on time and undamaged, the insured entity stands to
benefit, and if they do not reach at their stipulated time in their
described condition, the same entity stands to bear a loss.
• Proximate Cause: If you get creative and think like a philosopher, you
can practically establish some form of speculated causality between
any two events. Using this, your insurance claim as an entity can be
attributed to almost any reason, giving you an unreasonable advantage
against the insurance company.

10. • Subrogation: Subrogation is the follow-through principle
for the indemnity principle. It limits the scope to profit from
an insurance contract. After disposing of the damaged
goods, the net amount exceeding the actual price of the
goods post the claim must be returned to the insurer.

11. 10/09/2024
Insurance Broker And Underwriter
• The Insurance Broker:
An Insurance Broker works independently of the insurance company
and is not restricted to a single company, policy or premium
structure.
An Insurance Broker represents and owes a fiduciary duty to the
client.
An Insurance Broker represents the client to many insurance
companies and provides many options to the client.
An Insurance Broker is able to negotiate on behalf of the client and
help determine the best insurance carrier and policy for the client.
An Insurance Broker is able to seek options if an underwriter
declines the policy or charges too much money.

12. 10/09/2024
The Underwriter
• An Insurance Underwriter works for a single insurance company
and is restricted to the policy and premium offered by that
company.
• An Insurance Underwriter represents and owes a fiduciary duty to a
single insurance company.
• An Insurance Underwriter provides a single option to a client.
• An Insurance Underwriter is only able to negotiate on behalf of the
insurance company he or she works for and with limited authority.
• An Insurance Underwriter has no options if they are unable to
quote a policy or is confined to a filed premium rate structure

13. 10/09/2024
Marine Insurance – How It Works ?
• Broker approaches Insurance companies with lead terms - submits the full particulars of the
risk to be placed, the SUBMISSION - full vessel specifications, the values and management
loss record.
• Amount of the risk is large or complex - more than one market is required and circulate it to
more markets.
• As with all Insurances the DOCTRINE OF UTMOST GOOD FAITH applies - The expression
“good faith” and its related expressions (ie “utmost good faith” and “uberrimae fidei” – Latin )
are used primarily in relation to the pre-contract disclosure obligations of an insured and,
post-contract, in respect of the obligation of an insured not to make fraudulent claims.
• It is therefore prudent to disclose all material facts in the submission. In case the Doctrine of
Utmost Good faith has not been followed in the submission there are chances that the
underwriters can void the contract at any time when it is learnt that a true and honest
submission has not been made.
• Some countries - obligation by law that the insurance be placed with a local, often national
insurance companies, which might or might not reinsure with a leading market.
• Local insurer reinsures in another market overseas - a lawful practice

14. 10/09/2024
The Premium
• An insurance premium is the amount of money that an individual or
business must pay for an insurance policy.
• Premium is considered income by the insurance company once it is
earned, and also represents a liability in that the insurer must
provide coverage for claims being made against the policy.
• This is normally expressed as a percentage of the agreed value of the risk.
• In Marine Hull and Machinery insurance the agreed value must not be less
than that of the reasonable market value of the ship. This represents the
limit of the underwriters indemnity.
• This premium rating is negotiable and dependent on - the type and size of
the ship or the fleet, the reputation and experience of the owners and
operators and their loss record over previous years and in line with the
state of the insurance market .
• The amount that a ship owner is willing to accept to his own account in the

17. 10/09/2024
Marine Losses
• Marine Losses can be divided into two main categories –
• Total Loss - 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.
• Partial Loss - Any loss other than a total loss is a partial
loss. The partial loss is there where only part of the
property insured is lost or destroyed or damaged partial
losses

19. 10/09/2024
Total Loss
• Actual total loss :
• (a) The subject-matter is completely destroyed.
• (b) The goods are so damaged that they cease to be a thing of the kind which
were insured.
• c) The insured is deprived of the subject-matter.
• When a ship is sunk or is completely destroyed by fire, it will be a case of actual
total loss. A case when the goods are so damaged that they do not look like
goods which were insured e.g. if crockery is reduced to pieces, it is a case of
actual total loss.
• In another case if the insured is not able to get the things back i.e., if the ship is
missing and there is no trace of it, it is also a case of actual total loss.
• Actual total loss the insured is entitled to recover full amount of loss. When the
insured has been compensated the title of goods passes on to the insurer. If
some amount is received from the sale of damaged goods, the amount will go to
the insurer and not to the insured.

20. 10/09/2024
Constructive Total Loss
• This occurs when the ship is abandoned for certain reasons It is not
commercially viable to retrieve the ship or cargo. The ship or the
cargo is not wholly destroyed but it is not practicable to get it repaired
and restore it to its original position. When a ship is badly damaged,
and the cost of repairs is expected to be more than the value of the
ship, it will be advisable to abandon the ship.
• In the same way, if the cargo is safe in the abandoned ship but the
cost of bringing the cargo to the coast is more than the cost of cargo,
then it will be proper to leave the cargo. In the case of constructive
total loss, the insured gives a notice of abandonment and surrenders
its interest in the subject-matter to the insurer. The insured can claim
damage for total loss.

21. 10/09/2024
Partial Loss
• When the subject-matter is partially damaged, it will be a case of partial loss
- two types: Particular Average & General Average
Particular Average Loss - is a partial loss or damage caused to any particular
cargo or property where the damage is suffered by a particular interest.
The damage or loss should be of a particular subject matter in which case the
damage suffered cannot be partially shifted to others and the loss would be borne by
the persons directly affected by the damage to the said cargo. Remember that it is a
partial loss hence not the entire cargo or property would be damaged but a part of it.
The damage could either be to the cargo or the ship.
• A particular average loss with regards a cargo may either be depreciation in value
of the cargo or a total loss of a part of it. For instance when part of a cargo is
destroyed by say sea water or about 4 out of 10 of a number of cargoes are

22. 10/09/2024
GENERAL AVERAGE – Explanation
• The law of general average is a legal principle of maritime law
according to which all parties in a sea venture proportionally share any
losses resulting from a voluntary sacrifice of part of the ship or cargo
to save the whole in an emergency.
• In the exigencies of hazards faced at sea, crew members often have
precious little time in which to determine precisely whose cargo they
are jettisoning(THROW) .
• Thus, to avoid quarrelling that could waste valuable time, there arose
the equitable practice whereby all the merchants whose cargo landed
safely would be called on to contribute a portion, based upon a share
or percentage, to the merchant or merchants whose goods had been
tossed overboard to avert imminent peril(TYPE OF HAZARD) .
• General average traces its origins in ancient maritime law and still

23. 10/09/2024
• The first codification of general average was the York Antwerp Rules[2] of 1890.
American companies accepted it in 1949. General average requires three
elements which are clearly stated by Mr. Justice Grier in Barnard v. Adams:
• "1st. A common danger: a danger in which vessel, cargo and crew all
participate; a danger imminent and apparently 'inevitable,' except by
voluntarily incurring the loss of a portion of the whole to save the
remainder."
• "2nd. There must be a voluntary jettison, jactus, or casting away, of some
portion of the joint concern for the purpose of avoiding this imminent
peril, periculi imminentis evitandi causa, or, in other words, a transfer of
the peril from the whole to a particular portion of the whole."
• "3rd. This attempt to avoid the imminent common peril must be
successful".

