Marine Insurance Claims
This domain tests marine claims under the Marine Insurance Act 1963 and common Institute Cargo Clauses. Expect questions on hull and cargo cover, total and partial losses, general average, sue and labour, and underinsurance.
Core rules
- Marine insurance is uberrimae fidei. The assured must disclose material facts, and cover depends on the type of policy: hull and machinery, cargo, freight or P&I.
- Institute Cargo Clauses (A) cover all risks subject to exclusions; (B) and (C) cover named perils only. ICC(C) is narrower and does not cover theft or water damage from sources outside the listed perils.
- Actual total loss means the subject matter is destroyed or irrecoverably lost. Constructive total loss arises when recovery or repair costs exceed the value; the assured must give notice of abandonment.
- Particular average is a partial loss borne by the damaged property's owner. General average is an intentional, reasonable sacrifice for the common safety, shared by all contributors under the York-Antwerp Rules.
- Sue and labour costs reasonably incurred to avert or minimise loss are recoverable, subject to policy terms.
Worked example
Cargo has an insurable value of ₹1.2 crore but is insured for ₹90 lakh. A particular average loss of ₹60 lakh occurs. Because the insured value is less than the insurable value, the assured is his own insurer for the balance: claim = 90/120 × 60 = ₹45 lakh. If the loss were a general average sacrifice, contribution would be adjusted separately.
Traps
Do not assume ICC(C) covers theft. Do not treat a constructive total loss as an actual total loss without notice of abandonment. Do not confuse general average with particular average. Do not ignore underinsurance or sue and labour limits.