Marine Insurance for Cargo

Marine Insurance for Cargo
03/07/2017 Comments Off on Marine Insurance for Cargo Academic Papers on Business Studies,Academic Papers On Economics,Sample Academic Papers admin

Marine insurance is divided between the ships and the cargo. The insurance coverage of the ship or vessel is normally known as “Hull and Machinery” (H&M). A more specific form normally used in reinsurance called (TLO) covers the total loss of the vessel and the cargo collectively but does not cover partial losses. Insurance cover is usually issued on either a “voyage” basis which essentially provides compensation for losses between the sea port written in the policy or “time” basis which provides insurance cover for a specific period of time, usually one year and that is more generally used.

A marine policy is normally only liable to compensate for three-quarters of the insured obligations under the law. The normal responsibilities cover running into or colliding with some other ship, colliding with some equipment or fixed object in the harbor such as the edge of a wharf or any other fixed construction, or the removal of a wreck which could be blocking the sea port. During the 19th century, many ship-owners gathered to form “mutual underwriting clubs” which are also called “Protection and Indemnity Clubs”. These clubs are still operating and their policies are followed for other marine and nonmarine policies such as those related to oil pollution or the risk of nuclear accidents

Because liabilities are not the same throughout the world, insurers take great care to limit the liabilities between actual total loss and constructive total loss. These two terms are implemented to assess proof when a vessel or its cargo has to be compensated for losses arising out of claims. The real total loss occurs where the reimbursement or the cost of repairs is equal to or more than the value of the property. The constructive total loss formula is applicable where the cost of the repairs is added to the cost of recovery equals or is more than the value of the repairs

Compensation is given to claimants on the assessment of the damages or losses suffered, which sometimes becomes difficult to assess in cases of losses at sea, or in the case of thefts. This is where marine insurance is not the same as conventional insurance where the claimant has to prove his/her loss. Marine insurance was actual insurance of “an adventure”  with the insurers being partners of part owners of the vessel or cargo, and not just the monetary average aspects of the claim or the losses.

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