1. Parwinder Singh
6752

2. In one form or another, we all own insurance. Whether it's
auto, medical, liability, disability or life, insurance serves
as an excellent risk-management and wealth-
preservation tool. Having the right kind of insurance is a
critical component of any good financial plan. While most
of us own insurance, many of us don't understand what it
is or how it works.

3. Marine insurance is a contract whereby the
insurer undertakes to indemnify the assured,
in manner and to the extent thereby by
agreed, against marine losses, i.e. the losses
incident to marine adventure

4. Marine Insurance is not of recent origin. Its existence can be traced
back to several centuries. Questions concerning it have naturally
been coming up for a number of years and the law concerning it
had taken a definite shape much prior to 1906 when the English
Marine Insurance Act was passed with a view to codify that law.
Contrary to popular belief, Lloyds‟ of London was not the first
group of people to offer insurance for maritime commerce. The
first form of marine insurance dates back to the year 3000 BC
when Chinese merchants dispersed their shipments amongst
several vessels so as to abridge the possibility of damage to the
product(s).

5.  Since independence Indian shipping had undergone a
considerable expansion, and it became mandatory for an
Indian legislation consistent with Indian conditions, for the
smooth development of Indian marine insurance.
 But, as in the case of its English counterpart, the Indian Act
embodies only some and not all of the legal principles and
rules of marine insurance, and its language is so extremely
concise and general that its full import and meaning can
scarcely be understood without referring to the existing law
which it was intended to express or to the decided cases
from which that law was evolved.
In India the law of marine insurance has been put in a
statutory form since 1963.

6. Hull Insurance
Cargo
Insurance
Protection and
indemnity
Insurance

7. Hull and machinery insurance
is to protect the ship owner‟s
investment in the ship. It is
basically a property insurance
which covers the ship itself,
the machinery and equipment.
Furthermore, the insurance
covers some liabilities,
normally collision liability with
another ship and sometimes
also liability for colliding with
other objects than another
ship.

8.  Total loss of the ship
 Damage to the ship, engines and equipment
 Explosions and fire
 Groundings – damage to the ship, salvage of the
ship and possible contribution in general
average
 Collisions – damage sustained to the ship and
sometimes also liability towards the other ship.
 Striking other objects – damage inflicted to own
ship and sometimes also liability towards the
owners of the other object.

9. Cargo insurance (also called marine cargo
insurance) covers physical damage to, or
loss of your goods while in transit by land,
sea and air and offers considerable
opportunities and cost advantages if
managed correctly.

10. Open Cover
This is the most usual type of cargo insurance, where a
policy is drawn up to cover a number of consignments. The
policy can be either for a specific value that requires
renewal once the insured amount is exhausted or an
permanently open policy that will be drawn up for an
agreed period, allowing any number of shipments during
this time.
Specific (Voyage) Policy
Although not the norm for cargo insurance, you may from
time to time need to approach an insurance company (or
broker, or other intermediary) to request an insurance
policy for a particular consignment. This is usually referred
to as Voyage Policy as the insurance covers only that
specific shipment.

11. As an exporter you may often sell goods on terms
where your customer (as the importer) is responsible for
insuring (or at least bearing the risk of damage of or
loss to) the goods, for example under FOB and CFR
Incoterms 2000. In these cases you are exposed to the
risk of damage to the goods while in transit and your
customer refusing to accept them. In the worse case
your customer may not have insured the goods.
Contingency insurance

12.  THE „CARGO‟ TRANSPORTED BY SEA IS SUBJECT TO
MANIFOLD RISKS SUCH AS:
 _LOSS OR DAMAGE AT THE PORT AND
 _ LOSS OR DAMAGE DURING THE VOYAGE.
 - MARINE CARGO INSURANCE‟ PROVIDES THE
INSURANCE COVER IN RESPECT OF:LOSS OF OR
DAMAGE TO CARGO

13. There are many different things that can potential happen
during shipment of cargo and container on a ship. The
loading cranes could damage the containers, theft and
piracy, weather damage, as well as potentially losing the
cargo overboard or other marine disasters. All of these
possible issues are exactly why you need marine cargo
insurance. Your goods need to be protected, and if you are
a company transporting goods this way, then you need to
protect your company from these potential issues of loss.

14. Protection and Indemnity insurance, or “P&I” as it is
usually called, is a ship owner's insurance cover for legal
liabilities to third parties. “Third parties” are any person,
apart from the ship-owner himself, who may have a legal
or contractual claim against the ship. P&I insurance is
usually arranged by entering the ship in a mutual
insurance association, usually referred to as a “club”. Ship-
owners are members of such clubs. Legal liability is
decided in accordance with the laws of the country where
an accident takes place. The P&I insurance cover for
contractual liability is agreed at the time the owner
requests insurance cover from the club and is usually in
accordance with the owner‟s responsibility under crew
contracts or special terms relating to the trading pattern of
the vessel.

15. Other risks covered include liability for stowaways, liability
for oil pollution and other types of pollution and legal
liability for wreck removal if the ship sinks and is blocking
free navigation for other vessels. In short, P&I insurance is
a very comprehensive type of insurance cover which makes
it easier for a ship owner or charterer to trade in
international shipping transportation. P&I is as important
to a prudent ship owner as his Hull and Machinery
insurance cover.

16. P&I insurance also covers the owner‟s liability for loss
of crew belongings in cases of shipwreck or fire on
board. The cover only applies to items which are
deemed to be reasonable for any crew member to
have with him on board. A crew member travelling
with unusually expensive items, such as laptop
computers, gold watches etc should make sure that
he has such items separately insured.