1. Why Marine Insurance?

Marine Insurance is a method where by one party called assuror or

underwriter, agrees for a stated consideration known as a premium, to
indemnify another party, called the insured or assured, against loss,
damage or expense in connection with the commodities at risk if caused
by perils enumerated in the contract known as a policy of insurance.
Insurance provides individuals and organisations with financial
protection against the outcome of events which involve monetary
loss or liabilities which could not be predicted or anticipated and
over which they have no effective control.
Ship owners are not legally bound to insure except for liability of
oil pollution claim. However the modern methods of financing trade
and shipping makes it essential that they do so.
The capital exposed to loss in modern ship is so huge that no
company can afford to bear the liability incurred.
Besides most of the tonnage is mortgaged to banks and other
financial institutions and they require insurance as collateral
security.
There are various types of marine insurance policies available and they
could broadly be classified into 5 types.
1. Time policy - Insures property for a period of time.
2. Voyage policy - It insures property from one place to another it may
include a date limit.
3. Mixed policy - It covers both a voyage and a period of time of voyage
and in port after arrival.
4. Construction policy - It insures vessel while in course of
construction not for a period of time.
5. Floating policy - cargo policy that insures a number of shipments. In
Canada & US this policy is continuous and covers all shipments to a
limit of liability for any 1 loss.
The marine insurance policies that a ship owner can take are
1) Hull & machinery policy
2) Protection & indemnity cover.
The insurance policies for a cargo owner include
1) Marine cargo insurance
2) Goods in transit insurance.
Insurer is not liable for loss in following
1.Breach of contract ,Warranties & Fundamentals of insurance
2.Any loss due to willful misconduct / want of due diligence by assured.
3.Ordinary wear and tear, ordinary leakage and breakage, inherent vice
or nature of the subject matter insured.
4. Damage to subject matter not proximately caused by maritime perils.
5. Any loss proximately caused by rats or vermin.
6.The insurer on ship or goods is not liable for any loss proximately
caused by delay, although the delay is caused by a peril insured
against.
7.Insolvency or Financial default of the owner.
8.Claims not made in stipulated time window say within 180 days.
Exclusion in insurance Common but covered by additional cover
1.War & Strike, capture, seizure, detention, arrest, riots, & etc.- ALL
2.Terrorist ,Political & Malicious acts - All

3.Radioactive, Chemical, Biological, Biochemical, Electromagnetic weapon

damages. - All
4.Third party liabilities including oil pollution, which arise in
connection with the operation of a vessel- By P&I
5.Bursting of boiler, breakage of shafts, latent defects, IncompetencyHulls
Suppose shipowner takes the policy from the P&I now the vessel is sold
to another person will policy get transferred?
Ans: NO the policy will not gets transferred, because new owner may not
be a member of the same club, While other insurance premiums are fixed
on the basis of probabilities - or actuary calculations, P&I insurance
premiums are reviewed annually on a per ship and/or fleet basis. Several
factors are taken into account in the process, most importantly the
claims record of the vessel, specifically the average loss-ratio (claims
as percentage of premium) over the previous 5 years.
2. Third party liability and contractual liability?
Third party liability
An
insurance
policy
is
a
contract.
The
insured
is
referred as first party to the
contract.
The
insurer
i.e.
insurance company second party.
A stranger to the contract who
makes a claim against insured
is known as third party.
When the insured first party
causes a loss then the second
party
assumes
the
insured
liability up to the policy
limit.
Third
party
liabilities
are
those
liabilities
which
are
caused to any other persons or
his property not included in
any contract
Examples
of
third
party
liabilities
are
collision,
third party injury or death
claim, oil pollution liability,
cargo
claim,
crew
claim,
unrecoverable general average
contribution etc
For each defined peril there is
fixed premium. More cover means
more premium required by the
parties.
There
is
no
mandatory
requirement for the party to
take any type of policy except
Liabilities
for
pollution
damage. Rest is left to the

Contractual liability
During any agreement both parties agree
for certain terms and conditions for
achieving
particular
goals
and
interests. So some liabilities are set
towards achieving goals. As agreement
is signed by them, the liabilities are
called contractual liability
Contractual liabilities for a ship
owner are those by which he winds
himself under some contract with second
party
Here the liability is documented for
specific occasion and specific time.
Contractual liability claim settlement
takes
place
in
a
judiciary,
arbitration, tribunal as in agreement
This form of agreement where one party
takes on the liability of another by
contract is commonly termed as Holder
harmless
or
indemnity
agreement.
Contractual liability is the express
liability namely charter party, bill of
lading, cargo insurance, contractual
salvage, charterer agreement, towage
e.t.c.
Ship owner takes following types of
contract:
a. With employee
b. With flag state administration for
safe operation, to compliance with
national/international
regulations/conventions.
c. Contract with cargo owner
d. Contract with salver or tug owner

