SUBJECT MATTER OF MARINE INSURANCE

SUBJECT MATTER OF CONTRACT OF INSURANCE:Anything in respect of which there is a risk of loss from maritime perils may be the subject of
marine insurance. It will be recalled that there is a distinction between the subject matter of
insurance and the subject matter of the contract of insurance, that every lawful marine
adventure may be the subject of a contract of marine insurance, and that a contract of marine
insurance may be extended to cover risks other than maritime perils in a narrow sense. 1
However, even though a marine insurance contract may include risks arising inland, the
contract must be substantially one relating to a marine adventure. Therefore, the subject
matter of the insurance must be capable of exposure to maritime perils.
Hull insurance, Cargo Insurance, Freights Insurance and liability Insurance are the subject
matter of Marine Insurance:

A. HULL INSURANCE:
Insurance of vessel and its equipments are included under hull insurance. There are a number
of classifications of vessels such as ocean steamers, sailing vessels, builders, risks fleet
policies and so on. It is concerned with the insurance of hull and machinery of ocean-going
and other vessels like barges, tankers, fishing and sailing vessels.
Insurance of construction risks or builder's risks deal with hull insurance for vessels when
they are under construction. A recent development in hull insurance has been the growth of
insurance of offshore oil/gas exploration and production units as well as connected
construction risks.
It is covered with specialised class of business particularly for Fishing Vessels, Trawler's,
Dredgers, Inland and Sailing Vessels are available.
The subject matter of hull insurance is the vessel or ship. There are many types of designs of
ships. Most of them are constructed of steel and welded and are capable of sailing on the sea
in ballast or with cargo.

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The ship is to be measured with GRT (Gross Register Tonnage) and NRT (Net Register
Tonnage). GRT is calculated by dividing the volume in cubic feet of the ship's hull below the
tonnage dock, plus all spaces above the deck with permanent means of closing.
NRT is the gross tonnage less certain spaces for machinery, crew accommodation ballast
spaces and is intended to encompass only those spaces used for carriage of cargo. DWT
(Dead Weight Tonnage) means the capacity in tons of the cargo required to load a ship to her
load line level.
Subdivision of Hull Insurance
The Hull Insurance is further Subdivision into 1. General Cargo vessels
2. Dry Bulk Carriers
3. Liquid Bulk Carriers
4. Passenger Vessels
5. Other Vessels.
These can be further divided into ocean going and coastal tonnage. Ocean going general
cargo vessels is usually in the 5000 to 15000 GRT range, coasters are smaller in size and one
engaged in the carriage of bulk cargoes. Coastal tonnage does not withstand the same strains
as ocean going vessels.
1. GENERAL CARGO VESSEL :
The general cargo vessels may be container ships, large carriers (LASH - Lighter Abroad
Ship)
Ro-Ro (Roll on Roll off) vessels, Refers (Refrigerated Vessels General Cargo) many general
cargo vessels are built for specific purpose Vessels may be subdivided into Liners and
Tramps.
Liners loads at an advertised berth and runs to an advertised schedule calling can route at a
varying number of ports according to the particular service. It tries to maintain Time schedule
although there are heavy risk of seas.

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It requires hugeCAPITAL INVESTMENT. Liners are always fit and well maintained at all
times. Liners have high standard of officers and crew.
Tramp carries cargo whenever and wherever it is available. Mostly bulk cargo very often are
seasonal in character for which she is usually chartered. Vessels are built to comply with the
particular needs of the owner's trade.
2. DRY BULK CARRIERS :
Dry Bulk Carriers are specially constructed vessels in the size range of thousands GRT for
coasters and 70,000 GRT for ocean going tonnage. The main bulk cargoes carried are iron
ore, coal, grain bauxite and phosphate.
The main features of these vessels are the single weather deck and large holds with wide
hatches to facilitate loading and discharge by mechanical means. Most bulk carriers have
sloping upper wing tanks to assist in trimming the cargo and thus produce a safer slow.
Nature of cargo, routs conversation into bulk cargoes and stability are the main
considerations for underwriting.
3. LIQUID BULK CARRIERS :
Tankers are strongly constructed to carry bulk liquid. The tankers have using tanks which do
not extend across the breadth of the tanker. Due to the live nature of the liquids cargo, tankers
sustain heavier damage than other cargo ships. Tanker has shorter life due to corrosive effect.
There is considerable danger of fire and explosion. Before a tanker is allowed to enter a dry
dock for repairs, a gas free certificate is required. The risk of pollution following a casualty
makes salvage operation more difficult and expensive.
The tankers may be VLCC (Very Large Crude Carrier) and ULCC (Ultra Large Crude
Carrier) LASH and Sea Bee vessels are mother ships which carry floating containers in the
form of barges up to 1000 tonnes displacement. A RO- RO (Roll on Roll off) vessel is one
having facility for shipping Lorries, trailers, etc. without need for cranes. Passenger Vessels
There are cruise vessels or passenger liners which sail on voyages to distant areas of
scenically beautiful but rocky or shallow coasts or near the icy waters of the Arctic and
Antarctic. They possess modern navigational systems.

