Policies Required by Ship Owner - Essay Example

Introduction Shipping has a remarkable ability to respond to or anticipate a growth in demand. There has been a change in ship size, cargoes carried, performance and general market that is the support and demand trend have been changing and therefore the need for one to know how to shape the business. From these changes that have taken place there have been many new types of ship that have emerged and they have been caused by the rapid growth of world trade and the shift in marine markets. Therefore there are factors that a company has to consider before entering into time or voyage policy for hull and machinery activities. Most standard form marine insurance policies have been around so long that the intention of the drafters can only be surmised from the language used and the information that one has on a particular claim. It is important for one to know what it means by underwriting intent so that they can do away with confusion that might come up as one is applying the insurance forms. The underwriting intent can be used to mean a variety of things and the significance that attaches can vary greatly from controlling the practices and the legal rights and obligations to being legally irrelevant depending upon what one means by the use of underwriting. (Reed, 1996, pp, 23) Voyage policy is the insurance contract that is given to goods from one place to another or to other places. Where the subject matter is insured by a voyage policy then it is not necessary that the ship should be at that place when the contract is concluded but there is implied condition that the adventure shall be commenced within a reasonable time and that if the adventure will not be commenced the insurer may avoid the contract. The implied condition may be negatively by showing that the delay was caused by circumstances known to the insurer before the contract was concluded or by showing that he waived the condition. If the place of departure is specified then the ship instead of sailing from that place sails from any other place the risk does not attach. Still where the destination is specified in the policy and the ship instead of sailing for that destination sails any other destination then the risk will not be attached. After the commencement of the risk the destination of the ship is voluntarily from the destination contemplated by the policy in such a case then the ship will have changed the voyage and unless the policy otherwise provides where there is changes of voyage the insurer us discharged from liability as from the time of change. The time policy is the insurance that is given to goods for a definite period of time. in this policy then an institution or company that has to send its gods through this policy should ensure that they keep the time that is set in that they should ensure that they follow the definite time so that they can have the right time schedule followed. This will mean that if a cargo is expected to arrive in a certain time then what an organization has to do is to ensure that they follow this time schedule so that they have this product. This will mean that any delay of the product will not be accepted meaning that after the set time there will be no cover for these goods because they have not followed the time that is set for the products. Therefore it is important for a company to follow the set time so that they have insurance that is required to have their goods safe from one place to the destination point. (Reed, 1996, pp, 46) The relevant institute clause for hull is the seepage and pollution exclusion clause which is the agreement that excludes any loss arising from seepage, pollution or contamination unless such risks are insured solely on a sudden and accidental basis. In this agreement there is the exclusion of liability in respect of disposal or dumping of any waste materials or substances. In this there is exclusion of all loss accruing to the company as a result of body injury or damage arising out of the actual, alleged or threatened discharge, dispersal release or escape of pollutants that are : being transported or towed by or otherwise in the course of transit, being stored, disposed, treated or processed in . After the pollutants are moved from the insured auto to the place where they are finally delivered, disposed of by the insured. If there are any governmental direction for monitor, clean up, remove, contain, clean, treat, and detoxify pollutants. In this kind of clause the ship owner will have to make the clear follow up of the instructions that are set for the pollution so that they know what the institution excludes in other words if a ship owner will have to follow this clause then it will mean that there are the important things that are supposed to be followed therefore in case one has gone through such things then there will be no cover meaning that the ship owner will have to take the responsibility that is connected to this kind of harm. This will mean that the ship owner should have in mind things that are excluded by this clause and know the cover to give to the workers who are harmed in their work place. This clause is important because the ship owner will be required to ensure there is no pollution in as they transport their products therefore they are supposed to ensure that they give the right cover. (Mike, 1998, pp, 60) The advantages of this clause is that the ship owner will not be responsible for the body injury in that if a person will be harmed then no one will be responsible therefore the costs that are for a person to have insurance cover for the workers will be limited this will mean that this income that could have been spend for treating workers will be used in other fields like in increasing production. The ship owner will not be responsible for the damage of liability this will mean that the products that have to be carried will be secured by the company that is concerned this will mean that the ship owner will not have to incur many costs that are related to dumping of waste. This will mean that it will not be possible for the company to claim in case an accident has taken place. This