Page 294 - DMGT303_BANKING_AND_INSURANCE

Unit 14: Marine and Motor Insurance

14.1 Definition of Marine Insurance Business Notes

A contract of marine insurance is defined by the Marine Insurance Act 1963 as "an agreement
whereby the insurer undertakes to indemnify the assured, in the manner and to the extent
thereby agreed, against losses incidental to marine adventure. It may cover loss or damage to
vessels, cargo, or freight".
The identity with which insurance contract is entered into is called the "insurer" and the person
entering into contract is the "insured".

Section 2 (C and F) of the Marine Insurance Act, 1963 defines marine insurance and includes the
movables exposed to maritime perils. Movables mean movable tangible property, which includes
money, valuable securities and documents, etc.

As per Arnold marine insurance is a "A contract whereby one party for an agreed consideration,
undertakes to indemnify the other against loss arising from certain perils and sea risks to which
a shipment and other interest in a marine adventure may be exposed during a certain age or a
certain time."

Insurable Property

Insurable property means any ship, goods or other movables exposed to maritime perils.
Insurable property is also called the subject matter of insurance. Insurable property must be
stated in the policy with reasonable certainty.

Marine Adventure

There is a marine adventure, when:
1. Any insurable property is exposed to marine perils.

2. The earning of freight, passage money, commission, profit or other pecuniary benefit, or
the security for any advances, loans or disbursement is endangered by the exposure of
insurable property to maritime perils.
3. The owner of or other person interested in or responsible for, insurable property by
reason of maritime perils may insure any liability to the third party.

4. Voyage: Voyage is the route of the sea through which the vessel undertakes the journey.
The route of the ship is very important in the marine insurance business. The ship should
carry on the voyage in the specified route, which is mentioned in the policy. Change of
voyage is permitted only in a few specified circumstances.
5. Maritime Perils/Perils of the Sea: Maritime Perils are also called as "Perils of the Sea". It
means the perils consequent on, or incidental to the navigation through the sea,

Example: Fire, war perils, rovers, thieves, captures, seizures, jettisons, barratry and
any other perils.

6. The term "Perils of the Sea" refers only to fortuitous accidents or casualties of the sea, and
does not include the ordinary action of winds and waves.

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