SETTLEMENT OF CLAIMS IN MARINE INSURANCE

-In case, the cargoes (goods) are lost due to marine perils insured, the shipper (cargo-owner) will be indemnified by the insurance company. While settling the claims of the shipper, the following procedure is generally adopted- (I) Notice of claim- As soon as the cargoes (goods) are damaged or destroyed due to marine perils, the shipper (insured) has to bring the matter to the knowledge of the insurer by issuing a notice of claim. The notice of claim should contain all the relevant particulars. In case of constructive total loss, the insured is also required to issue a notice of abandonment to the insurer. (II) Submission of Relevant Documents- Immediately after issuing the notice of claim, the insured will have to produce certain documents to the insurer to substantiate the claim. 

The document to be produced varies according to the type of loss i.e., total loss and partial loss. In case of total loss, the following documents are required- (A) Insurance policy- It provides an evidence of the terms and conditions of insurance. (B) Bill of lading- It is the correspondence of the insurance contract with the voyage and vessel.  © Invoice or Bill- It provides information about the quantity and value of goods shipped. (D) Copy of protest i.e., statement made by the captain of the vessel on the loss before a Notary public (if relevant). (E) Bill of Entry. (F) Non-delivery of short landing certificate (if relevant). (G) Landed but missing certificate. (if relevant) (H) Letter of subrogation and correspondence exchanged with carriers, port trust, etc. regarding the claims filed against them. In case of partial loss, the documents to be produced will vary according to the nature of loss i.e., particular average loss and general average loss. Documents for Particular Average Claim: A. Insurance police or Indemnity Bond, if the policy has been lost or misplaced. B. Bill of lading. C. Invoice. D. Survey Report from a licensed surveyor. E. Bill of Entry issued by the customs authorities of the destination or departing port. F. Letter of subrogation. G. Account sales. H. Repair bills. I. Lost cover board certificate. J. Protest note. 

HISTORY OF MOTOR INSURANCE- The origin of motor insurance dates back to 1894 when the first motor car was introduced in U.K. This year 1895 saw  the first motor insurance policy to cover liability to public risks. By 1899 the cover of accidental damage to the car was incorporated in the policy. In 1903, the first insurance co. “Car and General Insurance Corporation” was set up to transact the business. Road traffic Acts 1930 and 1934 were passed to make third party insurance compulsory subsequently “Road traffic Act” came into being to consolidate compulsory insurance provisions. In India in 1939, Motor vehicles Act was passed to make third party insurance compulsory. This act made provisions for the use, maintenance and operation of motor vehicle. It provided for licensing of drivers of motor vehicle, Regulation of vehicles, Control of traffic etc. This Act was amended several times to keep it up to date. Fundamental Principles Of Motor Insurance- (I) Utmost good faith- This imposes a legal obligation to disclose material facts to the insurer. The proposal form must have to be filled up and the declaration clause in the proposal form makes the duty a contractual duty of utmost good faith. The Motor Vehicle Act 1988 has modified the doctrine. Section 149 of the Act speaks of the “Duty of insurers to satisfy judgements and awards against person insured in respect of third party risks”. (II) Insurable Interest- It implies “the legal right to insure”. The vehicle is the property which is exposed to loss or damage as a result of which the owner insured is to suffer financially.

