Marine insurance has been defined as a contract between the insurer and insured whereby the insurer undertakes to indemnify the insured in a manner and to the interest thereby agreed, against marine losses incident to marine adventure.
Hull insurance, Cargo Insurance, Freights Insurance and Liability Insurance are the subject matter of Marine Insurance.
Elements of Marine Insurance Contract
The marine insurance has the following essential features which are also called fundamental principles of marine insurance;
- Features of General Contract,
- Insurable Interest,
- Utmost Good Faith,
- The doctrine of Indemnity,
- Proximate cause,
- Assignment and nomination of the policy, and
- Return of premium.
The proposer may approach the insurer directly or through an agent or broker.
Generally, the proposal is made through brokers because they are well known of the insurance practices. The broker prepares a slip where material information is recorded.
This slip is presented to the insurer who will signify his acceptance by initialing the slip and indicating the sum they are prepared to- accept. The risk may commence from the date of acceptance or from at any other date which is mutually agreed.
Read more: 19 Types of Marine Insurance Policies
Sometimes, the insurer asks additional information from the broker.
When the additional information called closing slip has been accepted by the insurer he may issue a policy.
Before issuing the policy, the open cover is issued to the insured, which becomes inoperative as soon as the policy is issued. The document containing the term of the contract is called policy.
Read more: Elements of Insurance Contract
The assured cannot legally make any claim over the underwriter if the loss occurs before a final policy is issued. The ‘open cover’ or ‘slip’ is not legally binding on the insurers.
In practice, however, the insurer pays the number of claims even before the issue of policies. Insurers in marine insurance generally called ‘underwriters’.