Page 170 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 9: Marine Insurance

Bursting of boilers Notes
Negligence of master, officers
Negligence of repairs provided such repairs are not assured hereunder

Contact with aircraft
Contact with any land conveyance, dock or harbour equipment or installation
Earthquake, volcanic eruption or lightning.
8. Running down Clause: In an ordinary marine policy, the assured is covered in respect of
the damage sustained by his own ship in the case of collision, but such cover does not
extend to his liability for the damage done to the other ship. This clause provides a
supplementary contract whereby the assured is given some protection against such third
party damages. It provides that if the insured vessel collides with another vessel, the
underwriters agree to pay three-quarters of the amount of damage to which the assured
becomes liable.
9. Sue and Labour Clause: This clause explains in detail the extent of underwriter’s liability
for such expenses. In particular, it provides that liability shall not be exceeding the
proportion that the amount insured bears to the value of the vessels. It has been previously
mentioned that in the absence of the provision, underwriters would be liable for the full
amount of sue and labour charges even where there was underinsurance.
10. Re-Insurance Clause: There are various reasons why an underwriter may deem it prudent
to reinsure part or all of a risk for which he has accepted liability. For instance, he may find
that his commitments on any one vessel or in any locality have become too burdensome.
Declarations under open covers or floating policies and acceptances by his agents in other
markets give him an accumulated liability considerably in excess of his usual retention.
He may have accepted a line on ‘all-risks’ terms and then desire to re-insure in respect to
total loss only.
11. Memorandum Clause: This clause is meant to provide a minimum limit to the underwriter’s
liability regarding claims for particular average by exempting him from such claims.
12. Continuation Clause: This clause refers that the vessel shall continue to be covered even
after completion of voyage under the policy at a pro rata premium to her port of destination.
13. Perils of the Sea Clause: The term “perils of the sea” refers only to fortuitous accidents and
casualties of the seas. It does not include the ordinary action of the winds and waves.
14. Warrior Clause: This is really supplementary to the ‘Sue and Labour’ clause provided
simply to assure that, in the event of a casualty. Either party to the contract may take such
steps, or incur such expenses, as are contemplated under sue and labour clause, to minimize
a loss without prejudice to the right of the assured on the one hand and the underwriter on
the other.

15. All Risk Clause: This provides that the insurance is against all risks of loss or damage to
the subject matter insured and that claims are payable irrespective of percentage of loss.
16. Foreign General Average Clause (F.G.A.): Foreign General Average clause means that the
arrangement in case of General Average Claim which may arise under the policy, the
average settlement made in a foreign country will be adopted as the basis for settlement.

17. Free of capture and seizure (F.C.S.): This clause is generally inserted in times of war.
It means that the underwriters will not be liable for loss or claim arising from seizure of
ship as a price of war. In times of war this clause is inserted unless the insured pays the
underwriters additional premium for war risks.

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