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The incessant ballet of ships on the oceans is the invisible engine of our globalised economy. But this formidable logistical machine is exposed to the vagaries of the sea and a multitude of risks. Marine insurance has become an indispensable tool, enabling those involved in maritime trade to operate with a minimum of security. However, the way it works, its specific rules and its technical language may seem opaque at first glance.
The aim of this article is to give you a clear and accessible overview of the main principles of marine insurance. Without going into all the technical details reserved for experts, we'll take a look at what makes this insurance so special, what it covers in practice, how the contract governing it works and what happens when a claim arises.
Why is marine insurance different?
L'marine insurance is not simply a variation on land-based insurance. It has several characteristics that give it its own identity. Firstly, it is evolving in a context of international by its very nature, reflecting world trade flows and influenced by different legal traditions, particularly Anglo-Saxon. Secondly, it is an area of professionals Shipowners, shippers, carriers, insurers and brokers are all on a supposedly equal technical footing, which explains why the formalities are sometimes less protective than for insurance intended for private individuals. Finally, its legal framework is specific, combining dedicated provisions of the French Insurance Code (Title VII), commercial law, the law of the transport lawIt is based on the principles of international conventions and well-established professional practices. It meets specific risksoften referred to as "fortunes of the sea", which go far beyond routine incidents.
What does marine insurance cover?
Its scope of action mainly covers activities related to commercial shipping and activities that are a direct extension of this, such as shipbuilding or the operation of offshore platforms. But beware: it generally excludes pleasure boatingwhich is covered by a different insurance scheme.
Marine insurance covers a wide range of risks: navigational accidents (collision, running aground), natural events (storms), but also perils such as fire, theft, piracy or even war risks (the latter often requiring specific extended cover).
Traditionally, there are three main types of marine insurance:
- L'body insurance This covers damage to the ship itself (hull, engines, equipment).
- L'cargo insurance This covers damage to or loss of the cargo being transported.
- L'public liability insurance This covers damage that the insured party (shipowner, carrier, etc.) may cause to third parties (other ships, port facilities, the environment, etc.).
The keys to understanding the contract
The contract is the essential document that lays down the rules of the game between the insurer and the insured. In marine insurance, it is characterised by a greater freedom of contract than in terrestrial insurance, even if public policy rules (mandatory) exist to provide a framework for practices. The understanding the maritime contract is therefore crucial for the parties to avoid future disputes. Moreover, this contractual freedom also allows the terms of the contract to be adapted to the specific features of each maritime operation, which can be beneficial for both parties. However, it is imperative that policyholders are well informed of the specific annotations relating to their cover to ensure adequate protection.
In practice "Standard policiesThese are the standardised documents offered by insurers, and often form the basis of contracts. It is essential to understand the clauses, as they define the precise scope of cover and exclusions.
One of the policyholder's fundamental obligations when taking out the contract is to accurately declare all risks of which he is aware. An intentional omission or misrepresentation may render the contract null and void. Even an unintentional error may reduce future compensation. During the term of the contract, the main obligations are to pay the premium andprovide "reasonable care the conservation of insured property.
What happens if something goes wrong?
Le loss is the damaging event that triggers (or does not trigger) cover. When it occurs, the insured must notify the insurer as soon as possibleprovide all useful information and take all possible measures to limit the damage (rescue).
Damage assessment often involves specialised expertsThe damage surveyors, whose report is essential in determining the amount of compensation.
The aim of compensation is to make good the loss suffered, without enriching the policyholder. It can take various forms. In addition to the traditional reimbursement of repairs or lost value (special damage), two mechanisms are emblematic of marine insurance:
- L'general damage When the master voluntarily decides to sacrifice part of the ship or cargo (for example, throwing goods overboard) to save the rest of the expedition from imminent peril, the cost of this sacrifice is shared between all the interests saved. The insurance covers the contribution due by the insured goods.
- Le neglect In the event of a very serious claim (presumed total loss, irreparable vessel, disappearance, etc.), the insured may "relinquish" ownership of the damaged property to the insurer and receive the full sum insured in exchange.
Because of its technical nature and specific features, marine insurance requires special attention. Understanding how it works is the first step to securing your sea-related activities effectively.
A tailored advice to your situation could save you time and resources. Contact us to find out more.
Frequently asked questions
What is the main difference between marine insurance and traditional insurance?
Marine insurance is distinguished by its international nature, its professional audience, its specific legal framework (Title VII of the Insurance Code) and the particular nature of the risks covered ("fortunes of the sea"). Marine insurance is characterised by its international nature, its professional audience, its specific legal framework (Title VII of the Insurance Code) and the particular nature of the risks covered ("fortunes of the sea"). Managing maritime claims requires specialised expertise, given the economic and logistical stakes involved. Insurance companies are often faced with complex situations, ranging from the loss of cargo to material damage caused by unforeseen events at sea. This also involves close coordination with insurers, brokers and customers to ensure prompt and fair compensation. An understanding of maritime risks is therefore essential for effective navigation in this field. It also enables potential problems to be anticipated and appropriate preventive measures to be put in place. Ultimately, a proactive approach to claims management can significantly reduce financial losses and ensure the sustainability of maritime business activities.
Is my pleasure boat covered by marine insurance?
No, in principle, insurance for pleasure boating (non-commercial use) falls under the rules for land-based insurance, and not under the specific rules for marine insurance.
What does the expression "fortune of the sea" mean?
This is a traditional expression used to describe unforeseen perils and accidents that are specifically linked to navigation at sea, such as shipwreck, grounding, collision or storm.
Do I have to inform my insurer of all the details of my maritime activity?
Yes, when you take out the policy, you are obliged to declare exactly all the known circumstances that enable the insurer to assess the risk; a false declaration can have serious consequences.
What is a "standard policy" in marine insurance?
This is a standardised model contract, drawn up by professional insurance organisations, which serves as the basis for most marine insurance contracts taken out.
What is the difference between special and general average?
Specific damage is accidental damage affecting only a specific item (ship or goods), whereas general damage is the result of a voluntary sacrifice decided by the captain in the interests of the entire expedition to save it from peril.
What is "abandonment" in marine insurance?
In certain cases of very serious loss (total loss, irreparability, etc.), the insured party may transfer ownership of the damaged property to the insurer in return for payment of the full sum insured.
What are P&I Clubs?
These are shipowners' mutuals, mainly of Anglo-Saxon origin, which cover certain civil liability risks not covered by traditional hull or cargo marine insurance.
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