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SUBJECT MATTER OF MARINE INSURANCE

4. OTHER VESSELS:
There are other types of vessels such as fishing vessels, offshore oil vessels and others.
Fishing Vessels
Fishing vessels bulk of steel and fiberglass (GRP) are much more prevalent.
Geographical/physical features of the area of operations vary from
COMPARATIVELY sheltered waters of inshore fishing to the full rigors of the open seas
with exposure to gales, heavy seas fog ice and snow.
The vessels may be classed or unclasped. Classed vessels are reacognised by Classification
Society, and may possess class granted by it. Unclasped vessels are surveyed out of water and
all machineries are thoroughly examined.
There are special tariff for fishing vessel in India. The nature, type, age, geographical limits,
etc. are examined for insurance cover and rating. Offshore Oil Vessels
The offshore oil vessels are used for explanation or for commercial production of oil from the
ocean beds.
The comprehensive cover given covers not only the operations at site but also the transporter
of plant and equipment to the drilling sales which may be hundreds of kilometers away in
mid sea. These vessels are veritable artificial islands where the risks are present in one form
or another.
The jacks up units are self-elevating platform which can float freely with legs retracted by a
jacking system for movements in tow. Casualties may occur during tows or whilst jacking up
or down.
The sem-submersible or column established drilling platform can be bottom supported and or
free floating. They can operate is deeper water and usually have multi anchoring system
employing up to 10 separate lines.
Another ship shape unit is basically a modified conventional ship, with a slot for drilling
through, located in the centre. It is capable of much deeper water drilling.
Again another fixed structure is usually a platform construction on four or more piled legs.
The platforms are stationary. Hull and Machinery Insurance

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SUBJECT MATTER OF MARINE INSURANCE

The policy covers the hull, machinery and equipment and a store etc. on board but does not
cover cargo.
The insurance cover, the requirements of the individual ship owner and protects him against
partially loss, total loss, ship's proportion of general average and salvage charges, sue and
labor expenses and ship owner's liability towards other vessels arising from collisions.
Hull Underwriting :
Hull underwriting requires the following information to assure the risk
Type, construction, builders, age, tonnage, dimension, equipment, propulsion machines, engine, fire extinguisher; classification society, merchant shipping act, warranties, navigation
physical and moral hazard.

B. CARGO INSURANCE :
Cargo insurance is covered under risk policy or floating policies. The cargo may be of any
description, for example wares, merchandise, property, goods and so on.
Transit clause of ICC (A), (B), and (C) describes the duration of the risk as attaching from the
time the goods leave the warehouse or other place of storage at the placement in the policy
for commencement of transit. The risk then continues during the ordinary course of transit to
terminate on delivery.
Cargo insurance has coverage of loss or damage caused by war, civil war, revolution,
rebellion, insurrection or civil strife or any hostile act, capture, seizure, arrest, restraint
detainment, general average and salvage charges, strikes, riots, etc.
Trade coverage covers the insurance needs of various type of cargoes of general nature. A
number of commodities and foodstuff provide for particular hazards. Institute of London
Underwriters (ILU) have adopted uniform trade practices.
Which are followed by other insurers for insurance of cocoa, coffee, cotton, fats oil knots,
hides, skins, leather, metal, oil seeds, sugar, tea and so on are assured under standard policy.
There are separate insurance of coal. Jute, Rubber, tanker, bulk oil, frozen products.
Risks Covered:
All risks clause covers inland Transit risks also for the cargo insurance. Loss or damage are
covered if the risks occurred due to: fire lightning explosion

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SUBJECT MATTER OF MARINE INSURANCE

Riot, strikes, malicious damage impact by any rail road vehicle storm, cyclone flood,
inundation earth-quake, burglary accidental physical loss or damage.
A special declaration policy (SDP) is a form of floating policy issued to insured that have a
large turnover with many and frequent dispatches of goods anywhere within the country by
rail or road or in water warp.

