Page 301 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes to pay only up to actual loss incurred to the policy amount. It is also known as Open
Policy.
6. 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. Such policy has the
advantage of being a valid marine policy, in all respects fully complying with the
requirements of the Marine Insurance Act.
The declaration may be made by endorsement on the policy or in any other customary
manner. Unless the policy otherwise provides, declaration must be made in the order of
shipment. They must comprise all the consignments within the terms of the policy and
values must be honestly stated. Errors and omissions, however, may be rectified even
after a loss has occurred, if made in good faith.
When the total amount declared exhausts, the amount for which the policy was originally
issued, it is said to be "run off" or "full declared". The assured may then arrange for a new
policy to be issued to succeed the one about to lapse, otherwise the cover terminates when
the policy is fully declared.
7. 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.
If a policy contains such words as "Policy Proof of Interest" (PPI) or "Interest or No Interest"
it is Wagering or Honor Policy. Under Section 4 of the Marine Insurance Act, such policies
are void in law but such policies continue to be common.
8. 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. In the case of a very large vessel, the period may
extend over several years.
9. Blanket/Open Cover Policy: In order to arrange their marine insurance in advance and to
be assured to cover at all times, and also to avoid the effects of possible rapidly fluctuating
rates, it is the practice of regular importers and exporters to avail "Blanket Insurance".
One good way, and the most popular one of achieving this is by means of "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.
10. 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. This kind of policy is probably very
rarely used nowadays.

Self Assessment

State whether the following statements are true or false:

6. Wagering Policy: This policy is issued with there being any insurable interest, or a policy
bearing evidence that the insured is willing to dispense with any proof of interest.
7. In the case of an Unvalued Policy, the value of the subject matter insured is not specified at
the time of effecting insurance. It is taken for a specified amount and the insurable value
is ascertained in the case of loss.
8. Valued Policy: This policy specifies the uncertain value of the subject matter insured,
which is not necessarily the actual value.

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