ship owner and cargo owner or e. Contract with class and his fees and
any other party involved in the survey
maritime
adventure
to
take f. Repair contract etc.
cover for various liabilities
and bear themselves.
3. Marine insurance in India?
The Marine Insurance Act, 1963 (MIA1963) of India is substantially a
reproduction of its English counterpart, the Marine Insurance Act, 1906.
The act codifies the law relating to marine insurance i. e. it defines
various terms of the contract and their implied content and terms.
4. Principles of marine insurance?
1. Indemnity: It defines marine insurance as a contract whereby the
insurer undertakes to indemnify the assured, in manner and to the extent
thereby agreed, against marine losses, that is to say, the losses
incident to marine adventure. It permits mixed sea and land risks.
Indemnity means that the insured person is placed, financially, in the
same position, as he was before the loss. To indemnify is to make good a
loss suffered, not by replacement of the subject matter lost, but by a
financial payment; i.e. to compensate. Ships and cargoes therefore
normally have a value put on them at the commencement of the risk (i.e.
at the time of effecting the policy), and insurers use these values to
determine the measure of indemnity they will give the assured. Thus, in
marine insurance, the value of the subject-matter insured may be
different from its actual value at the time of loss, depending on how
the market has gone since the policy was effected. But whether or not
the assured has gained or lost by a fluctuation in value will not affect
what the insurer pays on the claim.
2. Double Insurance: Contribution is a principle of indemnity whereby
the assured cannot claim more than once on the same risk. Thus if he has
policies covering the same risk with two insurers (double insurance),
each makes a pro-rata contribution to any settlement. Double insurance
is not the same as spreading the risk between several insurers, which is
normally done.
3. Insurable interest: The Act does not give an exhaustive definition of
insurable interest. But it gives a general rule that to constitute
interest insurable against a peril, there must be an interest such that
the peril would, by its proximate effect, cause damage to the assured.
Without the rule of Insurable Interest, a person could insure a vessel
with the hope it would sink and collect the insurance. It declares every
contract of marine insurance by way of wagering as void. Interest in the
property insured does not have to be 100%--a person may insure up to the
value of his share of the property. Interest is acquired in the property
insured by the insurance company and they may reinsure to protect their
interest.
4. Utmost good faith: A contract of marine insurance is a contract based
upon the utmost good faith and if the utmost good faith be not observed
by either party, the contract may be avoided by the other party. The
contract is voidable at the option of the party prejudiced. An
underwriter pleading concealment must come out and say what he was told
and was not told.

5.Conclusion of contract: The contract is concluded when the assureds

proposal is accepted by the underwriters, whether or not the contract
document (the policy) is issued at that time.
6.Policy:Sections 24-33 of MIA 1963 deals with the embodiment of
contract, specifications in the policy, signature of the insurer,
designation of the subject matter in the policy, valued and unvalued
policy, floating policy, construction of the terms in the policy and
arrangement of premium. It recognizes two types of policy Time policy
and Voyage policy.
7. Subrogation: Subrogation is another principle whereby the assured
cannot recoup his loss from another party, after the insurer has settled
his claim. E.g. where the insurer has paid a goods owners claim, the
goods owner cannot afterwards claim from the carrier. Instead the
insurer who paid the claim, subrogates or takes over the assureds
rights in respect of any claim against a 3rd party. An insurer paying a
claim for goods lost or damaged on board may then claim against the
carrier in his own name and can retain any sum recovered up to the
amount claimed, any excess being repaid to the assured.
8. Warranty by Insured: Promise by Insured as part of contract that a
specified state of affairs will continue to exist for duration of
policy. It is a condition which must be exactly complied with, whether
it is material to the risk or not Breach of warranty makes policy
voidable from time of breach. Warranty may be expressed or implied;
Express warranty
An express warranty must be written into the policy or contained in some
document (e.g. Institute Warranties) incorporated by reference into the
policy. An express warranty does not override an implied warranty unless
the two conflict. Eg: Some of the common express warranties are
Navigation / trading warranty, private pleasure, towing warranties, ice
zones, war zones.
Implied warranties:
Implied warranties are not written in the policy but are implied by law
to exist in the contract. They must be strictly complied with in the
same way as express warranties. There are two major implied warranties
in marine insurance policies, covering seaworthiness and legality.
Seaworthiness
Under the MIA 1963, the ship must, at the commencement of the voyage, be
seaworthy for the purpose of the particular
Voyage insured. Thus a ship is deemed to be seaworthy when reasonably
fit in all respects to encounter the ordinary perils of the seas of the
adventure insured. Where, with the assureds knowledge and consent, a
ship is sent to sea unseaworthy, the insurer is not liable for any loss
attributable to the unseaworthiness. This means that cover may be lost
if the ship is sent to sea in an unseaworthy condition with the
knowledge of the owners senior management. Knowledge would include
both express, clear knowledge (e.g.after defects have been reported in
writing by a master or a surveyor) and the deliberate turning of a
blind eye. Cover would only be lost, however, where the known
unseaworthiness had caused the loss.
With reference to H&M policy, if the policy is voyage policy, there is
an implied warranty that at the commencement of the voyage, the ship
shall be seaworthy for the purpose of particular adventure. A ship is

