PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-2 | Fundamental Principles

PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-2 | Fundamental Principles

Insurance exams offered by the Insurance Institute of India (III), consist of various papers either in Life or Non Life or Combined. Here we are providing ONE LINER IC 67, Maine Insurance Chapter 2 “Fundamental Principles” for para 13.2 and III exam . These questions will be very helpful for upcoming promotional exam in 2020.

IC 67, Maine Insurance is a very important topic in insurance promotional exam. This IC 67, Maine Insurance paper comes in all GIPSA exams which makes it very important.

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♦Chapter 2 “Fundamental Principles”

  1. Uberrimae fidei means utmost good faith.
  2. Sections 19 to 23 of M.I.A (1963) deal with the principle of utmost good faith.
  3. If a representation relates to” material fact”, then the representation must be true.
  4. Representations fall into three categories: Material fact, Fact and Expectation or belief.
  5. Suppose insurance is arranged on the 10th of a month, the date of dispatch of goods is represented as the 12th of that month and goods are dispatched on the 14th of the same month. This is not ‘material fact’. However, if the actual date of dispatch is past , say, 1st of that month, it is ‘material fact’.
  6. Sections 35 to 43 of M.I.A, 1963 deal with Warranties.
  7. A Warranty is a promise by the assured to the underwriter that something shall or shall not be done or that a certain state of affairs does or does not exist.
  8. There are two types of warranties: Express Warranties and Implied Warranties.
  9. An Express Warranty is one which is appearing in the policy or which is incorporated therein by reference.
  10. Two important express Warranties in insurance of ships are the Disbursement Warranty and Trading Warranties.
  11. Implied warranties are not written on the policies but are deemed to be there.
  12. Two implied warranties are Seaworthiness of the vessel at the commencement of the voyage and Legality of the adventure.
  13. A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.
  14. In a cargo policy, there is no implied warranty that the goods insured are seaworthy.
  15. In cargo policies, warranty of seaworthiness is relaxed insofar as it is applicable only when the exporter is aware about the unseaworthiness at the time of shipment.
  16. Marine insurance contracts cannot be used to protect illegal voyages or adventures and such policies are void.
  17. Breach of warranty makes the contract voidable at the option of the insurer.
  18. Sections 6 to 17 of Marine Insurance Act, 1963 deal with the subject of insurable interest.
  19. when goods are purchased on FOB terms, the purchaser has no insurable interest in such goods during their transit from the seller’s factory to the vessel.
  1. A “defeasible interest” is one which can be brought to an end during the currency of the insurance by the occurrence of some event other than maritime perils.
  2. A seller has an insurable interest in the goods up to the time the title passes to the buyer. This passing of title may occur after commencement of the voyage, and when this occurs, the seller’s interest ceases. This is called defeasible interest.
  3. A “contingent interest” is an interest that attaches during the currency of a voyage on the happening of a contingency.
  4. Sections 52 and 53 of the Marine Insurance Act, 1963 deal with assignment of policy.
  5. A marine policy is freely assignable unless it contains terms expressly prohibiting assignment.
  1. Duty Insurance Policy not assignable.
  2. Increased Value Insurance Policy not assignable.
  3. Sellers’ Interest Contingency Insurance not assignable. ( can be assigned only to bankers)
  4. Special Storage Risk Insurance not assignable.
  5. A valued policy specifies the agreed value of the subject-matter insured.
  6. Where the value has not been agreed, the policy is an unvalued policy (e.g. Customs Duty policy for cargo) and, in the event of loss, the insurable value is computed in accordance with Section 18 of MIA, 1963.
  7. Subrogation is the right by which an insurer, having settled a claim for loss or damage, is entitled to place himself in the position of the insured to the extent of acquiring all rights and remedies in respect of the loss which the insured may have received.
  8. Section 79 of MIA, 1963, which deals with the right of subrogation.
  1. Subrogation is the corollary of the principle of indemnity and the right of subrogation, therefore, applies to policies which are contracts of indemnity.
  2. Subrogation rights are of immense value to the insurers in reducing their net claims.
  3. Abandonment is transfer of rights, titles, interests and property, including liabilities in favour of the insurers.
  4. Abandonment is compulsory in case of Constructive Total Loss claims on cargo and ship.
  5. Section 34(1) of the MIA, 1963, defines “Double Insurance” (Principle of contribution).
  6. The M.I.A provides that where a ship is missing and after a lapse of reasonable time no news of her has been received, an actual total loss may be presumed.
  7. When a vessel disappears at sea and it is necessary to decide whether the loss was due to a marine or war peril, and no direct evidence is available, then the balance of probabilities has to be.
  8. Insurers are liable if an insured peril is the proximate cause of the loss
  9. If an insured peril is only a remote cause of the loss, the proximate cause being an insured or excepted peril, the insurers are not liable.\Every contract of insurance is a contract “uberrimae fidei”.

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