Marine Insurance Act of 1906 - Essay Example

Marine Insurance The report principally looks at the Marine Insurance Act (MIA) 1906 and its policies such as, floating policy and marine open cover policy. The discussion entails the various aspects of section 29 of MIA and various advantageous factors of marine open cover policy. Moreover, the discussion within this paper also comprises required particulars during the contracts of the policy in terms of export and import transaction of a manufacturing organization of electrical appliances. In addition, the paper has also defined various impacts of MIA from the perspective of trading through the seas. The varied factors of floating policy along with marine open cover policy have been discussed with its conditions and aspects along with their roles in marine insurance. The discussion has provided an understanding that the marine insurance policy can be an extremely valuable component for the manufacturing organization in order to mitigate the risks of damage and loss during transaction of materials through the seas. Table of Contents 1 Abstract 2 Introduction 4 Marine Insurance 4 Floating Policy 4 The Marine Open Cover 5 Advantages of Marine Open Cover 6 Particular Requirements to Observe in Operation of Marine Contract 8 Conclusion 9 References 10 Introduction Marine Insurance Marine insurance is considered as a contract of insurance policies that cover up the losses or the damages for a person or a business entity that occurred during the transportation of the cargos or ships through the seas. Moreover, the marine insurance is a contract wherewith the insurer takes on to underwrite the assured with regard to various types of marine losses during acquired or transferred cargos or goods. The Marine Insurance Act 1906 (MIA), conveys certain consistency and uniformity that assures to be accomplished with the appropriate underwriting policies of the losses during the transportation of cargos or ships (Sitigorn n.d.). Floating Policy The “Floating Policy” is one of the major components that had been formulated under the MIA section 21. The floating policy possesses effective assurance of the goods and insured risks during the deliverance of the transported goods or cargos. The floating policy has been initiated comparatively at a large amount by the regular goods of the suppliers. The policy covers several shipments that are stated subsequently with other details. The floating policy is highly favorable for the exporters to avoid problems of issuing out another policy during every shipment (Insurance 2Day 2012). The floating policy within the MIA 1906 Act 29 depicts the insurance facilities in general terms. The policy makes use of the ship(s) name along with other particulars classified through succeeding statement in order to transport the cargos through the seas. The declaration may be formulated with approval of supportive guidelines principle of floating policies or other traditional client approaches. However, the floating policy will otherwise provide a declaration which must need to be made during the order of shipment of the insurer (National Institute of Open Schooling n.d.). The statement of deliverable goods should be consisted of all consignments according to the terms of the policy as well as the value of the transferable properties or other commodities must need to be honestly acknowledged by the insurer during the transportation of the cargos. In the context of omission of the declaration value after the notice of arrival or loss of ship or goods, the policy will be determined as unvalued according to the subject-matter of affirmed statement (Lexmercatoria 1906). The Marine Open Cover The marine open cover signifies the policy to insure a person in support of shipment of interest insured on transportation which has been conducted after an exact time according to the insurance policy. The conditions of the policy which are provided by the shipments are conveyed by or insurance of those shipments are under the insured control as purchasing or selling agent (CFS Risk Services Ltd. 2006). However, the marine open cover does not underwrite any consignment which has been insured in another place before acquiring an insurable interest on the insured goods. The insured needs to declare the consignments on time of its open cover and the declaration will be obtained by the insurer within the indemnity measures that have been stated in the open cover policy. Moreover, in the case of unintentional mistakes, an inappropriate declaration or incapability to declare a consignment, it must need to be corrected before setting up a marine open cover policy (Associated Marine Insurers Agents Pty. Ltd., 2009). Owing to the flexibility and its similarities with floating policy, the marine open cover has been considered as one of the feasible and effective strategies within the insurance market. The open cover policy can be considered more effective than floating