StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Function of Marine Insurance - Coursework Example

Cite this document
Summary
The author of the "Function of Marine Insurance" paper states that marine insurance adds the necessary element of financial security so that the risk of an accident occurring in the process of transportation does not inhibit the conduct of international trade…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.9% of users find it useful
Function of Marine Insurance
Read Text Preview

Extract of sample "Function of Marine Insurance"

Marine insurance Table of contents …………………………………………………………………………………..3 Introduction to marine insurance…………………………………………….3-4 Function of marine insurance ………………………………………………….4-5 The insured ……………………………………………………………………………..5 Risk covered…………………………………………………………………………… 5 Indemnity ……………………………………………………………………………….6 Compensation ………………………………………………………………………..6-7 Drawbacks……………………………………………………………………………….7 Conclusion……………………………………………………………………………….7-8 References………………………………………………………………………………9 Marine insurance Abstract Insurance is any method of risk management which is usually used to verge against the danger of a reliant, indefinite loss. It is the equitable transmission of the risk which may arise due to loss, from one unit to another which is paid. Insurer is the company which offers the services of compensation when a risk arises. Almost everything which exists whether it is an animal, human being, a building, a machine, or even money is usually exposed to some risks of different kinds. An animal can die of a disease or be injured and some items like money can be stolen and hence require some insurance to cover them. Introduction Marine insurance was developed 3,000 years ago by the Phoenicians who were the great traders around the Mediterranean Sea. This type of insurance covers the loss of vessels at sea when goods are transported regardless of the method of transportation. In cases where the owner of the cargo and the transporter are separate companies, the marine cargo insurance typically reimburse the owner of the cargo for different losses which may be continued by fire, shipwreck among other things though it usually excludes losses that can be recovered from the transporters insurance. Other elements which include time element which can extend the indemnity to overlook the loss of profit as well as other business expenses are also covered by the insurance. To indemnify is to restructure something into its original position which in this case is to put the marine business into the original state after some damage caused by fire. In indemnity policy, a claim can in no way be compensated until the insured has paid out some pocket to some third party. The compensation from the insurers takes the form of indemnity where the business is restructured after breaking down due to some calamities; most people adapt this system because it is guarantee in that it reorganizes businesses to their original positions. Pirates usually attack the ships and cause delays delivery thus causing a lot of losses in the business, they sometimes destroy the ship and hence the indemnity method is better as it can repair the ship in such circumstances. Restructuring the business into the previous position is the best form of compensation as the business owner cannot diversify the money to other activity apart from repairing the intended material. Function of the marine insurance Marine insurance is a very old practice in the conduct of sea trade. The purpose of Marine insurance has been to enable the ship-owners as well as the buyers and sellers of goods to carry on with their respective businesses while having a relaxed peace of mind in the course of trade. This is because the insurance reduces the burden that would otherwise be carried by the owners, which could arise due to lost or damage of goods as a result of many risks at the seas. Another secondary duty of the insurance therefore is to release the money which would otherwise be kept standby in reserves as a security measure in case of an emergency. Such money can be put into a more practical use such as purchasing other new ships, or in research and development and hence this is another function of the insurance in marine business. The other main function of the marine insurance is to plaster the loss of property incurred through piracy activities. These activities have a direct negative economic blow through frauds, delayed trips, and stolen cargos. Piracy have also triggered major environmental catastrophe for example in the Gulf coast oil spill which almost threatened the life of the aquatic animals. One major role of the marine insurance is to advice the ship owners and organizations on ways and means of reducing the likelihood of risks becoming a reality, thus helping to reduce the effects of risks in water. For example, the oil spill control in gulf coast can help to save the lives of fish which in turn saves the lives of human beings trough food security. It also helps the marine business men by encouraging the development and use of appropriate and profitable means in business of risk control. It also play a role of encouraging the business people to venture into marine business by giving them a peace of mind by ensuring the security of their transit goods in case of shipwreck in the sea. The insured The insurance cover the members who in this case are the ship owners and the operators or even the departure charters. The major concern of the marine insurers is the cover for some known measurable risks, which are the full and machinery insurance for ship proprietors, and on the other hand the cargo insurance for freight owners. Other covers include the third person accountabilities which include smash up to cargo, the ships liability after some collisions as well as the environmental effluence. Risks There are several risks covered under marine insurance. To begin with, the insured are covered against sea risks such as piracy, accidents where goods are damaged and lost just to mention a few. The war risk insurance is also considered in marine insurance cover which include; costs of repairing physical loss or damage to the vessel after an attack, the actual and constructive reimbursement, the coalition liability and expenses associated with claims. The risks covered by