This document discusses key concepts in marine insurance such as insurable interest, warranties, disclosure duties, and seaworthiness. It provides explanations and examples of each concept. Specifically, it notes that an insurable interest requires the insured to benefit from safety of the insured property or be prejudiced by its loss. It also gives examples of express warranties around classification societies and typhoon warnings. The duty of utmost good faith requires disclosure of all material facts and prior claims histories. There is no implied warranty of seaworthiness for time policies due to the inconvenience it would cause shipowners.
This document discusses key concepts in marine insurance such as insurable interest, warranties, disclosure duties, and seaworthiness. It provides explanations and examples of each concept. Specifically, it notes that an insurable interest requires the insured to benefit from safety of the insured property or be prejudiced by its loss. It also gives examples of express warranties around classification societies and typhoon warnings. The duty of utmost good faith requires disclosure of all material facts and prior claims histories. There is no implied warranty of seaworthiness for time policies due to the inconvenience it would cause shipowners.
This document discusses key concepts in marine insurance such as insurable interest, warranties, disclosure duties, and seaworthiness. It provides explanations and examples of each concept. Specifically, it notes that an insurable interest requires the insured to benefit from safety of the insured property or be prejudiced by its loss. It also gives examples of express warranties around classification societies and typhoon warnings. The duty of utmost good faith requires disclosure of all material facts and prior claims histories. There is no implied warranty of seaworthiness for time policies due to the inconvenience it would cause shipowners.
This document discusses key concepts in marine insurance such as insurable interest, warranties, disclosure duties, and seaworthiness. It provides explanations and examples of each concept. Specifically, it notes that an insurable interest requires the insured to benefit from safety of the insured property or be prejudiced by its loss. It also gives examples of express warranties around classification societies and typhoon warnings. The duty of utmost good faith requires disclosure of all material facts and prior claims histories. There is no implied warranty of seaworthiness for time policies due to the inconvenience it would cause shipowners.
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COMMENTS ON MARINE INSURANCE ACT
1. The procedure of Marine Insurance is to return the policyholder in the
same economic condition that he was before the marine risk appears.
*Three Conditions must be present in order the marine insurance policy is
valid: a. There must be Insurable Interest by the insured
In order to prove an insurable interest against a peril, it must be an interest such
that the peril would, by its proximate effect, cause damage to the assured. A policy containing the words ‘interest or no interest’, or ‘without further proof of interest than the policy’ allowed the assured to recover against the underwriters a certain stipulated sum of money, whether he had any interest in the ship/cargo or not. Thus, a policy of insurance was enforceable even if the assured stood neither to lose nor to gain from the success or failure of the adventure or the loss or survival of the insured property. These contracts were, in substance, wagering contracts in which neither party had any interest in the outcome of the future uncertain event, save for that amount which was to be won or lost under the contract. The modern definition of insurable interest emphasises that the context and the terms of a policy with which the court is concerned will be all important. Although it does not provide an exhaustive definition, section 5(2) of the MIA 1906 identifies three characteristics which the presence of an insurable interest would normally require: 1 The assured may benefit by the safety or due arrival of insurable property or be prejudiced by its loss or damage or detention or in respect of which he may incur liability. 2 The assured stands in a legal or equitable relation to the adventure or to any insurable property at risk in such adventure. 3 The benefit, prejudice or incurring of liability referred to at (1) must arise in consequence of the legal or equitable relation referred to at (2). b. Peril appears was covered over the period of insurance c. The adventure- the voyage is legal (the policyholder for example is not transfer drugs)
3. «Θαλάσσιοι κίνδυνοι» συνεπάγονται κίνδυνοι των θαλασσών όπως πυρκαγιά,
πόλεμοι , πειρατεία, κλοπές, συλλήψεις, κατασχέσεις, περιορισμοί και κρατήσεις ατόμων, Jettison, barratry και οποιοιδήποτε άλλοι κίνδυνοι, είτε παρόμοιου είδους είτε που μπορεί να ορίζονται από συμβόλαιο.