24. 10/09/2024
York Antwerp Rules 2004, there is a general average act when, and only when, any
extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred
for the common safety for the purpose of preserving from peril the property involved in
a common maritime adventure. General average sacrifices and expenditures shall be
borne by the different contributing interests on the basis hereinafter provided.
A loss is deemed to be considered under general average if and only if the reason of
sacrifice is extraordinary or the sacrifice is reasonably made for the purpose of common
safety for preserving the property involved .E.g. Capsizing due to inclement weather
condition, shifting of cargo leading to excessive listing of vessel, Falling Containers.
The onus of proof is upon the party claiming in general average to show that the loss or
expense claimed is properly allowable as general average. All parties claiming in
general average should give notice in writing to the average adjuster of the loss or
expense in respect of which they claim contribution within 12 months of the date of the
termination of the common maritime adventure.

25. 10/09/2024
Acceptable Expenses On GENERAL AVERAGE
Extinguishing fire onboard
Voluntary stranding
Damage to machinery and boilers
Expenses lightening a ship when ashore and consequent
damage
Cargo, ship's materials and stores used for fuel
Expenses at port of refuge

26. 10/09/2024
Average Adjusters & Adjustment Process
• Average Adjusters are expert in the law and practice of general average and
marine insurance.
• Prepare claims under marine insurance policies which generally involve loss or
damage to marine craft, their cargoes or freight.
• Called upon to prepare statements of claim against third parties and to deal
with the division of recoveries from third parties.
• Adjustment Process-
• Weeds out unconnected expenses and account for only the allowed
expenses. The task will get complicated if the case involves port of
refuge, repairs, salvage costs, etc.
• In case of a container ship, there will be thousands of Bills of Lading
involved and the average adjuster has to estimate the true value of
all the cargoes to arrive at the contribution to be made by them.

27. 10/09/2024
General Average Exercise
• A vessel suffered a damage during the voyage and
declared General Average.
• This incident involved a Loss of Usd 45000 and a General
Average expense of Usd 15000.
• The ships value was 3,000,000 Usd and the value of the
cargo was Usd 300,000
• What should be the contribution from the vessel owners
and the contribution from the Cargo Interest ?

28. 10/09/2024
GA Exercise Solution
• GA Loss
• General Average Sacrifice - Usd 45,000
• General Average Expense - Usd 15,000
• GA LOSS TOTAL Usd 60,000
• Contributory Values
• Ship Usd 3,000,000
• Cargo Usd 300,000
• Total Contribution Usd 3,300,000
• GA Contribution
• Ship pays Usd 54,545.45
• Cargo Interest pays Usd 5,454.54
• Total Usd 60,000.00

29. 10/09/2024
Difference Between GA & PA Loss
1.General average is incurred for the benefit of all interests but the
particular average is in connection with any of the interests.
2. General average is always voluntary and intentional but the
particular average is an accidental or fortuitous.
3. General average is shared by all those who are benefited by the
general average act. Particular average is paid by the insurer.
4. General average may include expenditure and sacrifice along
with loss, whereas the particular average results from a loss or
damage.

32. 10/09/2024
Salvage
 Salvage, in maritime law, the rescue of a ship or its cargo on
navigable waters from a peril that, except for the rescuer’s assistance,
would have led to the loss or destruction of the property.
 Except for salvage performed under contract, the rescuer—known as
the Salvor—must act voluntarily without being under any legal duty to
do so, apart from the general duty to give assistance to those in peril
at sea or to stand by after a collision.
 So long as the owner or his agent remains on the ship, unwanted
offers of salvage may be refused.
 A derelict—a vessel found entirely deserted or abandoned without hope
or intention of recovery—is, however, fair game for anyone who comes
across it.
 Typical acts of salvage include releasing ships that have run aground or
on reefs, raising sunken ships (or their cargo), putting out fires, and so
on.

33. 10/09/2024
• The popular belief that a salvor becomes the owner of the
property, at least if it was abandoned by the owner or was derelict,
is erroneous.
• The owner may always reclaim his property from the salvor on
paying salvage money.
• The salvor, for his part, has a maritime lien on the salved property
(in an amount determined by national statute or juridical custom)
and need not return the property to the owner until his claim is
satisfied or until security to meet an award is given.
• An owner who elects not to reclaim his property cannot be made
liable for a salvage reward.

34. 10/09/2024
 Much salvage is carried out under contract by professional salvors.
 In the past, if there was no recovery, there was no payment, whatever the
expense of the operation.
 This was referred to as NO CURE NO PAY and the salvage contract was
referred to as the LLOYDS OPEN FORM.
 In return for salvage services, the salvor receives a proportion of the “salved
value” (the value of the ship, its bunkers, cargo and freight at risk).
 In view of Environment damage concerns - Changed in recent years, to
reflect the public interest in prevention of damage to the environment.
 The salvor can now contract in such a way that he is shielded from loss when
responding to high risk or low value casualties.

35. 10/09/2024
Todays salvage contracts can also be based on a fixed rate for
the services rendered irrespective of the outcome or based on a
combination of what the rates will be but in any scenario, no
matter it being successful or unsuccessful. LOF, however, remains
the internationally preferred contract. Even today 50% of the
salvage operations are conducted on LOF basis.
Lloyd’s Standard Form of Salvage Agreement (universally known
as Lloyd’s Open Form, or LOF) was adopted in 1892 and the text
had been standardised by 1908.
Current edition is LOF 2011, which is the 11th
revised edition
introduced in January 2011.

36. 10/09/2024
Salvage And Award
• When a Salvor provides services to a commercial vessel, salvage costs are
shared between both ship and cargo interests and under current marine
policies (IHC 2003) they fall under General Average.
• Masters have the power to call for salvage services when he sees an
imminent danger or distress. He acts as an agent for both the ship and cargo
interest due since the situation warrants such a situation.
• Once Salvage has been requisitioned the Master and the Owner have a duty
to co-operate with the salvor during the entire operation.
• The Salvour has the responsibility of exercising due care to prevent further
damage to the ship and her cargo and to try minimise any damage to the
environment.
• The average adjuster as in the case of General Average is appointed to carry
out the necessary adjustments when salvage costs are finalised.

