Marine and fir insurance1

CLASSES OF INSURANCE

MARINE INSURANCE
-Insurance against risks connected wi th navi gati on, to which a shi p, cargo, frei ghtage,
profi ts orothers insurable interest in movable property, may be exposed during a certain voyage or a
fixed period of time.

Coverage of Marine Insurance
:1 . l o s s o r d a m a g e t o a i r c r a f t 2.Loss or damage goods & merchandise for
shi pment3. Per s ons i n c onnec t i on w/ mar i ne
i ns ur anc e4.Preci ous stones, j ewels, j ewelr y, precious metals5.Bri dges, tunnels, & other
instrumental ities of navigati on

Perils of Navigation
-peri ls i n making landi ngs in ri ver navi gation and damage from rai n i n consequence of
improperstowage.
War risks

-perils due directly to some hostile action, military maneuver, operational war danger

Builders risks
-damage to ways from launching as well as damage to the ship.

Perils of the sea
-all kinds of marine casualties & damages done to the ship or goods at sea by the violent action of
thewinds or waves; not foreseen & not attributable to the fault of anybody.

Perils of the ship
-losses or damages resulting from:a) nat ur al and i nev i t abl e ac t i on of t he s eab) or di nar y
wear and t ear of s hi pc)negl i gent fail ure of the shi p' s owner to provi de the vessel w/
proper equi pment to convey the cargo under ordinary conditions.

Inchmaree clause
-provision in the policy that the i nsurance shal l cover l oss of, damage to, the hul l or
machiner ythrough negligence of the master, charterers, engineers, or pilots, or through explosions,
bursting of boilers,breakage of shafts, or through any l atent defect in the machiner y or hul l
not resulti ng from want of duediligence.

Insurable Interest in Marine Insurance
:1 ) S h i p - o w n e r
over the vessel, except that if chartered, the insurance is only up to the amount not recoverable from the
charterer
.- he also has an insurable on expected freightage; no insurable interest if he will be compensated by
charterer in case of loss.

2 ) C a r g o o w n e r
over the cargo & expected profits

3 ) C h a r t e r e r
over the amount he is liable to the shipowner, if the ship is lost or damaged during the voyage.

Loan on Bottomry/Respondentia
-loan in which under any condition whatever, the repayment of the sum loaned, and of the premium
stipulated, depends upon the safe arrival in port of the goods on which it is made, or of the price they may
receive in case of accident.
Marine and fir insurance2



INSURABLE INTEREST ON VESSEL HYPOTHECATED BY BOTTOMRY IN CASE OF
1.Owner/debtor-difference between the actual value of the vessel and the loan on bottomry.2.Creditor-
amount of the loan

RIGHT OF INSURER & LENDER IN CASE OF LOSS
value of what may be saved/salvaged shall be divided between the lender & insurer, in proportion tothe
legitimate interest of each one.

Freightage
benefits derived by the owner, either from:a ) c h a r t e r i n g o f t h e s h i p b)its empl oyment for
the carri age of his own goods or those of others.

Time when Insurable Interest on Freightage exists:
a)In case of a charter part y, from the time the vessel has broken ground on the chartered
voyage

b)If no charter part y & price is to be paid for the carriage of goods, from the time sai d
goods are actual l y onboard the vessel or from the time both ship & goods are ready for specified
voyage.

In Marine Insurance, insured is required to reveal all information which he possesses material to the risk.

CONCEALMENT THAT DOES NOT VI TI ATE THE CONTRACT
EXCEPT WHEN THEY CAUSED THELOSS:
1. nat i onal c har ac t er of t he i ns ur ed2.l iabil ity of the thi ng i nsured to capture and
detenti on3.l iabil i t y to sei zure from beach of forei gn l aws of trade. 4 . w a n t o f n e c e s s a r y
d o c u m e n t s 5. us e of f al s e & s i mul at ed paper s

EFFECT OF CONCEALMENT OF MATTERS
:
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exonerates the insurer from a loss
EFFECT IF MISREPRESENTATION IS INTENTIONALLY FALSE:
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rescission of contract by insurer
EFFECT OF FALSITY OF REPRESENTATION AS TO EXPECTATION
:
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non-avoidance of a contract of insurance

IMPLIED WARRANTIES IN MARINE INSURANSE:
a ) t h e s h i p i s s e a w o r t h y
b)no improper devi ati on from the agreed voyage wi l l be made
c ) v es s el wi l l not engage i n i l l egal v ent ur e
d)where national it y or neutral it y of a shi p or cargo is expressl y warranted

Seaworthiness
relative term depending of the NATURE of the ship, the VOYAGE, & the SERVICE in which she is at
thetime engaged.

Reas onabl e f i t ness t o per f or m t he s er v i c e & t o enc ount er t he or di nar y per i l s of
t he v oyagecontemplated by the parties.


