Marine Insurance

Business Studies

definition

Main elements of Marine insurance contract

  • Marine insurance provides protection against loss from unforeseen events in the ocean. The events could be collision of ship with the rock, or ship attacked by the enemies, fire and actions of the captains and crew of the ship.
  • Marine insurance is further broken down into three categories of insurance. These are ship or hull insurance, cargo insurance and freight insurance.

The main elements of a marine insurance contract are:

(i) Unlike life insurance, the contract of marine insurance is a contract of indemnity. The insured can, in the event of loss recover the actual amount of loss from the insurer.

(ii) Similar to life and fire insurance, the contract of marine insurance is a contract of utmost good faith. Both the insured and insurer must disclose everything, which is in their knowledge and can affect the insurance contract.

(iii) Insurable interest must exist at the time of loss but not necessary at the time when the policy was taken.

(iv) The principle of causa proxima will apply to it. The insurance company will be liable to pay only if that particular or nearest cause is covered by the policy.