Marine insurance covers the physical loss or damage of ships, cargo, terminals, and any transport by which the property is transferred, acquired, or held between the points of origin and the final destination.
[2] In December 1901 and January 1902, at the direction of archaeologist Jacques de Morgan, Father Jean-Vincent Scheil, OP found a 2.25-metre (89 in) tall basalt or diorite stele in three pieces inscribed with 4,130 lines of cuneiform law dictated by Hammurabi (c. 1792–1750 BC) of the First Babylonian Empire in the city of Shush, Iran.
[3][4][5] Code of Hammurabi Law 100 stipulated repayment by a debtor of a loan to a creditor on a schedule with a maturity date specified in written contractual terms.
[9][10][8] Law 235 stipulated that a shipbuilder was liable within one year of construction for the replacement of an unseaworthy vessel to the ship-owner that was lost during the term of a charterparty.
Laws 236 and 237 stipulated that a sea captain, ship-manager, or charterer was liable for the replacement of a lost vessel and cargo to the shipowner and consignees respectively that was negligently operated during the term of a charterparty.
[11][12][8] In the Digesta seu Pandectae (533), the second volume of the codification of laws ordered by Justinian I (527–565) of the Eastern Roman Empire, a legal opinion written by the Roman jurist Paulus at the beginning of the Crisis of the Third Century in 235 AD was included about the Lex Rhodia ("Rhodian law")[13] that articulates the general average principle of marine insurance established on the island of Rhodes in approximately 1000 to 800 BC as a member of the Doric Hexapolis, plausibly by the Phoenicians during the proposed Dorian invasion and emergence of the purported Sea Peoples during the Greek Dark Ages (c. 1100 – c. 750) that led to the proliferation of the Doric Greek dialect.
[16] The oldest hedging instruments to mitigate risk in medieval times were sea/marine (Mutuum) loans, commenda contract, and bill of exchanges.
[citation needed] Separate marine insurance contracts were developed near Genoa, in Camogli[18] in 1853 and other Italian cities in the fourteenth century and spread to northern Europe.
By the end of the seventeenth century, London's growing importance as a centre for trade was increasing demand for marine insurance.
The participating members of the insurance arrangement eventually formed a committee and moved to the Royal Exchange on Cornhill as the Society of Lloyd's.
The establishment of insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty lawyers, bankers, surveyors, loss adjusters, general average adjusters, et al.), and the growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice.
In 1906 the Marine Insurance Act codified the previous common law; it is both an extremely thorough and concise piece of work.
[21] The Marine Insurance Act includes, as a schedule, a standard policy (known as the "SG form"), which parties were at liberty to use if they wished.
Because marine insurance is typically underwritten on a subscription basis, the MAR form begins: We, the Underwriters, agree to bind ourselves each for his own part and not one for another [...].
In legal terms, liability under the policy is several and not joint, i.e., the underwriters are all liable together, but only for their share or proportion of the risk.
A marine policy typically covered only three-quarter of the insured's liabilities towards third parties (Institute Time Clauses Hulls 1.10.83).
These Clubs are still in existence today and have become the model for other specialized and noncommercial marine and non-marine mutuals, for example in relation to oil pollution and nuclear risks.
Clubs work on the basis of agreeing to accept a shipowner as a member and levying an initial "call" (premium).
An actual total loss occurs when the property has been destroyed, or so damaged as to cease to be a thing of the kind insured.
[22][23] The use of these terms is contingent on there being property remaining to assess damages, which is not always possible in losses to ships at sea or in total theft situations.
The term "constructive total loss", or CTL, was used by the United States Navy during and after World War II to describe naval vessels that were damaged to such an extent that they were beyond economical repair.
In order for general average to be properly declared, 1) there must be an event which is beyond the shipowner's control, which imperils the entire adventure; 2) there must be a voluntary sacrifice, 3) there must be something saved.
General average requires all parties concerned in the maritime venture (hull/cargo/freight/bunkers) to contribute to make good the voluntary sacrifice.
A policy will usually include a "sue and labour" clause which will cover the reasonable costs incurred by a shipowner in his avoiding a greater loss.
The Lloyd's Open Form is headed "No cure — no pay"; the intention being that if the attempted salvage is unsuccessful, no award will be made.
However, this principle has been weakened in recent years, and awards are now permitted in cases where, although the ship might have sunk, pollution has been avoided or mitigated.
:§17: imposes a duty on the insured of uberrimae fides (as opposed to caveat emptor), i.e., that questions must be answered honestly and the risk not misrepresented.
However, if the assured knowingly allows an unseaworthy vessel to set sail the insurer is not liable for losses caused by unseasworthiness.
Policy features often include extensions of coverage for items typical to a marine business such as liability for container damage and removal of debris.