Page 318 - DMGT303_BANKING_AND_INSURANCE

Unit 14: Marine and Motor Insurance

14.11 Summary Notes

In marine insurance contracts, the proposal is made to the insurance company by the owner of
the ship to insure the vessel, crew and other cargo which is on board, to secure the same from the
marine perils. The insurance company accepts the offer for a payment of consideration called the
premium. The insurance company can demand for extra premium either to cover the extra risks
or cover the marine insurance contracts meant for the areas, which are decided to be high-risk
prone ports or routes.
The marine insurance contract, being a part of general/non-life insurance is a short-term contract
for a period of the voyage or for a maximum period of one year or for such period till a specific
purpose is complete. The premium is paid in lumpsum. Payment of insurance premium is must
as a consideration for the insurance cover. The insurance company issues a policy on payment of
insurance premium.

The insurable interest, principles of indemnity and proximate cause, contribution and subrogation
play an important role in the marine insurance business. A contract of marine insurance is a
contract based upon the utmost good faith and if the utmost good faith is not observed by either
party, the contract may be avoided by the other party.

The marine insurance policy should contain the clauses as per the Marine Insurance Policy Act,
1963. The policies of marine insurance may be voyage policy and time policy.
Health insurance may be provided through a government-sponsored social insurance program,
or by private insurance companies. The term health insurance is generally used to describe a
form of insurance that pays for medical expenses. It is sometimes used more broadly to include
insurance covering disability or long-term nursing or custodial care needs.

Accident insurance is a form of health insurance against loss by accidental bodily injury. This
protects the insured against loss due to injury. It also covers the loss of earnings resulting from
injury of the insured person.
In Personal Accident Insurance, it is deemed that a person has unlimited financial interest on his
own life but in practice there is a financial limit to the sum of insurance that matches the life of
an individual.

14.12 Keywords

Accidental Death: Death caused by accident. In case of death of the insured due to an accident
within the policy period, the nominee (mentioned in the policy) is compensated with the Sum
Insured.

Adventure: A risky undertaking of an uncertain outcome.
Bailee: A person to whom goods are entrusted by another, to hold and return after some time.
Bailer: A person entrusting goods to another, to hold and return after some time.
Barratry: It is a fraudulent practice/act committed by the master or crew of a ship to the
prejudice of the owner of goods.
Cargo Insurance: Type of ocean marine insurance that protects the shipper of the goods against
financial loss if the goods are damaged or lost.
Cargo: Goods being transported by rail, plane, truck, ship or other conveyance, excluding the
equipment needed to operate the conveyor.

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