The Marine Insurance Act includes, as a schedule, a standard policy (known as the "SG form"), which parties were at liberty to use if they wished. Because each term in the policy had been tested through at least two centuries of judicial precedent, the policy was extremely thorough. However, it was also expressed in rather archaic terms. In 1991, the London market produced a new standard policy wording known as the MAR 91 form and using the Institute Clauses. The MAR form is simply a general statement of insurance; the Institute Clauses are used to set out the detail of the insurance cover. In practice, the policy document usually consists of the MAR form used as a cover, with the Clauses stapled to the inside. Typically each clause will be stamped, with the stamp overlapping both onto the inside cover and to other clauses; this practice is used to avoid the substitution or removal of clauses.
Because marine insurance is typically underwritten on a subscription basis, the MAR form begins: We, the Underwriters, agree to bind ourselves each for his own part and not one for another [...]. In legal terms, liability under the policy is several and not joint, i.e., the underwriters are all liable together, but only for their share or proportion of the risk. If one underwriter should default, the remainder are not liable to pick his share of the claim.
Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is generally known as "Hull and Machinery" (H&M). A more restricted form of cover is "Total Loss Only" (TLO), generally used as a reinsurance, which only covers the total loss of the vessel and not any partial loss.
Cover may be on either a "voyage" or "time" basis. The "voyage" basis covers transit between the ports set out in the policy; the "time" basis covers a period of time, typically one year, and is more common.
Origins of formal marine insurance
Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied with intuitive estimates of the variable risk from seasons and pirates.
The modern origins of marine insurance law in English law were in the law merchant, with the establishment in England in 1601 of a specialized chamber of assurance separate from the other Courts. Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging of law merchant and common law principles. The establishment of Lloyd's of London, competitor insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty lawyers, bankers, surveyors, loss adjusters, general average adjusters, et al), and the growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice. The growth of the London insurance market led to the standardization of policies and judicial precedent further developed marine insurance law. In 1906 the Marine Insurance Act was passed which codified the previous common law; it is both an extremely thorough and concise piece of work. Although the title of the Act refers to marine insurance, the general principles have been applied to all non-life insurance.
In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardized clauses for the use of marine insurance, and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication.
Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a considerable freedom to contract between themselves.
Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance and reinsurance. It traditionally formed the majority of business underwritten at Lloyd's. Nowadays, Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form is known by the acronym "MAT"..
Cover loss of or damage to the subject matter insured, "reasonably attributable to:
"
1. Fire or explosion.
2. Vessel of craft being stranded, grounded, sunk or capsized.
3. Overturning or derailment of land conveyance.
4. Collision or contact of vessel, craft or conveyance with any external object other than water.
5. Discharge of cargo at a port of distress.
The insurance also covers loss or of damage to the subject matter insured caused by:
1. General average sacrifice.
2. Jettison.
To sum up, the "C" clauses provide major casualty coverage during the land, air or sea transit.
Contrary to popular belief, Lloyds' of London was not the first group of people to offer insurance for maritime commerce. The first form of marine insurance dates back to the year 3000 BC when Chinese merchants dispersed their shipments amongst several vessels so as to abridge the possibility of damage to the product(s). The earliest account of insurance came in the form of bottomry, a monetary payment that protects traders from debt if merchandise is lost or damaged.
Another form of early insurance was the general average. During cargo shipments in 916 BC, a merchant would accompany his cargo to see that it was not jettisoned, or voluntarily thrown overboard by the crewmen in times of a storm or sinkage. To guard against this mutual interest of safety and quarreling amongst merchants, the Rhodians initiated the general average, which ideally meant that a person would be compensated through pro rata contributions of other merchants if their goods were jettisoned during shipment.
From the 11th century to 18th century, a few additional breakthroughs occurred in marine insurance. In 1132, the Danish began to reimburse those who experienced loss at sea. In 1255, insurance premiums were used for the first time as the Merchant State of Venice pooled these premiums to indemnify loss due to piratry, spoilage, or pillage. The first marine insurance policy was introduced in 1384 in an attempt to cover bales of fabric traveling to Savona from Pisa, Italy. Within the next century, merchants from Lombard began the first insurance practice in London. Finally, in 1688, Lloyd's of London, named after Edward Lloyd, began the risky business of insurance underwriting and have grown to become the largest marine insurance underwriters in the world. The Marine Insurance Act of 1906 was then proposed and initiated in an attempt to clarify and set forth the regualtions and policy variables associated with marine insurance agreements.