will limit the costs that can be incurred by a ship owner. The disadvantages of this clause will be that the company will have a heavy burden because in case of loss of the products that are carried then it will not be able to know what to do this will mean that this company will have to ensure that the products are safe which is very expensive. Another thing is that the company will not have the burden for body injury but this will mean that it will end up losing many workers because they will not be insured. This will mean that the productivity will be reduced leading to low importation of products hence low profits will be received. (Mike, 1998, pp, 89) From the information about this clause then it will mean that the burden is placed top the owner of the products meaning that the causes of water pollution will be high because the ship owner will not be concerned about repairing the machines this will mean that the country will still be in danger of losing living things that stay in water and this will further affect the operations for the other organizations like the industry companies will be affected. The reason is that this clause will give freedom to the ship owner meaning that they are not concerned about the shipment of products. Without their concern then they are likely to face problems which will be hard to solve and will lead to low economic growth to the affected country. Therefore the water pollution which is very harmful to the economy of a country should be dealt with through involving the companies that are concerned with the use of sea for transport so that they come with the information that will reduce this danger. The factors that a ship owner should consider will be risks which include full risk which shows the total loss, particular average, general average contributions, and collision liability, salvage charges, sue and labour charges and profit. In total loss only have conditions that cover for total or constructive total loss and additional salvage. There are ship owner’s insurance interests who include insurance premiums which can be insured on total loss only conditions and full amount reducing pro rata over the policy period. There is loss of hire where a vessel is in charter, to hire money for a fixed period of time so that they can cover all the risks excluding total loss. There is the cargo rating where there is determination of vessel, voyage, and nature of cargo, packaging and stowage; there is shipper’s management quality and past claims experience. Insurance factors include the past claims experience, the conditions of insurance that is whether full risks, total loss only and the size of deductibles. There is the insured value which show unduly high value on old vessels in shipping recession would be avoided as would values which appear too low in relation to similar vessel. Other factors include the trade routes and limits, the cargo carried management quality and ownership. navigational aid, raked bow, life boats, bilge pumps, crew quarters, registration as a vessel, intention of owner to move it on regular basis, ability of submerged vessel to be refloated and the length of time structure that has to be taken. With these factors then a ship owner will know which insurance policy to choose. (Carol, 1992, pp, 45) The voyage will include port of loading and unloading and port facilities, the reputation for cargo handling and degree of security against theft and other dangers that can be faced. In order for a ship owner to take factors due to changes in circumstances then they should have the factors in mind and practically with flexibility this is because there are many changes that take placed like changes in weather which is un expected and this might leading to accidents this will mean that if there has been a change in weather then it should be taken as been something that should be considered so that they have changes that are required. This will mean that the insurance cover should not be fixed to particular factors but should be flexible because of the unexpected changes that may take place. This will imply that a ship owner will therefore have to know and keep in mind the things that are expected and be flexible so that they can deal with these changes in the right manner. This will mean that with changes in weather and lack of income then a ship owner should not fail to do the work that is set for them so that they have transportation been carried out. Generally the factors that ship owner have to consider will mean that the particular insurance that is taken will include the changes that are not accepted. Therefore in an insurance policy then it should not be fixed if a ship owner will chose time policy then they should be ready to keep time but still have allowances in case of changes that take place. The type of commodity affects susceptibility to major hazards such as fire, explosion, water damage and the possibilities of controlling damage once it occurs. The effective packaging and storage can minimise the impact of damage mainly the fragile products and help resist water damage. (Carol, 1992, pp, 23) The aims of voyage policy will be to give direction to the ship owner so that they can know how many trips to be made. This will mean that this ship owner will be required to come up with right information on voyage changes that can be done so that they can get insured as they require. The objectives of this policy will be to give protection against loss of goods, the cargo contract is meant so that it can replace the lost or damaged goods. The insurance value for export consignment is calculated on basis of some percentage and the marine perils will refer to peril when cargo is in the ship. In time policy then one will be able to be provided with parking which will be appropriate to the use of the land in context of the commercial area. There is provision of equitable and consistent approach to decision making under the clause that one has to use. There is provision of clear direction on the amount of parking that is likely to be required of applicants in commercial area. One will be able to establish an appropriate value for the parking where a fee in lieu is been considered. There will be provision of an alternative or waiving the car parking requirement if there is lack of parking. With the use of time policy then there will be provision of quality parking areas and provide additional kerbside. There will be provision of the traffic improvement measures to facilitate access to parking areas. These aims and objectives will give the users of this means of transport guarantee that they will have the best services that are required in that they will have to make use of this means because they will be provided with extra services for their vehicle that is the parking. The policies that one will use will give them a direction in that one will know the best policy to be applied this will mean that they will not be in a confusion on the best policy to apply.