The Marine Insurance Act, 1963 was enforced on 18th April, 1963. The Act codifies laws relating to marine insurance. Apart from a few exceptions, the Act is based on UK Marine Insurance Act, 1906. According to section 3 of The Marine Insurance Act, 1963 marine insurance is an arrangement whereby the insurer agrees according to contract terms, to indemnify the assured for losses incurred in connection with marine adventure. Marine adventure includes any adventure where any insurable property is exposed to maritime perils i.e. perils consequent to navigation of the sea. It also includes the earnings or acquisition of any freight, passage money, commission, profit or other pecuniary benefit, or the security for any advances, loans, or disbursements is endangered by the exposure of insurable property to maritime perils as defined under section 2 sub clause (e) of the Act.
An insurer underwrites to a risk in return of premium by assured, premium here is compensation in lieu of risk to an insured property. The amount of premium depends on degree of risk to property of insured. The business of insurance is usually carried out by spreading of potential liabilities in smaller amount over a number of persons. The risk here shall include not only the actual property but also the financial losses those incurred to third party. The marine insurance covers only certain type of risks which includes risks pertaining to casualties of the sea, fire, war perils, pirates, seizures and jettison. The types of marine insurance are Hull Insurance, Cargo insurance, Freight Insurance and Liability Insurance.
The marine insurance is a standard form of contract because it embodies terms and conditions which shall be standard for all the insured. Section 25 of the Act provides certain minimal requirements of the Act which shall include the name of assured, subject matter, risk insured, voyage- its time or period, sum insured, names of the insured.
Section 28 of the marine Insurance act deals with the subject matter and the same shall be considered with utmost care and caution. As per section 28 sub clause (2) the nature and extent of subject matter not be specified in policy, where policy specifies subject matter in general terms it shall apply to the interest intended by the assured. Under the Act there shall be three types of policy valued policy, unvalued policy and floating ship policy under sections 29, 30 and 31 apart from this there shall be time policy, voyage policy and mixed policy.
Marine Insurance is based on few principles which are also its essentials these are principle of utmost good faith; principle of insurable interest; principle of indemnity and principle of subrogation. Here utmost good faith shall mean that the insured relies absolutely on the insurer, a contract of marine insurance is nothing different from any other form of contract as laid down in General Assurance Society v. Chandumull Jain, AIR 1966 SC 1644. Incase either insured or insurer commits fraud the other party can avoid such contract. It shall be prima facie duty of both the parties to act in utmost good faith and disclose every material circumstance known as per section 20 and 21. Insurable interest here would mean, at the time of insurance the insurer should have interest in subject matter. The insurer is liable to indemnify the insured in case of loss also given under section 75 of the Act. Subrogation means substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third person for loss covered by insurance. The insurer is entitled to recover from a negligent third party for any loss payment made to the insured as also under section 79 of the Act.
Thus we can conclude that the Marine Insurance Act, 1963 is an essential piece of legislation which bring into its ambit maritime losses. Prior to the legislation losses incurred by the owner of goods and by the owner of vessel were unaccounted. The law provides for insurance in all such cases relating to maritime losses and the contract of marine insurance is similar in nature to that of any other insurance and contract.
by Vibhuti Nakta