Origins of formal marine insurance

Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek

and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and

other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied

with intuitive estimates of the variable risk from seasons and pirates.[1]

The modern origins of marine insurance law in English law were in the law merchant, with the

establishment in England in 1601 of a specialized chamber of assurance separate from the other

Courts. Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging of

law merchant and common law principles. The establishment of Lloyd's of London, competitor

insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty

lawyers, bankers, surveyors, loss adjusters, general average adjusters, et al), and the growth of

the British Empire gave English law a prominence in this area which it largely maintains and

forms the basis of almost all modern practice. The growth of the London insurance market led to

the standardization of policies and judicial precedent further developed marine insurance law. In

1906 the Marine Insurance Act was passed which codified the previous common law; it is both

an extremely thorough and concise piece of work. Although the title of the Act refers to marine

insurance, the general principles have been applied to all non-life insurance.

In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London

company insurers) developed between them standardized clauses for the use of marine insurance,

and these have been maintained since. These are known as the Institute Clauses because the

Institute covered the cost of their publication.

Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a

considerable freedom to contract between themselves.

Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance and

reinsurance. It traditionally formed the majority of business underwritten at Lloyd's. Nowadays,

Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form is

known by the acronym 'MAT'.

Specialist policies

Various specialist policies exist, including:

New building risks: This covers the risk of damage to the hull while it is under

construction.

Yacht Insurance: Insurance of pleasure craft is generally known as "yacht insurance"

and includes liability coverage. Smaller vessels such as yachts and fishing vessels are

typically underwritten on a "binding authority" or "line slip" basis.

War risks: General hull insurance does not cover the risks of a vessel sailing into a war

zone. A typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf

War. The war risks areas are established by the London-based Joint War Committee,

which has recently moved to include the Malacca Straits as a war risks area due to piracy.

If an attack is classified as a "riot" then it would be covered by war-risk insurers.

Increased Value (IV): Increased Value cover protects the ship-owner against any

difference between the insured value of the vessel and the market value of the vessel.

Overdue insurance: This is a form of insurance now largely obsolete due to advances in

communications. It was an early form of reinsurance and was bought by an insurer when

a ship was late at arriving at her destination port and there was a risk that she might have

been lost (but, equally, might simply have been delayed). The overdue insurance of the

Titanic was famously underwritten on the doorstep of Lloyd's.

Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with

coverage on an A, B, or C basis, A having the widest cover and C the most restricted.

Valuable cargo is known as specie. Institute Clauses also exist for the insurance of

specific types of cargo, such as frozen food, frozen meat, and particular commodities

such as bulk oil, coal, and jute. Often these insurance conditions are developed for a

specific group as is the case with the Institute Federation of Oils, Seeds and Fats

Associations (FOFSA) Trades Clauses which have been agreed with the Federation of

Oils, Seeds and Fats Associations and Institute Commodity Trades Clauses which are

used for the insurance of shipments of cocoa, coffee, cotton, fats and oils, hides and

skins, metals, oil seeds, refined sugar, and tea and have been agreed with the Federation

of Commodity Associations.

Warranties and conditions

A peculiarity of marine insurance, and insurance law generally, is the use of the terms condition

and warranty. In English law, a condition typically describes a part of the contract that is

fundamental to the performance of that contract, and, if breached, the non-breaching party is

entitled not only to claim damages but to terminate the contract on the basis that it has been

repudiated by the party in breach. By contrast, a warranty is not fundamental to the performance

of the contract and breach of a warranty, while giving rise to a claim for damages, does not

entitle the non-breaching party to terminate the contract. The meaning of these terms is reversed

in insurance law. Indeed, a warranty if not strictly complied with will automatically discharge the

insurer from further liability under the contract of insurance. The assured has no defense to his

breach, unless he can prove that the insurer, by his conduct has waived his right to invoke the

breach, possibility provided in section 34(3) of the Marine Insurance Act 1906 (MIA).

Furthermore in the absence of express warranties the MIA will imply them, notably a warranty to

provide a seaworthy vessel at the commencement of the voyage in a voyage policy (section

39(1)) and a warranty of legality of the insured voyage (section 41).[2]

Responsibilities

Classification societies set technical rules, confirm that designs and calculations meet these rules,

survey ships and structures during the process of construction and commissioning, and

periodically survey vessels to ensure that they continue to meet the rules. Classification societies

are also responsible for classing oil platforms, other offshore structures, and submarines. This

survey process covers diesel engines, important shipboard pumps and other vital machinery.

Classification surveyors inspect ships to make sure that the ship, its components and machinery

are built and maintained according to the standards required for their class

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Marine Insurance Application Form

Owner`s Name: *

Address:

Telephone: *

Email:

Fax:

Occupation of Insured:

Lienholder name, address and postal code:

Vessel Year, Make & Model:

Vessel Length:

Current market (resale) value:

Serial Number:

Vessel Name:

Lisence/Registration:

Purchase Date:

Purchase Price:

Power:

Hull Style:

Sailboats:

Propulsion:

Outboard

Inboard

Inboard/Outboard

Jet

Other

Other Propulsion:

Construction:

Custom Vessel/Professional Builder:

Home Built:

Engine Year, Make & Model:

Engine Serial Number:

Maximum Horsepower:

Maximum Speed:

Fuel:

Stainless Steel Propeller(s):

Trailer Year, Make & Model:

Leave Blank if it does not apply.

