1. Department for Maritime and Transport Law| 28 May 2018 Dr. Iva Savić
MARINE INSURANCE
Department for Maritime and Transport Law| 28 May 2018
Dr. Iva Savić

2. Role of transport insurance (TI)
Marine insurance – first insurance in the history (ancient cultures yrs BC)
follows growth of cargo shipping and technological development of maritime transport
insuring a variety of material interest involved in transport chain
marine insurance – special legal regime, specific institutes

3. marine insurance Insuring the interest – transfering the risk
Including:
Hull insurance
Marine Cargo insurance
Marine Liability insurance
* off-shore platforms, containers
* Club insurance (P&I clubs)

4. Princples of transport insurance
Principle of Uberrimae fidei (Utmost Good Faith)
insurance contract must be signed by both parties (insurer and insured) in an absolute good belief
person getting insured must willingly disclose and surrender to the insurer his complete true information regarding the subject matter of insurance
Transport insurance: like a professional
Principle of Insurable Interest
physical existence of the insured object gives him some gain but its non- existence will give him a loss > when the damage of the insured object occurs, the insured person must suffer some financial loss
Possible for damage occuring before the contract was signed - MIA „lost or not lost” - only if there is no (fraud)

5. PRINCIPLES (part 2) Principle of Indemnity
protection against unpredicted financial losses arising due to future uncertainties
Certain amount of money paid for material loss on insured object as a result of insured risk
insurance policy shall not provide compensation to the policyholder that exceeds their economic loss
Scope of compensation is defined by the policy
same financial state as the one prior to the loss
Cumulation of requests = limit: loss suffered

6. Marine insurance contract
Informal agreement
Issuance of insurance policy only if required by insured party
Defining - ELEMENTS:
Insured object/value (amount),
Insured risk,
premium,
compensation (indemnity)
INSURER– issues insurance policy + pays compensation
INSURED PARTY – has insurable interest + pays premium > and who signs the contract?

7. Insurance policy ON TIME ON (SPECIFIC) VOYAGE
> For those not regularly engaged in international trade; one- time-only basis > single shipment (voyage)
VALUED MARINE POLICY
> a policy which specifies the agreed value of the subject matter insured
OPEN COVER
> most commonly used; covering number of shipments over a period of time; „sleep easy” (pre-determined rates, terms and conditions)
Etc.

8. Insurable risk
Future, uncertain event that is outside the scope of the insured party and the insurer
Basic risks covered: accidents (sea perills), disaster, fire and explosion, piracy
Additional risks: war, strike etc.
≠INSURED EVENT– event that occured as a consequence of a insured risk

9. Damage covered Total Loss
Actual Total Loss – complete loss; damages too big to be reparable
Constructive Total Loss (Partial Loss) – repair costs are the same of higher than the real value of object insured;
Abandonment – insurer pays compensatino as if total loss occured and gets the vessel in possession
Compromised Total Loss - negotiated total loss settlement between the property owner and the insurance company under unusual circumstances

10. Excluded Losses Contractual exclussion Legal exclussions
> caused directly or indirectly with the intent of the insured party
> caused directly or indirectly with the intent or recklessly and with knowledge of persons for whose act and omissions the insured party is liable for (excluding crew members)
> caused by un-seaworthy vessel if the insured party knew or should have known (with due dilligence)
War and political risks, strike risks, nuclear risks

11. HULL INSURANCE

12. Hull and machinery insurance
Includes: the hull insurance, its machinery, installations and equipment, its supplies and other objects transported by ship or located on board
provides physical loss or damage insurance for the hull (shell) of a ship and her propulsion machinery and any equipment used for activities (e.g. cargo handling)
perils such as collision, grounding, fire and explosion, earthquakes (and the tidal waves that might follow them) etc.

