MARINE INSURANCE

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MARINE INSURANCE

• Lecture 15
• Week 8

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DEVELOPMENT

• One of the earliest forms of insurance
• Developed out of bottomry and respondentia bonds
• Standard forms used by Lloyds
• Marine Insurance Act 1906
• Often includes aviation insurance
• Different terminology

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TYPES OF COVER

• Hull
• Cargo
• Freight
• Voyage
• Collision

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TYPES OF VESSELS COVERED

• Dinghies
• Yachts
• Cargo vessels
• Liners
• Super tankers
• Oil rigs
• Fishing vessels

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BASIC COVER

• Perils of the sea and other navigable waters
• Restraint of princes
• Piracy
• All risks

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FURTHER COVER

• Pollution Hazard
• War and strikes clause
• Bursting boilers or breaking shafts
• accident or negligence of a third party

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IMPLIED WARRANTIES

• Seaworthiness
• Damaged bottom
• Insufficient crew
• Legality
• Marine Insurance Act 1906

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PARTICULAR AVERAGE

• This means a partial loss
• Covers loss caused by
• Perils of the sea rivers lakes or other navigable
  waters
• fire, explosion
• violent theft
• jettison
• piracy

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MEASURE OF INDEMNITY

• s.69 Marine Insurance Act 1906
• Where ship has been repaired the reasonable cost
  of repairs less the customary deductions but not
  exceeding sum insured
• Where partially repaired cost of repairs plus
  reasonable depreciation subject to not exceeding
  cost of complete repair
• Not repaired - the reasonable depreciation

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EXAMPLES OF ADJUSTMENTS

• Bottom end bearing fractured in generator as a
  result of latent defect led to damage to liner.
• Cost
• Bearing 5000
• Liner 4000
• Cylinder 3000
• Piston 6000
• Total 18000

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ADJUSTMENT

• Excess 2000
• Standard policy would exclude replacing defective
  part
• Thus total amount payable is 11000
• 18000 - 5000 (bearing) - 2000 (Excess)
• Additional perils clause would have covered
  bearing

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TOTAL LOSS CLAIMS (SHIP)

• Institute time clauses
• Hulls total loss only including salvage, salvage
  charges and sue and labour
• Hull total loss, general average and 3/4ths
  collision including salvage etc
• Hulls disbursements

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TYPES OF TOTAL LOSS

• Constructive total loss
• Deprived of ship by insured peril
• Recovery would exceed value
• or repair exceeds value
• Abandonment
• Insured entitled to abandon loss when
  constructive total loss
• Consequence is that if insured accepts notice of
  abandonment subject to assets and liabilities.
  May not accept abandonment

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SUE AND LABOUR CLAUSES

• Covers expenses reasonably incurred by insured to
  save vessel and cargo
• Paid in excess of sum insured.

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COLLISION LIABILITY

• Covers three quarters of the cost of liability
• Rest paid by Protection and Indemnity
  associations
• It is a liability policy

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CARGO

• Same risks and same methods
• General average clause
• Losses arising for the preservation of ship and
  cargo
• Salvage loss
• Follows forced sale of badly damaged cargo

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CARGO PARTIAL LOSS

• Where goods delivered damage measure of indemnity
  is
• Proportion of sum fixed by policy
• equal to the gross sound value less damaged value
  at place of delivery
• Example
• Goods insured at 120,000 Damaged value
  80,000 Sound value 100,000
• Depreciation or proportion is 20
• Apply this to 120,000 gives 24,000

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FREIGHT

• Profit made by a shipowners out of ships used to
  carry cargo, both their own and others
• The cargo includes all moveables
• Loss occurs when cargo is not deliverable

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FREIGHT LOSS

• Valued and unvalued policies
• Indemnity is the proportion of freight lost to
  freight at risk applied to insured
• This could be subject to Measure of indemnity
  clause which limits freight to amount actually
  lost.

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THE END ANY QUESTIONS