37. 10/09/2024
• When a Salvage in done on an LOF the award is calculated on the basis of the salved value of
the ship and her cargo.
 The amount of the salved value is based on the below:
 The degree of danger from which the vessel was rescued;
 The post-casualty value of the property saved ( vessel, cargo, freight, bunkers and any other
value saved)
 The risk incurred in saving the property from impending peril;
 The promptitude, skill and energy displayed in rendering the service and salving the property;
 The value of the property employed by the salvors and the danger to which it was exposed;
 The costs in terms of labor and materials expended by the salvors in rendering the salvage
service
 Even in a no cure no pay LOF, where the salvor is unable to save the vessel and its cargo, present day
salvage awards also provides for compensating the salvor an enhanced amount to cover the cost
incurred in preventing or containing pollution damage especially with respect to laden tankers, which
introduced in 1980.

38. 10/09/2024
Salvage Convention
 Salvage - earlier governed under the 1910 convention - purely on the NO
CURE NO PAY principle.
 1910 convention - not allowing for any efforts taken to protect the
environment this had to be amended.
 Under the old convention if the salvor had taken a potential sinking of a
damaged laden tanker, he would tow it to deep waters and would sink her
there. The ship has not been saved and hence no cure so no award was
available.
 Under the 1989 convention the salvage award is still based on the no cure no
pay basis, however the award will take into consideration the skill, efforts and
cost incurred in preventing or minimising the damage to the environment.
 This compensates the costs so incurred by the salvor which is referred to as
SPECIAL COMPENSATION under ARTICLE 14 of the 1989 convention.

39. 10/09/2024
 Article 14 of the Salvage convention 1989 signified a fundamental change
to the traditional “no cure-no pay” salvage law principle in that:
 Provides for special compensation for providing services to prevent
environmental damage but where the salvage award under Article 13 is
inadequate to properly compensate
 Compensation is based on salvors’ expenses.
 Article 14 special compensation- not dependent on success unlike “no cure-
no pay” principle governing Article 13.
 Total amount recoverable by a salvor may now exceed the total value of the
salved property compared with the traditional cap set by the salved value of
the property.
 The Special Compensation in Article 14 is paid by the liability insurers,
in other words, the ship alone.
 All parties to the marine adventure have an express, explicit, duty to protect
the environment.

40. 10/09/2024
SCOPIC Clause ( (Special Compensation P & I Club)
• Article 14 of the 1989 Salvage Convention ('Article 14') provided that salvors
('Contractors') could receive Special Compensation (ie their expenses and a
fair rate for tugs and equipment used in salvage operations) in certain
circumstances where the salved fund was insufficient to allow them to
recover adequate remuneration.
• Invoking the SCOPIC Clause The Contractor shall have the option to invoke
by written notice to the owners of the vessel the SCOPIC clause set out
hereafter at any time of his choosing regardless of the circumstances and, in
particular, regardless of whether or not there is a “threat of damage to the
environment”.
• The assessment of SCOPIC remuneration shall commence from the time the
written notice is given to the owners of the vessel and services rendered
before the said written notice shall not be remunerated under this SCOPIC
clause.

41. 10/09/2024
Sue & Labour Clause
• A standard clause in a maritime insurance policy which allows the insured to
recover from the insurer any reasonable expenses incurred by the insured in
order to minimize or avert a loss to the insured property, for which loss the
insurer would have been liable under the policy.
• The expenses of safeguarding the property will be paid according to the
respective interest of the insured and the insurer.
• Maritime voyages were of long duration and communication between ports
and cities were slow, so it was essential that the insured and the underwriters
agreed upon measures that shall be taken by the assured in the event of
misfortune and catastrophe.
• In return, it is the duty of underwriters to indemnify the assured for expenses
incurred in respect of averting and minimizing the loss.

42. 10/09/2024
War Risk Insurance
• War Risk Insurance is a type of insurance which covers damage
due to acts of war, including invasion, insurrection, rebellion and
hijacking.
• Some policies also cover damage due to weapons of mass
destruction. War risk insurance generally has two components.
• War Risk Liability - covers people and items inside the craft and is
calculated based on the indemnity amount.
• War Risk Hull - covers the craft itself and is calculated based on
the value of the craft.
• The premium varies based on the expected stability of the
countries to which the vessel will travel.

43. 10/09/2024
Sanctions
• Sanction - Sanction Limitation and Exclusion
Clause
• No insurer shall be deemed to provide cover and no
insurer shall be liable to pay any claim or provide any
benefit hereunder to the extent that the provision of such
cover, payment of such claim or provision of such benefit
would expose that insurer to any sanction, prohibition or
restriction under United Nations resolutions or the trade or
economic sanctions.

44. 10/09/2024
Third Party Recoveries
 Marine insurance companies provide "hull and machinery" cover for
shipowners, and cargo cover for cargo owners but these policies do not
cover for open-ended risks that traditional insurers are reluctant to insure.
 Ship Owners in view of they providing service for rewards and since third
parties use their facility have exposure to claims from these third parties
should something go wrong.
 To Cover such risks ship owners need a protection – P N I Cover.
 Typical P&I cover includes- a carrier's third-party risks for damage cause to
cargo during carriage; war risks; and risks of environmental damage such as
oil spills and pollution.
 H&M, Cargo and P&I Insurance together give the interests in a marine
adventure the insurance cover they need.

45. 10/09/2024
History - P N I Clubs
 18th Century Great Britain, formation of Clubs to provide Hull insurance at reasonable cost.
 Beginning of 19th Century, Hull insurance became more affordable, Hull Clubs went into decline.
(today a few exist but not commonplace at all).
 As the 19th Century progressed, greater exposure to 3rd Party liability claims, in particular from
their crews. Laws were passed which made it even easier for crews and their dependents to claim.
 Problem further exacerbated by the rapid increase in passenger traffic as emigrants flooded to
America and Australia.
 Shipowners were faced with claims from 3rd parties with those ships they had been in collision.
 A court ruling in 1836 found that following a collision hull cover did not extend to damage caused
by collision.
 H&M Insurers acted quickly to address this gap but only provided 3/4th of the damage.
 Original limitation was to the value of the ship itself, but this began to be exceeded, leaving
shipowners to find the excess.
Shipowners joined together in 1855 and formed the “Shipowners Mutual Protection Society”.

