Liability in Marine Insurance: Definition, Types [Explained]

The Marine Insurance policy may include liability hazards such as collision or running down. Insurance can also be taken for the expenses involved in non-compliance with rules and regulations without any intention to deceive.

It should be clear here that marine perils insurance covers not only the “ocean but also the inland perils.” The perils to be included in the policy are defined, and the insurer will be liable only for the insured perils.

Third Party Liability covers third-party liability, which the insurer undertakes to indemnify the insured in respect of;

1. Legal liability for accidental loss or damage to property of other persons, and
2. Legal liability for fatal or non-fatal injury to the third party is directly consequent upon or solely due to erection operations.

There will be liability for damage where negligence is shown or where liability has been assumed under contract.

To succeed in an action in tort, the claimant plaintiff must show that the loss resulted from the defendant’s negligence.

Negligence has been defined as doing something which ought either to be done differently or not at all or omitting to do something which ought to be done. The liability must arise as the result of a tort committed by the insured vessel.

The clause does not extend to indemnify the assured against payments that arose out of the contractual relationship and not in consequence of actionable fault committed by the insured vessel.

Form of Liability

There are two types of liabilities:

• Cross Liabilities,
• Single Liabilities.

Cross Liability

Where both vessels are to blame, then unless the liability of one or both vessels becomes limited by law, the indemnity shall be calculated on the principle of cross-liability. When the respective owners had been compelled to pay each other such proposition of each other’s damages as has been properly allowed.

Exclusions: There is no liability under the clause in respect of:

• Removal or disposal of obstructions, wrecks, cargoes,
• Any real or personal property,
• Cargo or other property,
• Loss of life, persona! Injury or illness,
• Pollution or contamination of any real or personal property.

Single Liability

Single liability is only a liability on the parts of the vessel under the lesser damages to that with the greater. When both vessels are to blame in a collision, the court decides the legal liability by;

1. assessing the degree of fault,
2. apportioning the liability according to the degree of fault, and
3. deciding settlement on a single liability basis which is determined by the difference between the two liabilities

Limitation of Liability

The right to limit liability is based on the international convention relating to the limitation of liability of owners of Sea-going ships, 1957.

India was uncompleted in part X A of the Merchant Shipping act 1958. Under the 3/4 collision liability clause, the “Cross Liability” principle will not apply where either ships or both ships limit liability. In such instances, the indemnity under clause 8 will be the “Single Liability” principle upon which the respected owners adjust the case at law.