Marine Cargo Insurance
Cargo Insurance is an insurance which covers any loss of/or damage to subject matter insured during shipment or transportation by :
* Marine transportation
* Land transportation
* Air transportation
Marine Cargo Insurance Conditions
There are three insurance condition that are mostly used amongst of many existing marine insurance conditions. These conditions are :
* Institute Cargo Clauses "A" 1/1/82
* Institute Cargo Clauses "B" 1/1/82
* Institute Cargo Clauses "C" 1/1/82
Each of these Marine Insurance condition provides different scope of cover, for instance, the Institute Cargo Clauses "A" 1/1/82 has the widest scope of cover, while Institute Cargo Clauses "B" 1/1/82 has less scope of cover. And Institute Cargo Clauses "C" 1/1/82 has the least scope of cover of these three.
Other conditions (Land transit)
· Land and Air Transit Clause Cover A,
Applied specifically for coverage during land and air transportation, against fire, flood, accident to the carriage vehicle or force landing, overturning, sunk during the ferry crossings.
· Land and Air Transit Clause Cover B,
Covers all risks of loss of or damage during land and air transportation except as specifically excluded.
Condition
Risk
A
B
C
Fire Explosion
Y
Y
Y
Sunk Stranded Grounded Burnt Capsized
Y
Y
Y
Collision
Y
Y
Y
Derailment Overturning
Y
Y
Y
Discharge of cargo (Port of Distress)
Y
Y
Y
Jettison
Y
Y
Y
General Average (Sacrifice)
Y
Y
Y
Earthquake Volcanic Eruption
Lightning
Y
Y
N
Washing Over Board
Y
Y
N
Entry of Sea River Lake
Y
Y
N
Total Loss Per Package (Loading
Unloading)
Y
Y
N
Earthquake, volcanic eruption or
lightening
Y
Y
N
Rain and/or Fresh Water Damage (RFWD)
Y
N
N
Sweat and Heating
Y
N
N
Chafing and Scratching
Y
N
N
Rats & Vermins
Y
N
N
Theft, Pilferage and/or Non-Delivery
(TPND)
Y
N
N
Breakage, Bending and/or Denting
(BBD)
Y
N
N
Leakage and/or Shortage
Y
N
N
Contamination
Y
N
N
Malicious Act
Y
N
N
Piracy
Y
N
N
Ordinary leakage, loss of
weight/volume, wear and tear
N
N
N
Delay, loss of market or
consequential loss
N
N
N
Insufficiency or unsuitability of
packing or preparation
N
N
N
Rusting, Oxidation, Discoloration,
Contamination
N
N
N
Extension Coverage
- Institute Strike Clause
Provide coverage for loss or damage to
cargo caused by strikes, locked-out workmen, persons taking part in
labor disturbances, riot, civil commotion, terrorism and persons acting
from political motive, general average and salvage charges.
·
- Institute War Clause
Provide coverage for loss or damage to cargo
insured caused by war, civil war, rebellion, hostile act, capture,
seizure, arrest, derelict mines, torpedoes, bomb or other derelict
weapons, general average and salvage charges, all due to war.es 1/1/82.
Single marine cargo insurance is for ‘one-off’ insurance cover for import or export shipments, except home removals.
Our Single Marine Cargo has a broad, market-leading and competitive cover incorporating internationally recognised Institute Clauses with our own special conditions and additional clauses.
Cargo is insured for loss or damage during import, export including within the Australian leg of the journey.
This policy is suitable for corporate customers arranging staff transfers from Australia to selected destinations overseas.
We can help you take some of the stress away from your employees by providing one of the most comprehensive home removals insurance solutions.
You can cover your employee's household goods and personal effects while in transit and also while in storage - providing seamless protection for precious goods and personal effects.
ICC- "Institute Cargo Clauses War" INSTITUTE WAR CLAUSES (CARGO)
RISKS COVERED
1. - Risks Clause
1 This insurance covers, except as provided in Clauses 3 and 4 below, loss of or damage to the subject-matter insured caused by
1.1 war civil war revolution insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power
1.2 capture seizure arrest restraint or detainment, arising from risks covered under 1.1 above, and the consequences thereof or any attempt thereat
1.3 derelict mines torpedoes bombs or other derelict weapons of war.
2. - General Average Clause
2 This insurance covers general average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from a risk covered under these clauses.