( Carol, 1992,pp, 36) Another aim will be to have protection to the environment in that the facility that is used by ship owner should ensure that it encourages safety and effective waste management and has operational waste reception. There will be procedures in place for managing, removal and storage of hazardous materials like fuel and lubricants, the cargo residue, floating materials, materials like wiring insulation and other electrical items and contamination of all wastes that result from paint removal process. If this is done then it will mean that the environment will be controlled from pollution. This pollution can be very costly if it is not considered as required as it can lead to high cost to ship owner leading to lack of income to make changes to their facilities. The factors give bearing to the policy that can be chosen because the ship owner will know which the best policy is to choose. This will be because not all policies will apply therefore in having the information and factors then one will be able to know the best policy to choose so that they can have many people getting their products through the same way. This will be important because without this information on factors that are to be considered then one will not know what is required by a certain company and will just take the products without having a specific policy to choose. Therefore with ship owner who want the machines to operate on daily basis then they should know that they are supposed to have time policy so that they can make many trips in a day. (Benjamin, 1993, pp, 56) This is important as it will warn a company of that ship a lot of income that will be used to make further changes in production of, more ship for transport. This will be made depending on the policy that one has chosen therefore in case they make change to a cargo and they are in use of voyage policy and did not have this indication of change before then it will mean that the ship owner will bear the cost without been insured therefore they have to indicate clearly on the type of policy that one can use so that they have information that will lead to high production. Therefore if there is a misdeclaration then what a ship owner will have to do is to take the policy that will best fit in that document that is given this will mean that the ship owner will have to ensure that they take the right policy so that they reduce the costs that can be incurred. In this I mean that the importance of a policy will be too have assurance to the public that there products will reach them the right time and at the same time it will declare the means of transport that will be used. This will mean that receiver of the product will be ready to get the products as they will be sure that they will get the product. Therefore a policy will give direction to ship owner so that they get the products to the customers at the right time and avoid delays. Some of the products are perishables and this will mean that if they are delayed then they will go at a loss therefore a ship owner will have to take time policy so that they ensure that the products reach the customer at the right time. Generally a ship owner will require certain clause so that they know what to do therefore in this clause there should be the indication of what is excluded so that they give the information to the companies that have to use this means of transport. This clause is important because it acts as the foundation for the operation of a ship company in that it will know what is excluded in other words it will know those who are not covered by insurance and from this information then they will further know what changes to be done so that they are in the right operations. The marine insurance is very important for a ship owner because they will not be able to safeguard the products for their people this will mean that without insurance very few people will be willing to use this means of transport and at the same time is will not be safe for the users. This will mean that this means of Transport Company will face challenges and high competition will result leading to collapse of the company at large. A ship owner should therefore follow the steps that are required so that they can operate from one place to another and still have a policy that will cover them as they move from one place to another. This will save time and money that could have been spend in dealing with unnecessary accidents that are caused by ship owners who are not careful. This will lead to high performance for a ship company and will be able to expand its operations top other related companies in other countries. (Benjamin, 1993, pp, 67) Conclusion Voyage and time policy are important for a ship owner this is because they assist them in taking the products to their destination without delay and losses. Therefore if a company has to transport its products then it should know the policy that is taken by a ship owner and this will lead to high performance of the companies that transport their products through sea. Reference: Benjamin, Y, 1993, policies required by ship owner. Marine text books. Carol, H, 1992, marine reinsurance. Marine text books. Mike, P, 1998, reinsurance principles and basic practice. UK publications. Reed, W, 1996, marine reinsurance. Reserves in Lloyd are in London market. Read More