policy, because, the floating policy has a major constraint that creates an uncovered position of insured cargos after the insured amount is exhausted. However, the open cover policy involves minimizing inconvenience cost along with incorporating the practice of open cover policy that ensures to cover the entire cargos that are to be supplied within the agreement of marine insurance policies (Soyer 2005). Advantages of Marine Open Cover The main objective of the marine open cover policy is to offer marine insurance in advance with additional benefits of an unsurpassed cover of the insured’s cargo(s). The marine open cover can ascertain various numbers of advantages for the insurers and their insured goods or commodities (Sethi & Bhatia 2007). The policy provides certain covers at prearranged rates with a least and feasible number of conditions. The terms and conditions within the open cover policy are specified within the policy. The orientation of any establishment within the policy is developed by the International Underwriting Association of London (Associated Marine Insurers Agents Pty. Ltd., 2009). The marine open cover policy has been tailored according to the affordability along with the individual need of the clients. The policy is one of the most popular guidelines for the exporter as well as importers in terms of acquiring or purchasing goods (Hinkelman & Putzi-Ortiz 2009). The insurance protection is a vital part, both for the insurer and for the insured person in terms of transporting the commodities from vendors to the ultimate destination. The open cover insurance policy provides an extensive approach or facility with regard to augmenting the security of the insured cargos. Marine open cover policy comprises various protective measures according to the varied intuitive estimates including variable risks from natural calamities and pirates. The losses that are occurred before endowing shipment are also covered according to the appropriate details of the required documents. The policy assures the facility of covering to a cargo or ship owner in keeping with the various risks that might occur due to a voyage in a jeopardized situation (Trade Finance Association of Bankers n.d.). Moreover, an additional benefit of marine open cover policy is its amount of investment. The insurance amount of marine open cover policy is considerably lower than other policies that are organized within the marine insurance. The policy comprises a large number of quality assured services within the same shipment agreement that has occurred among the insurer and the insured individual. In addition, the policy also possesses the benefits of offering insurance by the exporters as per the cost of their goods or cargos conferring sales (David & Stewart 2010). Furthermore, the process of premium payment is also designed according to the needs of the clients by facilitating in monthly, quarterly or in annual adjustable rates (The Insurance Council of New Zealand 2006). Particular Requirements to Observe in Operation of Marine Contract A marine policy can be considered as a floating policy that considers the name of the ship or other required particulars that are needed to be provided after completing the process of declaration. The floating policies are often used by the scheduled shippers that also assure the shippers to avoid new policy for their every shipment activity (American Institute of Marine Underwriters n.d.). In this context it can be said that, the shipment policies will be an effective process of transporting domestic electrical appliances for a manufacturing company. The floating policy consists of various benefits along with essential terms of policy contract that would be effective for the organization in terms of dealing with overseas countries. Subsequently, the cargos or the products of the shipper will be covered by the insurance or contract that requires the shippers to declare the cargos or goods necessitated by the agreement. Therefore, the organization must need to adhere to the provided regulations within the policy or the agreement by the insurer (David & Stewart 2010). The basic guidelines of constructive interpretation of a contract should be relevant to the insurance policies. With this concern, it can be highlighted that the intention of the insured significantly promotes the interpretation of the parties during the process of conducting a contract. However, the application of this guideline might not be straightforward all the time. Moreover, the courts likely to interpret coverage sections along with barely interpret prohibiting of constructing of such contracts. The manufacturing organization needs to be more conscious with regard to conducting a marine insurance within the process of purchasing machines and/or raw materials for other nations along with supplying products to another country through shipping (Giaschi & Morgolis 1994). Conclusion The first codification of MIA was conducted in