MARINE INSURANCE COVER,HULL AND CARGO CLAIMS

Why does a ship require Marine Insurance cover? Explain Hull Claims and Cargo Claims related with Marine Insurance. State the related documents and information required from the ship in this regard highlighting their validity.

Ans.  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. The policy pledge to compensate the insured by does not guarantee the continued existence or the replacement of the good itself.

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. In the case of ship-owner or ship manager insurance is usually confined to financial consequences of damage to its own ship, damage to the peoples property or death or injury to people all ship-owner and shipping merchants should insure this property against the loss or damage. They 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.

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 there of 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 by them 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 all 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 and information required from the ship.

In addition to copies of the relevant insurance policies (which will be supplied by the owner), documents and information listed below may be required to accompany a claim lodged by owners against underwriters

                      u          Deck and E/R logbooks covering the casualty and the repair period.

     u          Master’s and / or chief engineers detailed report (as appropriate)

     u          Relevant letters of protest.

     u          Protest and extended protests.

     u          Underwriter’s surveyor’s report

     u          class surveyor’s report

     u          owner’s superintendent’s report.

     u          Receipt and account for repairs.

     u          Accounts covering and drydocking & general expenses.

     u          Details of E/R stores and spares consumed.

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 thro’ the 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 Lloyd’s 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’s 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 surveyor’s 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 usually required are :

Bill of landing / Airway bill, commercial invoice, insurance certificate, copy of Notice of claim reported against carrier, Documentation related to outturn / receipt of goods, local carrier’s way bill where applicable, copy of temperature records, where available copy of instructions to carrier regarding carriage temperature, where applicable invoices to confirm salvage / sale price.