Losses in the marine insurance business are the result of various perils. Marine insurance policy does not necessarily cover all the risks.
The insurer is liable to indemnify an insured in respect of only losses which result from perils insured against. When the loss occurs beyond the insured peril, the insured himself shall have to bear it.
The onus of proof under a policy of Marine insurance is upon the insured to establish that the loss was proximate, caused by an insured peril. When goods are insured against ‘All Risks,’ the onus of proof of loss is transferred to the insurer.
The perils insured against are mentioned in the policy, and the underwriter shall be liable for damages caused by the insured perils.
“Marine Perils means the perils consequent on,” or incidental to the navigation of the sea, that is to say, perils of the seas, fire, war perils (enemies), pirates, rovers, thieves, captures, seizures, restraints, and detainment of princes and peoples, jettisons, barratry, and other perils, either of the like-kind or which may be designated by the policy.”
12 Marine Perils
Let’s look at the following marine perils;
Perils of Sea
Under the perils of the sea, the ordinary action of the winds and waves, ordinary wear and tear to the vessel, and the inherent risk of the cargo are not included.
The underwriter may be liable for losses caused by Perils of the sea; he is not necessarily liable for perils on the sea.
Perils of the sea refer to fortuitous accidents or casualties of the sea. Suppose the loss arising out of any of the perils of the sea insured is attributable to the fraud or willful misconduct of the assured. In that case, the underwriter is acquitted of the liability under the policy.
Fire
In olden times fire was the biggest maritime peril, but recently it has been under control to a greater extent. Damage resulting from fire and smoke is included under fire-peril.
The water used for extinguishing a fire may cause damage to the insured goods.
So, this peril is also insurable. The damage due to spontaneous combustion may be maritime peril and be insured against.
Damage done due to the lightning, explosion, and fire originating from the negligence of the crew are recoverable from underwriters.
The losses which are not included in the standard policy can be covered by having special clauses and paying an extra premium.
Man-of-War
This is the vessel that is authorized by nations for the purpose of defense or attack in the event of hostilities. Any damage to the goods or ships arising out of collision against a man-of-war is insurable.
Enemies
Tile ships belonging to the foe (enemy) may cause loss to the insured and are re-underwritten by the marine policy.
This policy extends to all the persons of the enemy country and to their hostile acts, provided such acts form part of the enemy’s actions.
Pirates, Rovers, Thieves
The perils on account of pirates, rovers, and thieves were common in olden times, but they have been reduced considerably.
These acts are generally committed to pursuing individual gain by persons beyond the jurisdiction of a state.
The term ‘thieves’ does not mean clandestine theft or theft committed by any crew, officers, or passengers.
Jettison
Jettison means voluntary throwing away of the cargo or part of the vessel’s equipment for lightning or relieving the ship for common safety.
- The aim of intentionally throwing away the goods or property is to relieve the vessel from some imminent peril.
- The accidental falling of things does not constitute a jettison.
- Own inherent vice of cargo is also not included in the jettison.
Barratry
Barratry includes every wrongful act willfully committed by the master or crew with the prejudice of the owner. The act of barratry must be committed without the knowledge of the owner.
The theft, then setting fire to a ship, and fraudulent selling of vessel and cargo without the connivance of the ship-owner is the various examples of barratry. The insurer, if barratry insured, is liable for losses arising out of barratry.
Restraints and Detainments
The prevention of free use of a port by the government of the country is called restraints. It may cause interruption and possible loss of voyages involving such ports and sacrifice of cargo.
The term detainments cover losses resulting from the detention of a vessel and its cargo by blockage or possibly quarantine regulation or other interference by the police power of a nation while a vessel is in port.
It does not cover losses that result merely from delay or interruption of the voyage, loss of market, or some other remote result.
The Free of Capture and Seizure Clause (F.C. & S. Clause)
The policy generally covers war perils. But, to include the perils of the sudden declaration of war, the war clause or free of capture and seizure clause is added to relieve war perils.
By deletion of this clause, the policy is automatically restored to its original condition, and adequate premiums are charged for the purpose.
Explosion
The risk of an explosion has greatly increased. An explosion on board a vessel damaging hull or cargo or both could be constructed as peril on the sea, and an explosion onshore might damage a ship or its cargo.
Marine cargo policies were amended to include the risk of explosions not clearly caused by war perils. In case of hull policies, the explosion ‘on shipboard or elsewhere’ is covered in the amended “Inchmaree or Negligence clause.”
Strikes, Riots, and Civil Commotion Clause
The marine insurance on cargo is extended to cover from warehouse to warehouse or otherwise insures the goods on shore prior to shipment and after discharge; the danger of underwriters being held liable for losses resulting from the unlawful acts of strikers from riots or civil commotions is materially enhanced.
The insurers are unwilling to assume liability for losses due to unlawful acts.
All Other Perils
The loss occurred by the saltwater of the sea, the action of worms on timber, and cattle dying due to wanting of fodder as a result of lengthy voyages constitute sea perils.
Other damages may be due to oil, sweat, and heat, which are insured under other perils.
