Marine insurance cover the loss or damage of cargo,ships,terminals and any transport of cargo by which the property is transferred ,acquired or held between the ports of origin and final destination.
Principles of marine insurance
1)Principle of insurable interest
Insurable interest means that the insured should have an interest in the subject when it is to be insured.He should be benefited by the safe arrival of commodities and he should be prejudiced by the loss or damage of goods.
Parties may be be said to have insurable interest:
1) cargo owners on their cargo to be shipped
2)ship owners on their ships.
3) Shipping company on their freight receivable.
4)Captains and crew in respect of their wages and salaries.
5)An insurer on the insured property for reinsurance.
2)Principle of indemnity
It means that the insured will be compensated only to the extent of loss suffered.He will not be allowed to earn profit from marine insurance.
The underwriter provides to compensate the insured in cash and not to replace the cargo or the ship.
Exception to the principle of indemnity
Some profit margin is allowed to be included in the value of the goods.The assumption is that the insured will earn profit only when goods reach the destination.
3)Principle of subrogation
The transfer of rights and remedies of insured to an insurer who has indemnified the insured in respect of the loss.
It follows the principle of indemnity, insured should not make any profit out of loss.
4) Principle of proximate cause
It helps in deciding the actual cause of loss when a number of causes have contributed to the loss.
The intermediate cause of a loss should be determined to fix the responsibility of the insurer.
The remote cause of a loss is not important in determining the liability.
If the proximate cause is insured against insurable indemnify the loss.