The contract of marine insurance is generally effected through the agency of insurance brokers employed by the insured. The broker prepares a brief memorandum of the risks to be covered and takes it to a number of individual insurers, called underwriters, each of whom initial the note for the amount he is prepared to underwrite. The document, known as "The slip, " contain information such as the name of the ship, the date of voyage, the description of the risk, the sum insured and the rate of premium. "The Slip" is in practice a complete and final contract. However, a contract of marine insurance must be embodied in a marine policy in accordance with the Act.
Kinds of marine policies
The document containing the terms and conditions of the contract is called the Marine Policy. It must contain the names of the assured and the insurer or insurers. The subject-matter insured and the risk covered the voyage or period of time or both and the sums insured. It must be duly signed by the insurer and stamped under the Stamp Act, 1899. The Marine Insurance Act deals with the following types of policies:
When the contract is to insure the subject matter at and from one place to another, the policy is called a "Voyage policy". In this case the risk attaches only when the ship starts on the voyage.
Where the subject -matter is insured for a definite period of time, it is called a "Time Policy. The ship may pursue any course it likes; the policy would cover all the risks from perils of the sea for the sated period of time. A time policy cannot be for a period exceeding one year, but it may contain a continuation clause.
It is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time.
It is a policy, which specifies the agreed value of the subject-matter insured. If there is no fraud or mis-representation, the value in a valued policy is conclusive as between the insurer and the insured, whether the loss is partial or total.
Open or Un-valued Policy
In this policy the value of the subject-matter insured is not specified. Subject to the limit of the sum assured, it leaves the value of the loss to be subsequently ascertained.
The practice of taking out floating policies has come in vogue because of the difficulty of knowing by which ship or ships the goods are to be shipped. Such a policy therefore only mentions the amount for which the insurance is taken out and leaves the name of the ship(s) and other particulars to be defined by subsequent declarations.