Tender Year, Make & Model:

Leave Blank if it does not apply.

Outboard Motor Year, Make & Model:

Leave Blank if it does not apply.

Other Equipment Year, Make & Model:

Please Describe. Leave Blank if it does not apply.

Radar Year, Make & Model:

Depth Finder. Year, Make & Model:

G.P.S. Year, Make & Model:

V.H.S. Year, Make & Model:

Other Electronics Year, Make & Model:

Please Describe. Leave Blank if it does not apply.

Appliances:

Stove

Heater

Barbeque

Refrigeration

Continuous Burning Pilot light:

Appliance Fuel:

Gas

Diesel

Propane

Butane

Natural Gas

Where is the fuel tank located:

Fire Extinguishing System:

CO2

Halon

Area Protected:

Safety Appliances:

Fume Detector

Automatic Bilge Pump

Engine Blower

Smoke Detector

Auxiliary Generator Fuel Type:

Is the vessel equipped according to Canadian Coast Guard Standards: *

Sailboats, Describe Sail inventory:

Leave Blank if it does not apply.

Winter Lay-Up Location:

Lived Abord (winter):

No

Yes

Location:

Ashore

Afloat

Summer mooring location:

Water Navigated:

Is the vessel lived abord during the summer:

Water skiing/tubing/Knee boarding, towing ... etc:

Is the vessel a race boat or used for or in races:

Please Describe below. Leave Blank if it does not apply.

Is the vessel used commercially or chartered:

Please Describe below. Leave Blank if it does not apply.

Is the vessel corperately owned:

Please Describe below. Leave Blank if it does not apply.

If you charter your yacht what is the length of employment in commercial operations:

Leave Blank if it does not apply.

If you charter your yacht what are the estimated annual gross receipts:

What is the passenger capacity of the vessel:

Do you employ a paid crew or Captain:

Qualifications and experience of all operators:

Include applicant, age, years experience (owner/ operator), size of vessels (owner/ operator),

drivers licence number.

Are all the operators graduates of an approved power/sailing course:

Please describe.

Has any operator or owner had any losses with this or any other boat in past 5 years:

Leave blank if it does not apply.

List all other insurance losses in excess of $5000 within the past 5 year period:

Leave blank if it does not apply.

Suspension of Licence:

Yes

No

Have you or the operator of the vessel had a suspension of your lisence because of an

impairment, dangerous driving or criminal negligence within the past 6 years?

Convictions:

Have you or the operator of the vessel been convicted of an infraction relating to the sailing of a

marine vessel?

Have you or the operator of the vessel been in a court of law for insurance fraud:

Remarks/Losses/Violations:

Explain. Leave blank if it does not apply.

Name and policy number of previous Insurer:

Insurance Policy Expiry Date:

If your previous policy was cancelled, lapsed or renewal was refused, explain below:

Amount of insurance required for the hull and equipment:

Amount of insurance required for the tender and outboard motor:

Amount of insurance required for the boat trailer:

Amount of insurance required for the personal effects:

Amount of insurance required for injury and property damage liability:

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Client Name

Tel

Fax

Email

Policy No.

Isse Date

Commencement Data

Expiry Date

Date of Loss

Cause of Loss

Dealer

Carrier

Loss Claimed (Amount)

Intimation Remarks

Marine Insurance

International business carries with it significant risks. The importing and exporting of goods can expose

you to massive financial losses should your international shipments be damaged or destroyed in transit.

HDFC ERGO’s Marine Cargo Insurance not only provides the best protection for your cargo, but also

understands the importance of swift response and efficient service in handling your claims.

Catering to both importers’ and exporters’ needs, the coverage is comprehensive and flexible with

international shipments protected from the time the goods leave the seller’s warehouse until they reach

the buyer’s warehouse.

The party usually responsible for insuring the goods is determined by the sales contract. To help you

familiarise yourself with the buyer’s and seller’s responsibilities, HDFC ERGO can extend its experience in

respect of the most common sales contracts, i.e. ex-Works, Free on Board (FOB) , Cost and Freight (CFR)

and Cost Insurance and Freight (CIF).

Types policies

Policies are customisable to your needs, with a specific policy to cover each single consignment.

There are also other various types of policies:

Open Policy - This policy covers all the marine sendings of a client in a 12 month policy

period where the voyage involved is within a country (domestic/inland)

Open Cover – This policy covers all the marine sendings of a client in a 12 month policy

period where the voyage involved is import or export

Specific Voyage or Time Policy - These policies are issued to firms that require

coverage for a specific voyage. It is suitable for those firms who seldom require marine

cargo policies in the course of their trade.

These policies are issued on a "from and to" basis and the cover commences once the

goods leave the place of origin named in the policy and terminates on delivery at the

place of destination.

