Various clauses of Marine Insurance are explained briefly below:
Valuation Clause
Here the value of the subject is the value as decided between both parties. In case of any loss or damage, the compensation amount would not exceed the amount as stated in the marine insurance policy.
Case: K.S Shipping is planning to buy a marine insurance policy. It approaches one of the insurers to compute the value of the ships for which it wants to buy the insurance and decides its value. In case of any loss or damage, the compensation would not be more than the value of the item as mentioned in the policy document. Among various clauses of Marine Insurance, its is most popular.
‘At’ and ‘From’ Clause
It signifies the time when the risk would start. As per the clause, the risk cover would start when the ship is there at the port for the departure and from the time it leaves the port.
Case: L.S Shipping buys hull insurance. The policy clearly states the words, ‘at and from Chennai’. Thus, the risk is covered when the ship is at Chennai port and also when it leaves this port.
Sue and Labour Clause
The money spent to save goods from an impending loss or damage can be recovered from the marine insurance company.
Case: L.S Automobile’s consignment was underway when it got the news that the political conditions in the buyer’s country, i.e., Malaysia were not favourable. Due to unrest prevailing there, L.S Automobile decided to divert its consignment to Sri Lanka so that later it could send the goods from there to Malaysia. L.S Automobile had to incur extra costs in order to reach Sri Lanka and secure goods. Hence, its marine insurer agreed to bear those extra expenses. L.S Automobile made efforts to save goods and therefore, the insurer covered them.
Additional Read: What are the perils of the sea in Marine Insurance?
Warehouse to Warehouse Clause
It covers risks to goods arising from the time they leave the consignor’s warehouse until they reach the consignee’s warehouse.
Case: L.S Engineering has a marine insurance policy. It sends goods to a buyer situated in Chennai. According to this clause, the insurance cover starts from the time goods left the warehouse of L.S Engineering till they reach the consignee’s warehouse.
Change of voyage clause
Details regarding the voyage, including, the ports of departure & arrival and the route are clearly defined in the policy document. The marine insurance company is relieved of liability in case of any deviation. When a policyholder changes the route and later takes the same route, it is still considered a deviation in marine insurance.
Case: F.S Shipping has purchased a marine insurance policy for all its ships. The company exports goods to the Middle East. At the time of purchasing the policy, F.S Shipping clearly stated the route of these ships along with the details of the port of departure and arrival. In case of a deviation in the route, the same needs to be communicated to the insurer. No coverage is offered in case of non-communication.
Touch and Stay Clause
As per the clause; the ship has to go and stay only at points as clearly mentioned in the marine insurance policy. The ship has to take the customary route in case the policy document does not mention the ports. Furthermore, it has to stay at the port which comes on that route. In case the ship goes to any other port, it will be termed as the deviation.
Case: M.J Shipping has a marine insurance policy that clearly states the names of all ports where its ships will stay. In case, its ship would stay at a different port; the insurer would not cover the same.
Inchmaree Clause
This clause covers loss or damages to ship or machinery which happen due to the negligence of the shipowner or by a defect in the machinery of the vehicle.
Case: K.S Garments has a marine insurance policy. Last year, when it was sending goods to a buyer situated in Nepal, the engine of the vehicle failed, and due to this, the vehicle met with an accident. Here, the marine insurer settled the claim which happened due to a defect in machinery.
Read more: What does ‘both to blame clause mean in marine insurance policies?
Jettison clause
It means throwing off certain cargo from the ship and lightening the load during an emergency. It is necessary to do this in order to avoid any marine peril to happen.
Case: The rainwater caused severe damage to the ship of L.K Shipping. At that time, the ship was carrying goods worth Rs 1 crore. In order to save the ship from sinking, L.K Shipping had to throw out certain cargo. In this case, L.K Shipping had a marine insurance policy. Thus, the insurer offered coverage for goods thrown off in the water. The coverage was provided as it prevented the ship from sinking.
Memorandum Clause
This clause is there to protect the marine insurance company. Goods carried are often perishable and therefore, get damaged. The clause saves the insurer from paying small losses related to perishable items.
Case: L.S Confectionary was exporting 100 boxes of ice-creams and candies to a buyer situated in Sri Lanka. Nearly ten boxes got damaged due to the nature of the items. In this case, though, L.S Confectionary had a marine insurance policy, the insurer was not liable to pay compensation. The goods were perishable, and there were high chances of them getting damaged. Therefore, the insurer did not pay compensation with regard to 10 damaged boxes.
In conclusion, understanding and navigating the various clauses of marine insurance is essential for both insurers and insured parties, ensuring comprehensive coverage and minimizing potential risks in the complex world of maritime trade and transportation.