deemed to be seaworthy when reasonably fit in all respects to encounter

the ordinary perils of the sea of the adventure insured.
But if it is a time policy, there is no implied warranty that the ship
shall be seaworthy at any stage of adventure but where, with the privity
of the assured , the ship is sent to the sea in an unseaworthy state,
the insurer is not liable for any loss attributable to unseaworthiness.
Legality:There is an implied warranty that the adventure insured is
lawful and that, so far as the assured can control it, the adventure
will be carried out in a lawful manner. If the adventure is illegal at
the time the insurance is effected, the policy will be void. Thus, drugrunning or gun-running trips, or voyages to countries or .ports subject
to a Government embargo, would be deemed unlawful.
There is an implied warranty that the adventure insured (voyage time are
mixed policy) is lawful and that so far as the assured can control it.
The adventure will be carried out in a lawful manner. If the adventure
is illegal at the time of the insurance is affected, the policy will be
void.
9.Breach of warranty: If a warranty is breached, then subject to any
express provision in the policy, the insurer is discharged from
liability from the date of the breach, but without affecting any
liability incurred by him before that date. If a loss occurs after a
warranty has been breached, the assured cannot use the defence that the
breach was remedied and the warranty complied with once again before the
loss occurred.
10.Doctrine of proximate cause: An insurer is liable for any-loss
proximately caused by a peril insured against, but, subject to the same
conditions, he is not liable for any loss not proximately caused by a
peril insured against. Where there is a chain of events leading to a
loss, the proximate cause is the most dominant and effective cause, not
the nearest cause in time. For example, if a ship is scuttled, the
proximate cause is the act of scuttling, although the nearest cause in
time is seawater entering the ship. An assured who scuttled his ship
might claim that a peril of the seas was the cause of his loss, but
the insurer would not be liable as scuttling is willful misconduct of
the assured.
11.Insurers liabilities and exclusions: The insurer is liable for any
loss proximately caused by a peril insured against, but, subject to the
same conditions, he is not liable for any loss not proximately caused by
a peril insured against. The insurer is not liable for any loss
attributable to the willful misconduct of an assured, but unless the
policy otherwise provides, he is liable for any loss proximately caused
by a peril insured against, even though the loss would not have occurred
without the misconduct or negligence of master or crew. Thus, if a ship
runs aground through its masters or crews negligence, the underwriter
will be liable.
5. TYPES OF MARINE LOSSES?
A marine loss may be either:
1. A total loss :a. An Actual Total Loss (ATL) :- There is an Actual Total Loss where the
subject matter of Insurance is completely destroyed Eg: where a ship has
not reported for several weeks.

b. A Constructive Total Loss (CTL).: In marine Insurance a Constructive

Total Loss occurs where an assured is deprived of possession of his ship
or goods by a peril insured against and where the subject matter of
Insurance is reasonably abandoned by the Insured on account of its
Actual Total Loss appearing unavoidable because it could not be
preserved from Actual Total Loss without expenditure that would exceed
its value after the expense had been incurred.
2. A partial loss (termed average)
a. Particular Average (PA), i.e. an accidental partial loss; or:
Particular Average (PA) loss is a partial loss, proximately caused by a
peril insured against and which is not a general average loss. Thus,
structural damage proximately caused by collision, grounding, heavy
weather, etc. (perils of the seas) would normally be classed as a PA
loss.
b. General Average (GA), i.e. an intentional partial loss.: General
average is an ancient form of spreading the risk of sea transport and
existed long before marine insurance. General average means general
loss, as opposed to a particular loss under marine insurance. A general
average act is defined in Rule A of the York Antwerp Rules 1994 and
Marine Insurance Act as follows:
There is a general average act when, and only when, any extraordinary
sacrifice or expenditure is intentionally and reasonably made or
incurred for the common safety for the purpose of preserving from peril
the property involved in a common maritime adventure.
The five component parts of a general average loss are therefore:
a) an extraordinary sacrifice or expenditure,
b) which is intentionally
c) and reasonably made
d) against a peril,
e) in order to benefit the common venture.
6. Reinsurance?
Reinsurance is the insurance of insurance. It is the insurance arranged
by an insurer to cover all or part of the cost of claims that it may
incur under contracts of insurance it may have written. Insurers reduce
their exposure to risk by insuring themselves against claims. The
practice is known as reinsurance. General Insurance Corporation (GIC)
was designated as the Indian Reinsurer in November 2000 by Act of
parliament to function exclusively as Life and Non-life Reinsurer. The
reinsurance regulation of the country aims at maximum retention of
insurance premium within the country. As per existing statute, GIC is
entitled for 20% obligatory cessions on risks underwritten by the nonlife insurers in India. The legislation also provides for utilizing
GICs capacity before any risk is offered to the international market.
Being the Indian Reinsurer, GCI plays the role of reinsurance
facilitator for the Indian insurance companies.
7. P&I, H&M and cargo insurance?
P&I:
A Protection and Indemnity or P&I club is a nongovernmental, non
profitable mutual or co operative association of marine insurance
providers to its members which consists of ship owners, operators,
charterers and seafarers under the member companies for the purpose of
mutual insurance against third party liabilities arising in connection
with ship operation.

