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Unit 9: Marine Insurance

This principle of contribution is in support to the principle of indemnity which states that Notes
insurance must make good only the actual loss suffered by the insured.

A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify
the insured, in the manner and to the extent thereby agreed, against transit losses, that is
to say losses incidental to transit.

A marine policy may be assigned either before or after a loss. Assignment may be through
endorsement or in other customary manner.
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.

In the case of an Actual Total Loss, the insurer has to pay either the insured amount or the
actual loss whichever is less. But the cause of loss must be one of the perils insured against.
Where there is a constructive total loss, the assured may either treat the loss as a particular
loss or abandon the subject matter insured to the insurer and treat the loss as if it were an
actual total loss.

Claims under marine policies have to be supported by certain documents which vary
according to the type of loss as also the circumstances of the claim and the mode of
carriage.

9.8 Keywords

Assignment Clause: This clause makes it clear that the marine policy is assignable unless it
contains terms expressly prohibiting assignment.
Construction or Builders Risk Policy: This is designed to cover the risks incidental to the
buildings of a vessel, usually giving cover from the time of laying the keel until completion of
trails and handing over to owners.

Floating Policy: A floating policy describes the insurance in general terms, leaving the names of
the ship or ships to be defined by subsequent declaration.
Negligence Clause: This is designed to extend the underwriters’ liability to cover risks of a kind,
which are not included within the ordinary meaning of maritime perils.
Open Cover: An open cover is an agreement between the assured and his underwriters under
which the former agrees to declare, and the latter to accept, all shipments coming within the
scope of the open cover during some stipulated period of time.
Port Risk Policy: This is to cover a ship or cargo during a period in port against the risks
peculiar to a port as distinguished from voyage risks.
Transit Clause or Warehouse-to-Warehouse Clause: This clause provides with respect to goods,
for the risk to attach “from the loading thereof aboard the said ship” and for the insurance to
continue until the goods are discharged and safely landed at the port of discharge.
Unvalued Policy/Open Policy: In the case of an unvalued policy, the value of the subject matter
insured is not specified at the time of effecting insurance.
Valued Policy: This policy specifies the agreed value of the subject matter insured, which is not
necessarily the actual value.

Wagering Policy: This policy is issued without there being any insurable interest, or a policy
bearing evidence that the insured is willing to dispense with any proof of interest.

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