The insured also has legal liability towards third parties. He/She suffers from financial loss if involved in liability through third party by negligent use of the vehicle therefore,. In case of Hire purchase agreement, the finance company has an insurable interest in the vehicle till the loan is repaid in full. (III) Indemnity- This principle ensures that the insured does not make any profit out of the loss. The insured is placed after a loss as far as possible in the same financial position as he was immediately prior to the loss. When there is total loss of the vehicle, indemnity is the market value of the vehicle (its depreciated value) at the time of loss or the sum insured whichever is less. In Partial loss, the cost of repairs is paid, but in replacement of old parts by new, depreciation is charged on the cost of new parts. In the event of Third party liability, the amount are settled subject to the limit of liability, if any. (IV) Subrogation- It refers to transfer of rights from the insured to the insurer i.e., rights to cover loss from the party responsible. The policy condition provides for subrogation before the settlement of the claim. (V) Contribution- In case of Double insurance when the vehicle is insured under two policies as per policy condition, the loss is shared between the insurers on pro-rata basis. (VI) Proximate cause- The loss/damage must be proximately caused by an insured peril. Types of Motor Vehicles- For purposes of insurance, motor vehicles are classified into three broad categories- 1. Private cars (not used for carrying passengers for hire or reward). 2. Motor cycles/scooter (Two wheelers) and three wheelers not exceeding 350CC Engine capacity. 3. Commercial vehicles such as good carrying vehicles, passenger vehicles, tractors and others. Kind of Policies- According to the coverage of risks, each vehicle policy can be divided into the following three categories- 1. Act only policy; 2. Third party policy 3. Comprehensive policy. 1. Act only policy- This policy is created to meet the requirements of Motor Vehicles Act 1939, which provides for compulsory insurance in regard to liabilities arising out of use of motor vehicle in a  public place. This policy is confined to bodily injury or death of the third parties. According to Section 95(2) of the Motor vehicles act, a insurance policy shall cover any liability incurred in respect of any one accident up to the following limits- A. Good Vehicle- RS. 50,000 in all including the liabilities if arising under the Workmen Compensation Act 1923, in respect of death of or bodily injury to employees (other than the driver) not exceeding six in number being carries in the vehicle.

This means that liabilities if any towards driver and employees (above six) being carried in the vehicle under workmen compensation act in addition to RS. 50,000. B. Passenger vehicles- Vehicles which are used for carrying passenger for: (a) for hire or reward; (b) by reasons of or in pursuance of contract of employment. (I) in respect of persons other than passengers carried for hire or reward RS. 50,000 in all. (II) In respect of passengers- RS. 50,000 in all where the vehicle is registered to carry not more than 30 passengers; RS. 75,000 in all where the vehicle is registered to carry not less than 30 but not more than 60 passengers RS. 1,00,000 in all where the vehicles are registered to carry more than 60 passengers; and subject to the limit aforesaid RS. 10,000 for each individual passenger where  the vehicle is a motor car (used to carry not more the 6 passengers excluding the driver) and RS. 5,000 for each individual passenger in any other case. C. Other vehicles- The amount of liability incurred except as provided otherwise. 

The Act only policy, besides meeting the requirements of motor vehicles act, provides for indemnification of the claimants’ costs and expenses which the insured shall become legally liable to pay as also costs and expenses incurred with the written consent of the insurer. The policy may extend to indemnify any driver who is driving the motor vehicles on the insured’s order or with his permission provided he is not entitled to indemnify under any other policy. 2. Third party policy- This covers the insurance of legal liability to others for accidental death or personal injuries and damage to the property of third parties. Thus, this policy indemnifies the insured against his legal liability in respect of damage to property of third parties over and above RS. 2,000. The limit of liability is as follows: (a) Private car- unlimited (b) Commercial vehicle (I) Goods or passenger carrying vehicles- RS. 20,000 (II) Other miscellaneous or special type of vehicle- RS. 50,000 (III) Motor cycle- unlimited. This policy may be extended to include: A. Fire B. Theft risks C. Legal liability to persons employed in connection with the operation and/or maintenance and/or unloading of motor vehicles. 3. Comprehensive Policy- This policy covers all risks to be insured arising out of legal liability i.e., to third parties under Motor vehicles act, Total accident and common law. It also covers loss or damage to vehicles. It provides  cover for private car, motor cycle/scooter and commercial vehicles. This policy generally covers the risks such as (I)loss or damage to  the car. The car, inclusive of lamps, tyres, Accessories etc. is insured against loss or damage by accidental external means, fire, external explosion, lightning, frost, burglary, self ignition house breaking or theft, damage by malicious act or while in transit by road, rail, inland water way, lift or elevator etc., (ii) Removal charges up to a certain limit regarding removal of the car to and from the premises of the nearest repairs; (iii) All costs and expenses incurred with the prior consent of the insurance company; (iv) Risks covered under third party policy; (v) Medical expenses incurred in connection with injuries sustained by the insured or any other occupant of the car up to a certain limit; (vi) Repair charges of the car up to a certain limit for which the company liable. At the payment of Extra premiums, this policy covers the risks like (I)  Death or injury to family members who are above 16 years and below 65 years; (ii) Riots, strikes, thefts, etc., (iii) Loss of Rugs.