the insurance company are usually paid for by the insured. Indemnity Indemnity is a principle of insurance where the insured is only paid the extent of damage incurred. This does not entail replacing the entire freight or vessel but paying in cash the value for the time when the policy was taken. The ship owners as well as the business men in the marine business usually enjoy the security offered by the insurers in that they are compensated whenever there is a loss which is caused by what is covered by the insurer. In many cases, especially in the marine business, the insurers take the form of indemnity which makes sure that the insured is placed in the same position where he or she was before the occurrence of the damage for example when there is a fire outbreak. The party insured should not be better or worse off than when it was before the damage occurred. In this case, when the ship is damaged by the pirates let’s say by bombing, the insurer will have the mandate repair the ship to its original position but will not by a new one which might be expensive than the previous one. This means that any insurance company must not aim at making of profit in the process. Indemnity might take various forms which might include; the payment of money which equals the sum of the item lost, or the replacement of the damaged item, or the repair of the damaged item. Compensation Compensation refers to the case where the insurance company takes liability of the loss incurred on behalf of the insured. The compensation which in this case takes the indemnity is given depending on the mode of agreement and what is covered. These includes the hull and machinery, the protection and indemnity, the war risk among other risks which include the loss of charter hire can be compensated by the insurers when there is damage. The ship owners can also be compensated when there is a kidnapping for ransom and hence compensation can be done to any risk provided it is in the insurance cover. Compensation is also given to the companies involved as well as the entire environment in case of pollution for example if there is oil spill in the ocean then it is the responsibility of the insurer. Indemnity therefore cannot apply to the personal misfortune insurance or to life cover as a lost leg cannot be replaced neither can it replace a death child. In this case, the insurance seeks to reduce the suffering induced to individuals by accidents and therefore indemnity only applies to goods such as those in marine e business. Indemnity is very important to marine business as it is subjected to a lot of dangers ranging from fire, collision, delay, piracy, and pollution. Drawbacks One of the drawbacks in this system of insurance is that it does not provide insurance to life as it only deals with some things which can be replaced or reconstructed to their original position. It also covers extensive areas and hence this can lead to loss to the insurers or is inefficient for example in hull war risk, if the vessel is attacked with some goods it can be expensive and this may make the insurer to lose a lot. In the process of repairing the damage, the time taken during the repair period is not considered. The policy of indemnity is limited to covering only total losses instead of covering all partial losses including those caused by accidents in the sea such as wind, storms and waves or even other risks like fire and hence this is another disadvantage as it forces the business owner to look for other funds incase such accidents occurs. Conclusion In conclusion, the marine insurance adds the necessary element of financial security so that the risk of an accident occurring in the process of transportation does not inhibit the conduct of international trade. Compensation by the insurers takes the form of indemnity because every successful business owner would like to see his/her business restored to the original position even after severe damages to ensure progression and peace of mind. The indemnity form of insurance is the best method to cover large businesses though it does not give any profit to the affected business but only restores it to their previous states. References: Carey, F, H. (2007). Marine insurance: a series of lectures. Cambridge, Cambridge university press Francis D R, and McMeel, G. and Watterson, S. (2004). Marine insurance: law and practice. Haley T, L and Bacharach, G, J. (2008). The suretys indemnity agreement: law and practice 2nd ed. American Bar Association Hodges, S. (1996). Law of marine insurance, Routledge, New York NY John, A. H. (1958) "The London Assurance Company and the Marine Insurance Market of the Eighteenth Century," Economica New Series Leon P, A. (1988), The law and practice of marine insurance and average, Steven’s publishers, University of Virginia Soyer, B. (2006). Warranties in marine insurance 2nd ed. Cavendish publishing limited glass house Wharton Street, London. Wilson, D, J. and Donaldson. (1997). Lowndes and Rudolf: General Average and the York-Antwerp Rules. British Shipping Law Library: Sweet & Maxwell. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(The main function of marine insurance is to compansate the 'insured' Coursework - 4, n.d.)
The main function of marine insurance is to compansate the 'insured' Coursework - 4. https://studentshare.org/business/1768915-the-main-function-of-marine-insurance-is-to-compansate-the-insured-for-loss-or-damage-caused-by-the-risk-insured-against-in-many-case-the-compansation-by-the-insurers-takes-the-form-of-indemnity-what-do-you-understand
(The Main Function of Marine Insurance Is to Compansate the 'Insured' Coursework - 4)
The Main Function of Marine Insurance Is to Compansate the 'Insured' Coursework - 4. https://studentshare.org/business/1768915-the-main-function-of-marine-insurance-is-to-compansate-the-insured-for-loss-or-damage-caused-by-the-risk-insured-against-in-many-case-the-compansation-by-the-insurers-takes-the-form-of-indemnity-what-do-you-understand.
“The Main Function of Marine Insurance Is to Compansate the 'Insured' Coursework - 4”. https://studentshare.org/business/1768915-the-main-function-of-marine-insurance-is-to-compansate-the-insured-for-loss-or-damage-caused-by-the-risk-insured-against-in-many-case-the-compansation-by-the-insurers-takes-the-form-of-indemnity-what-do-you-understand.
  • Cited: 0 times

