Marine Insurance

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Here, perils of the sea in marine insurance include extraordinary forces of nature which maritime ventures might need to face during the voyage. Broadly speaking, ‘peril of the sea’ is defined to cover everything that happens to ship during the voyage by the Acts of God. It means perils of the sea include those accidents or casualties which do not happen due to the free will of a human-being. Even if we talk about natural perils, it will not include the natural and ordinary action of wind. Some of the examples of these perils include collision, sinking, heavy wave action and high winds.

Further, ‘perils of the sea’ in marine insurance comprise of losses only to goods which are on board that happens due to some irresistible force or natural cause or from the overwhelming power which is beyond the human skill and prudence. Also, the ‘perils of the sea’ won’t cover every accident or casualty that arises in the sea.

To sum up, perils of the sea means everything which happens to the vessel during the voyage by the Act of God without any intervention of a human. Here are some of the instances which are covered under perils of the sea are-

  • Foundering at Sea= If a ship is found to be missing for a duration of time and there is no news about the missing ship, it would be considered as foundering at sea. Here, the loss would be assumed as caused by the perils of the sea.
  • Ship wreckage= In a case where the ship collides against a hill or rock and is driven to the shore by the violent winds, it would be considered as shipwreck.
  • Stranding= In a situation where a ship got out of the action after an accident and struck up in a shallow region of sands, it would be called stranding.
  • Collision= In a case, where the ship collides with another ship, it will be considered as a collision.

There are some risks which are not covered under perils of the sea in marine insurance, like=

  • Wear and Tear
  • Breakage of goods
  • Springing a leak
  • Inherent vice
  • Death of animals on board due to natural perils
  • Loss by rats

The burden of proving that losses actually happened due to perils of the sea remains with the marine insurance policyholder only.

Read more: What is the Meaning of Free on Board in Marine Insurance?

Case: 1

30 cases of betel nuts were ready to be sent from Chennai to Sri Lanka. While the goods were waiting in the boat for discharging into the water, the sea which was calm, suddenly became rough. High swells splashed into the boats and damaged the goods, which were later destroyed by the health officer. The owner of the ship had a marine insurance policy and therefore, approached the insurer for the claim settlement. It was considered that the loss happened due to seawater which came under ‘perils of the sea’, and therefore, the insurer settled the claim. The insurer asked for documents like a complete account of the accident, duly filled claim form along with other documents. After reviewing all the documents, the insurer agreed to settle the claim as per the sum insured.

Case: 2

Jack ship was carrying the consignment of rice when the ventilators of a ship were closed in order to avoid the sea water to enter during unaffordable weather conditions. However, the closing of the ventilators damaged rice due to excessive heat.

In this case, the owner of the ship approached its marine insurance company who agreed to consider it under perils of the sea. The insurer held that the incursion of the seawater through the ventilators came under the definition of the perils of the sea. In fact, the damages which happened due to ventilator were happened due to an action which was taken to prevent the perils of the sea from damaging the goods. In fact, it was a loss which happened due to perils of the sea, and therefore, the insurer settled the claim accordingly.