Marine Cargo Insurance PDF

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BPP notes on Marine Cargo Insurance...

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COMMERCIAL LAW MARINE CARGO INSURANCE Insurer provides indemnity against specific type of loss -

F.o.b contracts – arranged by B C.i.f contracts – S to arrange on behalf of B

Marine Insurance Act 1906 S1: A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. S3(2):‘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, seisures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind or which may be designated by the policy. Institute Cargo Clauses (ICC); (A), (B), (C) ICC A – Full coverage (usually required if banks are financing) ICC B – Covers fewer perils ICC C – Covers seven perils as basic coverage – minimum required All ICC’s cover “warehouse to warehouse” risks Arranging insurance 1. Contract for the sale of goods; 2. Depending on trade term used, either buyer or seller will contact broker; 3. Broker given instructions on date of shipment, amount and kind of cover; 4. Broker will prepare a ‘slip’ containing this information; 5. Broker presents the slip to underwriters who may choose to underwrite all or part of the risk; 6. By writing on the line, the underwriter enters into binding agreement; 7. When 100% of the risk is covered the broker will give assured a cover note. Actual policy to be issued later. The underwriter will insure in return for a ‘premium’ S52: Unless otherwise agreed, the duty of the assured or his agent to pay the premium, and the duty of the insurer to issue the policy to the assured or his agent, are concurrent conditions, and the insurer is not bound to issue the policy until payment or tender of the premium. S53(2): - Broker responsible for paying premium to underwriter; - Assured must then pay broker. Broker has lien on policy until paid. Types of Policy 1. Voyage and time 2. Valued and unvalued 3. Floating policies and open

COMMERCIAL LAW 1. Voyage and Time S25: Where the contract is to insure the subject-matter “at and from,” or from one place to another or others, 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. 2. Valued and Unvalued S27: (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. S28: 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 hereinbefore specified. The Main (case) - Insurance affected on return freight reasonably valued - Vessel damaged resulting in delay and freight market declined - Court refused to open the valuation when freight was lost 3. Floating and open cover Floating: S29(1): A floating policy is a policy which describes the insurance in general terms and leaves the name of the ship or ships and other particulars to be defined by subsequent declaration. Policy arranged for coverage of a lump sum, insurer does not provide details of the goods or shipment to be made but can ship goods up to the value of the insurance arranged Ionides v Pacific Fire & Marine Open: Similar principles to floating cover A promise to make available insurance to the insured upon request Any requests must be printed on the contract

Key Characteristics of Marine Insurance Historic situation: ‘uberrimae fidei’ – owed by all parties Carter v Boehm (1766)

COMMERCIAL LAW Fair Presentation New position – Insurance Act 2015: ‘duty of fair presentation’ S17 – “A contract of marine insurance is a contract based upon the utmost good faith” • If deliberate or reckless, insurer may avoid; otherwise, must show that would not have entered on those terms or at all. • ‘Fair presentation’ means to disclose material information known or ought to be known; or, sufficient information to put insurer on notice. • Only ‘fair’ if ’reasonably clear and accessible’ and ‘substantially correct’. Insurable Interest S4 (1) Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure. (2) In particular a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof. Gentlemen would gamble on safe arrival of ships, so insurance became a wager Insurable interest prevents this Subrogation Rights of the insured are subrogated to the insurer S79(1): Where the insurer pays for a total loss… he thereupon becomes entitled to take over the interest of the assured in whatever may remain of the subject-matter so paid for, and he is thereby subrogated to all the rights and remedies of the assured in and in respect of that subject-matter as from the time of the casualty causing the loss. Yorkshire Insurance v Nisbet Shipping - Devaluation of pound so surplus payment (CAD) around £55,000 - Subrogation rights only applied to sums paid out - Assured got to keep the remainder Transfer by assignment – S 50 Requirements: i. No express prohibition ii. Cannot be assigned to carrier iii. Indorsement Assignment of a policy after loss – allows policy assignment if retrospective risk

COMMERCIAL LAW Seaworthiness (S39) and consequences Problem and solution • Institute Cargo Clauses, clause 5.2 Problem of knowledge • The Star Sea Deviation (S49) Problem and exceptions • S49(1)(a)-(g) Solution • Institute Cargo Clauses, clause 8.3...