16. As insurable value is the agreed value between insured and insurer at the beginning of the adventure. Regardless the market value of the insured ship or the insured cargos after the risk occurred; the indemnity reflects the agreed amount of the insurable value. Sometimes there is no agreed value. Then, a discussion start between the counterparties in order to decide the exact amount that would be compensated by the insurer (usually is the market value). This condition stems mainly for yachts insurance cover.
17. For an insurer, statements made by the assured regarding the subject matter insured are crucially important.
“Insurance is a contract of speculation... the special facts, upon which the
contingent chance is to be computed, lie most commonly in the knowledge of the insured only” Two matters were especially emphasized by Lord Mansfield. First, the duty is imposed because the underwriter relies on the information provided by the assured, which represents the risk. Second, if the representation is not fair, the risk run is different to the risk the insurer has assumed to run. Thus, in case the duty is breached, the contract will need to be remedied. Ship owners have sometimes many companies. Utmost good faith clause oblige the insured to disclosure all the claims ratios (last 5 years) from all the companies that belong to him. If the insurer discovers conceals then the policy should be altered in order to be valid. A material non-disclosure or misrepresentation will entitle the insurer to seek a remedy irrespective of the assured being innocent, negligent or fraudulent. Section 18(1) provides that . . . the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him An innocent non-disclosure will entitle the insurer to seek remedy for breach of the duty of good faith if the assured ought to know the circumstances in the ordinary course of his business. Under Section 20 ‘Every material representation made by the assured or his agent to the insurer during the negotiations for the contract, and before the contract is concluded, must be true.’
In terms of the meaning of materiality it is necessary to examine the words ‘. . .
which would influence the judgment of a prudent insurer . . .’ which are seen in both sections 18(2) and 20(2). This matter has been discussed in a number of cases and three tests were suggested to define the test of materiality: decisive influence test (Under this test to prove materiality it must be shown that full and accurate disclosure would have led the prudent insurer either to reject the risk or at least to have accepted it on more onerous terms). increased risk test (The test is whether a prudent underwriter, if he had known the undisclosed facts, would have regarded the risk as increased beyond that which was disclosed on the actual presentation. It is not necessary to prove that the underwriter would have taken a different decision about the acceptance of the risk. The question is whether the prudent insurer would view the undisclosed fact material as probably tending to increase the risk). mere influence test (everything is material to which a prudent insurer, if he were in the proposed insurer’s place would wish to direct his mind in the course of considering the proposed insurance with a view to deciding whether to take it up and on what terms, including what premium to charge).
32. In the case of double insurance, obviously, as the two sets of underwriters have to share the burden, they would be entitled to the proportionate benefit of any sums which went in reduction of the burden, and they would share both the amount of the indemnity which had to be paid, and against that they would be entitled to share the salvage in regard to which they were entitled to be subrogated in reduction of that indemnity (Gurses, 2015).
33. The assured may warrant that the vessel will be classed before the risk attaches by a reputable Classification Society and the class will be maintained throughout the policy. In insuring his yacht the assured may warrant that the yacht will be fully crewed at all times. If a vessel will be towed (ρυμουλκηθεί) from one port to another the assured may warrant that the Salvage Association’s Approval will be obtained before the towage begins. In an insurance of a passenger ferry the assured may warrant not to sail the ferry if there is a typhoon warning in the area. In all these examples the assured commits that some particular actions shall be or shall not be done. Breach of such a promise will entitle the insurer to seek a remedy.
* Reputable Classification Society includes the 11 Classifications that are
34. An example of an express warranty can be seen in Amlin Corporate
Member Ltd v Oriental Assurance Corp4 where the policy provided: ‘Notwithstanding anything contained in this policy or clauses attached hereto, it is expressly warranted that the carrying vessel shall not sail or put out of Sheltered Port when there is a typhoon or storm warning at that port nor when her destination or intended route may be within the possible path of the typhoon or storm announced at the port of sailing, port of destination or any intervening point. Violation of this warranty shall render this policy void.’ The vessel sailed despite the typhoon warning and hundreds of passengers together with members of the crew on board died. The assured was clearly in breach of warranty. 39 The ship must be in a condition that it is ready for an adventure even if there is NO insurance cover.