46. 10/09/2024
• Until 1870, exclusions in the Bills of Lading facilitated shipowners to avoid liability for cargo
related claims.
• An incident occurred whereby it was deemed it lay outside of the exclusions and the
shipowner was liable and Club rules did not cover the cargo claim.
• Claim incidents, increasing value of cargoes, cargo interests try and recover their losses -
shipowners to look at the cover available to them.
• “Indemnity Clubs” - established Protection Clubs amended their rules to take on Indemnity
risks and “P & I” Clubs came into existence.
P&I Insurance cover covers
• Members’ legal liabilities to third parties which arise out of
the operation or management of the ship

47. • What is P&I club?
• A Protection and Indemnity or P&I club is a non-
governmental, non-profitable mutual or cooperative
association of marine insurance providers to its members
which consists of ship owners, operators, charterers and
seafarers under the member companies
• Typical P&I cover includes: a carrier's third-party risks for
damage caused to cargo during carriage; war risks; and risks
of environmental damage such as oil spills and pollution. In
the UK, both traditional underwriters and P&I clubs are
subject to the Marine Insurance Act 1906.

48. • Who are the members of the P and I Club?
• The basic definition of a mutual P&I club is that it is an
association of shipowners (called “members”) who group
together to insure and cooperate with each other on a
mutual, not for profit basis, proportional to their tonnage
• Why is P&I Club important in shipping?
• P&I insurances are typically provided by P&I Clubs, which
are mutual insurance associations. These clubs allow
members to pool their risks, leading to more extensive
coverage terms and creating a support network that offers
legal and technical advice on maritime issues

49. 10/09/2024
Risks Covered By A P&I Club
1. Death and personal injury of – Seamen, Passengers and Third
parties
2. Liabilities in respect of persons saved at sea.
3. Liabilities arising from collisions.
4. Liabilities arising from groundings.
5. Liabilities arising from damage to fixed and floating objects.
6. Liabilities arising from pollution.
7. Liabilities arising from wreck removal.
8. Liabilities arising from towage operations.
9. Liability to cargo. together with other legal and other costs
associated with dealing with these claims.
.

50. • What are the functions of P & I Clubs?
• Ensure ship owners and operators against third-party liabilities not
covered by hull and machinery policies obtained. The club will usually
only accept risks on chartered-in-tonnage where the member also
has owned vessels entered with the organization. Charterers club
exists to offer similar cover for charterers
• Often ensure entire company fleets, but tend to prefer owners with
similar types and standards of fleet
• May subject owners vessels to inspection before entry into the club
and during membership
• Strive to keep ‘calls on their members’ at a minimum through loss
prevention methods such as information bulletins aimed at owners
insurance officers
• Disseminate information aimed at keeping members premiums down

51. • Produce lists of correspondents and reliable lawyers and
surveyors
• Produce standard forms of letters of indemnity and protest
• May post bonds against members, ships when under arrest
• Issue handbooks containing club rules and lists of
correspondents, which are very useful to master seeking
advice and assistance win in any kind of trouble

52. 10/09/2024
Club Entry
Shipowner enrolling with a club is called the ENTRY.
The applicant has to provide details of the vessel or the fleet
which he wants to enter and the Club might exercise its
option of conducting a full survey of the vessel.
On the successful completion of the survey the vessel is
accepted and a certificate will be issued which provides the
details of the cover, the call rate, deductibles etc.
In case the ship is operated by an entity other than the ship
owner say operator, that entity will appear as the CO
ASSURED.

53. 10/09/2024
Claims And Handling
• Insurance claims generally arise due to accidents and incidents.
• The circumstances and incidents in the casualties are never the same. However, there
would be certain general factors in the casualties.
• It is imperative that there is a close coordination between the claims department, the
technical and the accounts department for a prompt settlement of the claims by the
underwriter as the underwriter would require a lot of information on the casualty prior
settlement of claims.
• Most claims will be negotiated between the insured and the Underwriter to determine the
actual loss amount.
• In view of almost all accidents occurring are on board vessels this would be dealt with by
the ships staff as best as they can as the situation warrants.
• When an incident or an accident, which could lead to a claim occurs the information would
be passed on from the Master to the Attending Superintendent, who in turn should pass on
the information to the Claims Department.

54. 10/09/2024
• Claims department to inform the Broker who in turn informs the Underwriter. This would enable
Underwriter to arrange their Surveyor to assess the damage.
• Inform local maritime authority for incidents on the water and the police for any loss involving theft
and vandalism.
• The P N I Club if the accident is related to losses insured by the Club ( e g – Crew claim, cargo
claim, collisions, pollution, contact with fixed and floating objects etc).
• Forward details of the incident including, dates and times, names and contact details of any
witnesses, a diagram of the scene. In the event of a collision or grounding, it will assist with
understanding the situation/circumstances of the accident.
• Keeping the owner and charterer appraised of the developments.
• Keeping cargo interests informed.
• If General Average declared to appoint Average Adjuster who in turn to keep all interests such as
surveyors, agents etc to enable them collect security or deposits towards general average
contribution.

55. 10/09/2024
• Simultaneously the companies technical department to liaise with the vessel
and gather information on the extent of damage and plan for repairs in
consultation with the Classification Society if damage pertains to Class, such
as damage to hull, machinery or other safety aspects of the ship.
• Vessel crew to photograph the developing incidents as these could come in
handy during enquiries postmortem of the incident.
• All documents and evidences such as log book entries etcc to be preserved
and handed over to owners or their representative. These documents are not
to be handed over to solicitors of the charterer, the media or anyone.
• If vessel needs repair the repair port has to be decided in discussion with the
Underwriters.
• The owners representative, a surveyor representing the Underwriter, along
with the Class Surveyor would be in attendance during the repairs.
• the Club representative or its surveyor would also be present if there are any
claims that would fall under the purview of the P N I club.

56. 10/09/2024
• The hull insurers surveyor will assess and certify the repairs to be
conducted and the cost which he could approved as being fair
basis which the owners would proceed with the survey.
• On completion of the repairs, a detailed report will be prepared by
the Underwriters Hull Surveyor and submitted to the owners which
could also include an opinion on the reason for the accident. All
costs incurred towards repairs and other expenses due to the
collision would be forwarded to the average adjuster.
• The adjuster would then work out the claim statement and the
amount payable by the Underwriters depending on the policy
clauses.