Marine and fir insurance3

EFFECT OF VIOLATION OF IMPLIED WARRANTY OF SEAWORTHINESS
insurer will not be liable for a loss


WHEN REQUIREMENT OF SEAWORTHINESS SATISFIED

General Rule:
Seaworthiness of the vessel is required only at the commencement of the risk.
Exceptions:
1.insurance is made for a specifi ed length of ti me
2.insurance is upon the cargo required to be transshi pped at an immedi ate port

COURSE OF THE VOYAGE INSURED
:a) one agr eed upon by t he par t i es
b)i n the absence of agreement, the course of sai l ing fixed by mercantil e usage
c ) i f t he c our s e of s ai l i ng i s not f i x ed by mer c ant i l e us age, one whi c h t o
a mas t er of or di nar y sk i l l and direction, would seem the most natural, direct & advantageous

DEVIATION

as defined is:
a)departure from the course of the voyage i nsured
b) unr eas onabl e del ay i n pur s ui ng t he v oyage
c)commencement of an entirel y different voyage

DEVIATION IS PROPER:
a)when caused by circumstances over which neither the master nor the owner of the ship has any control
b) when necessary to comply with warranty, or to avoid a peril, whether or not the peril is insured against
c)when made i n good f ai th, & upon reasonabl e grounds of bel i ef i n i ts necessi t y to avoi d a
peri l
d)when made in good faith, for the purpose of saving human life, or relieving another vessel in distress.

EFFECT OF IMPROPER DEVIATION:
insurers become immediately absolved from further liability

Loss
A . T O T A L
1.Actual total l oss ( exi sts when the subj ect matter of the insur ance i s whol l y destroyed or
lost or when it is
so damaged as no longer to exist in its original charter) is caused by:
a. t ot al des t r uc t i on of t he t hi ng i ns ur ed
b.irretrievabl e loss of the thi ng by sinking, or by leaving broken up
c.any damage to the thi ng which renders it val uel essd.other event which effecti vel y
deprives the owner of the possession

2.Constructi ve total loss ("technical total loss")
one that gives to a person insured a right to abandonB . P A R T I A L L O S S
loss other than a total loss
presumption of actual loss: continued absence of a ship without being heard.

CONTINUATION OF LIABILITY OF INSURER:
whenever the ship upon which the cargo insured was loaded cannot continue the voyage due to theperil
insured against, & cargo is loaded on another vessel



Marine and fir insurance4

ABANDONMENT - necessary only in Constructive Total Loss

Average
extraordinary/accidental expense incurred during the voyage for the preservation of the vessel, cargo,or
both and all damages to the vessel & cargo from the time it is loaded and the voyage commenceduntil it
ends & the cargo unloaded.


KINDS OF AVERAGE
:1 . GR OS S / GE N E R A L A V E R A GE S
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incl ude al l the damages & expenses which are deli beratel y caused i n order to save the
vessel, i tscargo, or both at the same time, from real & known risk.
Requisites to the Right to claim general average contribution:
a. c ommon danger t o t he v es s el / c ar gob.part of the vessel / cargo was
sacrificed del iberatel yc.sacrifice must be for common safet y/benefit of al l d. mus t be
made by t he mas t er or upon hi s aut hor i t y e.not be caused by any fault of the part y
asking the contri butionf . m u s t
b e s u c c e s s f u l g . m u s t b e n e c e s s a r y 2 . S I MP L E / P A R T I C U L A R A V E R A
G E
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includes all the expenses & damages caused to the vessel or to her cargo which have not inured
tothe common benefit & profit of all the persons interested in the vessel & her cargo.
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Partial loss caused by a peril insured against, which is not a general average loss
''FPA CLAUSE
"
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a situation wherein the insured & insurer stipulated in the policy that the vessel/cargo insured shall befree
from particular average
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effects:a.if damage to the thing insured is a PARTICULAR average, the insured shal l not be
l iabl e UNLESSthe loss suffered is totalb.if damage to the thi ng insured is a GENERAL
average, i nsurer shall be l iable whether the loss ispartial or total or for the condition of the
insured for his proportion of all general average lossesassessed upon the thing insured which was saved.

There is an ACTUAL TOTAL LOSS if the i nsured is effecti vel y depri ved of the use &
possessi on of theproperty, whether by seizure/capture followed by condemnation/theft.

Abandonment
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act of the i nsured by which, after a constructi ve total loss, he decl ares the rel inquishment
to theinsurer of his interest in the thing insured

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effect: insured is surrendering to the insurer whatever is left of the property insured, & resorting tothe
pol icy for i ndemni ty, i nsurer then becomes the owner of whatever may remain of the
i nsuredthing & the insured may recover a total loss.

