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Marine Insurance is the oldest known type of insurance. It is a contract of indemnity in which the under write agrees to compensate the insured against specified perils in consideration of certain premium. Some writers define the marine insurance. “It is a contract of indemnity where by the assure undertakes to indemnify the insured in a manner and to extent thereby agreed against the loss caused in connection with a marine adventure.” It is primarily concerned with the loss imposed by some maritime perils. Temple man has defined this types of insurance “A contract of indemnity whereby the insurer undertakes to indemnify the insured against perils insured.”
A marine insurance policy is generally taken in order to obtain protection against the risk included in the clause.
The growth of the international trade has been greatly helped by shifting of risk to insurance company. A ship sailing in the sea faces some misfortune. Marine Insurance is a device to reduce or to eliminate the sea perils. So industrials and exporters may devote their full attention towards the promotion of business which may increase the export activates.
There are three insurance of property in marine insurance i.e.
(1) Hull insurance
(2) Cargo Insurance
(3) Freight Insurance. All marine insurance use a policy document embodying the terms of the contract between the parties concerned.
Essentials of the valid marine insurance contract
1. Contract of indemnity
As marine insurance is a contract of indemnity, so insured cannot claim before he suffers loss; In the absence of the loss the entire amount paid as premium will be possessed by the underwrite as profit.
2. Insurable interest
The assured must have insurable interest in the subject matter. Its absence will make the insurance policy as gambling. It must be present at the time of the loss and need not exist when the policy is effected.
3. Fair dealing
It is the important essential of the contract that insured must disclose all the material facts concerning the risk insured. The contract becomes void in case of concealing any fact.
4. Sea worthiness
It is one of the clause of implied warranty that the ship must be in a fit condition in order to encounter the ordinary perils of voyage being insured. The condition of the sea worthiness must be satisfied before the commencement of the 'voyage.
5. Non deviation
The ship must follow proper route which is usually specified in the policy. Any departure by a ship from such course is called as deviation. Deviation is however, allowed in un avoidable circumstances.
6. Legality of the venture
The object of the voyage must be lawful. For example a policy to cover the risk of smuggling and trading with enemy in time of war are void. In case of default, the underwriter is discharged from his liability.
7. Condition of the cargo
The cargo must be in sound condition and properly packed.
8. General consideration
(a) The ship must carry the necessary documents to establish her nationality.
(b) The parties must be competent to contract and it should be made by the free consent of the parties.
(c) The agreement must be supported by a valuable consideration.(d) Contract of marine insurance must be embodied in a policy.