Marine Cargo Insurance Practice

Marine Cargo Insurance Practice

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

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"..

Institute Cargo Clauses "C"

Institute Cargo Clauses "C"

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.

HISTORY OF MARINE INSURANCE

HISTORY OF MARINE INSURANCE 

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

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

Single Marine Cargo Insurance

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.

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Home Removals Insurance

Home Removals Insurance

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.

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