CHECK THESE SAMPLES OF Function of Marine Insurance

Historical Trends and State of Health Care

This is by creating provisions that regulate the financing of individuals' plans such as medical insurance and put the industry on a leash.... This is in the form of having the playing field altered to the point that it is not level for private insurers and other insurance providers.... Those worrying about the economy again echo the earlier mentioned issue of sending insurance companies out of business.... It also goes ahead to bar insurance companies from denying insurance cover to individuals with preexisting conditions that often seek covers to pay for their medical bills (Institute of Religion and Public Life, 2011)....
4 Pages (1000 words) Essay

Company Business Opportunity Analysis

Business Opportunity Analysis for the Lowbush Blueberry Moisture Sensor Professor Table of Contents Executive Summary 3 Market Research & Analysis 3 Market trends and needs 3 Market Segmentation 4 Product 4 Product Description 4 Timeline for development 6 Competition Analysis 6 Identification of competition 6 Financials 6 a....
4 Pages (1000 words) Assignment

Rationale and Analysis for Agency Selected

USCIS also performs the following function; i.... Introduction: The agency under review is the US Citizenship and Immigration services department, abbreviated as USCIS.... This agency is under the department of homeland security, and it carries out administrative duties that were once performed by the department of Immigration and Naturalization service (INS)....
3 Pages (750 words) Essay

Right Whales in today's environment

hellip; Right whales are classified as marine mammals.... Right whales, similar to the North Atlantic right whale, are one of the rarest marine mammals (Knowlton & Kraus 193).... By the latter part of the 1990s marine biologists already knew that right whales will eventually become extinct due to harmful human activities....
5 Pages (1250 words) Research Paper

The Main Function of Marine Insurance

Insurance Information Institute (2010) acknowledges that the main Function of Marine Insurance has been to compensate the insured in case of losses suffered as a consequence of the insured risk.... In the… n world, marine insurance plays a crucial role in protecting the interest of the insured against losses or damage to the hull, cargo or third party liability.... Occurrence of risks insured against would call for the insurer to indemnify the insured as per the contract of Despite the drawbacks in marine insurance, it still remains an important form of insurance and this paper evaluates its function and application in the modern world and critically evaluates the forms of indemnity applicable....
6 Pages (1500 words) Essay

Student action plans

This would then lead to extreme erosion and siltation of water beds, hence endangering marine life.... Trees provide a water-catchment area that ensures the survival of soil microorganisms as well as marine organisms.... As a result, ecological integrity has been lost in some areas....
2 Pages (500 words) Essay

Fourwinds Marina case study

In the paper “Four Winds Marina Case Study” the author analyzes the case of Jack Keltner, who succeeded as general manager of the Four Winds Marina, has numerous objectives to realize in order to improve the marina's performance.... Keltner wants to make a big impression in order to impress his boss....
4 Pages (1000 words) Assignment

Biological Production of Arachidonic Acid: Sources, Past and Future

It is widely known that Arachidonic acid is produced from gram-negative marine microorganisms but it can also be produced from a positive type of bacterium strain SRS30216T.... In the past, it was thought that polyunsaturated fatty acids were supposedly associated with the adaptation of the bacterium to marine environments....
4 Pages (1000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us