13. 1995 INTL HULL CLAUSES MARINE WAR AND STRIKE
Institute Time Clauses-Hulls
Institute Time Clauses-Hulls-Restricted Perils
Institute time Clauses-Hulls, Total Loss, General Average and ¾ the Collision Liability
Institute time Clauses-Hulls, Total Loss only
Institute Voyage Clauses-Hulls
Institute Voyage Clauses, Total Loss, General Average and ¾ the Collision Liability
WAR AND STRIKE
Institute War and Strikes Clauses, Hulls-Time
Institute War and Strikes Clauses, Hulls-Voyage

14. CARGO INSURANCE

15. Cargo insurance International transport
Domestic transport- terms and conditions of national (local) insurers
INSTITUTE AMERICAN CARGO CLAUSES A,B,C
(USA)
INSTITUTE LONDON CARGO CLAUSES
(REST OF THE WORLD)

16. Institute Cargo Clauses
The Institute Cargo Clauses (ICC) = Set of terms for cargo insurance policies
adopted as standard terms by many international marine insurance organizations
Institute = international underwriting association (IUA) (formerly known as The Institute of London Underwriters)

17. MARINE CARGO INSURANCE - INTERNATIONAL
INSTITUTE
GENERAL
ICC A
ICC B
ICC C
SPECIAL
TRADE
WAR
STRIKES

18. coverage Port-to-port Warrehouse-to-warehouse clause
> The time goods leave the warehouse (at the place named in the policy) – ordinary course of transit – discharge at final port (warehouse)

19. New Marine Policy Form (MAR)
5 basic packages > A/B/C marine insurance+ war + strike
BASIC
marine/multimodal: Institute Cargo Clauses (A/B/C)
Institute War Clauses
Institute Strike Clauses
SPECIAL
Institute Theft, Pilferage and Nondelivery Clause)
Institute Frozen Food Clauses
Institute Frozen Meat Clauses
FOSFA Trades
Institute Timber Trade Federation Clauses
Institute Bulk Oil Clauses
• Norwegian Marine Insurance Plan, Institute American Cargo Clauses, intl UNCTAD conditions for cargo insurance

20. Liability insurance

21. Compulsory vs non-compulsory
Charterers, carriers, marine operators, ship repairers, stevedors, terminal operators etc.
COMPULSORY, when
there is a special public interest for protection of certain society groups, relations or objects
There is a great danger of certain objects or activities

22. Compulsory marine liability insurances
Oil pollution (CLC 1992)
Transport of HNS (HNS Convention 1996)*
Bunker oil pollution (Bunker Convention 2001)
Wreck removal (Nairobi convention 2007)
Death and personal injury to passengers (Athens Convention with Protocol 2002) – only 1st tier of liability

23. P&I Clubs

24. Protection and indemnity insurance
Mutual liability insurance
Standard (hull&machinery) insurance was not covering liability of shipowners for collission damages and other liabilities
18th Century Great Britain, formation of Clubs to provide Hull insurance at reasonable cost
Beginning of 19th Century, Hull insurance became more affordable, Hull Clubs went into decline. (today a few exist but not commonplace at all).
As the 19th Century progressed, greater exposure to 3rd Party liability claims, in particular from their crews. Laws were passed which made it even easier for crews and their dependents to claim.
Mid 19th Century - group of shipowners joined together in 1855 and formed the “Shipowners Mutual Protection Society”

25. Insuring named perils(P&I Rules) Including:
Personal injury / illness / death (Crew, Passengers, Stevedores, Third parties)
• Collision
• Wreck removal
• Damage to fixed and floating objects
• Pollution
• Cargo damage/shortage
• Fines
P&I clubs offer indemnity in limitations set by relevant laws
pay-to-be-paid / “first pay” rule
wilful misconduct defence

26. Rules of the Club – insurance conditions
No premiums
so-called „calls”
first call - 80% predicted sums
Supplementary (closing) call – at the end of the year, depending on
Reinsurance possibility : International Group of P&I
Certificate of Entry
Rules of the Club – insurance conditions