MARINE INSURANCE

Marine Hull Insurance

Marine hull insurance covers loss or damage to the vessel and machinery arising from maritime perils as well as salvage costs and limited property damage liability. The terms and conditions of the coverage are spelt out in the Institute Time Clauses-Hulls Ship Builders’ risk policies on the other hand protect these same vessels during construction until they are ready for operation.

3/4th Collision Liability

Marine hull insurance covers damage caused by collisions with other ships for only ¾ of the liability for such damage is paid by Protection & Indemnity Clubs). The maximum recovery under hull policies including damage to the insured ship and liability for the damage it had caused is the insured value of the ship.

Protection & Indemnity (P&I)

P&I Clubs provide insurance cover for broader indeterminate risks such as third-party liabilities that marine insurers usually do not cover. Third party risks include a carrier’s liability to a cargo owner for damage to cargo a shipowner’s liability after a collision environmental pollution and P&I war risk insurance that is to say legal liability arising out of acts of war affecting the ship.

Each collision liability underwriter reimburses its share of each vessel’s gross liability to the other vessel. In most maritime jurisdictions the question of responsibility for collisions is determined with reference to the International Regulations for the Prevention of Collisions at Sea. Which codify how vessels should conduct themselves in order to avoid collisions. The apportionment of liability between the vessels is normally based on the causative importance of any breaches of these Regulations.

Marine Cargo Insurance

Marine cargo may take the following forms of insurance when using sea or inland waterway transportation: -

1.  Free on Board (FOB) – risk passed on o the buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller.

2.  Coast and Freight (CFR) – title risk and insurance cost passed on to the buyer when delivered on board the ship by the seller who pays the transportation coast to the destination port.

3.  Cost Insurance and Freight (CIF) – title and risk passed on to the buyer when delivered on board the ship by the seller who pays the cost of transportation and insurance to the destination port.

There are three main types of marine cargo policies which would incorporate any one of the following clauses: -

1.       Institute Cargo Clause A – All Risks

2.       Institute Cargo Clause B – Specific Risks

3.       Institute Cargo Clause C – Specific Risks

Marine Cargo Extensions:

The following extensions are provided on payment of additional premiums as prescribed by the Institute of London Underwriters (ILU): -

• Institute War Clause

• Institute Strike Clause

Marine Cargo Exclusions: -

• Willful misconduct of the Assured

• Ordinary leakage loss in weight or volume, wear and tear

• Improper packing

• Inherent vice

• Delay

• Insolvency or financial default of carrier

Aviation Insurance

Most aviation insurance policies are issued on an “all risks’ basis covering damage to the hull liability to passengers and public liability.

General for mid-range aircrafts there are two main types of polices: -

• Hull spares and third-party liability (usually in combined single limit) and

• War and allied perils

In addition, aviation insurance policies may include cover for the following:

• Fright liability to cover aircraft owner’s liability to cargo owners

• Personal accident for crew

• Loss of licence of pilot flight engineers

Aviation insurance buyers mainly comprise large commercial airliners who may arrange “Fleet Policies” to cover all aircrafts owned or operated by them.

Others buyer may include:

• • Corporate/business aircraft owners

  • Private Owners, and

  • Flying clubs

Malaysian risks and Malaysian interest abroad are written collectively by the Malaysia Aviation Pool comprising eight local insurers and four reinsurers with an underwriting capacity of RM393 million. No single insurer has the resources to retain a risk the size of a major airliner or even a substantial proportion of such a risk. The catastrophic nature of aviation risks can be measured in the number of losses that have cost insurers hundreds of millions of dollars.

The Montreal Convention (formally the Convention for the Unification of Certain Rules for International Carriage by Air) was adopted by a diplomatic meeting of international Civil Aviation Organization (ICAO) members states in 1999. The multilateral treaty came into force in 2003 and standardizes the rights of passenger on international flights.

Goods in Transit Insurance

Goods in transit insurance covers conveyances of goods as a direct result of domestic sales or purchase. The insurance is normally taken out by the owner of the goods or by a professional carrier or logistics company who are equally responsible for the goods in their custody. The goods in transit policy usually offer ‘all risks’ type of coverage on an annual basis or an each and every transit basis.

Scope of Cover:

• Indemnity for physical loss of or damage to goods by fire accident, theft or pilferage while being conveyed on land by road, rail and inland waterway (e.g. by ferry from the mainland to Penang Island); and

• While loading and unloading from the vehicle or trailers and during temporary storage in the ordinary course of transit within the geographical boundaries (e.g Malaysia and Singapore).

Main Exclusions under Goods in Transit Insurance:

• Wear, rear and depreciation

• Delay, loss of market, consequential loss of any kind;

• Theft or pilferage by the insured’s employees;

• Earthquake and subterranean fire;

• Moth, vermin, insect, damp, mildew or rust;

• Deterioration and changes by natural causes;

• Goods accompanying commercial travellers;

• Cargo such as explosives, hazardous chemicals and acids, cash, bank and currency notes, securities, 

 jewellery and business books.