39(5) The reason for non-existence of a seaworthiness warranty in time policies
is historical. In Fawcus v Sarsfield it was argued by the insurers that on a time policy, if on the day on which the risk is to commence the ship be in a port in any region of the Globe in which there are the means of repairing her and rendering her seaworthy, there is an implied warranty or condition that she shall be repaired and rendered seaworthy before she sails from this port. This was argued to be the case although the assured may not know that she stands in need of repair, and although he may have no funds nor means of raising funds there to repair her. Αν την ημέρα που ξεκινά ο κίνδυνος το πλοίο είναι σε λιμάνι στο οποίο υπάρχουν τα μέσα να καταστεί αξιόπλοο αυτό συνιστά μια έμμεση εγγύηση ότι όντως θα επισκευαστεί και θα γίνει αξιόπλοο πριν αποπλεύσει από το συγκεκριμένο λιμάνι. Οι ασφαλιστές είπαν ότι αυτό ισχύει ακόμα και αν ο ασφαλιζόμενος δεν γνωρίζει ότι το πλοίο χρειάζεται επισκευή και ακόμα και αν ο ασφαλιζόμενος δεν έχει τα λεφτά για να το επισκευάσει. It was held in Fawcus v Sarsfield that in time policies such a doctrine would be exceedingly inconvenient and would prevent shipowners from having that indemnity and security which time policies have afforded them. It is inconvenient when the risk begins while the ship is on the high seas: and a similar inconvenience would arise from the implied warranty of seaworthiness, the risk beginning when the ship, in the middle of a long adventure, is in a distant port. Η απόφαση ήταν εναντίον των ασφαλιστών. Στα Time policies θα ήταν εξαιρετικά άβολο και θα εμπόδιζε τους ασφαλιζόμενους πλοιοκτήτες να έχουν την αποζημίωση και την ασφάλεια που δίνουν τα time policies. Είναι άβολο όταν ο κίνδυνος ξεκινά κ το πλοίο είναι μέσα στον ωκεανό και το ίδιο άβολο προκύπτει από αυτή την αρχή της έμμεσης εγγύησης αξιόπλου όταν ο κίνδυνος ξεκιναει ενόσω το πλοίο είναι σε μακρινό λιμάνι στην μέση του ταξιδιού γιατί δεν θα προλάβει να φτάσει στη ώρα του.
40. Regarding Goods should be packaged correctly. The cargo owner or the constructor of the containers has the responsibility of seaworthiness. Especially, in the case of raw/bulk cargo (minerals, cement, wheat, copra etc) the master of the ship is responsible for possible bad navigation that resultς a shipwreck. There is loading master usually is the second master of the ship. P&I clubs cover these risks. DO NOT FORGET THAT MARINE IS SELF REGULATED. 48. If there is Time policy the assured could deviate for any reason provided that he fulfills the timetable of the policy at the end of the adventure.
50. The assured could assign where he owes money (a bank), to the owner of the lost cargo etc.
66. Do something in order to save the whole vessel but I lose a part of it. The ship owner (insured) should be compensated. The salvor should be compensated in case of salvage expenditures.
77&78. Suppose a ship is hit by a torpedo. It does not sink, she is in a bad condition but she manages to return at the port in order to repair the damage. Unfortunately the weather next day the weather is bad and the harbor master commands that the ship should be go out of the port. This happens since the harbor master wants to protect the harbor from possible losses derive from a sink due to bad weather. Finally, the ship sinks due to bad weather, but out of the port. Which is the peril that is responsible for the total loss? Torpedo is not the bad weather. Therefore, the insurer that has to pay the claim is the all risks policy insurer who pays, not the hull policy insurer.
79. Subrogation means substituting one creditor to another. There are 4
characteristics of Subrogation: a. The insurer gets all the rights, remedies and liabilities of the insured after payment of the claim b. the insurer can pay the amount of loss after reducing the sum received by the insured from the 3rd party. c. the right of subrogation arises only after the payment of the insurer to the insured. d. the insured Must assist the insurer in getting compensation from the 3rd party. Let say, that there is a collision due to broke of the ship machine or car brakes. My insurer compensates the first ship or car for instance. But it was the engineer’s fault. Then my insurer claims against the engineer and his insurer.
