Property insurance

We have different types of insurance policies covering the ship from when she is being built right up until the date she is sent to the scrap yard or is written off as a total loss at sea.

There are three main types of property insurance in marine insurance:

a. Hull Insurance

For the owners of the ship the hull policy will be the most important. The fact is that this policy also includes deck and engine room machinery, and inventory covering loading/discharging equipment, navigation instruments, anchors, chains, etc.

b. Cargo insurance

Cargo insurance may be taken out to cover goods of every kind; which are being transported by ship under a Bill of Lading or ' charter party. Cargo may be insured by anyone who i has a financial interest in the goods - i.e. an insurable interest

Normally the goods will be insured for their full value on arrival. This value will take into account their original cost, the cost of the insurance in transit and the cost of carriage or freight; customs duty may also be included in the cost.

c. Freight insurance

The term "freight" means the cost of transporting the goods. It may also be used when referring to the hire of a vessel.

When the shipper of the goods pays the freight in advance (prepaid freight), the cost will be added to the value of the goods for insurance purposes. In certain cases, however, where the shipowner is not to receive payment until the task is carried out (payable at the port of destination), the shipowner will be the one with the insurable interest in the freight and can insure the full amount. He insures againk the freight being all or partially lost if the ship fails to reach her port of destination.

Insurance policies

The former Lloyd's S.G. Policy has been replaced by the new Marine Policy (MAR form). It is a simple document containing blank spaces for the following information: Policy number, name of assured, vessel, voyage 'or period of insurance, subject matter insured, agreed value (if any), amount insured, premium and clauses, endorsements, special conditions and warranties. The new form of policy came into force on 1st January 1982. and all business on the S.G. form was phased put by 1st April. 1983. For a marine insurance contract to be valid it must be expressed in a policy. No policy form has been prescribed by statute.

There are several different types of policies available

The type chosen depends upon the requirements of the assured

The voyage policy covers the risks of a particular voyjage and provides cover from the port of departure to the port of destination. Cargo insured under a voyage policy is normally covered from warehouse to warehouse and this terminates 60 days after unloading at destination.

The time policy, as the name implies, is for a specified period of time, but not more than 12 months, hull insurances jare normally effected on this basis.

The mixed policy is a combination of time and voyage insurance, and a longer period of time is allowed after jthe vessel has arrived at its port of destination.

The building risk policy is, as the name suggests, useld when a vessel is being constructed and until the vessel has been successfully launched and delivered to its owner. This pplicy is also used when the ship is under repair.

The valued policy is a policy in which an agreed value is placed on the subject matter.

The unvalued policy is a policy in which there is no agreed value placed on the subject matter.

Floating policies do not apply to the ship or hull as we might expect, but are used in the insurance of cargo. Exporters estimate the number of shipments expected to be made in one year and the total value involved. Then for a relatively large sum they take out an insurance policy. The advantage of floating policies is that there is no need to issue a new policy every time a new shipment is made.

Open cover is an agreement between the merchant or shipper and the underwriters/insurers to insure the shipper's proposed shipments for the next 12 months. There is no total lump sum per year but there are fixed conditions and fixed rates for each type of goods. Shippers declare each shipment as it is made and the underwriters then issue a separate policy for each of these shipments.