An Overview on Marine Insurance
Insurance on marine insures the damage or loss of ships. An insurance on cargo is another small branch of marine insurance. When insured goods or ships are surrendered to the insurers, this is called “abandonment.” This happens when there is a total loss of the insured thing.
Laws on marine insurance have a start with its origin in the merchant of law. It is built in England in the year 1601 by a specialized legislative body of assurance which is not associated with the other Courts. In the middle of 18th century, a lord chief justice started to combine principles of common law with law merchant. Policies are standardized due to the expansion of the insurance market of London. Then laws on marine insurance are developed by a judicial precedent. An act on marine insurance was passed in the year 1906; it classified the former principles on common law. Even though the Act title associates with marine insurance, the common principles apply to all the insurance on non-life. The oldest category of insurance, insurance on marine has branched out to reinsurance and non-marine insurance. It is often linked with Transit and Aviation risks.
Marine Insurance is divided by the cargo and the vessels. Vessel Insurance is identified as “Hull and Machinery.” It has a limited cover form which is “Total Loss Only”, whose utilization is reinsurance. The only coverage for the reinsurance is the total loss of the ship and not the partial loss. Another basis for the cover might be on “time” or “voyage.” The cover based on “time” is about policies based on a period of time which one year is the most common. On the other hand, the cover based on “voyage” takes up transit in the middle of the ports.
Marine policy only covers ¾ of the liabilities of the insured things in the direction of a third party. A common liability ensues when the ship collides with another; this is known as “running down” while an accident with fixed objects is known as “allision.” And still another common liability is wreck removal, when a ship is wrecked and is blocking the harbor.
There are terms utilized to differentiate the level of proof when a cargo or vessel has been lost, these are the Constructive Total Loss and the Actual Total Loss. Constructive Total Loss may refer to a loss where the price of the repair is not cheap while the Actual Total Loss describes a clear position of an incident. These terms are used when it is hard to prove a loss and there might not be any proof of the loss at all. An insurance on marine is perceived as an adventure insurance wherein insurers stake for the interest on the cargo or the vessel instead on the interest of the financial outcome of the subject.
There are also different types of specialist policies like the new building risks, the increased value, the war risk, the cargo insurance, and the overdue insurance. These policies are specially made to insure the risks of both the cargo and the vessels.
by Maria-Goldsmith 19 years ago