Introduction to Marine Insurance
Marine insurance is concerned with,
- The insurance of goods in transit from one place to another by se, inland waterway, by rail and by road.
- The insurance of ships, covering loss or damage to the hull and machinery of a vessel and insurance of ship owners’ various interests and liabilities.
- The insurance of freight at the risk of a carrier.
The principle statute governing mine insurance is the Marine Insurance Act Chapter 390 of the Laws of Kenya. This Act is a replica of the UK Marine Insurance Act 1906 which codified marine insurance law, incorporating all precedents for three centuries.
Section 3 of the Act defines marine insurance contract as a contract whereby the insurer undertakes to to indemnify the assure, in manner and to the extent thereby agreed against the losses incident to marine adventure. It further that the contract of marine insurance may, by its express terms or by use of trade, be extended so as to protect the assured against losses on inland waters on any land risk which may be identical to any sea voyage. The section therefore, makes it legally possible to extend a marine insurance contract to cover risks on land which are incidental to marine adventure also cover a vessel while it is in the course of construction.
Marine insurance provides protection against all perils of the sea and had its origin in the bottomry bonds which were issued by the Mediterranean merchants as early as the 4th century B.C.
A bottomry bond was an advance of money on a ship during the period of voyage. The loan was repayable within the agreed rate of interest on the arrival of the ship safety at destination. If, however the ship was lost during the voyage, the obligations to repay the loan was extinguished.
The interest payable constituted a form of premium for the risk of total loss. similar loans were granted on security of the cargo and were called respondentia bonds. In view of the advance communication today, the use of bottomry and respondentia bonds is of academic interests only. Another forerunner of marine insurance is the practice of general average. here, loses voluntarily incurred in order to save the common venture were shared by the contribution of all the interests saved by general average act. These interests were ship, the cargo and freight.