Page 171 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes 18. Free of Particular Average Clause (F.P.A.): This clause restricts the liability of the
underwriter and the underwriter is liable only for total loss and not for particular average
or partial loss.

Task Visit the websites of any two insurance firms and study their marine insurance
policies and analyse the clauses they have in their policies and prepare a report on the
same.
Besides the above clauses, an understanding of the following bonds is also important in marine
insurance:

1. Bottomry Bond: It is a bond-representing loan raised by the master of the ship so as to
meet certain urgent expenses like repairing a ship on the security of a ship or ship and
cargo. It is repayable after a certain agreed number of days after the arrival of the ship as
specified in the bond. If the vessel is lost before the arrival at destination, the lender losses
his money.
2. Respondentia Bond: Like bottomry bond, respondentia bond also represents a monetary
loan borrowed by the master of a ship to meet certain urgent expenses. The loan is raised
on the security of the cargo only. The loan is to be repaid within a certain period after
arrival of the cargo at the destination as specified in the Respondentia Bond. If the cargo is
lost on its way, the lender losses his money.

Self Assessment

Fill in the blanks:
11. A marine policy may be assigned either before or after a ……………………
12. Memorandum clause is meant to provide a minimum limit to the ……………………………
liability regarding claims for particular average by exempting him from such claims.

9.5 Marine Losses

You need to know that according to the Marine Insurance Act, unless the policy otherwise
provides, the insurer is liable for any loss proximately caused by a peril insured against. The
insurer is not liable for any loss attributable to the wilful misconduct of the assured but, unless
the policy otherwise provides, he is liable for any loss proximately caused by a peril insured
against even though the loss would not have happened but for the misconduct or negligence of
the master or crew of the ship.

!
Caution Unless the policy otherwise provides, the insurer is not liable for ordinary wear
and tear, ordinary leakage and breakage, inherent vice or nature of the subject matter
insured, or for any loss proximately caused by rats or vermin or any injury to machinery
not proximately caused by maritime perils.
The losses of insurance may be divided broadly into two classes:
1. Total Loss and
2. Partial Loss.

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