C. FREIGHT INSURANCE:
Freight is to be payable for the carriage of cargoes or if the vessel, is chartered, the money to
be paid for the use of the vessel. The carriage is unable to earn freight if the goods or
properties (cargoes) are not safely transported.
Pre-paid freight payable in advance is at the risks of the cargo owner who includes it in the
value of the goods insured under a cargo policy. But freight payable only on delivery of the
goods at the destination is at the risk of the ship owner who has insurable interest in it and
therefore can insure it.
The disbursement warranty of the ITC (Hulls) allows the ship owner to effect in conjugation
with 12 months insurance on the ship's hulls and machinery etc. Time insurance on freight
and/or charters freight and/or anticipated freight. When the ship is lost, it also results in loss
of her profit earring capacity and the termination of freight contracts already entered into.
A certain amount of freight is insured by a ship owner for a period of 12 months under the
Institute Time Clauses (freight). Additional policies are insured on a voyage basis. The freight
at risk on any voyage exceeds the amount of insured for time. The Institute Voyage Clauses
(freight) are then used.
Time charter hire is payable to the ship owner for the use of his ship for carriage of goods for
a specific period of time.
If any events occur, such as breakdown of machinery damage to the vessel etc. which
prevents the operation of the vessel for more than 24 consecutive hours, of the payment hire
shall cease until the ship become operational. This freight is at the risk of the ship owner.
Freight Standard Clauses:
The standard clauses in use are Institute Time Clauses-Freight (1.10.83) and Institute Voyage
Clause- Freight (1.10.83). Freight is insurable on a time basis.

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SUBJECT MATTER OF MARINE INSURANCE

Ship owners usually insure a certain amount on freight for a power of 12 months. Additional
policies on voyage basis are issued if the freight at risk on any one voyage exceeds the
amount insured for time.
A loss of freight to the carrier who may be a ship-owners or a character-can only arise when
the freight is payable at destination and the carrier runs the risks of not receiving it by reason
of loss of ship and/or loss or damage to cargo.
No such loss can arise to the ship owner where freight in advanced of prepaid and is not
repayable if the ship and/or cargo are lost because in such cases the freight is usually merged
with the value of the cargo and any claim would be made under the policy covering cargo.
The freight may be prepaid freight; freight payable on ship or cargo lost or not lost freight
payable on delivery, lump sum freight, time charter hire. Prepaid freight is not refundable in
case of non-delivery of the goods and hence it is not at risk of ship owner.

D. LIABILITY INSURANCE:
The Marine Insurance policy may include liability hazards such as collision or running down.
Insurance can also be taken for the expenses involved in non-compliance of rules and
regulations without any intention to deceive.
It should be clear here that the marine perils insurance covers not only the "ocean but also the
inland perils", the perils to be included in the policy are clearly defined and the insurer will
be liable only for the insured perils.
Third Party Liability covers third party liability which insurer undertakes to indemnify the
insured in respect of
(i) legal liability for accidental loss or damage to property of other persons, and (ii) legal
liability for fatal or non-fatal injury to the third party directly consequent upon or solely due
to ERECTION operations There will be liability for damage where negligence is shown or
where liability has been assumed under contact.
To succeed in an action in tort, the claimant plaintiff has the onus of showing one that the loss
resulted from the defendant's negligence. Negligence has been defined as doing something
which ought either to be done in a different way or not at all or omitting to do something
which ought to be done.

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SUBJECT MATTER OF MARINE INSURANCE

The liability must arise as the result of tort committed by the insured vessel. The clause does
not extend to indemnify the assured against payments which arose out of contractual
relationship and not in consequence of actionable fault committed by the insured vessel.
Form of Liability :
There are two types of liabilities: Cross Liabilities and Single Liabilities
Cross Liability: where both vessels are to blame, then unless the liabilities of one or both
vessels become limited by law, the indemnity shall be calculated on the principle of cross
liability.
When the respective owners had been compelled to pay each other such proposition of each
other's damages as has been properly allowed.
Exclusions: There is no liability under the clause is respect of: (i) removal or disposal of
obstructions wrecks, cargoes. (ii) Any real or personal property (iii) cargo or other property
(iv) loss of life, personal injury or illness (v) pollution or contamination of any real or
personal property.
Single Liability:
Single liability is only a liability on the parts of the vessel under the lesser damages to that
with the greater. When both vessels are to blame in a collision, the court decides the legal
liability by
Assessing the degree of fault
Apportioning the liability according to the degree of fault, and
Deciding settlement on a single liability basis which is determined by the difference between
the two liabilities
Limitation of Liability
The right to limit liability is based on the international convention relating to the limitation of
liability of owners of Sea-going ship, 1957. India has in completed it in part X A of the
Merchant shipping act 1958.
Under the 3/4 the collision liability of clause the principle of "Cross Liability" will not apply
were either ships or both ships limit liability.

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SUBJECT MATTER OF MARINE INSURANCE

In such instances, the indemnity under clause No.8 will be "Single Liability" principle upon
which the case is adjustised at law between the respected owners.

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