UNDERWRITERS AND ITS PRINCIPLES
AS PER MARINE INSTURANCE ACT THE TERM UNDERWRITERS MEANS AN ASSOCIATION OF COMPANIES (AS OPPOSED TO INDIVIDUAL) WHICH HAVE UNIFORM PRACTICES AND POLICY FORMS WHICH PROVIDES FACILITIES FOR THE TRANSACTION OF INSURANCE BUSINESS.
UNDERWRITERS ARE A FEW HUNDRED INDIVIDUALS WHO ASESSES RISKS INVOLVED IN INSURING AND CHARGE PREMIUM ACCORDINGLY.
FOR e.g. ‘Institute of London Underwriters”.
MARINE INSURANCE ACT 1906
- REQUIRES THAT EVERY CONTRACT OF MARINE INSURANCE MUST BE EMBOIDED IN A MARINE INSURANCE POLICY CONFIRMING TO THE REQUIREMENT OF THE ACT
- RECOGNISES TWO POLICY TYPES: TIME AND VOYAGE.
- PROVIDES THAT THE CONTRACT IS CONCLUDED WHEN THE ASSURED’S PROPOSAL IS ACCEPTED BY THE UNDERWRITERS, WHETHER OR NOT THE CONTRACT DOCUMENT IS ISSUED AT THAT TIME.
- PROVIDES THAT A ‘MARINE ADVENTURE’ EXISTS WHEN A SHIP, CARGO OR ‘OTHER MOVEABLES’ ARE EXPOSED TO MARITIME PERILS.
- PROVIDES FOR 3 MAJOR PRINCIPLES OF INSURANCE:
Ø INDEMNITY;
Ø INSURABLE INTERST; AN
Ø UTMOST GOOD FAITH.
PRINCIPLES OF INSURANCE
1.INDEMNITY:
v MIA 1906 DEFINES A CONTRACT OF MARINE INSURANCE AS “A CONTRACT WHEREBY THE INSURER UNDERTAKES TO INDEMNIFY THE ASSURED, IN THE MANNER AND TO THE EXTENT THERE BY AGREED, AGAINST MARINE LOSSES”.TO INDEMNIFY IS TO MAKE GOOD A LOSS SUFFERED, NOT BY REPLACEMENT OF THE SUBJECT MATTER LOST, BUT BY A FINANCIAL PAYMENT.
v TO INDEMNIFY THE ASSURED” IN A MANNER AND TO THE EXTENT THEREBY AGREED” BECAUSE OF THE DIFFICULTY OF PUTTING A VALUE ON SHIPS AT SEA OR ON CARGOES IN TRANSIT
v SHIPS AND CARGOES THEREFORE NORMALLY HAVE A VALUE PUT ON THEM AT THE COMMENCEMENT OF THE RISK(i.e. AT THE TIME OF EFFECTING THE POLICY)
v WHERE THERE IS A TOTAL LOSS THE MEASURE OF INDEMNITY = 100% OF THE INSURED VALUE.
v WHERE 50% OF A SUBJECT MATTER INSURED IS DESTROYED, THE MEASURE OF INDEMNITY = 50% OF THE INSURED VALUE.
CARGO INSURANCE
v CARGOM INSURANCE CAN BE ARRANGED IN THE LLOYD’S MARKET OR THE ILU COMPANIES MARKET, OR DIRECTLY FROM SOME INSURANCE COMPANIES. OR
v A MERCHANT MAY ALTERNATIVELY APPROACH AN INSURANCE COMPANY OFFERING CARGO INSURANCE.
v MOST POLICIES INCORPORATE THE INSTITUTE CARGO CLAUSES (A, B OR C).
INSTITUTE CARGO CLAUSES A, B AND C
v INSTITUTE CARGO CLAUSES C GIVE COVER ONLY AGAINST MAJOR CASUALTIES: FIRE, EXPLOSION, VESSEL OR CRAFT STRANDED, GROUNDED, SUNK, CAPSIZED, OVERTURNING OR DERAILMENT OF LAND CONVEYANCES, COLLISION OR CONTCT, DISCHARGE AT A PORT OF DISTRESS, GENERAL AVERANGE SACRIFICE AND JETTISON.
v INSTITUTE CARGO CLAUSES B EXTEND THE ‘C’ COVER TO INCLUDE EARTHQUAKE, VOLCANIC ERUPTION, LIGHTNING,WASHING OVERBOARD, ENTRY OF SEA, LAKE OR RIVER INTO THE VESSEL,CRAFT , HOLD, CONVEYANCE, LIFTVAN OR PLACE OF STORAGE, TOTAL LOSS OF PACKAGES LOST OVERBOARD OR DROPPED OVERBOARD DURING LOADING OR UNLOADING.
v INSTITUTE CARGO CLAUSES A GIVE COVER ‘AGAINST ALL RISKS OF LOSS OF OR DAMAGE TO THE SUBJECT MATTER INSURED’, MAKING THE POLICY ALMOST ‘FULLY COMPREHENSIVE’.
v INSTITUTE STRIKE CLAUSE IS COMMON FOR ALL INSTITUTE CARGO CLAUSES.
v THE FOLLOWING CLAIMS ARE EXCLUDED:
1. CLAIMS RESULTING FROM INSUFFICIENT OR UNSUITABLE PACKING OR PREPERATIONS OF THE SUBJECT MATTER INSURED.
2. CLAIMS ARRISING FROM THE INSOLVENCY OR FINANCILA DEFAULT OF THE OWNERS, MANAGERSS OR CHARTERERS
3. CLAIMS ARRISING FROM THE USE OF NUCLEAR WEAPON.
4. CLAIMS FOR DAMAGE CAUSED BY TERRIORISTS
5. CLAIMS ARRISING FROM UNSEAWORTHINESS OF THE VESSEL OR CRAFT.