Sometimes these policies are also issued in terms of duration of the voyage, in which case

the cover commences on the date and time specified for the same in the policy. Inland

specific transit will exclude terrorism.

Duty Insurance Policy - Customs duties form a major part of the cost of imported goods.

Once the goods land at the port of destination custom, duty becomes payable.

In case the goods are damaged during the transit from the port to the importer's

warehouse, the CIF value is not sufficient to represent the actual value of the goods since

the custom duties should have already been paid.

This additional element of cost can be covered by a Duty Insurance Policy. Claims under

a duty policy are only payable if the claim is otherwise admissible in the marine cargo

policy covering the goods.

Seller’s Contingency Policy - In almost all export transactions where credit is allowed

by the seller to the buyer and the goods are not exported on CIF basis, responsibility for

the goods passes to the buyer when the goods are loaded on to the overseas vessel. But

ownership does not change until the buyer accepts the goods and relative documents.

Thus, if the seller is allowing credit to the buyer and has shipped goods on FOB terms,

where the responsibility for loss or damage to the goods is passed to the buyer when the

goods are loaded on to the overseas vessel, the seller has no control over the conditions of

the insurance cover arranged by the buyer.

In the event of loss of or damage to the goods in transit from a peril insured against and

the buyer refusing to pay for such loss or damage, the seller could stand to lose

financially. Seller's Interest or Contingency Interest cover could help to prevent this.

The cover is normally arranged as an extension of FOB cover. The seller's interest cover

in effect retrospectively reinstates cover, as per Institute Cargo Clauses as provided for in

the policy and allows the seller to be protected in an area where he has no control over

the insurance arrangement.

E-marine – HDFC ERGO has the facility which provides any time marine certificate

issuance facility to clients/ intermediary. This facility is provided free of cost and can be

availed by any one who buys open marine cover or policy from HDFC ERGO.

Marine

A rich heritage and mastery of Marine insurance

CNA has been underwriting marine insurance in Europe since 1864. Over the past century and a

half, we have become a leading and trusted player in this specialist class of business. Operating

from branches throughout Europe, our highly qualified and respected team provides brokers and

clients with superior technical expertise, responsive service, market-leading products and value.

In this specialist field, our broad coverage is based upon clear, concise, comprehensible policy

wordings. And when it comes to more complex and unusual risks, our experts have the

knowledge to provide flexible and tailor-made solutions.

Our in-house marine claims service prides itself on superior technical competence, integrity and

speed of settlement. Our unique structure allows small claims to be handled efficiently and

complex claims to be directed immediately to the company’s most experienced adjusters.

Our products include:

Marine Cargo (including annual and open covers, single shipment policies, exhibition

risks, affinity schemes and own vehicle policies)

Stock and Transit policies (providing continuous cover for goods in transit and

worldwide storage with premium based upon a single turnover-based rate)

Freight Liability (for hauliers, warehouse keepers, freight forwarders, logistic operators

and other transport companies)

Sub-sea operating equipment policies (and other type of equipment policies that cover

physical loss or damage to equipment whilst in use, in transit or in store on a worldwide

basis)

Global insurance programmes that cover all marine insurance risks relating to a

multinational clients operating subsidiaries worldwide (by using a combination of locally

admitted policies and a supporting master policy)

Online policy management – CNAcargo.com

CNA is committed to providing innovative products in order to continuously improve efficiency

and reduce a client’s costs. Our online policy management system, www.cnacargo.com , is a

market-leading solution that allows brokers and clients to issue marine insurance certificates,

make shipment declarations and manage their cargo exposures securely, simply and efficiently.

Risk Control

Our marine risk control experts work alongside our marine underwriters and claims experts to

mitigate and manage the risks associated with the storage and distribution of goods worldwide.

For further information, please visit our Marine risk control advice and service.

Our objective

Our objective is simple. We strive to attract, retain and develop the highest quality people - in

claims, risk control and underwriting - so that we can provide brokers and clients with superior

technical expertise, responsive service, market-leading products and value for money.

Conclusion

The bias that surrounds the useful information volunteered in this manual is that, unless you have

an in house commercial marine or oil field insurance professional, you need the services of an

outside one to keep your USL&H workers comp, Maritime Employers Liability and other

commercial insurance costs down and to make sure that you have the coverage you need.

The complex nature of marine and oil field Insurances causes many operators to leave Insurance

to the last minute or occasionally bring in another agent or agents to generate some competition.

In practice all this does is increase the amount of uncontrolled activity on your business. There is

no way you can control it because in order to do that you need a degree of knowledge that can

only be achieved from being in and knowing the industry.

Course Objectives

By the end of this program the participant should be able to:

a]Understand the importance of insurance in the economy

b) Understand the principles governing the practice of insurance

c) Understand the origins and historical development of insurance in general and marine in particular

d) Understand the international maritime conventions governing the international maritime laws

e) Understand the legislation governing insurance operations in general and marine insurance in

particular

f) Appreciate the emerging trends in the insurance industry