Prepared by: Ms. Norazimah Mazlan
Marine insurance policies can be divided to:
• All Risk Policies (e.g. Institute Cargo Clauses (A))
• Named Risk Policies(e.g. Institute Cargo Clauses (B)
& (C).
Since most marine policies in practice are named risk
policies, it is necessary to ascertain the scope of
marine risks which are likely to be insured against in
most marine policies.
Schedule 1 Rule 7 MIA 1906:
The term “perils of the seas” refers only to fortuitous
accidents or casualties of the seas.
It does not include the ordinary action of the winds and
waves.
In order to claim under perils of the sea, the accident must
be accidental, fortuitous and unexpected.
It must not be something which is inevitable (unavoidable).
E.g high tide and low tide.
The Xanto
• The term perils of the sea does not cover every accident or
casualty which may happen to the subject matter of the
insurance on the sea.
• It does not protect against the natural and inevitable
action of the winds and waves.
• There must be some casualty, which could not be
foreseen.
• A peril must be “of the sea”.
• The extraordinary accidents must not merely occurring “on the
sea” but must be associated with the sea. (E.g. collision,
groundings.)
• Rats and vermin are not perils of the seas. Even though the loss
caused by rats and vermin occurred on the sea, it is not
associated with the sea because the same thing would have
happpened occur on land.
• This was because the damage was not caused by the sea, but
simply occurred while the vessel was at sea and had nothing to
do with the sea conditions.
• Other example: the damage to the donkey engine which is not
due to the sea condition is not a peril of the sea.
Storms
Canada Rice Mills Ltd. v. Union Marine & General Insurance
Co. Ltd. [1941] AC 55
•
an unexpected storm was held to be a peril of the
sea
Unexpected Ice berg
Popham v. St Petersberg Insurance Co. (1904) 10 Com. Cas.
31.
•
Ice berg encountered by the vessel at an
unexpected time of the year was also regarded as
a perils of the sea.
Icing Sea
• The annual icing over of particular seas in winter preventing
any chance of passage is part of the ordinary course of
things. Thus, it is not perils of the seas.
Ingress of sea water
Mountain v Whittle
 A loss caused by the entrance of sea water is not necessarily a
loss by perils of the seas.
 There must be some special circumstances such as heavy
waves causing the entrance of the sea water to make it peril
of the seas.
Collision
A collision at sea between two vessels is a peril of the sea.
The Xantho
Cargo on board the Xantho was damaged in a collision with the
Voluta, which could have been due to the fault of either.
Held: The cause of loss was “perils of the sea”.
• Negligence of crew during management or navigation is covered
under perils of the seas. E.g. negligent acts which allow entry of
seawater would amount to perils of the seas.
• Not every negligent act at sea constitutes a peril of the seas.
Thames & Mersey v. Hamilton (1887) 12 App. Cas. 384
• Held: damage to the engine resulting from a valve left closed
as a result of negligence of the crew was not a perils of the
sea.
• This was because the damage was not caused by the sea, but
simply occurred while the vessel was at sea and had nothing to
do with the sea conditions.
• ordinary action of winds and waves (e.g. high tide and low
tide)
• deliberate damage /wilful misconduct of any person
e.g. Scuttling – wilful and deliberate throwing away of a ship.
• damage caused by wear and tear.
• The burden is on the shoulders of the assured to show that the
loss is attributable to “perils of the sea”.
The Buckeye State (1941) 39 F. Supp 344
 Fire is caused by ignition or combustion, and it includes the idea
of visible heat or light.
Heating is not included
Fact of the case: A cargo of grain was damaged since the light
bulbs in the hold were left on, and this caused the heating of the
cargo.
Held: The cause of the loss was over-heating, not a fire.
Tempus Shipping Co Ltd v Dreyfus & Co Ltd
 Mere heating which has not arrived at the stage of ignition is
not within the definition of fire.
 Once ignition has occurred, recovery is not confined to damage
inflicted by flames.
 Subject to the terms of the policy, it may include :
• smoke damage
• damage caused while fighting against the fire
• damage caused while attempting to save the subject matter
insured or preventing the spread of fire.
• Different from perils of the sea, the element of fortuity is
immaterial. The loss by fire is covered either the fire started
accidently or deliberately.
The perils of the sea does not distinguish between reasons for the
fire. It makes no difference if the fire:
• caused by a common acccident
• caused by lightning
• caused by negligent
• deliberate fire by a stranger
• deliberate fire by master or a member of the crew or a
stranger.
Fire started by the assured is excluded (e.g. arson). It is
considered wilful misconduct which is an excluded peril.
• r 9 of the Rules for Construction, MIA 1906:
“Thieves” does not cover clandestine theft or a theft
committed by any one of the ship’s company, whether
crew or passengers.
Theft is not to be interpreted in the strict sense of the
criminal law.
Two elements need to be fulfilled:
1. Theft must be violent
• The theft must be of violent nature either to person or property.
• Clandestine or secret theft is not covered under this definition.
Andreas Lemos
 While the vessel was at anchor, thieves boarded the vessel and
stole equipment on the vessel. When they were challenged by
armed members of the crew, the thieves drew knives and then
jumped into the sea.
 Held: This is a clandestine theft because the theft was complete
before threat occurred.
2. Committed by persons from outside the vessel
The word thieves did not include persons in the service of the ship.
Persons from outside the vessel:
 stevedores who were employed to load the ship.
 Pilots
Yes, by applying this additional clause.
Institute Theft, Pilferage and Non-delivery Clause:
• “In consideration of an additional premium, it is hereby agreed
that this insurance covers loss or damage to the subject matter
caused by theft or pilferage…”
• International law definition of piracy is rather narrow.
r 8, Schedule 1 of MIA:
• The term “pirates” includes passengers who mutiny and rioters
who attack ship from the shore
1. Piracy is robbery for personal gain
• Robbery committed for other reasons, i.e. political, does not
amount to piracy.
2. Violence is an essential element for piracy
• Force must be used or there must be threat to use force before
the robbery takes place. (violence on crew)
•
3. Piracy could be committed either by outsiders or passengers
•
Outsiders- the most common form of piracy
•
Passengers- who use force or threaten to use force for
personal gain
• Section 55(2) MIA 1906
Wilful misconduct of the assured (Deliberate acts done
with the intent to cause loss)
Delay
Ordinary wear and tear (damage due to or sustained
during ordinary usage)
Inherent vice (loss arising due to nature of the cargo
without the intervention of any fortuitous external accident
or casualty )
Contractual Exclusions
•
E.g. war risks are excluded from marine policiesClause 24.1 of Institute Hull Clauses 1995 states:
“In no case shall this insurance cover liability or
expense caused by war, civil war, revolution, rebellion,
insurrection, or civil strife arising therefrom, or any hostile
act by or against a belligerent power