The
following are the fundamental
principles or essential characteristics
of marine insurance contract: (1) UTMOST GOOD FAITH: In the contract of marine insurance, each party is supposed to observed utmost good faith and to the disclose all
material facts to the other party. By material facts are meant those which are
likely to influence the judgement of the other party. For example, the
declaration by the insured of the shipment on deck of cargo which would be the
normally carried on under deck. The
holding back of the material facts by the party either party is fraud. If the
insurer knows at the time of insuring the policy that the ship has the reached
the destination quite safely which fact the does not the communicate to the
insured, will have to return the premium to the insured.
(2). INSURABLE INTEREST: In marine insurance, the insured he will have to should have an insurable interest in the subject
matter. On other words, he must have some recognized relationship with the
subject matter whereby the benefits by
its is a safety and suffers loss if the
subject matter is lost, destroyed by its
safety and suffers loss if the subject matter is loss, destroyed or damage. The
insurable interest must exist at the time of the loss. though it is a not required at the time
of a taking insurance. The following parties may be said to the have insurable
interest. (a). Cargo owners on their cargo to be shipped. (b). Shipowner on his ship. ( C). Shipping company on their freight receivable. (d). An insurer on the insured properties
for reinsurance. (e). Captain and crew in respect of their wages and
salaries. (f). Lenders of money on bottomry and respondentia bonds to the
extent of their loan and. (g).
Mortgage of the subject matter insured
to the extent of mortgage money.
(3). INDEMNITY : indemnity is yet a another fundamental principle of
marine insurance. The main object of his
this principle is than an insured should
not be allowed to secure a sum by the way of the indemnity in excess of the loss actually suffered by him. The indemnity in cash is to place the insured as far as
a possible in the same financial
position as occupied by the him before the happening of the event. However there is one
exception to the principle of
indemnity in marine insurance. Some
profit margin in the also allowed to be
included in the value of goods. This is based on the assumption that insured will earn profit when the goods reach at
their destination. (4). SUBROGATION: In
the marine insurance whether the loss is total or partial the insurance are subrogated at to all th rights and remedies of the insured. But in the case
of the total loss, then insurers are entitled to take over the remains
salvage of the property. If they loss
is partial the insurers acquire an no proprietary interest in the property. It is to be noted
that insurance insurer’s recovery is nit
limited to the amount of claim. They
cannot recover more than what they have paid the insured. If the insured consider
his ship not worth while to repair it because the cost of the would
exceed the value of the ship after
repair he may abandon the ship to the insurer and claims the sum insured on the basis of constructive
total loss. If the insurers accept the abandoned ship, they acquire
proprietary rights in the ship. If it is
possible to sell the damaged ship with the without repairs for the more than
the insured value, of the insurers can
make and the retain the profit. But under subrogation , they can retain only upon the amount by the have indemnity the insured.
(5). CAUSA PROXIMA: This principle defines and limits the scope
within which liability may attach to the
insurer. That insured affirms or negatives the existence of the certain state
of facts. Warranty is strictly enforced because of the a breach
of the warranty ends a contract. There
are two classes of warranty. (a). EXPRESS WARRANTY; An express warranty is one of which is
expressed or written on the face of the policy itself and imposes some obligations upon the insured. Compliance of such a
warranty is essential for a contract.
For example, package in containers of a standard size. (B).
IMPLIED WARRANTY; An implied
warranty is always by nature to the
contract of marine insurance, but need
not be definitely expressed in writing on the face of the policy, . There are
three implied insurance:. (a)
SEAWORTHINESS: The ship undertaking
voyage must be reasonably fit or for
such voyage. Ship may be seaworthy at
the commencement of the journey. A ship is said to the be seaworthy when it is has been completely repaired, the master of the crew and other
staff are present and there is adequate fuel in the ship so that it can be face
the routine sea perils of the sea. The
seaworthiness of ship may vary from
situation to situation and from vessel to vessal Seaworthiness is also worthiness. The ship must be
reasonably fit and the suitable to carry
the type of cargo insured and this is
called cargo-worthiness.(b). LEGALITY OF
THE VENTURE: The voyage or
adventure must be lawful and not illegal
such as a smuggling etc., The warranty of legality cannot be waived under any
circumstances.
( C ) .
NON-DEVIATION: The ship will follow the proper course/ route or the course
contemplated by the policy. Any
departure from such a course is known by
the policy. Any departure from such a
course is known as deviation. As per this warranty. There should be no change during the voyage
i9n the ordinary course whether
intentionally or otherwise after
the commencement of the voyage. there should
be not delay in voyage. the ship shall not be deviate from it's a common route in the
ordinary course except in certain cases
excusable by law