Marine Insurance

Topics: Insurance, Ship, Cargo Pages: 5 (1628 words) Published: July 16, 2012

It is said that marine insurance started sometime by the end 12th century in North Italy though some writers opine that it was in 3000 BC (not in the present form) when the Chinese merchants were dispersing their shipments along with several vessels with a view to minimize the damage to the shipments. Then a time came when the insurance of ships and cargo came in the form of bottomry that was essentially a monetary protection in the case the cargo is lost at sea or damaged. Then, the Danish sometime in 1132 started reimbursement of the loss occurring at sea. When Italian merchant came to England, they brought with them this practice of marine insurance. Since then it passed through various developments and the marine insurance in present form was the creation of Lloyds Association in 1774 in London. The merchants concerned with the marine insurance used to assemble In coffee house where the members of the Lloyds Association used to take marine insurance, or liability of marine perils, according to their financial position. Even today it is the leading party in whole of the world.

The marine insurance was modified from time to time and then each country passed its own law regulating the marine insurance. The Marine Insurance Act, 1906 was passed in England and the Indian marine insurance business was conducted according to the provisions of that Act.

At present in our country the Marine Insurance Act, 1963, guides the marine insurance. This Act was made in order to codify the law relating to marine insurance. The Objects and Reasons of this Act throw light on what was the necessity for enacting this Act. According to it, the Indian Navy and Indian Shipping have undergone considerable expansion since Independence. As there was no Indian legislation to govern the marine insurance, it continued to be governed by the British Marine Insurance Act, 1906. At the same time the insurance contracts in India also became subject of the Indian Contract Act, 1872.The insurance policy forms used in India were the English forms based on mercantile customs and business convention. At times, it appeared to be in conflict with the provision of Indian Contract Act which resulted in the own interpretation by the Court. To overcome these difficulties, the Marine Insurance Act was enacted in the year 1963. The marine insurance covers practically everything, namely, the ships, the fishing vessels, the cargo, the freight, etc., but there are three main categories of such insurance, that is, the cargo, the hull and the freight.

The cargo insurance is generally taken by the owner of the consignment (not necessarily owner of the ship) to protect and saveguard the cargo against sea perils. Such insurance generally cover the risk for damage from pirates, theft, fire, damage due to sea water, storage contamination, jettison, explosion, general average sacrifice, general average contribution, and the like. The cargo insurance may be from port to port, or from warehouse to warehouse depending upon the terms and conditions in the policy.

Hull Insurance covers perils of sea, like, damage to vessel due to rough sea that may be total or partial. This insurance generally covers, unless excluded by the policy, the risks of explosion, fire, collision with any other fixed or floating object, piracy, general average contribution, salvage charges, damage due to bursting of boilers. The cargo insurance is normally confined to the transit period, namely, from port to port or from warehouse to warehouse but the hull policy is generally for one year. It may single vessel insurance or a fleet insurance.

Definition of Marine Insurance

The marine insurance has been defined in Section 3 of the Marine Insurance Act which runs as under:

“ A contract of marine insurance in an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby...
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