59. • What is underwriting claims?
• Underwriting, whether for an insurance policy or a loan, revaluates
the riskiness of a proposed deal or agreement. For an insurer, the
underwriter must determine the risk of a policyholder filing a claim
that must be paid out before the policy has become profitable. For a
lender, the risk is of default or non-payment.
• Underwriters are under pressure to find new ways to assess and
respond to amplified risk. The number one cause of marine
insurance losses in 2022 by value were fires on board vessels,
often due to mis-declaration or non-declaration of cargos

60. • Claim Submission: It starts when the insured party (usually the shipowner
or cargo owner) submits a claim to the insurance company. The claim
details the incident, such as damage to the vessel, loss of cargo, or any
other covered event.
• Claim Documentation Review: Underwriters review the claim
documentation provided by the insured. This includes reports, surveys,
invoices, and any other relevant evidence related to the claim. They
examine the circumstances of the incident and verify if it falls within the
coverage of the policy.
• Policy Examination: Underwriters carefully review the insurance policy to
determine the extent of coverage for the claimed event. They check for any
exclusions, limitations, or conditions that may affect the claim's validity.

61. • Assessment of Loss: Underwriters assess the extent of the loss or damage
incurred by the insured. This may involve consulting with surveyors,
adjusters, or experts to evaluate the value of the claim and the extent of the
damage.
• Risk Analysis: Underwriters analyze the risk factors associated with the
claim, considering various aspects such as the nature of the incident, the
vessel or cargo involved, the geographical location, and any other relevant
factors.
• Decision Making: Based on the information gathered and analyzed,
underwriters make a decision regarding the claim. They may approve the
claim for payment, partially approve it, or deny it based on the findings of
their investigation and assessment.

62. • Settlement: If the claim is approved, the insurance company settles
the claim by providing compensation to the insured in accordance
with the terms of the policy. This may involve reimbursing for repair
costs, replacement of damaged goods, or other forms of financial
compensation as specified in the policy.
• Communication: Underwriters communicate their decision to the
insured, providing explanations if the claim is denied or only partially
approved. They may also offer guidance on how to proceed further,
such as providing additional documentation or information if
necessary.

64. • Reinsurance
• Reinsurance
• is a deal wherein the insurer shares a part of the risk
portfolio with another insurance firm. It helps spread the
risk to avoid an enormous unmanageable financial strain
on a single entity. Reinsurance companies are of two
types: facultative and treaty.

65. a

68. • Facultative Reinsurance
• It is called facultative as the reinsurer possesses the “faculty” or power to accept or
reject the entire or a proportion of the provided policy. Here, the insurer utilizes it to
cover single or multiple risks registered in the insurer’s business book.
• Facultative reinsurance usually covers a single deal and is a one-time agreement with
the insurance firm. Most importantly, the primary insurer and reinsurer design a
facultative certificate displaying the reinsurer’s absorption of a particular risk in the
contract.
• 2. Treaty Reinsurance
• The treaty reinsurance demonstrates insurance obtained from another insurer through
the insurance firm. Additionally, this offers extra security for the equity of ceding
insurers and increases safety in relevant or extraordinary situations. Therefore, it is
further categorized into two categories, namely, proportional and non-proportional.

69. • business insurance
• There are several different kinds of liability insurances, such as general liability insurance,
public liability insurance, professional liability insurance, management liability, contractual
liability
• business insurance plans include:
• General liability insurance
• Commercial property insurance
• Business income insurance
• Professional liability insurance
• Workers’ compensation insurance
• Employment practices liability insurance
• Product liability insurance
• Commercial auto insurance
• Commercial umbrella insurance
• Cybersecurity insurance

70. • Insurance business can be broadly classified into two main categories: Life Insurance and
General (or Non-Life) Insurance. Each category can be further subdivided based on the
nature and scope of the coverage provided. Here's a detailed classification:
• 1. Life Insurance
• Life insurance policies provide financial protection against the risk of death. They are
designed to offer monetary support to the policyholder's beneficiaries upon the
policyholder's death.
• Subcategories:
• Term Life Insurance: Provides coverage for a specified period. If the policyholder dies
within the term, the beneficiaries receive a death benefit. It has no cash value component.
• Whole Life Insurance: Offers lifelong coverage and includes a savings component, known
as the cash value, which grows over time. Premiums are typically fixed.
Insurance business classification

71. • Endowment Plans: Provide a lump sum amount after a specific term or on
death. These policies combine insurance and investment benefits.
• Unit-Linked Insurance Plans (ULIPs): These are market-linked products that
provide both insurance and investment benefits. The premium is divided into
two parts, one for life cover and the other for investment in various funds.
• Pension Plans: These are retirement plans that provide a regular income
stream post-retirement. They accumulate savings during the policyholder’s
working years and disburse them as a pension.
• Money Back Plans: These plans offer periodic returns along with life cover. The
policyholder receives a percentage of the sum assured at regular intervals
during the policy term.

72. • 2. General (or Non-Life) Insurance
• General insurance policies provide financial protection against various risks other
than death, including health, property, and liability.
• Subcategories:
• Health Insurance: Covers medical expenses incurred due to illnesses or injuries.
Includes:
• Individual Health Insurance: Coverage for an individual.
• Family Floater Policy: Single policy covering all family members.
• Critical Illness Insurance: Lump sum benefit on diagnosis of specified critical
illnesses.
• Group Health Insurance: Offered by employers to their employees.

73. • Motor Insurance: Covers losses related to vehicles, including:
• Third-Party Liability Insurance: Mandatory by law; covers damages to third
parties.
• Comprehensive Insurance: Covers both third-party liabilities and damages to
the insured vehicle.
• Property Insurance: Protects against damage to property due to various perils,
including:
• Home Insurance: Covers the structure and contents of a home.
• Commercial Property Insurance: Covers businesses and their properties.
• Travel Insurance: Covers risks associated with travel, such as trip
cancellations, medical emergencies, and lost luggage.

74. • Marine Insurance: Covers loss or damage to ships, cargo, and terminals during
transport over sea or inland waterways.
• Fire Insurance: Provides coverage against loss or damage due to fire and related
perils.
• Liability Insurance: Protects against legal liabilities arising from injuries or damages
to third parties, including:
• Public Liability Insurance: Covers legal liabilities to third parties for bodily injury or
property damage.
• Professional Liability Insurance (Errors and Omissions): Protects professionals
against claims of negligence or inadequate performance.
• Product Liability Insurance: Covers manufacturers against claims arising from
defective products.
• Personal Accident Insurance: Provides compensation in case of accidents causing
death, disability, or injury.

75. • Reinsurance
• Reinsurance is a specialized form of insurance for insurers. It
involves one insurance company (the reinsurer) providing
financial protection to another insurance company (the ceding
company) to manage risk.
• By understanding these categories and subcategories, individuals
and businesses can choose the appropriate insurance coverage
based on their specific needs and circumstances.