1. P&I means protection refers to the ship owners protection from

risks which involve personnel injury, collision liability which is
not covered by H&M policy and indemnity refers to the clubs
indemnity or compensation for liability to cargo under a contract
of carriage. wish to pool their risks together in order to obtain
at cost insurance cover.
2. It is governed by a board of directors (a committee elected). It
has managers for underwriting and claim sections and has
correspondents, lawyers and surveyors at various ports of the
world. There are 13 major P&I clubs world wide which covers almost
90% of the world fleet. Some of them are SKULD, GARD, BRITANIA,
AMERICAN CLUB, STEAM SHIP MUTUAL, NORTH OF ENGLAND, WEST OF ENGLAND
Etc
3. Each P&I club sets a premium rating for an individual owner
reflecting the risk against which he requires cover on the basis of
his fleets gross tonnage, his fleets exposure to risk, type of
ships, etc.
4. The member is advised of his total estimated call (premium) for
next 12 months. This comprises of an advanced call and a
supplementary call. Advance call is levied from all the members at
the start of the P&I year. Later in the year if the claims have
been heavier than expected, the managers will ask the members for a
supplementary call.
5. The clubs aim to be as much accurate in their prediction for future
claims, so that they do not burden ship owners with supplementary
calls. Surplus refunds are made if income (call + investments)
exceeds outgoings (claims + expenditure).
The principal risks covered are liabilities, costs and expenses for:
Crew related
Injury/ hospitalization
Deviation
Death, repatriation of body
Repatriation of injured crew and for his reliever
Personal effects, in case of fire
Crew wages, if the vessel lost and passenger saved.
Passenger claims
Third party people
Injury to Supplier, Agents, stevedores etc.
Cargo related
Damage to cargo( Wet)
Collapsing of twin deck
Cargo shifting and damaging the hull- In this case the H&M
insurance will pay first but later they will charge from the ship
owner as it may be due to lack of lashing arrangement or improper
lashings. That will be paid by the ship owner.
Damage to fixed and floating objects/ installations
S.P.M, Buoys, shore crane etc.
Wreck removal
Sometimes ship wrecks has to be removed, marked or destroyed if it
is in a channel.

 Pollution of any nature

Sometimes the claims will be so high and the individual clubs have
limitations. Those cases it will be paid by clubs, pools and
reinsurance. Reinsurance is available up to 2030B$
Fine
Customs, immigration cordaband etc.
Piracy
For Crew and cargo.
Stoways
Fines and cost for repatriation.
Deserter
Fines and cost for repatriation.

Salvage
Which is not a part of GA(Salvage for oil pollution)
GA unrecoverable for cargo.
GA unrecoverable for H&M.

Restrictions on P & I cover include :

1) Deviation
2) delivery of cargo at port other then port specified in the contract
of carriage.
3) failure to arrive or late arrival at port of loading
4) delivery of cargo without bill of lading
5) Out dated bill of lading
6) clean bill of lading in respect to damaged cargo
7) arrest or detention.
When a ship owner requires P&I insurance for a ship, the club
underwriter will ask for information which the ship owner has to
furnish. Information he will require is:
The tonnage of the ship in GT,
Year of build, Number of crew members,
Type of vessel (tanker, dry bulk, reefer, heavy-lift, container,
passenger, ro-ro etc),
Type of cargoes to be carried (if a tanker is clean or dirty),
Areas of trading,
Liner trade or tramp,
Classification society,
Management expertise,
Compliance with national and international legal requirements,
How many ships in the company,
Previous P&I history.
The club will often make a company audit with the management company of
the ship. In addition, the club will often require a survey of one or
more ships in the new fleet to ensure the quality and technical standard
of the ships. Entry into the club is often dependent upon the ship being
found satisfactory on inspection.

