PRINCIPLES OF MARINE INSURANCE:

• ⚓ What are the fundamental principles governing Marine Insurance?
  • Marine insurance operates based on several core principles that underpin the contractual relationship between the insured and the insurer. These principles include:
• 📜 Utmost Good Faith (Uberrimae Fidei):
  • Marine insurance contracts are based on the principle of utmost good faith, requiring both the insured and the insurer to disclose all material facts relevant to the insurance risk. This principle emphasizes honesty, transparency, and full disclosure during the underwriting and claims processes.
• 🛳️ Insurable Interest:
  • The principle of insurable interest stipulates that the insured must have a financial interest in the subject matter of the insurance policy, such as the vessel, cargo, or freight, at the time of policy inception and throughout the policy period. Insurable interest ensures that the insured has a legitimate stake in protecting against potential losses.
• 📄 Indemnity:
  • Marine insurance contracts are based on the principle of indemnity, which aims to restore the insured to the same financial position they were in before the occurrence of the insured peril. Under this principle, the insurer agrees to compensate the insured for the actual monetary loss suffered, up to the policy’s coverage limits, without conferring any financial gain.
• 🔄 Subrogation:
  • The principle of subrogation allows the insurer to assume the legal rights of the insured after indemnifying them for a covered loss. By exercising subrogation rights, the insurer can pursue recovery from third parties responsible for causing the loss or contributing to the insured peril. Subrogation helps prevent the insured from receiving double compensation for the same loss.
• 📝 Contribution:
  • The principle of contribution applies when the insured obtains multiple insurance policies covering the same risk from different insurers. In the event of a covered loss, each insurer shares the loss proportionally based on the policy limits. Contribution ensures equitable distribution of liability among insurers and prevents over-insurance or unjust enrichment.
• 📊 Warranties and Conditions:
  • Marine insurance contracts may include warranties and conditions that define the terms and obligations of the insured and the insurer. Warranties are specific promises or undertakings made by the insured regarding the insured risk, while conditions outline the prerequisites for policy coverage and the insured’s duties in the event of a claim.
• 🚢 Uberrimae Fidei Doctrine:
  • The principle of Uberrimae Fidei, derived from Latin, emphasizes the utmost good faith between the insured and the insurer in marine insurance contracts. It requires the insured to disclose all material facts relevant to the risk, even if not explicitly asked by the insurer. Failure to adhere to this principle may void the insurance contract or lead to claim denial.

🔑 Keywords: Principles of Marine Insurance, Utmost Good Faith, Insurable Interest, Indemnity, Subrogation, Contribution, Warranties and Conditions, Uberrimae Fidei Doctrine.

Share on Facebook