EXCLUSIONS
3. - General Exclusions Clause
3 In no case shall this insurance cover
3.1 loss damage or expense attributable to wilful misconduct of the Assured
3.2 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject-matter insured
3.3 loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured (for the purpose of this Clause 3.3 "packing" shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the Assured or their servants)
3.4 loss damage or expense caused by inherent vice or nature of the subject-matter insured
3.5 loss damage or expense proximately caused by delay, even though the delay be caused by a risk insured against (except expenses payable under Clause 2 above)
3.6 loss damage or expense arising from insolvency or financial default of the owners managers charterers or operators of the vessel
3.7 any claim based upon loss of or frustration of the voyage or adventure
3.8 loss damage or expense arising from any hostile use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.
4. - Unseaworthiness and Unfitness Exclusion Clause
4.1 In no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft, unfitness of vessel craft conveyance container or liftvan for the safe carriage of the subject-matter insured, where the Assured or their servants are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded therein,
4.2 The Underwriters waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the subject-matter insured to destination, unless the Assured or their servants are privy to such unseaworthiness or unfitness.
DURATION
5. - Transit Clause
5.1 This insurance
5.1.1 attaches only as the subject-matter insured and as to any part as that part is loaded on an oversea vessel and
5.1.2 terminates, subject to 5.2 and 5.3 below, either as the subject-matter insured and as to any part as that part is discharged from an oversea vessel at the final port or place of discharge, or on expiry of 15 days counting from midnight of the day of arrival of the vessel at the final port or place of discharge, whichever shall first occur; nevertheless, subject to prompt notice to the Underwriters and to an additional premium, such insurance
5.1.3 reattaches when, without having discharged the subject-matter insured at the final port or place of discharge, the vessel sails from, and
5.1.4 terminates, subject to 5.2 and 5.3 below, either as the subject-matter insured and as to any part as that part is thereafter discharged from the vessel at the final (or substituted) port or place of discharge, or on expiry of 15 days counting from midnight of the day of re-arrival of the vessel at the final port or place of discharge or arrival of the vessel at a substituted port or place of discharge, whichever shall first occur.
5.2 If during the insured voyage the oversea vessel arrives at an intermediate port or place to discharge the subject-matter insured for on-carriage by oversea vessel or by aircraft, or the goods are discharged from the vessel at a port or place of refuge, then, subject to 5.3 below and to an additional premium if required, this insurance continues until the expiry of 15 days counting from midnight of the day of arrival of the vessel at such port or place, but thereafter reattaches as the subject-matter insured and as to any part as that part is loaded on an on-carrying oversea vessel or aircraft. During the period of 15 days the insurance remains in force after discharge only whilst the subject-matter insured and as to any part as that part is at such port or place. If the goods are on-carried within the said period of 15 days or if the insurance reattaches as provided in this Clause 5.2
5.2.1 where the on-carriage is by oversea vessel this insurance continues subject to the terms of these clauses, or
5.2.2 where the on-carriage is by aircraft, the current Institute War Clauses (Air Cargo) (excluding sendings by Post) shall be deemed to form part of this insurance and shall apply to the on-carriage by air.
5.3 If the voyage in the contract of carriage is terminated at a port or place other than the destination agreed therein, such port or place shall be deemed the final port of discharge and such insurance terminates in accordance with 5.1.2. If the subject-matter insured is subsequently reshipped to the original or any other destination, then provided notice is given to the Underwriters before the commencement of such further transit and subject to an additional premium, such insurance reattaches
5.3.1 in the case of the subject-matter insured having been discharged, as the subject-matter insured and as to any part as that part is loaded on the on-carrying vessel for the voyage;
5.3.2 in the case of the subject-matter not having been discharged, when the vessel sails from such deemed final port of discharge; thereafter such insurance terminates in accordance with 5.1.4.
5.4 The insurance against the risks of mines and derelict torpedoes, floating or submerged, is extended whilst the subject-matter insured or any part thereof is on craft whilst in transit to or from the oversea vessel, but in no case beyond the expiry of 60 days after discharge from the oversea vessel unless otherwise specially agreed by the Underwriters.