76. • MODULE 4 Chartering
• A bill of lading (BL or BoL) is a legal document issued by
a carrier (transportation company) to a shipper that details
the type, quantity, and destination of the goods being
carried.
• A bill of lading also serves as a shipment receipt when
the carrier delivers the goods at a predetermined
destination

77. • The purpose of Bill of Lading (B/L) is to outline the journey of your cargo
from the origin to the destination.
• A Bill of Lading is a document issued by a Carrier (somebody who
transports and delivers goods) to a Shipper (someone who supplies
and/or owns the goods – also known as a Consignor), confirming goods
were received in an acceptable condition and are ready to be shipped.
• When the buyer is entitled to receive goods from the carrier, the bill of
lading in this case performs as a document of title for the goods. In simple
words, the function of BL as a document of title shows who owns the
cargo. Whoever has the duly endorsed BL is the rightful owner of the
cargo described in the BL.

78. • Typically, there are three bills of lading, one for the shipper, one for
the consignee, and one for the banker, but there is no limit to the
number of bills of lading issued. Addition bills of lading increase the
risk of fraud, theft, or the unauthorized release of goods.
• The bill of lading has three main functions:
• Evidence of a contract of carriage
• Receipt of goods i.e. an acknowledgement that the carrier has
received the freight
• Document of legal title to goods

79. • A bill of lading is a legal document that's issued by a
carrier to a shipper detailing the type, quantity, and
destination of the goods being carried.
• A bill of lading is a document of title, a receipt for shipped
goods, and a contract between a carrier and a shipper.
• This document must accompany the shipped goods and
must be signed by an authorized representative from the
carrier, shipper, and receiver.
• A bill of lading can help prevent asset theft if it's managed
and reviewed properly.

80. • The bill of lading includes, for example:
• Party details — shipper, consignee and/or notify party
• Cargo description
• Cargo weight, package count, and volume
• Terms of payment
• Port of loading
• Port of discharge
• Bill type

82. • Types of Bills of Lading
• Inland bill of lading.
• Ocean bill of lading.
• Through bill of lading.
• Negotiable bill of lading.
• Nonnegotiable bill of lading.
• Claused bill of lading.
• Clean bill of lading.
• Uniform bill of lading.

83. • 1. Clean Bill of Lading:- It is issued by the Shipping Company or by its
agents without any declaration on the defective Constitution of the
goods/packages taken on Board/stuffed in containers.
• 2. Received for Shipment Bill of Lading:- It is a document that is issued by
a carrier as evidence of receipt of goods for shipment. It is issued prior to
the vessel loading and is therefore not an onboard bill of lading.
• 3. Through Bill of Lading:-. The document permits the shipping carrier to
pass the cargo through several modes of transportation or through several
distribution centers. This bill includes an Inland Bill of Lading and an Ocean
Bill of Lading depending on the destination.

84. • 4. Claused Bill of Lading:- It is issued when the cargo is damaged or
when the quantity goes missing.
• 5. Container Bill of Lading:- It is a document that gives information about
goods that are delivered in a safe container or containers from one port
to another.
• 6. House Bill of Lading:- It is a document generated by an Ocean
Transport Intermediary freight forwarder or non-vessel operating
company. The document is an acknowledgment of the receipt of goods
that are shipped, issued to the suppliers when the cargo is received. This
Bill of Lading is also known as Forwarders Bill of Lading.

85. • Master Bill of Lading:- This is a document that is created for shipping
companies by their carriers as a receipt of transfer. The document specifies
the terms that are required for transporting the freight, details of the
consignor or the shipper, the consignee and the respective person who
possesses the goods.
• 8. Charter Party Bill of Lading:- This is an agreement between a charterer
and a vessel owner. The document is issued by the charterer of the vessel to
the shipper for the goods that are shipped on board the vessel.
• 9. Multi-Modal Transport Document/ Combined Transport Document:- It is a
type of Through Bill of Lading that involves a minimum of two different modes
of transport, land or ocean. However, the modes of transportation can be
anything from freight boat to air.

86. 10. Order Bill of Lading:- It is the bill that expresses words
that make the bill negotiable. This explains that the delivery
is to be made to the further order of the consignee using
terms such as delivery to A Limited or to order or assigns.
11. Short-term/ Blank Back Bill of Lading:- It is issued when
the detailed terms and conditions of the carriage contract
are not given on the body of the Bill of Lading or on the
back of the Bill of Lading

87. • What are bill of lading clauses?
• A claused bill of lading is a type of bill of lading that shows that the
bill of lading did not provide delivery as stated in the contract. A bill
of lading is a legal document that tracks a shipment from start to
finish. A claused bill of lading would indicate that the delivery
included a shortfall or damaged goods
• What is the bill of lading Clause 14?
• 14. Freight and Charges. Freight shall be payable, at Carrier's
option, on gross intake weight or measurement, or gross discharge
weight or measurement, or ad valorem basis, or package or
customary freight unit basis or any other applicable rate as set forth
in Carrier's Tariff.

88. • What is Article 20 bill of lading?
• Article 20 applies when the credit requires the presentation of a
(marine/ocean) bill of lading covering transport by sea from one
port to another port. It defines the mini- mum requirements as to
the content of such a bill of lading to be compliant
• What is a Section 7 bill of lading?
• Section 7 on a bill of lading helps protect the shipper from being
liable for freight charges if the consignee does not make payment
upon delivery on collect terms. If the shipment is marked collect
and the shipper signs Section 7, then the carrier can not go back to
the shipper for payment

89. • Bill of Lading Clauses
• Bill of lading clauses are standard texts used in a bill of lading.
Clause texts can be preconfigured in the system, and there's also an
option to add a one-time free text clause in the bill of lading.
• Clauses can be customized as:
• Mandatory: Such clauses appear in the bill of lading by default
without an option to remove them.
• Changeable: The original clause text is derived from Customizing but
it can be changed for the individual bill of lading.

92. • What are the challenges / issues with bill of lading?
• Bill of lading errors can lead to delivery delays, payment delays,
denial of claims, incidental costs incurred, and even penalties or
fines. The later an error is caught, the more disruptive it will be,
making it particularly vital to maintaining timely, accurate bill of lading
records during the first mile.
• On the demand of the shipper, the carrier has a duty to record the
condition and quantity of the cargo upon loading. Problems
sometimes arise when the cargo is in a damaged condition or does
not tally with the quantity declared by the shipper.

93. • Incorrect weight and tonnage (reweight) – Common in LTL (lighter
than truckload) shipping (where every pound matters), if the BOL
weight doesn’t match and the carrier needs to reweigh, expect
additional charges for the added tonnage. Check and double-check
your BOL weights, and definitely don’t fudge the numbers.
• Incorrect freight class – Marking the wrong freight class could
saddle you with higher fees than normal. You might be paying a
rate that’s too high for what you’re shipping; or, you could end up
costing your carrier fees that they pass on to you if the freight class
is incorrect.

