MARINE INSURANCE Liability insurance: It is one in which the insurer undertakes to indemnify against the loss which

the insured may suffer on account of liability to a third party caused by collision of the ship and
Marine Insurance refers to where the insurer compensates the insured when the latter suffers other similar hazards.
from financial loss from marine perils against the premium paid by the insured to the insurer. It
covers the loss of ship or the vessel as well as the goods or cargos which are being transported by In a contract of marine insurance, the insured must have the insurable interest in the subject
land, air or water matter insured at the time of loss. Insurable interest is not required at the time of taking the
policy. Under marine insurance, the following persons are deemed to have insurable interest:--
The Marine Insurance in India is regulated by Marine Insurance Act, 1963 which is based on
Marine Insurance Act, 1906 of United Kingdom. Section 3 of Marine Insurance Act 1963 defines The owner of the ship,
Marine Insurance as “A contract of marine insurance is an agreement whereby the insurer
undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against The owner of the cargo,
marine losses, that is to say, the losses incidental to marine adventure.” A contract of marine A creditor who has advanced money on the security of the ship or cargo to the extent of his loan,
insurance may, by its express terms, or by usage of trade, be extended so as to protect the assured
against losses on inland waters or on any land risk, which may be incidental to any sea voyage. The master and crew members of the ship in respect of their wages,

The Nature of Marine Insurance If the subject matter is mortgaged, the mortgager in respect of full value of the ship, and also in
Marine insurance is special insurance that covers risks of shipping goods by sea. It provides respect of any sum due to him,
financial protection against most hazards a maritime voyage may face, including piracy, vessel
sinkings, collisions and natural disasters. This particular type of insurance is crucial for Any trustee holding any property in trust in respect of such property,
businesses engaged in global trade because it covers losses incurred by unanticipated events that
might interrupt or damage cargo in transit. In incase of advance freight the person advancing the freight in so far as such freight is repayable
in case of loss, and
Marine insurance policies can be one of two main types: hull and cargo insurance. Hull insurance
covers the ship (its hull, machinery and equipment) and cargo insurance protects the goods being The insured in the charges of any insurance policy which he may take
carried. Marine insurance may also provide liability for third-party claims related to maritime
Scope of Marine Insurance
accidents or incidents.
The scope of marine insurance extends beyond the protection of ships and cargo. It provides
Types of Marine Policy
maritime risk management and indemnification covering all those involved in the carriage of
Marine insurance policies are categorized by coverage area and plan structure. Some of the goods by sea. The scope of marine insurance generally comprises:
major types of marine insurance policy grouped by these categories are discussed below:
Protection against Perils of the Sea: Marine insurance policies typically cover disasters such as
Hull insurance: It covers the insurance of the vessel and its equipment’s. Furniture and fittings, floods, tsunamis and hurricanes in addition to manmade perils like pirates, collisions and theft.
machinery, tools, fuel, [Link] is affected generally by the owner of the ship. Marine insurance covers these risks and ensures that goods reach their destination safely and on
time.
Cargo insurance:It includes the cargo or goods contained in the ship and the personal
belongings of the crew and passengers. General Average and Salvage Costs: General average and salvage costs may occur if a
maritime emergency necessitates sacrifices or expenditures to preserve the common safety of the
Freight insurance:It provides protection against the loss of freight. In many cases, the owner of ship and cargo. Marine insurance policies often cover these costs, helping all parties involved in
goods is bound to pay freight, under the terms of the contract, only when the goods are safely the voyage.
delivered at the port of destination. If the ship is lost on the way or the cargo is damaged or
stolen, the shipping company loses the freight. Freight insurance is taken to guard against such War and Strikes Risks: Because geopolitical conflicts and labor disputes are unpredictable,
risk. marine insurance policies may provide optional war and strikes risk. This coverage protects
insured parties from losses resulting from war, terrorism or labor unrest affecting maritime
operations.

Freight and Charter Party Liability: Marine insurance may also extend to include freight chemicals spill during transport, contaminating a shipment, the goods may no longer hold their
contract and charter party agreement liabilities. This includes indemnification for breach of original qualities or utility.
contract, delivery delay, cargo damage and other contractual obligations relating to sea freight 3. Irretrievable Deprivation: This scenario arises when the insured object is lost beyond hope of
transport. recovery. An example would be if a ship is captured by pirates or sunk with no hope of salvage.
Determining irretrievable deprivation can be challenging, as illustrated by the case of George
Conclusion Cohen Sons and Co v. Standard Marine Insurance Co Ltd. In this case, the British Court ruled
Marine insurance helps minimize the risks and uncertainties of maritime trade. Marine insurance that although retrieving the ship would be costly and difficult, it was still possible, thereby
provides protection for ships, cargo, and liabilities to all involved in international shipping. preventing the insured from claiming an actual total loss.
Understanding the nature and scope of marine insurance is essential information for companies A missing vessel also qualifies as an ATL if there is no communication for an extended period.
looking to safeguard their assets and guarantee the efficient and safe transport of items across the For example, a ship that has been out of contact for months, presumed lost, allows the insured
seas. party to claim a total loss.