Omni bus clause: Rules of the club gives their directors discretion to
pass a claim that are not covered under any head provided they are not
excluded expressly elsewhere. This is most unusual provision makes P&I
not profitable and cooperative and benefit for the ship owner who are
members.
After the H&M claim is quantified and documented, the underwriter
settles the claim. The underwriter then decides (under the doctrine of
subrogation) whether or not the claim is worth pursuing against the
carrier. If he decides to pursue the claim, he immediately makes a
written claim on carrier. The claim is settled by the carrier in the
currency stated in the policy. The carrier then claims on his P&I club
for reimbursement. But P&I club requires following documents from ship
to settle the claim by the claimants:1. Bilge, ballast and bunker sounding and pumping record
2. Cargo ventilation, humidity and temperature record
3. Records of any unusual weather condition
4. Records of hatch, access, hold and watertight doors check
5. Records of fire and safety equipment check
6. Records of cargo securing and lashing
7. Records of cargo temperature(heating or cooling) where applicable.
8. Records of inert gas and venting operation as applicable
P&I clubs stress the importance of keeping record in order to help
defeat cargo claims by cargo insurer.
Method of Handling Claims
1.Up to 9m USD by individual Club
2.71m to 80m USD by International group Pool
3. 80m to 2000m USD by Excess loss Re-insurance
4. 2000 USD & above by overspill calls
5.Limitation to Oil Pollution single Claim 1billion USD
6.Limitation to any Passengers Claim 2 billion USD.
7.Limitation to passenger & Crew 3 billion USD.
8.Limitation to any single largest Claim 4.35 billion USD.
9.Standard maximum limit of USD 10 m per event crew Cover
10.Standard maximum limit of USD 500 m per ship war risk Cover
H&M
These are usually time policies with a maximum period of 12 months.
Normally the items covered will be clearly stated in the clauses of each
policy. Any extra port to be covered will raise the insurance premium.
The different types of H&M policies a vessel owner can purchase to
insure a vessels are:a) Navigation policy: it provides coverage when vessels are used in
maritime operations
b) Port risk policy: Used when a vessel is expected to be laid up or non
operational for an extended period of time
c) Builders Risk policy: Used to cover a ship being built from the time
its keel is laid until the ship is completed and accepted by the owner
including sea trials
d) Work Risk Policy: Covers damage to the vessel for war and other risks
excluded from the H&M policy by the war, strikes and related exclusions
clause. This policy also covers damages caused by strikes, lockouts,
labour disturbance riots and civil commotions, which may be important in
a port environment.

1.Paramount Clause :- 1.War & Strike exclusion 2. Terrorist, Political &

Malicious act exclusions 3.Nuclear & specified weapon exclusions, shall
override contained in this insurance inconsistence herewith.
2.Institute Warranty Navigational Limit & Restricted cargo with
periods
3.Sister ship adjusted with applicable arbitration
4.New for Old No deduction as depreciation
5.Fixed & Floating objects - 3/4th & 4/4th
6.Running down - 3/4th & 4/4th
a.Single liability First setting off liability, and then apply
limitation.
b.Cross liability First apply limitation and balance liability applied
7.Sue & Labor incurred to avert / minimize loss
8.General Average contribution in common adventure loss
9.General Average Absorption- total contribution in GA subject to
conditions
10.Deductibles: - it is an agreed amount to deduct in each claim to
ensure the owners participation. Based on deductibles premium varies. It
may be zero to million depends contract. It is not applicable in case of
total loss claim.
11.Inchmaree, Latent defect, Liner negligence - Clause
Perils include
1) Peril of seas
2) Fire / explosion
3) Theft from outside
4) Jettison
5) Piracy
6) Earthquake volcanic eruption, lightening
7) Accidents during loading or discharging
8) Machinery damage
9) Latent defects in machinery or hull
10) Negligence of master, officer or crew
11) 3/4 collusion liability
items not covered under insurance include
1) Loss / damage eg insurer deliberately set fire to ship caused by
willful misconduct willful negligence by owner.
2) Loss of charter hire due to delays
3) Loss due to wear and team
4) War risk cover.
5) Cost for scraping & painting vessel underwater part due to fouling
6) Valuation clause i.e. in case the vessel is a constructive total
loss, salvage values are not considered.
7) Loss / damage from nuclear weapon or by radioactive material.
H&M insurance is issued under principal insuring conditions:
-Assured has to take measurers to minimise the loss
-Navigation provisions
-Vessel to maintain class throughout the insurance period.
-Owners hold valid DOC, -Vessel has valid SMC
-Vessel meets statutory and class requirements with no suspension or
withdrawal.
Hull Insurance claims :