94. • Incorrect billing info – Mislabeled BOLs result in delayed payments
for shippers. If the BOL and payment information can’t be easily
reconciled, that’s money left on the table. Even when it doesn’t
result in money lost or excess fees, it’s still an unrealized expense.
• Accessorial not listed – Forgetting to include accessorials will drive
up the shipment cost because those fees show up on the final
invoice. This confuses the reconciliation process and adds
headaches to the shipping process.

95. • What is a Sea Waybill?
• A Sea Waybill is a transport contract (contract of carriage)
- the same as a Bill of Lading. A Sea Waybill, however, is
not needed for cargo delivery and is only issued as a
cargo receipt. It can either be issued in hard copy format
or soft copy format. A Sea Waybill is not negotiable and
cannot be assigned to a third party. Wallenius Wilhelmsen
Ocean will deliver the cargo at destination to the person
or company described as Consignee in the Sea Waybill.

96. FREIGHT RATE
• Freight Rate, the cost of transporting goods, is reflective of
a number of factors aside from normal transportation costs.
The main determining factors of freight rate are: mode of
transportation (truck, ship, train, air craft), weight, size,
distance, points of pickup and delivery, and the actual
goods being shipped.
• The freight rate depends on the final destination, the
accountable weight of the shipment and the mode of
transport selected. For instance, air carriers use
dimensional weight to determine the price for the cargo.

97. • Advance Freight:
• This is payable in advance, before delivery of the actual
goods. This is generally regarded as the most important type
of freight and is extensively used in the liner cargo trades
and tramping.
• Lump sum Freight:
• A fixed sum is payable by the charterers for the capacity
made available to them by the ship owner.

98. • Dead Freight:
• Charge payable on space booked on a ship but not utilized by the
charterer or the shipper. It is imposed at full freight rates, less loading
and handling charges. E.g., if the charter party agreement was that the
charterers would load 50,000 tons of wheat, but he loaded only 40,000
tons, the ship owner will claim dead freight on 10,000 tons at the
agreed rate of freight.
• Back Freight:
• This arises when goods have dispatched to a certain port, and on
arrival are refused. The freight charged for the return of the goods
constitutes Back Freight.

99. • Pro-Rata Freight:
• Pro-rata freight is payable in common law where only part of the
voyage has been completed, e.g. when the voyage is abandoned
following an outbreak of war or an accident, and the cargo is
discharged at an intermediate port. It is not “freight” in the normal
sense, but the ship owner’s compensation for carrying the goods at
least part-way to their destination.
• Ad Valorem(according to the value ) Freight:
• Ad valorem freight is charged at a rate stated as a percentage of the
value of a shipment, usually of high-value good. It is not normally
used in voyage charter parties, generally being confined to liner
shipments.

100. • Chartering
• It is the term used to name the renting of a whole ship, in
an agreement between a shipowner and a renting party,
in this case known as charterer, intermediated by a freight
forwarder or a shipbroker. The charterer is the individual
or organization renting the ship.

102. • What are the four types of chartering/ chater party types?
• The four principal methods of chartering a tramp ship are
voyage charter, time charter, bareboat charter(demise ) , and
contract charter. The voyage charter, in which a ship is
chartered for a one-way voyage between specified ports,
with a specified cargo at a negotiated rate of freight, is most
common

103. • In a time charter, the vessel is hired for a specific amount of
time. The shipowner manages the vessel but the charterer
gives orders for the employment of the vessel, and may
sub-charter the vessel on a time charter or voyage charter
basis.
• In a voyage charter, the charterer hires the vessel for a
single voyage, but the shipowner provides the master,
crew, bunkering and supplies.

106. • In a demise (or bareboat) charter, the charterer takes
responsibility for the crewing and maintenance of the ship
during the time of the charter. S/he assumes the legal
responsibilities of the owner, and is known as a disponent
owner.
• In a demise charter, the charterer is the carrier; in a time
or voyage charter the shipowner is the carrier).

114. TYPES DAYS IN A CHATERPARTY
• The days are called laydays (or laytime) and are stipulated in the
charter party as working days, weather working days, running
days and excepted days. If the charterer loads or discharges his
cargo in less time than the number of laydays allowed, he earns
dispatch money at so much a day or part of a day saved.
• Running days – Includes consecutive days including weekends
and holidays. Working days – Includes consecutive days
excluding weekends and holidays. Weather working days –
Includes days on which the weather permits to continuous work of
cargo loading and unloading.

115. • Laydays: When the vessel on a voyage chart is in port, the
expenses of the shipowner continue. At the same time loading or
discharging is controlled by the charterer, who if not held to a
definite number of days to complete this work, can make the stay in
port long and expensive for the shipowner.
• For this reason, the charter party will specify a definite number of
days for loading or discharging cargo; or it may specify a certain
number of tons per day to be loaded or discharged.

116. • If the charterer loads or discharges his cargo in less time
than the number of laydays allowed, he earns dispatch
money at so much a dayor part of a day saved.
• If he takes longer to load or discharge than the number of
laydays allowed, he must pay demurrage at so much a day.
Both dispatch and demurrage may be the cause of much
disagreement and argument in which the vessel's logbook
can play an important part.

117. • WORKING DAY shall mean a Day when by local law or practice work is normally carried
out.
• RUNNING DAYS or CONSECUTIVE DAYS shall mean Days which follow one immediately
after the other.
• RUNNING HOURS or CONSECUTIVE HOURS shall mean hours which follow one
immediately after the other.
• HOLIDAY shall mean a Day other than the normal weekly Day(s) of rest, or part thereof,
when by local law or practice work during what would otherwise be ordinary working hours
is not normally carried out.
• WEATHER WORKING DAY shall mean a Working Day or part of a Working Day during
which it is or, if the Vessel is still waiting for her turn, it would be possible to load/discharge
the cargo without interruption due to the weather. If such interruption occurs (or would have
occurred if work had been in progress), there shall be excluded from the Laytime a period
calculated by reference to the ratio which the duration of the interruption bears to the time
which would have or could have been worked but for the interruption.

118. • WEATHER WORKING DAY OF 24 CONSECUTIVE HOURS shall mean a Working
Day or part of a Working Day of 24 consecutive hours during which it is or, if the
vessel is still waiting for her turn, it would be possible to load/discharge the cargo
without interruption due to the weather. If such interruption occurs (or would have
occurred if work had been in progress) there shall be excluded from the Laytime
the period during which the weather interrupted or would have interrupted work.
• WEATHER WORKING DAY OF 24 HOURS shall mean a period of 24 hours made
up of one or more Working Days during which it is or, if the Vessel is still waiting
for her turn, it would be possible to load/discharge the cargo without interruption
due to the weather. If such interruption occurs (or would have occurred if work had
been in progress), there shall be excluded from Laytime the actual period of such
interruption.