MARITIME PERILS
Constructive Total Loss (CTL)
In marine insurance, "perils of the sea" refer to extraordinary natural forces that maritime Constructive total loss applies in situations where the cost to salvage or repair the insured object
ventures might face during a voyage. These perils include natural disasters, accidents at sea, and exceeds its value after the loss, or when an ATL becomes inevitable. CTL, defined under Section
other incidents beyond human control. 60 of the Marine Insurance Act, allows the insured to abandon the damaged property and claim
Examples of Maritime Perils: full compensation. However, the loss must meet specific criteria:
 Natural Calamities: Storms, hurricanes, floods, tsunamis, and earthquakes. 1. Excessive Salvage or Repair Costs: If repair or retrieval costs would exceed the insured value
of the object, it is considered a CTL. For instance, a fire-damaged ship that still floats but
 Accidents at Sea: Collisions with other vessels, underwater obstacles, sinking, capsizing, and
requires prohibitively expensive repairs would be eligible.
stranding.
2. Irretrievable Loss Due to Peril of the Sea: When the insured loses possession of the object due
 Piracy: Damage or theft caused by pirates.
to a peril covered by the policy, and retrieval is either impossible or would exceed the object’s
 Fire and Explosion: Damage or loss caused by fire or explosion on board. value, a CTL claim can be made.
 Jettison: Voluntarily throwing cargo overboard to save the vessel or cargo from greater loss. Example Case – Marstrand Fishing Co Ltd v. Bear: This case emphasised that the inevitability
 Other Perils: Winds, waves, and other forces of nature. of ATL should be based on objective facts, not the insured’s beliefs. For a CTL to be valid, the
loss must be factually unavoidable, reinforcing the legal distinction between CTL and ATL.
What are Losses in Marine Insurance?
Losses in marine insurance refer to the financial losses or damages incurred by the insured cargo,
vessel, or freight during a marine voyage due to various risks. Marine insurance protects these
interests from losses caused by perils of the sea, ensuring that businesses engaged in shipping
and global trade have a safety net against potential financial setbacks.

Actual Total Loss (ATL)

Actual total loss refers to cases where the insured property is either entirely destroyed or so
damaged that it loses its essential characteristics. Under Section 57 of the Marine Insurance Act,
three situations constitute an actual total loss:
1. Destruction of the Insured Object: This type of loss occurs when the insured cargo or vessel is
completely destroyed. For instance, if a fire ravages a ship or a cargo of perishable goods is
entirely spoiled by seawater, the damage is complete and renders the goods unusable.
2. Damage Changing the Nature of the Insured Object: If damage significantly alters the
inherent quality of the insured object, it qualifies as an actual total loss. For example, if
 Discuss the salient features of the Public Liability Insurance act 1991 along with Judicial commencement and should be renewed regularly. The aim is to ensure continuous coverage to
pronouncements address potential accidents.

The Public Liability Insurance Act, 1991 was enacted by the Indian government to provide
Section 5: Role of the Collector
immediate relief to individuals affected by accidents occurring while handling hazardous Section 5 designates the collector as the responsible authority in the event of an accident. The
substances. This legislation aims to ensure that industries dealing with such substances are collector is required to verify the incident, publicise it, and invite claims from affected
financially responsible for accidents, thereby protecting public health and the environment. individuals. This section emphasises prompt action and public awareness to facilitate a swift
claims process.
This act was mainly brought up as a result of Bhopal Gas Tragedy took place in 1984
where thousands of people lost their lives and Wildlife was killed, injured, and
Section 6: Application for Claims
contaminated. Similarly another tragedy held in 2020 Gas Leak at LG Polymers Chemical
Section 6 allows individuals who have sustained injuries or damages due to an accident to file a
Plant in RR Venkatapuram Village Visakhapatnam in Andhra Pradesh caused nearly 13 people
claim for relief. However, such claims must be submitted to the collector within five years of the
were died in a very short period of time, and thousands were hospitalized with serious
occurrence. The application must include supporting documents as prescribed by the authorities
complications
to ensure validity.
Objectives of the Public Liability Insurance Act, 1991
 Immediate Assistance to Victims: The primary goal of the Act is to provide financial relief to Environmental Relief Fund
individuals affected by industrial accidents involving hazardous substances. This ensures that The Environmental Relief Fund, managed by the Central Government, is used to provide
victims do not have to wait for lengthy litigation to receive compensation. compensation in cases where the responsible party is unable to pay. This ensures a safety net for
 Promoting Accountability: The Act mandates industries to maintain liability insurance, victims.
fostering a culture of responsibility among business owners who handle hazardous materials.
 Simplification of Legal Processes: By establishing a no-fault liability framework, the Act Claims Process
eliminates the need for victims to prove negligence, enabling faster claim settlements. Claims can be filed by victims, property owners, legal representatives, or authorised agents.
 Environmental Safeguards: The Act includes provisions for the establishment of Applications must be submitted within five years of the accident to the Collector, a government-
an Environmental Relief Fund to address damages caused by hazardous substances. appointed authority.
 Protection for Economically weaker Groups: Many victims of industrial accidents belong to
economically weaker sections. This Act ensures timely assistance to such individuals, reducing Powers of Authorities
the economic burden caused by accidents. The Act grants significant powers to government authorities, including:
 Inspecting industrial premises.
Key Provisions of Public Liability Insurance Act, 1991  Searching and seizing hazardous materials.
 Investigating accidents and ensuring compliance with safety norms.
Section 3: Liability of the Owner Penalties for Non-Compliance:The Act imposes penalties on owners who fail to comply with
Section 3 establishes the owner’s liability for any death or injury caused to a third party due to its provisions, including the requirement to obtain insurance and provide relief to affected
negligence on the part of the business or its employees. This section ensures that victims receive persons.
compensation without unnecessary legal hurdles, holding the owner directly accountable for their
Conclusion
operations.
The Public Liability Insurance Act, 1991, is a landmark legislation that addresses the risks
associated with industrial activities involving hazardous substances. It ensures timely financial
Section 4: Mandatory Insurance for Hazardous Substances
relief for victims, promotes accountability, and safeguards the environment. However, periodic
Under Section 4, owners are obligated to purchase insurance policies for businesses that handle
updates and stricter enforcement are essential to enhance its effectiveness in an evolving
hazardous substances. This insurance must be acquired within one year of the business’s
industrial landscape.