Following any cases of Hull damage e.g. collision, grounding etc. ship
owner/managers insurance dept. will normally immediately inform H & M
lead underwriter via broker. As per clause 49 of IHC 1.11.02, lead
underwriter will instruct a surveyor to ascertain the nature, cost and
extent of the damage, necessary repairs and fair and reasonable cost
thereof and any other matter which leading underwriter or surveyor
considers relevant. The lead underwriter will make decision in respect
of any claim within 28 days of receipt of the appointed average
adjusters final adjustment or, if no adjuster is appointed, a full
document claim presentation sufficient to enable the underwriter to
determine their liability in relation coverage and quantum. The
underwriter is discharged from the liabilities of the claim if it is not
notified within 180 days of the assured becoming aware of accident or
occurrence.
Documents generally required for processing of claims are:1. Policy/ underwriter documents
2. Survey reports with photographs
3. Claims intimation letter by the insured with respect to the claim
4. Log book
5. All applicable valid certificates
Apart from above standard documents some other documents based on the
nature of claim are as follows:1. Deck and engine room log books covering the casualty, and, if
possible the repair periods. Master/ Chief engineer detailed report
and/or note of protest, as relevant.
2. Underwriters surveyor report and account.
3. Class surveyor report and account
4. Superintendents report and account
5. Receipted accounts for repairs and/or any spare parts supplied by
owner, in connection with repairs, endorsed by underwriter surveyor as
being fair and reasonable.
6. Accounts covering any drydocking and general expenses.
7. Accounts for all incidental disbursements at the port of repair.
8. Details of fuel and engine room stores consumed during repair period
together with the cost of replacement.
9. Accounts of owners repairs effected concurrently with damage
repairs.
10. Copies of faxes/ e-mails sent and details of long distance calls
made in connection with the casualty.
11. Details of dates of payments of all account.
Cargo Insurance
The policies will incorporate institute of cargo clause A B or Institute
of cargo clause C : This covers only against major casualties eg fire,
explosion, grounding or vessel stranded, sinking or capsizing, collusion
or contact disc at port of distress general average sacrifice and
jettison.
Institute of cargo clause B : In addition to the above will also cover
casualties like earthquake, volcanic eruption, lightening strike washing
obd entry of sea.
Institute of cargo clause A - Offers cover against all possible risks.
Items excluded from maritime cargo insurance policy are

1) Claims resulting from insufficient or in suitable packing or

protection of matter insured.
2) Claims for loss or damage arising from financial default of Owners
Company cannot be responsible for performance of the carrier and this
exclusion is aimed at encouraging the use of reputable company.
3) Claims arising from use of nuclear weapons.
4) Claims arising from damage by terrorists or politically motivated
groups.
5) Claims arising from unfitness of vessel ware risk and strike risk
cover is available for cargo insurance for an additional premium for
long term insurance, open cover policy and floating policies are
available.
Cargo Claims:
1) When cargo loss or damage is discovered a delivery note or
consignment note will be claused with a note of the loss or damage.
2) The cargo owners will immediately inform his insured if it is outside
UK, this is done throthe local Lloyds agent in case of Lloyds policy.
3) If loss or damage is extensive underwriters will normally ask for a
survey report. This is arranged by Lloyds agent, who can appoint
surveyor and pay small claims locally.
4) After the claim is quantified and documented the underwriter settles
the claim thro Lloyd agents,
5) Underwriter then decides (under the doctrine of subrogation) whether
or not claim is worth pursuing against carrier.
6) If he decides to pursue the claim be immediately makes a written
claim on the carrier, failure to claim may prejudice his right of
recovery.
7) The claim (including surveyors fee) is settled by the carrier in the
currency stated in the policy or on the certificate of insurance.
8) The carrier if a PI member then claims on his club policy.
Documents generally required to furnish the claims are:1. A proper duly filled claim form along with policy certificate.
2. Photographs &/or video film of insured damaged property showing the
extent of damage
3. Sale contract or commercial invoice for the entire shipment
4. Original bill of lading
5. Surveyor report together with a duly paid surveyor fee bill
6. Packing list for the entire shipment
7. An authentic certificate of origin
8. Custom transit declaration
9. Claim notification letter to company together with Xerox copy of the
policy and premium receipt
10. Letter of subrogation cum undertaking
11. Claim bill
8. Sue and labour clause: An ocean and inland marine insurance provision
that requires the insured to protect damaged property from further loss
once a loss has occurred. It also establishes that the expenses of doing
so will be borne by the insurer and the insured "in proportion to their
respective interests" in the property. Thus, the insurer will pay the
full "sue and labor" costs if the amount of insurance is equal to or
greater than the value of the property. Current property and marine
forms usually contain a similar provision, but it is seldom labeled a