119. • . (WORKING DAY) WEATHER PERMITTING shall have the
same meaning as WEATHER WORKING DAY OF 24
CONSECUTIVE HOURS.
EXCEPTED or EXCLUDED shall mean that the Days
specified do not count as Laytime even if loading or
discharging is carried out on them.

120. • In Charter
• When a vessel is "in charter," it means that the vessel has been hired or leased
by a company or individual (the charterer) from the vessel owner for a specified
period or voyage. The charterer pays a fee, known as charter hire, to the vessel
owner for the use of the ship. During the in-charter period, the charterer is
responsible for operating the vessel and bears most operational costs, such as
fuel and port charges.
• There are different types of in charters:
• Time Charter: The charterer leases the vessel for a specific period.
• Voyage Charter: The charterer leases the vessel for a specific voyage.
• Bareboat Charter (or Demise Charter): The charterer leases the vessel without
crew, provisions, or any operational responsibilities, taking full control of the
vessel.

121. • Out Charter
• When a vessel is "out charter," it means that the vessel owner has
leased out their vessel to a charterer. The vessel owner receives
the charter hire fee from the charterer. The specific responsibilities
and costs covered by the vessel owner and the charterer depend
on the type of charter agreement.
• In summary:
• In Charter: A company or individual leases a vessel from the
owner.
• Out Charter: The vessel owner leases out their vessel to a
charterer.

122. fixation of vessel voyage estimate
The fixation of a vessel voyage estimate in the marine industry involves the process of negotiating
and finalizing the terms for a vessel's voyage charter. This process includes estimating various costs,
revenues, and operational details to determine the feasibility and profitability of the voyage. Here are
the key steps involved in fixing a vessel voyage estimate:
• 1. Voyage Planning
• Route and Ports: Determine the route and the ports of loading and discharge.
• Cargo Details: Identify the type, quantity, and handling requirements of the cargo.
• 2. Estimation of Costs
• Fuel Costs: Estimate the cost of bunker fuel based on the distance and fuel consumption rate.
• Port Charges: Calculate port dues, pilotage, towage, berthage, and other port-related expenses.
• Canal Transit Fees: If applicable, include fees for canals like the Suez or Panama Canal.
• Crew Costs: Include wages, insurance, and other crew-related expenses.
• Maintenance and Repairs: Estimate any necessary maintenance or repairs during the voyage.
• Insurance: Calculate the cost of insurance for the vessel and cargo.
• Miscellaneous Costs: Include other expenses such as agency fees, communication costs, and

123. • Estimation of Revenues
• Freight Rate: Determine the freight rate based on market
conditions, cargo type, and route.
• Demurrage and Dispatch: Estimate potential demurrage
(penalty for delays) or dispatch (reward for early
completion) fees.
• 4. Risk Assessment
• Market Conditions: Assess the current market conditions
and potential fluctuations in freight rates and fuel prices.

124. • Negotiation
• Contract Terms: Negotiate the terms of the charter party agreement,
including laytime, demurrage, and dispatch terms.
• Clauses: Include important clauses like force majeure(unforeseen
event) and dispute resolution.
• 6. Finalization
• Agreement: Finalize and sign the charter party agreement, detailing
all the terms and conditions agreed upon.
• Documentation: Ensure all necessary documentation, such as bills of
lading and certificates, are prepared and ready.

125. • Example of Voyage Estimation Calculation:
• Cargo Details: 50,000 metric tons of grain.
• Route: From Port A to Port B.
• Distance: 5,000 nautical miles.
• Fuel Consumption: 50 metric tons per day.
• Fuel Cost: 45,000 per metric ton.
₹
• Port Charges: 7,500,000 at each port.
₹
• Freight Rate: 1,500 per metric ton.
₹
• Time Estimate: 20 days at sea + 5 days
loading/unloading.

126. • Costs:
• Fuel: 20 days x 50 tons/day x 45,000/ton = 45,000,000
₹ ₹
• Port Charges: 2 x 7,500,000 = 15,000,000
₹ ₹
• Crew, maintenance, insurance, etc.: 7,500,000
₹
• Total Costs in INR: 67,500,000
₹
• Revenue:
• Freight: 50,000 tons x 1,500/ton = 75,000,000
₹ ₹
• Profit Calculation
• Profit in INR: 75,000,000 - 67,500,000 = 7,500,000
₹ ₹ ₹

127. • Who is a Marine Surveyor?
• A marine surveyor is a professionally qualified individual who is responsible for
surveying various marine vessels, such as ships, boats, and yachts. He conducts
inspections and surveys to assess the vessel's condition and the equipment
installed therein.
• A surveyor is a highly qualified inspector who is also responsible for carrying out
detailed evaluations of damages for marine insurance purposes. They are
qualified professionals who ascertain a vessel's seaworthiness by implementing
various survey methods.
• The post of surveyor demands excellent technical know-how and in-depth
knowledge of the vessel's hull, marine engines, electrical systems, and other
related areas.

128. • What are the Responsibilities & Duties of a Surveyor?
• Inspecting the Vessels- The primary and most important responsibility of a marine surveyor is to inspect and
assess the condition of the vessels. Only after a report from the surveyor, is it decided whether the vessel is fit
to venture into the sea or not.
• Inspection of the Cargo- Apart from inspecting the marine vessels, a surveyor also examines, inspects, and
assesses the cargo or goods.
• Maintaining a record of the Vessels—One of the surveyor's duties is to maintain all the essential records of the
ship. All the necessary information regarding the interior and exterior of the vessels is stored in photos or
videos.
• Inspecting the Maintenance Records— A surveyor is also required to inspect the ship's maintenance records
closely and ensure that all the rules and procedures are followed appropriately.
• Equipment Testing- A craft surveyor also checks the functioning of the vessel mechanisms and machinery to
ensure they are working without any disruption.

129. • Types of Marine Surveyors
• Since the marine industry is vast and diverse, there are various types of marine hull surveyors
who have specialised roles to perform. Here are the types of surveyors and the tasks they
perform:
• Government Surveyor- He is responsible for carrying out surveys on ship registration and
implementing ship safety standards.
• Cargo Surveyor- Cargo owners appoint surveyors to inspect the cargo to ensure its quality and
quantity.
• Classification Surveyor- The classification society appoints them to ensure that a vessel's
machinery and mechanisms adhere to the pre-set regulations.
• Small Craft and Yacht Surveyor—These surveyors are responsible for inspecting smaller crafts
and vessels (less than 24 metres) that are often used for pleasure sailing.