Marine insurance

Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination

Two Broad Categories

Ocean Marine Insurance

  • Hull
  • Cargo
  • Freight
  • Protection and indemnity insurance

Inland Marine Insurance

  • Extension of Ocean marine insurance
  • Domestic goods in transit
  • Property held by Bailees
  • Mobile equipment and property
  • Block Policies- “all-risks” basis
  • Means of transport and communication


Two types of risks are covered by ocean marine insurance.

  • The first type is the perils of the sea that include both natural calamities and fortuitous accidents.
  • The second type of risks covered is extraneous risks. These risks include ordinary risks such as theft, pilferage, rain damage, shortage, breakage, etc and special risks such as strike, war, failure to deliver, etc.

Common Exclusions

  • Loss, damage or expenses attributable to willful misconduct of the assured
  • Ordinary or inevitable losses
  • Loss, damage or expense caused by inherent vice or nature of the subject matter insured
  • Loss / Damage due to insufficient, unsuitable or defective packing (including storage)
  • Loss / Damage or expenses proximately caused by delay even if the delay is caused by a peril insured against
  • Loss damage or expenses arising from insolvency of the owners, managers, operators of the vessel.
  • Loss damage due to un seaworthiness of the vessel or craft, container, lift van employed for carrying the insured matter.
  • Wars, strikes and civil commotions unless covered under separate endorsements.
  • Hull Insurance

    • Covers physical damage to ship or vessel
    • Always written with a deductible
    • Contains collision liability clause
    • Covers owner’s legal liability
  • Cargo Insurance

    • Covers the loss to the shipper if the goods are damaged or lost
    • Policy can be single or open cargo policy
    • Salvage loss
      Follows forced sale of badly damaged cargo
  • Cargo Partial Loss

    Where goods delivered damage measure of indemnity is

    • Proportion of sum fixed by policy
    • Equal to the gross sound value less damaged value at place of delive ry
  • Freight Insurance

    • Insures the profit made by a ship owners out of ships used to carry cargo, both their own and others
    • Loss occurs when cargo is not deliverable
  • Liability Insurance

    • Covers the property damage or bodily injury to third party
    • Damage caused by the ship to docks, harbor installation, fines, penalties, injury to crew members, etc

Major Types of Policy

Time Policy

  • A time policy is one that runs for a period of time usually not exceeding 12 months.
  • In using a time policy, the most important question is whether the loss occurred at a time in which the policy was running because sometimes it is difficult to prove in case where it is alleged that the conditions giving rise to the loss (e.g. a hole in the ship) occurred during the policy, although the final consequence (the foundering of the vessel) occurred afterwards.

Voyage Policy

  • This is a policy that operates for the period of the voyage.
  • For cargo, the cover is from warehouse to warehouse.
  • The policy will not apply if the actual voyage and/or ports are different from those in the policy.

Mixed Policy

  • This is a policy that covers the subject matter for the voyage within a time period.
  • It is used to cover the cargo from warehouse to warehouse with a time limit.
  • The cargo has to be warehoused within 60 days after discharge or the policy will no longer cover the cargo.

Open Policy

  • This is an arrangement in which terms such as types of risks to be covered, validity of the insurance contract, rate, premium, maximum value of each shipment and geographical limits, etc are worked out when the contract is signed.
  • Each shipment is covered once the assured declares the details. The assured may be authorized to issue against payment a pre-printed insurance certificate which is valid after completion of shipment details and his signature for documentation purposes.
  • The insurance certificate is pre signed by the insurer. If the contract is effective only for a specified period, a clause of termination should be included.