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This is a fairly young chapter in the history of marine insurance. Traditionally the term Marine Liability (apart from the collision liability covered under "Hull") is used to embrace straightforward professional, legal liabilities of such people as carriers, forwarders, wharfingers, stevedores, ship repairers etc. In other words, cover is provided for a rather well-defined and limited group of professionals all engaged in an occupation closely related to maritime trade, against legal liability claims arising out of the operation of their business.
Another group included under Marine Liability is the owners of small vessels such as yachts, speedboats, harbour craft and the like. The reason for this is that small vessels cannot join one of the so-called P and I clubs (Protection and Indemnity) which traditionally provide the liability cover not obtainable in the Marine market.
What Can Go Wrong?
Hopefully nothing! But in the event of a loss, one of two types apply: total loss or partial loss.
Total loss can be one of the following:
- Actual total loss: when the assured's goods are no longer 'a thing of the kind insured' or are irretrievably removed from the assurer's use.
- Constructive total loss: when the goods are abandoned because their actual loss seems unavoidable, or the cost of recovering the goods would exceed the insured value.
- Total loss of part: when a part of the consignment is destroyed but the rest arrives safely at its destination.
Partial loss can be:
- General average loss
General average loss refers to deliberate partial loss incurred as a result of the voluntary actions of the ship-owner, or the ship's master, to save the voyage if it is in danger. The voluntary actions might be, for example:
- Jettisoning cargo in order to lighten the ship which is stranded on a reef.
- Pumping water into the ship's hold to quench a fire.
- Having the ship towed to port for repairs as a result of engine failure.
- Particular average loss
Particular average loss refers to a fortuitous partial loss, which affects a particular cargo owner only, such as the owner of a crate which was dropped during the loading of the vessel. A claim for a particular average loss is based on the proportion of the invoiced value which has been lost. This proportion is applied to the insured value in order to arrive at the amount of compensation payable. These contributions are levied pro rata on all the parties who have an interest in the safety of the voyage. These include the owner and/or the charterer of the vessel, the master and crew, and each owner of cargo on board.
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