Hello, welcome to this blog Post on Marine Insurance. We are going to be looking at the meaning, the features, types of marine insurance, marine policy and marine losses.
Meaning Of Marine Insurance
Marine insurance is a type of insurance that cover losses or liability relating to ship and cargoes against the dangers or perils of the sea. This is probably the oldest form or type of insurance. The perils of the sea include storm, tempest, collision, theft and fire.
Marine insurance policy is compulsory in international trade so that all Goods passing through the sea including the ships must be covered by marine insurance. Lloyds of London is considered as the largest marine insurers in the whole world.
Features of Marine Insurance Policy
- It covers against risk associated with sea voyag.
- The ship owner can insure his ship against loss as a result of fire, storm or collision.
- The cargo can also be insured.
- The ship owner can insure a ship for one voyage or for a specified period of time.
TYPES OF MARINE INSURANCE
Marine insurance risk may be classified under the following
- Hull Insurance: This is a types of marine insurance policy which covers the ship against damages which may result from Perils of the sea. The policy can be taken to cover the Hull of the ship against damages by Storm, collision and fire. It may be for a specified period Of time or journey.
- Cargo Insurance: This types of marine insurance policy is entered into to cover goods of cargos carried by the ship. It is taken to cover loss arising from damage to cargo while in transit. Cargo insurance is very important in foreign trade and it must be stated whether the importance will be responsible for the insurance of the cargo. It is a valued policy based on the value stated on the invoice.
- Ship owner liability: This types of marine insurance covers all risk or losses for which they owner of the ship or is employees are liable for negligence in handling of goods, injury to crew on board, damage to other ships or to Ports. The liabilities include the cargo, passengers, crew members, fixed installations at wharves and beaches liable to be damaged by the action of the ship.
- Freight Insurance: This is a type of policy taken to cover against refuser to pay charges for lifting the goods. The shipper covers himself against loss for sums paid out in freight if the cargo was lost in the transit before reaching is destination.
TYPES OF MARINE INSURANCE POLICIES
- Time policy: This marine policy Covers the ship and cargo for a specified period, usually a year. In case the policy expires on the sea, there will be a continuation clause to cover it until the ship arrive at its destination.
- voyage policy: This policy covers a particular or specific voyage, e.g, London to Amsterdam. The ship will be insured to cover a journey from one place to another, any decision from this specified route will not be covered.
- Floating policies: This marine policy is used by traders who makes frequent shipment of cargo. The cover applies to any shipment made by the holder who makes a declaration as to the precise amount involved with individual shipment. This declaration is set against the floating policy, reducing the sum insured by that amount until the full sum is exhausted.
- Mixed policy,: This marine policy covers the subject matter of the voyage and a period of time thereafter, e.g, while in ports.
- Construction policy: This marine policy covers the construction of a marine vessel.
- Open cover policy: This relates to an agreement by a marine insurer to accept insurance on proposed shipment. It is a form of insurance in which the insurers agrees to insure all shipments of cargo made during an agreed period.
- Valued Policy: Value policy specifies the value of the goods, and the holder of such a policy received specified sum in the event of a total loss, irrespective of its value at the time of the loss.
- unvalued policy: This provide for claims based on the value of the goods at the time of loss. The policy does not state the original value of the goods.
- Fleet Policy: This is a policy which covers a fleet of the ship under one ownership.
MARINE LOSSES: Marine insurance can be categorized into total loss and partial loss.
Total Loss: This occurs where the subject matter (goods) is completely destroyed. Total loss can be divided into:
- Actual Total Loss: This is a type of loss which occurs when the goods are completed destroyed by fire, when a ship sinks after collision or when the goods have been affected by Sea Water such that they are no more fit for purpose intended.
- Constructive Total Loss: This occurs where there the objects insured have to be abandoned because what is left is beyond economic repairs, i.e, the cost of repair is more than the value.
Partial Loss: This of occurs when there is damage to a portion of the ship or its cargo. It can be categorized into the following:
- General Average Loss: This is a partial loss which occurs when the ship master, for the interest of the parties, deliberately and reasonably throws overboard or jettisons some of the cargoes in order to lighten the ship so as to reduce loss. The expenses will be borne by all parties concerned, e.g, during storm, some of the ship’s cargo can be in jettisoned.
- Particular Average Loss: This occurs when the cargo or ship suffer partial loss or damage. The loss here is accidental. It occurs when loss which is accidental is not suffered for the general benefit of all on board a vessel, e.g, when the propeller blade is damaged. In this case, loss is borne by the owners of the object affected.