The Marine Insurance Blog

Utmost Good Faith

The principle of utmost good faith is indispensable in any insurance contract. Under the open policy the insurer usually knows only of the shipments made by the exporter after the receipt of the insurance declaration form and/or the copy of the insurance certificates. Under such circumstances, a consignment may have reached the importer in:

good condition, that is, without sustaining any loss or damage, before the insurer knows of such consignment. If the exporter knows that the consignment has safely reached the importer and deliberately does not declare such consignment in the insurance declaration form in order to avoid paying the insurance premium, such action is a breach of good faith. Consequently, the insurer may cancel the insurance policy issued to the exporter when the exporter’s bad faith is known.

(more…)

Global Positioning System (GPS) and the Marine Industry go well together since boats really don’t know where they are exactly and certain individuals have to constantly know where they are for them to be able to breathe easily and relax. This is one of the importances of having a GPS unit in a marine vessel.

To finding the best Marine GPS device, you really have to ask yourself what you are looking for and for what purpose you would really use it. And when I say research, you really have to research and base it on to your criteria that you’ve set.

In the case of races it is straightforward. You say where you are going, how long the race is, and when you expect to finish. If you are going on an extended cruise the insuring company or broker will want to know much more about the vessel in terms of its internal and external ballast, whether it has a centerboard or lifting keel, what sort of self-steering it has, the type of construction, and particularly the thickness of the topsides, deck, and cabin top. There will be a number of items covering radio call signs, the color of various parts, the sort of radio sets and the frequencies on board, what radio watch schedule is proposed and more details about the engines. These items are needed in case a search has to be initiated.

by Andrea

The term “salvage” refers to the performance of representing an assistance to a vessel in agony. Separately from the deliberation at the sea, it is conventionally “a place of safety”, and  sailors honour-bound to make assistance as mandatory. It is visibly in underwriters’ interests to give assistance to the vessels that has been broken down. In the guidelines, the rule includes a “sue and labour” segment  that covers the practical costs gained by a ship owner to avoid a larger defeat and downfall. At sea, a ship in misery and danger will naturally be in agreement to “Lloyd’s Open Form”.

Have you come across an insurance terminology that you don�t understand and were afraid to ask to your agent? Here are a few of them for you to better understand what you are getting into.

Claim is used to describe the process of getting an insurance company to pay out on the policy you bought from them.

Exclusions are events not covered by an insurance policy

Indemnity – the principle by which insurance policyholders are put in the same financial position after a loss as they were immediately before it.

Lloyd’s of London – An insurance market organized into syndicates, which underwrites most types of policy.

The cargo (marine) insurance works on the principles of insurable interest, utmost good faith, and indemnity.

Insurable Interest

When the goods are lost or damaged and the owner of the goods (i.e., the title holder in the goods) suffers a loss, fails to realize an expected profit, or incurs liability from the loss or damage, the owner (the title holder) is deemed to have an insurable interest in the goods.
When the exporter delivers the goods, the insurable interest in such goods transfers at the point and time where the risk shifts from the exporter to the importer, as determined by the international commercial terms used. For example, the point and time where the risk shifts in:

(more…)

Troubles at sea can result in big losses for companies relying on the products on board. No agency tracks how much cargo is lost at sea around the world each year.

However because ships can hold such huge loads, accidents take on a large extent. One sunken ship can carry thousands of cars worth tens of millions of dollars. There is a great need for marine and ocean protection, as the marine entrepreneur must be protected against an ever-increasing suit-conscious public.

Ocean marine insurance covers material goods damage and liability to both cargo being shipped and the vessels containing them. The coverage can be divided into commercial and personal lines. Ocean marine insurance consists of several types of coverage.

Cargo policies cover loss or damage to goods being shipped, while hull policies cover vessels shipping the goods. There are two types of hull coverage: blue water hull, pertaining to maritime vessels, and brown water hull, which covers ships and boats on rivers and lakes. Different lines of ocean marine coverage appeal to different customers; importers and exporters usually buy cargo policies, while ship holders more frequently obtain hull and liability insurance.

The Container Owners Association calculates that a fully loaded 20-foot dry freight container will float because its volume displaces 83,000 pounds of water, more than its weight of 30 tonnes or 66,000 pounds. Mathematically, it would float with 18 inches sticking out of the water. However, if water enters and increases the weight to over 83,000 pounds, the container will sink. Floating containers were previously shot at or exploded to sink them and reduce their danger to ships because this was less expensive than salvage costs for towing and recovery. This is now illegal because of the pollution risk it poses.

The Container Owners Association provides some information collected from its members about floating shipping containers. How long a container cast adrift or fallen overboard will float before sinking depends on the container and its cargo. It is possible for containers to sink instantly or stay adrift for years. However, even empty containers may not watertight and sink almost immediately. Containers with large but low-density cargo have a better chance of floating. COA members say that the “sub-floater” or container that is submerged just below the water level, is a myth that can be disproven with the laws of physics.

Image by elbfoto