Marine insurance covers the loss or damage

of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

Maritime insurance was the earliest welldeveloped kind of insurance, with origins in the Greek and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and other Italian cities in the fourteenth century and spread to northern Europe. The modern origins of marine insurance law in English law were in the law merchant, with the establishment in England in 1601 of a specialized chamber of assurance separate from the other Courts.

Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance and reinsurance. Nowadays, Marine insurance is often grouped with Aviation and Transit (i.e. cargo) risks, and in this form is known by the acronym 'MAT'. Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines); Hull; Marine Casualty; and Marine Liability.

The Marine Insurance Act includes, as a schedule, a standard policy (known as the 'SG form'), which parties were at liberty to use if they wished. Because each term in the policy had been tested through at least two centuries of judicial precedent, the policy was extremely thorough. In 1991, the London market produced a new standard policy wording known as the MAR 91 form and using the Institute Clauses.

The MAR form is simply a general statement of insurance; the Institute Clauses are used to set out the detail of the insurance cover. Because marine insurance is typically underwritten on a subscription basis, the MAR form begins: We, the Underwriters,

agree to bind ourselves each for his own part and not one for another [...]. In legal terms,
liability under the policy is several and not joint; i.e. The underwriters are all liable together, but only for their share or proportion of the risk. If one underwriter should default, the remainder are not liable to pick his share of the claim.

Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is generally known as 'Hull and Machinery' (H&M). A more restricted form of cover is 'Total Loss Only' (TLO), generally used as a reinsurance, which only covers the total loss of the vessel and not any partial loss. Cover may be on either a 'voyage' or 'time' basis. The 'voyage' basis covers transit between the ports set out in the policy; the 'time' basis covers a period of time, typically one year, and is more common.

A marine policy typically covered only threequarter of the insured's liabilities towards third parties. The typical liabilities arise in respect of collision with another ship, known as 'running down' (collision with a fixed object is an 'allision'), and wreck removal (a wreck may serve to block a harbor,for example).

An actual total loss refers to the situation where the position is clear and a constructive total loss refers to the situation where a loss is inferred. In practice, a constructive total loss might also be used to describe a loss where the cost of repair is not economic; i.e. a 'write-off'. Traditionally, in law, marine insurance was seen as an insurance of 'the adventure', with insurers having a stake and an interest in the vessel and/ or the cargo rather than, simply, an interest in the financial consequences of the subjectmatter's survival.

The term 'Average' has two meanings: (1) In marine insurance, in the case of a partial loss, or emergency repairs to the vessel, average may be declared. This covers situations, where, for example, a ship in a storm might have to jettison certain cargo to protect the ship and the remaining cargo. 'General Average' requires all parties concerned in the venture (Hull/Cargo/Freight/Bunkers) to contribute to compensate the losses caused to those whose cargo has been lost or damaged. 'Particular Average' is levied on a group of cargo owners and not all of the cargo owners. (2) In the situation where an insured has under-insured, i.e. insured an item for less than it is worth, average will apply to reduce the amount payable. There are different ways of calculating average, but generally the same proportion of underinsurance will be applied to any payout due.

An excess is the amount payable by the insured and is usually expressed as the first amount falling due, up to a ceiling, in the event of a loss. The equivalent term to 'excess' in marine insurance is 'deductible' or 'retention'. A co-insurance, which is typically applied in nonproportional treaty reinsurance, is an excess expressed as a proportion of a claim, e.g. 5%, and applied to the entirety of a claim. A franchise is a deductible below which nothing is payable and beyond which the entire amount of the sum insured is payable. It is typically used in reinsurance arbitrage arrangements.

Various types of specialist policy exist, including: New building risks: This covers the risk of damage to the hull whilst it is under construction. Yacht Insurance: Insurance of pleasure craft is generally known as 'yacht insurance' and includes liability coverage. Smaller vessels, such as yachts and fishing vessels, are typically underwritten on a 'binding authority' or 'lineslip' basis. War risks: Usual Hull insurance does not cover the risks of a vessel sailing into a war zone. A typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf War. War risks cover protects, at an additional premium, against the danger of loss in a war zone. The war risks areas are established by the London-based Joint War Committee, which has recently moved to include the Malacca Straits as a war risks area due to piracy [1]. If an attack is classified as a "riot" then it would be covered by war risk insurers. Increased Value (IV): Increased Value cover protects the ship-owner against any difference between the insured value of the vessel and the market value of the vessel. Overdue insurance: This is a form of insurance now largely obsolete due to advances in communications. It was an early form of reinsurance and was bought by an insurer when a ship was late at arriving at her destination port and there was a risk that she might have been lost (but, equally, might simply have been delayed). The overdue insurance of the Titanic was famously underwritten on the doorstep of Lloyd's. Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with coverage on an A, B, or C basis, A having the widest cover and C the most restricted. Valuable cargo is known as specie

The most important sections of this Act include: s.4: a policy without insurable interest is void .s.17: imposes a duty on the insured of uberrimae fides (as opposed to caveat emptor); ie. that questions must be answered honestly and the risk not misrepresented. s.18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance and rating of the risk. Failure to do so is known as non-disclosure or concealment (there are minor differences in the two terms) and renders the insurance voidable by the insurer. s.33(3): If [a warranty] be not [exactly] complied with, then, subject to

any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date. s.34(2): where a warranty has been broken, it is no defence to the
insured that the breach has been remedied, and the warranty complied with, prior to the loss.s.34(3): a breach of warranty may be waived (ie. ignored) by the insurer.

s.39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the purpose of it (voyage policy only). s.39(5): no warranty that a vessel shall be seaworthy during the policy period (time policy). However if the assured knowingly allows an unseaworthy vessel to set sail the insurer is not liable for losses caused by unseasworthiness. s.50: a policy may be assigned. Typically, a shipowner might assign the benefit of a policy to the ship-mortgagor .ss.60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual total loss describes the physical destruction of a vessel or cargo.) s.79: deals with subrogation; ie. the rights of the insurer to stand in the shoes of an indemnified insured and recover salvage for his own benefit.Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording.