MARINE INSURANCE Over the amount he is liable to the

shipowner, if the ship is lost or damaged during

the voyage (Sec. 106).
Insurance against risks connected with B.
navigation, to which a ship, cargo, freightage, In loans on bottomry and respondentia
profits or other insurable interest in movable Repayment of the loan is subject to the
property, may be exposed during a certain condition that the vessel or goods, respectively,
voyage or a fixed period of time. (Sec. 99) given as a security, shall arrive safely at the
 port of destination.
Coverage: 1. Owner/Debtor
A. Difference between the value of vessel or
1. Vessels, goods, freight, cargo, merchandise, goods and the amount of loan. (Sec. 101)
profits, money, valuable papers, bottomry and 2. Creditor/lender
respondentia, and interest in respect to all risks
or perils of navigation; Amount of the loan
2. Persons or property in connection with Note: If a vessel is hypothecated by bottomry, only
marine insurance; the excess is insurable, since a loan on bottomry
3. Precious stones, jewels, jewelry and precious partakes of the nature of an insurance coverage to
metals whether in the course of transportation the extent of the loan accommodation. The same
or otherwise; and
rule would apply to the hypothecation of the cargo by
4. Bridges, tunnels, piers, docks and other aids
to navigation and transportation. (Sec. 99) respondentia. (Pandect of Commercial Law and
Jurisprudence, Justice Jose Vitug, 1997 ed.)
Cargo can be the subject of marine
insurance, and once it is entered into, the
implied warranty of seaworthiness immediately PERILS OF THE PERILS OF THE
attaches to whoever is insuring the cargo, SEA SHIP
whether he be the shipowner or not. (Roque v. Includes only those A loss which in the
IAC, 139 SCRA 596) casualties due to ordinary course of
B. Marine Protection and Indemnity Insurance the: events, results
 1. unusual from the:
Classes of inland marine insurance: (Prof. violence; or 1. natural and
De Leon, p. 325) 2. extraordinary inevitable action
action of wind and of the sea
wave; or 2. ordinary wear
1. Property in transit – provides protection to 3. Other and tear of the
property frequently exposed to loss while it is extraordinary ship or
transportation form one location to another. causes connected
2. Bailee liability - insurance for those who with navigation. 3. Negligent
have temporary custody of the goods. failure of the
3. Fixed transportation property – they are so ship’s owner to
insured because they are held to be an essential provide the vessel
with proper
part
equipment to
of the transportation system such as bridges, convey the cargo
tunnels, etc. under ordinary
4. Floater – provides insurance to follow the conditions.
insured property wherever it may be located,
subject always to the territorial limits of the
contract.

Insurable interest:
A.
1. Shipowner
a. Over the vessel to the extent of its value,
except that if chartered, the insurance is only
up to the amount not recoverable from the
charterer. (Sec. 100).
b. He also has an insurable interest on expected
freightage. (Sec. 103).
c. No insurable interest if he will be
compensated by charterer for the value of the
vessel, in case of loss.
2. Cargo owner

Over the cargo and expected profits (Sec.

105).
3. Charterer
Note: It is only perils of the sea which may be 1. National character of the insured;
insured against unless perils of the ship is 2. Liability of the thing insured to capture or
covered by an all-risk policy. detention;
3. Liability to seizure from breach of foreign
SPECIAL MARINE INSURANCE CONTRACTS AND laws;
CLAUSES 4. Want of necessary documents; and
5. Use of false or simulated papers.
A. All Risks Policy – insurance against all causes
of conceivable loss or damage, except: 1) as Note: This should be related to the general rule
otherwise excluded in the policy; or 2) due to regarding material concealment.
fraud or intentional misconduct on the part of
the insured.
The insured has the initial burden of proving DISTINCTIONS ON CONCEALMENT (Commercial Law
that the cargo was in good condition when the Reviewer, A.F. Agbayani, 1988 ed.)
policy attached and that the cargo was damaged
when unloaded from the vessel; thereafter, the MARINE OTHER
burden then shifts to the insurer to show the INSURANCE PROPERTY
exception to the coverage. (Filipinas Merchants INSURANCE
Insurance vs. Court of Appeals, 179 SCRA 638) The information of The information or
the belief or belief of a 3rd party
B. Barratry Clause expectation of 3rd is not material and
A clause which provides that there can be persons is material need not be
and must be communicated
no recovery on the policy in case of any willful
communicated unless it proceeds
misconduct on the part of the master or crew in form an agent of the
pursuance of some unlawful or fraudulent insured whose duty
purpose without consent of owners, and to the it is to give
prejudice of the owner’s interest. (Roque vs. information
IAC, 139 SCRA 596) The concealment of Concealment of any
any fact in relation material fact will
C. Inchamaree Clause to any of the vitiate the entire
A clause which makes the insurer liable for matters stated in contract, whether
Sec. 110 does not or not the loss
loss or damage to the hull or machinery arising
vitiate the entire results for the risk
from the: contract but merely concealed.
1. Negligence of the captain, engineers, etc. exonerates the
2. Explosions, breakage of shafts; and insurer from a risk
3. Latent defect of machinery or hull. (Bar resulting from the
Review Materials in Commercial Law, Jorge fact concealed
Miravite, 2002 ed.)

D. Sue and Labor Clause

A clause under which the insurer may
become liable to pay the insured, in addition to IMPLIED WARRANTIES
the loss actually suffered, such expenses as he
may have incurred in his efforts to protect the 1. Seaworthiness of the ship at the inception of
property against a peril for which the insurer the insurance (Sec. 113);
would have been liable. (Sec. 163) 2. Against improper deviation (Sec. 123, 124,
125);
E. Lost or Not Lost Policy- a policy which states 3. Against illegal venture;
that the insurer will pay even if loo insured 4. Warranty of neutrality: the ship will carry the
against has occurred prior to or at the time of requisite documents of nationality or neutrality
the insurance provided there is no fraud of the ship or cargo where such nationality or
neutrality is expressly warranted; (Sec. 120)
MATTERS ALTHOUGH CONCEALED, WILL NOT 5. Presence of insurable interest.
VITIATE THE CONTRACT EXCEPT WHEN THEY
CAUSED THE LOSS (Sec. 110)
While the payment by the insurer for the 1. Departure of vessel from the course of the
insured value of the lost cargo operates as a sailing fixed by mercantile usage
waiver of the insurer’s right to enforce the term 2. Departure of vessel from the most natural,
of the implied warranty against the assured direct and advantageous route if not fixed by
under the marine insurance policy, the same mercantile usage
cannot be validly interpreted as an automatic 3. Unreasonable delay in pursuing voyage
admission of the vessel’s seaworthiness by the 4. Commencement of an entirely different
insurer as to foreclose recourse against the voyage (Secs. 121-123)
common carrier for any liability under the
contractual obligation as such common carrier. Kinds:
(Delsan Transportation Lines vs. CA, 364 SCRA 1. Proper -
24) a. When caused by circumstances outside the
control of the ship captain or ship owner;
Seaworthiness b. When necessary to comply with a warranty or
A relative term depending upon the nature to avoid a peril;
of the ship, voyage, service and goods, denoting c. When made in good faith to avoid a peril;
in general a ship’s fitness to perform the service d. When made in good faith to save human life
and to encounter the ordinary perils of the or to relieve another vessel in distress (Sec. 124)
voyage, contemplated by the parties to the
policy (Sec. 114). Effect: In case of loss, the insurer is still
 liable.
GENERAL RULE: The warranty of seaworthiness 2. Improper - Every deviation not specified in
is complied with if the ship be seaworthy at the Sec. 124 (Sec. 125).
time of the commencement of the risk. Prior or
subsequent unseaworthiness is not a breach of
Effect: In case of loss or damage, the insurer is
the warranty nor is it material that the vessel
not liable. (Sec. 126)
arrives in safety at the end of her voyage.

EXCEPTIONS: LOSS
1. In the case of a time policy, the ship must be
seaworthy at the commencement of every 1. Total:
voyage she may undertake
2. In the case of cargo policy, each vessel upon a. Actual -
which the cargo is shipped or transshipped, must i. Total destruction;
be seaworthy at the commencement of each
ii. Irretrievable loss by sinking;
particular voyage
iii. Damage rendering the thing valueless; or
3. In the case of a voyage policy contemplating
iv. Total deprivation of owner of possession of
a voyage in different stages, the ship must be
thing insured. (Sec. 130)
seaworthy at the commencement of each
b. Constructive -
portion
i. Actual loss of more than ¾ of the value of the
Applicability of implied warranty of object;
seaworthiness to cargo owners: It becomes the ii. Damage reducing value by more than ¾ of the
obligation of a cargo owner to look for a reliable value of the vessel and of cargo; and
common carrier, which keeps its vessels in iii. Expense of transshipment exceed ¾ of value
seaworthy conditions. The shipper may have no of cargo. (Sec. 131, in relation to Sec. 139)
control over the vessel but he has control in the
choice of the common carrier that will transport In case of constructive total loss, insured
his goods (Roque v. IAC, 139 SCRA 596). may:
Deviation 1. Abandon goods or vessel to the insurer and
A departure from the course of the voyage claim for whole insured value (Sec. 139), or
insured, or an unreasonable delay in pursuing 2. Without abandoning vessel, claim for partial
the voyage or the commencement of an entirely actual loss. (Sec. 155)
different voyage. (Sec.123)
Instances: 2. Partial: That which is not total (Sec. 128).
 relinquishment to the insurer of his interest in
the thing insured. (Sec. 138)
AVERAGE Requisites for validity:
Any extraordinary or accidental expense 1. There must be an actual relinquishment by
incurred during the voyage for the preservation of the the person insured of his interest in the thing
vessel, cargo, or both, and all damages to the vessel insured (Sec. 138);
and cargo from the time it is loaded and the voyage 2. There must be a constructive total loss (Sec.
139);
commenced until it ends and the cargo unloaded.
3. The abandonment be neither partial nor
GENERAL PARTICULAR conditional (Sec. 140);
Has inured to the Has not inured to 4. It must be made within a reasonable time
common benefit the common benefit after receipt of reliable information of the loss
and profit of all and profit of all (Sec. 141);
persons interested persons interested 5. It must be factual (Sec. 142);
in the vessel and in the vessel and her
6. It must be made by giving notice thereof to
cargo cargo.
To be borne alone the insurer which may be done orally or in
To be borne equally by the owner of the writing (Sec. 143); and
by all of the cargo or the vessel, 7. The notice of abandonment must be explicit
interests concerned as the case may be. and must specify the particular cause of the
in the venture. abandonment (Sec. 144).

vessel or cargo; Effects:

2. Part of the 1. It is equivalent to a transfer by the insured of
vessel or cargo his interest to the insurer with all the chances of
was sacrificed recovery and indemnity (Transfer of
deliberately; Interest)(Sec.146)
3. Sacrifice must 2. Acts done in good faith by those who were
be for the agents of the insured in respect to the thing
common safety or insured, subsequent to the loss, are at the risk
for the benefit of of the insurer and for his benefit. (Transfer Of
all; Agency)(Sec.148)
4. Sacrifice must
be made by the If an insurer refuses to accept a valid
master or upon his abandonment, he is liable upon an actual total
authority; loss, deducting form the amount any proceeds of
5. It must be not the thing insured which may have come to the
be caused by any hands of the insured. (Sec.154)
fault of the party CO-INSURANCE
asking the A marine insurer is liable upon a partial loss,
contribution; only for such proportion of the amount insured
6. It must be by him as the loss bears to the value of the whole
successful, i.e. interest of the insured in the property insured.
resulted in the (Sec. 157)
saving of the When the property is insured for less than
vessel or cargo; its value, the insured is considered a co-insurer
and of the difference between the amount of
insurance and the value of the property.
Requisites:
1. The loss is partial;
2. The amount of insurance is less than the value
of the property insured.
ABANDONMENT Rules:
The act of the insured by which, after a 1. Co-insurance applies only to marine insurance
constructive total loss, he declared the 2. Logically, there cannot be co-insurance in life
insurance.
3. Co-insurance applies in fire insurance when What is Doctrine of Inscrutable Fault??
expressly provided for by the parties.
Case in which it cannot be decided which of the
two vessel caused the collision.
What is Jettison?

Ans: Jettison is the intentional

casting overboard of any part of a venture
exposed to peril, whether it be of the
cargo, or of the ship’s furniture or tackle, in the
hope of saving the rest of the venture.

When does insurable interest in marine

insurance exist?

Ans: The assured in a marine

insurance contract need not have an insurable
interest at the time the insurance is effected
but he must have reasonable interest
expectation of acquiring such interest
and he must have an interest at the time of loss.

Define” Concealment”

Ans: Concealment is the neglect to

communicate that which a party knows or
ought to communicate

Concealment in the law of Marine Insurance, is

failure t disclose any material fact or
circumstances in relation to the subject matter f
the contract which may increase the liability for
loss or affect the risk or obligation assumed,
and which is, in fact or law, within, or ought to
be within, the knowledge of on party, and of
which the other party has no actual or
presumptive knowledge.