Principles of Marine insurance
1. Principle of Utmost Good Faith:-
The marine insurance policy relies on the principle of utmost good faith, which clearly states that at the time of filling the marine insurance policy document, the applicant should disclose the correct information. Also, the applicant would not withhold any material information. If the applicant conceals or hides important information, the marine insurance company has all rights to reject the policy application.
Fashion Stop is planning to buy a marine insurance policy. It means, the company should disclose all the material information about its current state. In case Fashion Stop hides material information, the marine insurance company has all rights to reject the policy application. Even if at the time of the claim, the insurer finds out that Fashion Stop hides material facts, it can reject its policy application form.
2. Principle of Insurable Interest:-
According to this principle, it is necessary for the policyholder to have some insurable interest in the subject for which he/she wants to buy insurance. It means, the policyholder should be benefited from the safe arrival of goods and should suffer losses due to damage of goods. It might happen that the policyholder doesn’t have an insurable interest at the time of buying a marine insurance policy, however, he should expect getting such interest in the future. It is necessary that the policyholder must have some insurable interest in the insured item otherwise he will not be able to get the claim settled from the insurer.
Last year, K.M Manufacturing bought a marine insurance policy for the consignment which it was sent to Sri Lanka. Now, once the consignment reached the destination, the insurer’s liability also ended at that point. As K.M Manufacturing had an insurable interest in consignment, it bought marine insurance but as soon as goods reached the destination, its insurable interest was over and therefore, the marine insurance company was not liable to pay for any losses or damages which happened to goods after delivery.
3. Principle of Indemnity:-
As per this principle, the marine insurance policyholder would be compensated only to the extent of the loss. It means, the person should not purchase marine insurance to earn profits. In any case, the policyholder will not get more than the actual loss incurred.
As M.K Tech has a vast base of clients which spread around the world, the company has purchased marine insurance to get coverage in case something goes wrong. The total cover available under the policy is Rs 50 lakhs. It means, M.K Tech will not get more than the loss even if the sum insured is more than the loss. It means, if the loss is of Rs 20 lakhs, M.K Tech will not get more than the actual loss, i.e., Rs 20 lakhs, even when the total cover is Rs 50 lakhs.
4. Principle of Cause Proxima:-
At the time of loss, the marine insurance policyholder would consider the nearest or proximate cause, which would help in deciding the actual cause of loss when there would be a series of causes which have attributed to the loss. Here, remote cause for a loss is not required to determine the liability and therefore, if the proximate cause is insured, the marine insurance company has to settle the claim.
M/S Fashion Stop has taken a marine policy to cover the goods exported by him. Under the policy, goods have been insured against damage likely to be caused by sea water. During the voyage, a hole was caused at the bottom of the ship. Through this hole, sea water has entered into the ship and damaged the goods insured.
In this case, there are two causes of the mishap. First, the hole that was caused in the bottom of the ship and second, the seepage of sea water into the ship. The nearest cause of the damage caused to the goods is the seepage of the water, the hole in the bottom of the ship being the remote cause. Therefore, ‘A’ must be compensated for the loss suffered due to damaged goods, covered by the policy.
5. Principle of Loss Minimization:- Just because someone has a marine insurance policy, it doesn’t mean the person can act carelessly. It is necessary for the policyholder to take all the steps to curtail and minimize the losses. The policyholder must not behave irresponsibly during an accident just because the property is insured under marine insurance.
#Principlesofmarineinsurance, #marineengineering, #iappcertificate, #propellercurve, #criticalequipment #criticalequipmentlist, #conditionofassignment, #conditionsofassignment, #dynamicstabilityofship,
The marine insurance policy relies on the principle of utmost good faith, which clearly states that at the time of filling the marine insurance policy document, the applicant should disclose the correct information. Also, the applicant would not withhold any material information. If the applicant conceals or hides important information, the marine insurance company has all rights to reject the policy application.
Fashion Stop is planning to buy a marine insurance policy. It means, the company should disclose all the material information about its current state. In case Fashion Stop hides material information, the marine insurance company has all rights to reject the policy application. Even if at the time of the claim, the insurer finds out that Fashion Stop hides material facts, it can reject its policy application form.
2. Principle of Insurable Interest:-
According to this principle, it is necessary for the policyholder to have some insurable interest in the subject for which he/she wants to buy insurance. It means, the policyholder should be benefited from the safe arrival of goods and should suffer losses due to damage of goods. It might happen that the policyholder doesn’t have an insurable interest at the time of buying a marine insurance policy, however, he should expect getting such interest in the future. It is necessary that the policyholder must have some insurable interest in the insured item otherwise he will not be able to get the claim settled from the insurer.
Last year, K.M Manufacturing bought a marine insurance policy for the consignment which it was sent to Sri Lanka. Now, once the consignment reached the destination, the insurer’s liability also ended at that point. As K.M Manufacturing had an insurable interest in consignment, it bought marine insurance but as soon as goods reached the destination, its insurable interest was over and therefore, the marine insurance company was not liable to pay for any losses or damages which happened to goods after delivery.
3. Principle of Indemnity:-
As per this principle, the marine insurance policyholder would be compensated only to the extent of the loss. It means, the person should not purchase marine insurance to earn profits. In any case, the policyholder will not get more than the actual loss incurred.
As M.K Tech has a vast base of clients which spread around the world, the company has purchased marine insurance to get coverage in case something goes wrong. The total cover available under the policy is Rs 50 lakhs. It means, M.K Tech will not get more than the loss even if the sum insured is more than the loss. It means, if the loss is of Rs 20 lakhs, M.K Tech will not get more than the actual loss, i.e., Rs 20 lakhs, even when the total cover is Rs 50 lakhs.
4. Principle of Cause Proxima:-
At the time of loss, the marine insurance policyholder would consider the nearest or proximate cause, which would help in deciding the actual cause of loss when there would be a series of causes which have attributed to the loss. Here, remote cause for a loss is not required to determine the liability and therefore, if the proximate cause is insured, the marine insurance company has to settle the claim.
M/S Fashion Stop has taken a marine policy to cover the goods exported by him. Under the policy, goods have been insured against damage likely to be caused by sea water. During the voyage, a hole was caused at the bottom of the ship. Through this hole, sea water has entered into the ship and damaged the goods insured.
In this case, there are two causes of the mishap. First, the hole that was caused in the bottom of the ship and second, the seepage of sea water into the ship. The nearest cause of the damage caused to the goods is the seepage of the water, the hole in the bottom of the ship being the remote cause. Therefore, ‘A’ must be compensated for the loss suffered due to damaged goods, covered by the policy.
5. Principle of Loss Minimization:- Just because someone has a marine insurance policy, it doesn’t mean the person can act carelessly. It is necessary for the policyholder to take all the steps to curtail and minimize the losses. The policyholder must not behave irresponsibly during an accident just because the property is insured under marine insurance.
#Principlesofmarineinsurance, #marineengineering, #iappcertificate, #propellercurve, #criticalequipment #criticalequipmentlist, #conditionofassignment, #conditionsofassignment, #dynamicstabilityofship,
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