Marwa Ibrahim write to “eBlue Economy “Importance of Marine Insurance

Marine insurance plays an important role in the shipping industry and in Shipping Law.

Most owners carry hull insurance on their ships and protect themselves against claims by third parties by purchasing “protection and indemnity” insurance. Cargo is usually insured against the perils of the sea, which are defined as natural accidents peculiar to the sea. For example storms, waves, and all types of actions caused by wind and water is classified as perils of the sea .

If a ship owner or cargo owner wishes to be protected against losses incurred from war, the owner must purchase separate war risk insurance, or pay an additional premium to include war risk in the basic policy.

It is a contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure.

The Contract must be embodied in policy

Subject to the provisions of any statute, a contract of marine insurance is inadmissible in evidence unless it is embodied in a marine policy in accordance with this Act 1906. The policy may be executed and issued either at the time when the contract is concluded, or afterwards.

A marine policy must specify:

–        A marine policy must specify the name of the assured, or of some person who effects the insurance on his behalf

Signature of insurer

1- A marine policy must be signed by or on behalf of the insurer, provided that in the case of a corporation the corporate seal may be sufficient, but nothing in this section shall be construed as requiring the subscription of a corporation to be under seal.

2- Where a policy is subscribed by or on behalf of two or more 92 insurers, each subscription, unless the contrary be expressed, constitutes a distinct contract with the assured.

Valued policy:

(1) A policy may be either valued or unvalued.

(2) A valued policy is a policy which specifies the agreed value of the subject-matter insured.

(3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial.

(4) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss.

Unvalued policy

An unvalued policy is a policy which does not specify the value of the subject-matter insured, but subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained, in the manner herein-before specified.

Marine adventure and maritime perils defined

(1) Subject to the provisions of this Act, every lawful marine adventure may be the subject of a contract of marine insurance.

(2) In particular there is a marine adventure where:

(a) Any ship goods or other movables are exposed to maritime perils. Such property is in this Act referred to as “insurable property”; (b) The earning or acquisition of any freight, passage money, commission, profit, or other pecuniary benefit, or the security for any advances, loan, or disbursements, is endangered by the exposure of insurable property to maritime perils; (c) Any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property, by reason of maritime perils. “Maritime perils” means the perils consequent on, or incidental  to, the navigation of the sea, that is to say, perils of the seas, fire, war, perils, pirates, rovers, thieves, captures, seizures, restraints, and detainment’s of princes and peoples, jettisons, barratry, and any other perils, either of the like kind or which may be designated by the policy.

Subject to any express provision or valuation in the policy, the insurable value of the subject-matter insured must be ascertained as follows:

(1) In insurance on ship, the insurable value is the value, at the commencement of the risk, of the ship, including her outfit, provisions and stores for the officers and crew, money advanced for seamen’s wages, and other disbursements (if any) incurred to make the ship fit for the voyage or adventure contemplated by the policy, plus the charges of insurance upon the whole: The insurable value, in the case of a steamship, includes also the machinery, boilers, and coals and engine stores if owned by the assured, and, in the case of a ship engaged in a special trade, the ordinary fittings requisite for that trade.

(2) In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross amount of the freight at the risk of the assured, plus the charges of insurance

(3) In insurance on goods or merchandise, the insurable value is the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole.

(4) In insurance on any other subject-matter, the insurable value is the amount at the risk of the assured when the policy attaches, plus the charges of insurance.

Voyage and time policies

Where the contract is to insure the subject-matter `at and from,’ or from one place to another or other, the policy is called a `voyage policy,’ and where the contract is to insure the subject matter for a definite period of time the policy is called a `time policy.’ A contract for both voyage and time may be included in the same policy.

Salvage

In shipping law, salvage is the compensation allowed to persons who voluntarily assist insaving a vessel or its cargo from impending or actual peril from the sea. Generally salvage islimited to vessels and their cargoes, or to property lost in the sea or other Navigable Waters, that have been subsequently found and rescued.

Except for salvage performed under contract, the rescuer, known as the salvor, must actvoluntarily without being under any legal duty to do so. As long as the owner or the owner’sagent remains on the ship, unwanted offesof salvage may be refused.

Typical acts of salvage include releasing ships that have run a ground or on reefs: سلسلة صخور قرب سطح الماء  raising sunken ships or their cargo, or putting out fires.

The salvor has a maritime lien on the salvaged property, in an amount determined by a courtbased on the facts and circumstances of the case. The salvor may retain the property until theclaim is satisfied or until security to meet an award is given. The owner may elect to paysalvage money to the salvor or to not reclaim the property.

General Average

Under the law of general average, if cargo is jettisoned in a successful effort

to refloat agrounded vessel, the owners of the vessel and the cargo saved are

required to absorb a proportionate share of the loss to compensate the owner

of the cargo that has been singled out for sacrifice.

All participants in the maritime venture contribute to offset the losses incurred.

The law of general average became an early form of marine insurance.

The York-Antwerp  Rules of General Average establish the rights and obligations of the partieswhen cargo must be jettisoned from a ship. These uniform rules on the law of general averageare included in private shipping agreements and depend on voluntary acceptance by themaritime community. The rules are incorporated  by reference into most bills of lading, contracts of affreightment (It is a contract between the shipper and the shipping company. In this contract shipper agrees to hire the ship at settled price. This price is called affreight) , and marine insurance policies.

The rules provide for the shipowner to recover the costs of repair, loading and unloading cargo, and maintaining the crew, if these expenses are necessary for the safe completion of the voyage.

Claims are generally made against the insurer of the cargo and the ship owner’s insurance underwriters