the year 1906 which was the origin of other subsequent policies that have occurred in the marine insurance policy. MIA is a codification of active jurisprudence and practices made within the transportation of export and import through shipment over the seas (Mercatoria 1993). More significantly, the nature and the scope of marine insurance are established by the orientation of MIA along with the characterization of “Marine Adventure” and “Maritime Perils” (Brown 2012). The brokers such as Lloyd’s play a crucial part within the conductance of any marine insurance. The brokers are the negotiators who play a supportive part for recovery of the insurance policy in terms of any losses or arrival of goods during transportation. They canvass the assured to identify the requirements of the insurance policy. Then, the broker will investigate the market to identify the underwriters likely to be assured with the insurance policies and will also converse about terms and conditions of the policy with those underwriters. During any loss or arrival of goods of insured items, the brokers may also be involved in negotiation in support of the assured (Giaschi n.d.). Even though the MIA legalizes certain definite facets of a marine policy contract, it usually safeguards independence of the agreement. Therefore, the manufacturing company of domestic electrical appliances is independent to determine the extension and the nature of their responsibilities along with their requirements for most of their parts within the contract of insurance policies of MIA. Moreover, the open cover policy of the Act provides beneficial obligations in case of loss or arrival of their cargos during the process of transporting their exported or imported goods. References American Institute of Marine Underwriters, No Date. Guide to U.S. Cargo Insurance. American Institute of Marine Underwriters. [Online] Available at: http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CG8QFjAD&url=http%3A%2F%2Fwww.aimu.org%2FAIMU%2520CARGO%2520GUIDE%2520-%25202005.DOC&ei=GMz7T-LpHoa3rAeG5_TeBg&usg=AFQjCNF74atpnI_FkFFefBlJZv0N947LJA&sig2=-ex66F-YdtelpqxFulbOCQ [Accessed July 10, 2012]. Associated Marine Insurers Agents Pty. Ltd., 2009. Marine Open Cover Policy Wording. Zurich Financial Services Group. [Online] Available at: http://www.zurich.com.au/zportal/cs/BlobServer?blobtable=GSDocument&blobcol=urldoclink&blobkey=id&blobwhere=1242903908905&blobheader=application/pdf [Accessed July 09, 2012]. Brown, E. 2012, Marine Policy. Elsevier B.V., Vol. 36, Iss. 6, pp. 1193-1314. CFS Risk Services Ltd. 2006, marine Cargo Insurance. Open Policy. [Online] Available at: http://www.cfsriskservices.co.nz/assets/pdfs/marine%20cargo%20policy%20wording.pdf [Accessed July 10, 2012]. David, P. A. & Stewart, R. D. 2010, International Logistics The Management of International Trade Operations, Cengage Learning, Stamford, Connecticut. Giaschi, C. J. No Date. Marine Insurance. UBC Law 332. [Online] Available at: http://www.admiraltylaw.com/UBC%20Law332/marine_insurance-outline.pdf [Accessed July 10, 2012]. Giaschi, C. J. & Morgolis, 1994. Marine Insurance Act. News, Announcements, Recent Cases. [Online] Available at: http://www.admiraltylaw.com/statutes/Marine%20Insurance%20Act.htm [Accessed July 10, 2012]. Hinkelman, E. G. & Putzi-Ortiz, S. 2009, Glossary of International Trade, 5th Ed., World Trade Press, United States. Insurance 2Day. 2012. The Need For Marine Cargo Insurance. Information. [Online] Available at: http://www.insurance2day.co.uk/marine-insurance/information/the-need-for-marine-cargo-insurance [Accessed July 09, 2012]. Lexmercatoria, 1906. English Marine Insurance Act 1906 – An Act to codify the Law relating to Marine Insurance [21st December 1906]. England. [Online] Available at: http://www.jus.uio.no/lm/england.marine.insurance.act.1906/portrait.pdf [Accessed July 09, 2012]. Mercatoria, L., 1993. English Marine Insurance Act 1906 - An Act to codify the Law relating to Marine Insurance. England. [Online] Available at: http://www.jus.uio.no/lm/england.marine.insurance.act.1906/doc.html [Accessed July 10, 2012]. National Institute of Open Schooling. No Date. Insurance. Business Studies. [Online] Available at: http://www.nios.ac.in/Secbuscour/18.pdf [Accessed July 09, 2012]. Sethi, J. & Bhatia, N., 2007. Banking and Insurance. India, PHI Learning Pvt. Ltd. India. Sitigorn, No Date. The Marine Insurance Act 1906. Documents. [Online] Available at: http://www.sittigorn.net/documents/law/MIA1906.pdf [Accessed July 09, 2012]. Soyer, B. 2005, Warranties in Marine Insurance, New York, Routledge. The Insurance Council of New Zealand, 2006. Marine Cargo Open Policy Handbook. Terms of Sale. [Online] Available at: http://www.icnz.org.nz/downloads/marine-cargo-handbook.pdf [Accessed July 09, 2012]. Trade Finance Association of Bankers, No Date. Marine Insurance. Files. [Online] Available at: http://www.tfab.org/files/Marine%20Insurance.pdf [Accessed July 09, 2012]. Read More