14.1 Marine Insurance Copy
Marine insurance is an extension of land-based property insurance. Ocean marine coverage was designed to protect ships and their cargo. Inland marine coverage was created to insure shipments carried by railroads, trucks, and aircraft.
Today, marine insurance policies cover any type of property that is being transported, has the potential to be transported, or is designed to move property or information from place to place, such as bridges, tunnels, computers and broadcast antennas.
Coverage’s provided under marine policies are highly specialized, unique and, to a great degree, unregulated. The regulated portion of marine insurance is referred to as regulated because the state insurance department approves the rates and forms companies use. This section will review the regulated side of marine coverage.
Commercial Ocean Marine Insurance
There are four major classes of ocean marine insurance that provide coverage against four types of losses:
- Hull Insurance
- Cargo Insurance
- Freight Insurance
- Protection and Indemnity(P&I) Insurance
Marine Hull Form
The marine hull form covers the perils of the seas, including the hostile actions of Men-of-War (fighting ships), pirates, rovers and thieves, fire, lightning, earthquakes, enemies, jettison, barratry and other like perils.
Jettison is a voluntary act of destruction in which cargo is cast overboard to save the ship or crew. In barratry, the master or mariners steal the ship and its cargo, willfully sink or desert the ship or imperil the vessel by disobeying instructions.
Insuring Agreement
The insuring agreement includes collision liability and loss during pilotage and towage. Additional coverage’s are disbursement, managers’ commissions, profits or excess or increased value of hull and machinery, and freight including chartered freight or anticipated freight insured for time in an amount not exceeding in the aggregate 25 percent of the agreed value, where agreed value is the coverage on the vessel.
Deductible Condition
All heavy weather damage or damage caused by contact with floating ice that occurs during a single sea passage between two successive ports is treated as though due to one accident.
Therefore, one deductible is applied.
Additional Perils Covered
The policy covers damage caused directly by:
- Accidents in loading, discharging or handling cargo;
- accidents while entering, leaving or sitting in dry-dock, graving docks, ways, gridirons or pontoons;
- explosions aboard a ship or elsewhere; and
- breakdown of motor generators or other electrical machinery.
Exclusions
Commercial ocean marine insurance does not cover the following:
- Capture, seizures, arrest, restraint or detainment;
- any taking of the vessel by requisition or otherwise, whether in time of peace or war;
- damage or destruction from any mine, bomb or torpedo not carried as cargo aboard the vessel;
- strikes, lockouts, civil commotions, riots, and martial law; and
- malicious acts or vandalism unless committed by the vessel’s master or mariners.
Clauses
Free of Capture and Seizure Clause: The Free of Capture and Seizure Clause excludes war in all of its aspects. A separate war risk policy may be purchased to cover the perils of war.
Strike Riot and Civil Commotion clause: The Strike, Riot and Civil Commotion Clause excludes loss or damage caused by acts of strikers, rioters or persons engaged in civil commotion.
Ocean Marine Open Cargo Policy
Insuring Agreement: The insuring agreement says the policy pays for losses “touching the adventures and perils the underwriters are contended to bear and take upon themselves, they are of the seas, fire, assailing thieves, jettison, and barratry of the Master or Mainers, and like perils.” The ocean marine policy is still technically a named perils policy, because the phrase referring to like perils means the coverage applies only to listed perils.
Inchmaree Clause (Additional Perils): The Inchmaree Clause covers bursting boilers, breaking propeller shafts or damage resulting from any latent defect in the machinery, hull or appurtenances. The policy also applies to loss due to faults or errors in navigation by the master, mariners, mates, engineers, and pilots.
Marine Extensions: The insurance attaches from the time the goods leave the warehouse at the place named in the policy until the goods are delivered to the final warehouse at the destination named.