sue and labor clause. Instead, it is typically included as one of the

insured's "Duties in the Event of Loss."
9. Average value = in case of emergency repairs/ partial loss average
value may be calculated.
Floating value = total insurable amount that can be reasonably estimated
but cannot be accurately determined before the Insurance comes to an
end.
10. Indian Marine Underwriters
Under the present Indian law, ships cannot be insured outside the
country. As a consequence, Indian ship owners have to seek permission
from the Government every two years to place their protection and
indemnity cover (P&I cover) abroad.
In the case of hull, machinery and war risk, Indian owners have to take
insurance cover only from State-owned insurance companies as per law. To
understand the issues involved in its proper perspective, the Shipping
Ministry has set up a small committee comprising Government officials
and industry representatives to study and make recommendations. The
recommendations of the committee will be taken up with the Finance
Ministry for further action.
The state-owned insurance companies are:
1. The Oriental Insurance Company Limited, New Delhi
6. The New India Assurance Company Limited, Mumbai
7. National Insurance Company Limited, Kolkotta
8. United India Insurance Company Limited, Chennai
International Insurance market The major international markets are
London, USA, Scandinavia, Japan and France. The London market is
discussed below:
Lloyds of London: Lloyd's began in Edward Lloyd's Thames-side coffee
house in London around 1688. The wealthy individuals in the coffee house
would each take a share of a risk, signing their names one beneath the
other on the policy together, with the amount they agreed to cover. For
this reason they were known as 'underwriters'. The Society of Lloyd's
was incorporated by Lloyd's Act 1871 which provided the business with a
sound legal basis and laid the foundations for today's market. Lloyd's
is a self-regulated market comprised of individual and corporate
underwriting
members
who
accept
insurance
risks
through
their
participation in competing syndicates. Lloyd's has agents in every
important world port. It also serves as a shipping information agency,
publishing Lloyd's List, the oldest daily newspaper in London, and
maintaining a Register of Shipping.
Lloyds members: Members of Lloyds of London provide the supporting
capital on which the market is built. Corporate members include
investment
institutions
and
international
insurance
companies.
Individual members are known as Names. These names have unlimited
liability.
Underwriting syndicates
An insurance syndicate is a group of Lloyds members, corporate or
individual, who provide capital to back the liabilities they insure.
Syndicates operate as independent business units within the Lloyds
market and are run by managing agents, who appoint the underwriting team
which writes risk on behalf of the syndicate membership. There were 71

insurance
underwriting
syndicates
operating
within
the
market.
Syndicates cover either all or a portion of the risk and are staffed by
underwriters, the insurance professionals on whose expertise and
judgement the market depends.
Lloyds brokers
Accredited Lloyds brokers place risk in the Lloyds market on behalf of
clients. These brokers use their specialist knowledge to negotiate
competitive terms and conditions for clients. There are over 150 firms
of brokers working at Lloyds, all of whom have a good understanding of
the Lloyds market and many of whom specialise in particular risk
categories.
International Underwriters Association (IUA)
The IUA came into existence in 1998, following the merger of the
Institute of London Underwriters (ILU) and the London International
Insurance and Reinsurance Market Association (LIRMA). The IUA is the
trade and market association representing the company sector of the
London market. The ILU's history in the marine insurance markets dates
back to 1884. LIRMA was formed in 1991 from the merger of previous
insurance associations formed in the 1960's and 1970's to support nonmarine insurance business and reinsurance. The IUA has 57 Ordinary
members and 9 Affiliate members. They are mainly based in London or in
the rest of Europe. There are also 35 associate members from over 20
countries.
11. In case of Engine room crank case explosion main engine badly
damaged and engine room personnel suffered serious injuries your
actions?
After every incidence, investigations take place and insurance claims
are raised. The insurance underwriters appoint damage surveyors who come
on board and do their investigation. In the process of doing it, they
ask for all the relevant documents.
Now, you will have to present your vessel for subsequent inspections by
P&I and H&M insurance companies. We will see step by step what all
should be done after the incidence:- a. Take care of persons injured:Since persons are seriously injured, give them first aid and ask for
medical advice from a rescue centre. Give the information to owner and
charterer and seek their advice. If the vessel needs to divert and make
a emergency port of call take permission from owner and charterer. But
since main engine is also badly damaged the vessel will need emergency
towing. Give notice to agent and P&I correspondent at the nearest port.
They will arrange for the salvage assistance. Enter in the port. Injured
personnel to be transported to hospital and later on they can be
repatriated. All the medical treatment given to the personnel should be
chronologically documented in the medical book.
b. Reporting of incidence to:- The incident should be reported to
following without delay Administration, Owner, Class, P&I correspondent,
H&M broker & MAS centre
c. Record keeping:- Time, date, place and cause of injury should be
recorded. The evidence should be preserved and a witness statement
should be taken. Write down all important medical condition and drugs
that were given to the person. The persons injured were wearing PPEs or
not. Take the statement of injured personnel as soon as possible if they
are in position of giving one. The most important report in case of

