‘Marine Insurance is a contract whereby the insurer or underwriter undertakes to indemnify the assured in the manner and to the extent thereby agreed, against marine losses, that is to say, losses incidental to marine adventure.’
The instrument in which the contract of marine insurance is recorded is called a policy. The insurer in marine insurance is known as the underwriter and the person who is thereby indemnified is called the insured.
Type of Marine Policies
A policy of insurance may e of the following types:-
(i) Time Policy which covers the risk up to a stated amount for a fixed time;
(ii) A Valued Policy, i.e. a policy which specifies the agreed valued of the subject matter insured;
(iii) Mixed Policy which covers voyages between specified places within a specified time.
(iv) Floating Policy which describes the insurance in general terms and leaves the name of the ship or ships or other particulars to be defined by subsequent disclosures;
(v) Open Policy which does not specify the value of the subject matter insured, which has, therefore, to be ascertained subsequently at the time the claim arises; and
(vi) Voyage Policy which covers a particular voyage.
An underwriter or an insurance company may, when the risk is considered too great, get a part reinsured with another underwriter or insurance company. This reinsurance does not affect the position of the original insured, for the original insurance remains a distinct contract by itself and the reinsurance in its turn forms an equally distinct contract, between the second set of parties.
The original insured therefore has no claim on the reinsurance contract, but can only claim from his own underwriter wishes to reinsure half the risk, he may reinsure with C for say Rs. 5,000.
In case of loss A can only put in a claim against B, but the has no right against C. B has to pay his claim and in his turn claim half the loss from C. If, therefore, B were to fail and A’s claim is not paid, A cannot claim the reinsured amount from the underwriter C with whom the reinsurance was effected. C is liable to pay in such an event only to B’s trustee in bankruptcy.