REQUISITES FOR VALID ABANDONMENT
:1.actual rel inquishment by the person insured of his i nterest i n the thi ng
insured2 . c o n s t r u c t i v e t o t a l l o s s 3.abandonment must be neither parti al nor
condi tional 4.made wi thin a reasonabl e time after recei pt of rel iabl e inf ormati on of the
loss5 . f a c t u a l 6.made by gi vi ng notice to the insurer which may be done oral l y or
in writi ng7.notice of abandonment must be expl icit & must specif y the particular cause of
the abandonment
Marine and fir insurance5


WHEN ABANDONMENT MAY BE MADE:
1.if more than 3/4 of the value of the thing insured is actuall y l ost 2.if more than 3/4 of
the value of the thing insured would have to be expended to recover it from the peril3.if i t is inj ured to
such an extent as to reduce its val ue by more than 3/44.if the thing i s insured is a ship &
the contempl ated voyage cannot be l awful l y performed wi thout i ncurringan expense to be
insured of more than 3/4 the value of the thing abandoned.5.If the thi ng insured is & the
contempl ated voyage can' t be l awful l y performed wi thout i ncurri ng risk whicha prudent man
would not take under the circumstances6.If the thi ng i nsured, bei ng cargo or freightage, the
voyage cannot be performed nor another shi p procuredby the master within reasonable time &
with reasonable diligence

RIGHT OF RECOVERY WHEN:
1 . a b a n d o n m e n t i s m a d e
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recovery of TOTAL LOSS, insurer acquires all interest of the insured2 . n o a b a n d o n m e n t
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recovery only of ACTUAL LOSS

When abandonment becomes ineffectual
:
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information which formed the basis of abandonment proved to be incorrect & there was in fact nototal loss

Form of Notice of Abandonment
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no particular form; may be made orally unless required to be in writing, even notice by telegraph
issufficient if complies with requirements
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if done orally, insured must submit to the insurer within 7 days from such oral notice, a written noticeof
the abandonment

EFFECTS OF ACCEPTANCE OF ABANDONMENT
1.becomes irrevocabl e UNLESS the ground upon which i t owes made proven to be
unfounded2 . c o n c l u s i v e u p o n p a r t i e s 3.admission of the l oss & suffici ency of
abandonment

HOW ACCEPTANCE OF ABANDONMENT MADE:
a ) e x p r e s s b) i mpl i ed f r om t he ac t s of t he i ns ur er
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mere sil ence of the i nsurer for an unreasonable l ength of time after notice shal l be
construed asacceptance

EFFECT OF VALUATION:
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conclusive between the parties provideda) t he i ns ur ed has s ome i nt er es t at t he
r i s k b ) t h e r e i s n o f r a u d o n h i s p a r t y

Co-insurance
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form of insurance in which the person who i nsures his propert y for less t han the entire
val ue isunderstood to be his own insurer for the difference which exists between value of property &
amountof insurance

REQUISITES FOR APPLICATION
:1.i nsured taken is l ess than the actual val ue of the thi ng insured2 . l o s s i s p a r t i a l
Marine and fir insurance6

Mari ne Insurance
There i s al ways co-i nsurance

Fire Insurance
No co-i nsurance UNLESS expressl y stipulated i n the pol icy


Fire insurance
- a contract by which the insurer for a consideration agrees to indemnify the insured against loss,
ordamage to, property by fire, but may include loss by lightning, windstorm, tornado & earthquake & other
alliedrisks, when such risks are covered by extension to fire insurance policies/ under separate policies

Alteration
al terati on i n the use or condi tion of thi ng i nsured wi l l entitle the insurer to resci nd the
contract provided following requisites are present:
a) use or condition of the thing is specifically limited/stipulated in the policy.
b) such case/condition as limited by the policy is altered
c) the alteration is made without the consent of the insurer
d) alteration is made by means within the control of the insured
e) the alteration increases the risk
f) violation of a policy provision

Co-insurance clause
clause requiring the insured to maintain insurance to an amount equal to a specified percentage of
thevalue of the insured property under penalty of becoming co-insurer to the extent of such deficiency

Fall-off Building Clause
clause in fire insurance policy that if the building or any part thereof falls, except as a result of fire, all
insurance by the policy shall immediately cease.

Option to Rebuild Clause
opti on of i nsurer to repair, rebui ld or replace bui ldi ngs/structures whol l y or parti all y
damaged or destroyed, instead of the payment of the loss.
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Alternative obligation, either pay the amount of the loss/ rebuild the building damaged

Casualty Insurance
includes all forms of instrument against loss or liability arising from accident/mishap other than those
within the scope of other types of insurance


GENERAL DIVISION OF CASUALTY INSURANCE:
1.insurance against specifi ed hazards which may affect the person/propert y of the insured
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e.g. personal accident, robbery/theft, damage to or loss of motor vehicle2.insurance against specified
hazards which may give rise to liability on the part of the insured for claims forinjuries to others/damages
to their property
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e.g. workmen's compensation, motor vehicle liability

Life Inusrance
U s u a l o b j e c t i s t o p r o v i d e f u n d f o r t h e b e n e f i t o f t h e estate/heirs beneficiaries
of insured after the death of the insured

Accidental/ Health Insurance
Protect against not a loss of l ife but a l oss of time, earning capacity and expenses