personnel injuries is Masters report. It is an important evidence to

judge whether the injury is work related or not. Photos of sites and
other evidence should be preserved.
d. Necessary documents and records required to honor only genuine claims
In case of P&I surveyor following documents should be kept ready:i. Master statement of fact
ii. Witness report
iii. Injured person statement
iv. Communication with the owners, managers, medical advisors and
authorities.
v. Deviation report
vi. Photos of place of evidence
vii. Medical report book relating to important medical condition and all
the drugs that were given to personnel
viii. Evidence showing personnel wearing PPEs
ix. Injured personnel familiarization with machinery form duly signed by
him.
x. Safety instructions explained.
In case of H&M surveyor following documents should be kept ready:i. Chief engineer log book and official log book entry.
ii. Masters and chief engineers statement
iii. Witness statement
iv. Engine room crew statements
v. Main engine PMS records
vi. ME bearings last renewal & evidence showing that only genuine
bearings were used.
vii. Main engine crankcase lubricating oil report
viii. Engine parameters at the time of incidence ( from log book or data
logger)
ix. Records showing last alarms and trips tried out ( from alarm logger)
x. Compliance with manufacturer or service letter received recently
All the above documents will be required by the surveyor appointed by
H&M underwriter. After the survey a damage survey report will be made.
Now the main engine will be repaired. And after that claims will be
settled. Depending upon the nature of insurance and the clauses inducted
repairs can either be carried out by owner and later the claims can be
settled or repair tender can be floated by H&M underwriter only and they
can carry out the repairs.
12. Deviation as per Marine insurance and charter party?
Deviation as per Marine insurance
Deviation as per charter party
When a ship without lawful excuse Deviation
means
contract
is
deviates
from
the
voyage
as performed in a manner that is not
contemplated by the policy. The originally contemplated. Eg: cargo
insurer is discharged from the carried on deck when it is not
liabilities from the time of the authorized.
deviation, it is immaterial that
the ship has regained her route
before any loss occurs.

13.IMPORTANT: Compulsory insurance cover for CLC (>2000GT Oil Tankers &
other ships carrying same oil), bunker(>1000GT all ships), Nairobi Wreck
removal after 14 april 2015.
Insurance :- Minimize the risk of loss by spreading to others
Double Insurance :- two covers taken for single property
Co / Mutual insurance two or more insurer cover the property
Re insurance Insurer invest the part of premium in insurance industry
to protect self.
What Is Pooling (sharing risks between Clubs under International Group )
If ship owner failure to pay salary, seaman may file a lawsuit against
the ship owner in admirality court & if ship owner goes bankrupt then
seaman wages are protected by maritime lien, sell the ship by sheriffs
sale.
14. What is the difference between P&I and H&M?
P&I insurance is primarily intended to cover a shipowners or operators
liability towards third parties and it generally excludes damage to the
insureds own property or direct loss of the Company.
Hull and Machinery insurance is basically insurance of the clients
vessel as its primary asset. The two types of insurance interact in the
area of collision liability and liability for contact damage to third
party property.
Hull and Machinery insurance and P&I insurance are often complementary
when it comes to collision liability and liability for damage to piers,
loading cranes and other third party property, generally known as damage
to fixed and floating objects (FFO).
Hull and Machinery (H&M) insurance may include cover for liabilities
towards third parties depending upon the type of policy and scope of
cover of that specific policy. Under the standard English Hull and
Machinery insurance terms (ITC Hulls Institute Time Clauses Hulls),
collision liability cover has, historically, been limited to 3/4ths of
the own ships liability towards the other vessel in a collision.
However, under Norwegian and German Hull and Machinery insurance terms,
the liability cover provided is for 4/4ths, i.e 100%, of the own ships
liabilities towards the other vessel. Similarly, under the United
Kingdom Hull and Machinery insurance terms, damage to so-called Fixed
and Floating Objects (FFO), i.e. objects others than a vessel, is not
covered at all whereas under Norwegian and German insurance terms these
risks are covered 100%.
Some shipowners have placed full (4/4ths) collision liability under
their P&I insurance. This collision liability cover would be the most
comprehensive liability cover available, as all third party liability
arising out of the collision would be covered in principle. However, the
shipowner would still need his Hull and Machinery cover to deal with the
loss of or damage to his own vessel.
Under Norwegian and German Hull and Machinery insurance conditions,
cover is also provided in respect of liability arising out of the
insured vessel striking third party property other than a vessel. The
Hull and Machinery insurance covers loss or damage caused by the
physical contact between the hull of the insured vessel, or equipment
permanently affixed to the vessel, and third party property, for example

a pier or buoy. Americans sometimes refer to such incidents as

allision but this is not a term used universally. FFO (damage to fixed
and floating objects) is the shorthand for striking damage under the
English terms.
The situation is more complicated when oil escapes from the other vessel
as a result of the collision. Under the Norwegian Hull and Machinery
insurance conditions these liabilities are not covered, whilst they are
covered under German Hull and Machinery insurance conditions.
The situation for damages and resulting liabilities becomes even more
complicated if the vessel drags an anchor.
Remember, the cornerstone of the P&I cover is that it responds to
liabilities that are not covered under the Hull and Machinery cover.
It is important that the Master and the ships officers have a full
understanding of what is covered under the Hull and Machinery insurance
policy as this determines what is covered by the P&I insurance. The
Master will thus be in a position to understand whose insurers
representative or correspondent should be contacted in any given
incident.
It Can Deny or reject claims on the basis that
(i)unseaworthiness,
(ii) deviation from the agreed vessel trading area or route,
(iii) violation of safety rules or
(iv)negligence, gross negligence or wilful misconduct of the insured.