5.5 Subject to prompt notice to Underwriters, and to an additional premium if required, this insurance shall remain in force within the provisions of these Clauses during any deviation, or any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers under the contract of affreightment. (For the purpose of Clause 5 "arrival" shall be deemed to mean that the vessel is anchored, moored or otherwise secured at a berth or place within the Harbour Authority area. If such a berth or place is not available, arrival is deemed to have occurred when the vessel first anchors, moors or otherwise secures either at or off the intended port or place of discharge "oversea vessel" shall be deemed to mean a vessel carrying the subjectmatter from one port or place to another where such voyage involves a sea passage by that vessel)
6. - Change of Voyage Clause
6 Where, after attachment of this insurance, the destination is changed by the Assured, held covered at a premium and on conditions to be arranged subject to prompt notice being given to the Underwriters.
7. - Nullification
7 Anything contained in this contract which is inconsistent with Clauses 3.7,3.8 or 5 shall, to the extent of such inconsistency, be null and void.
This annual marine cargo product is for businesses with a turnover of over $20M pa. If your turnover is less than $20M pa, please see our Annual Marine Cargo Insurance page for small to medium business.
Annual marine cargo is subject to an annual premium based on the value of all shipments that the insured is responsible to insure. It is the simplest and most convenient way to cover the insured’s import and export risks.
Our Annual Marine Cargo policy has a broad, market-leading and competitive cover incorporating internationally recognised Institute Clauses with our own special conditions and additional clauses.
Cargo is insured for loss or damage during import, export and within Australia transit.
Stock and equipment at exhibitions or while on display can also be covered under the policy.
Some of the clauses covered in a marine insurance policy are given as under:
1. Valuation Clause:
The value of the subject is given in the clause. The value is agreed upon between both the parties. In case of loss or damage, the compensation will not exceed the amount given in the policy. If the value of the policy is to be decided at the time of loss, then this column is left blank.
2. ‘At and From’ Clause:
This clause refers to the time when risk commences. According to this clause the risk coverage starts when the ship is lying at the port of its departure and from the time it leaves the port. If insurance policy states the words, ‘at and from Madras’, it means the risk is covered when the ship is at Madras port and also when it leaves this port. This clause applies to Hull and Freight Insurance.
3. Sue and Labour Clause:
This clause enables the insured and the insurer in trying to save the subject- matter of insurance from any type of loss. If the insured spends some money in an attempt to save the goods from an impending loss, he can recover this amount from the insurer. The act of saving the subject-matter on minimising loss does not amount to deviation and the contract will not be void.
4. Warehouse to Warehouse Clause:
This clause covers the risk from the warehouse of the shipper or consignor to the warehouse at the destination. If the cargo is to be brought from the hinterland to the port, one marine policy will cover the risk at land and also at sea. The risk of taking goods to the port from sender’s warehouse to the arrival of goods at the receiver’s warehouse is covered. This clause saves the shipper from lot of troubles and he is sure of the safe arrival of the subject matter not only at the port but also at the warehouse.
5. Change of Voyage:
The details of the voyage are mentioned in the policy. The ports of departure and arrival are mentioned in the policy. The route to be followed by the ship is also given. In case of any deviation, the insurer will be relieved of his liability. If the ship changes its original route and follows same route later on, it will be taken as deviation. The insurer will not be liable to indemnify the loss if the original route is changed.
6. Touch and Stay Clause:
The ship should go and stay only at those ports which are mentioned in the policy. In case the ports are not mentioned, then the ship should take the customary route and stay at the port coming on that route only. If the ship goes to any other port, it will amount to deviation. The calling at ports must be for justifiable reasons.
7. Inchmaree Clause:
Under this clause any loss caused by the negligence of the master or a crew member is also covered. The damage caused to the cargo in loading and unloading operations is also recoverable. This clause was inserted after a famous case involving a ship named ‘Inchmare’ in 1857. This ship was damaged by the negligence of the crew and the insured could not get the claim for damages because it was not covered under the ‘perils of the sea’. Later on, underwriters included this clause in Marine Insurance.
8. Jettison:
It means throwing off certain cargo in order to lighten the load on a ship in emergency situations. It is necessitated to avoid a marine peril. The jettisoning must be done deliberately. The load to be thrown off is left to the master of the ship. The loss caused by jettisoning is covered under general clause.
9. Memorandum Clause:
Sometimes perishable goods are the subject-matter of insurance. The memorandum clause is used to save the insurer from paying small losses of perishable goods. Under this clause the insurer is not liable for partial losses. In certain commodities this loss is allowed up to 50%. However, if there is a general loss or the ship is stranded, the insurer will be liable to pay the loss.
