MARINE INSURANCE
Marine insurance policy cover insurance of ships and cargo or goods in ship except proximate cause arising from wear and tear , theft , pilferage and losses from rates and vermin.
Marine insurance divided into two section.
Marine hull – which deal only with the insurance of ships
Marine cargo – this cover goods in ship or import
TYPES OF MARINE INSURANCE
1) Hull policy
This policy cover the vessel it self or deal with the insurance of ships only.
2) Cargo policy
This policy cover the carried by vessels (ship) only.
3) Freight policy
This policy cover the services offered in the vessel by the ship owner.
4) Voyage policy
Is the policy for specified voyage only e.g. from London to dar es salaam.
LIFE INSURANCE
Is the where a person insured his life it is referred as ” assurance” because an event ensured against must occur either by maturity of the policy or death of the policy holder
Life assurance is an insurance against risk on a person life
TYPES OF LIFE ASSURANCE
A. Whole life assurance
− This require payment of premium through the life of the assured or for a specific period but the sum ensured is payable only after the death of the life insured.
− Whole life assurance policy is paid only at the death of the assured.
B. Endorsement assurance
Is for fixed term of years from the date of the policy and payable at that time or if death occur before the lapse of the time.
C. Education plan
This plan is meant to benefit your children by agreeing that the insurance company will undertake payment of fixed sums at intervals over a given period. This benefit is available provide the assured child is still a live when the company’s liability to pay for his education become due.
DIFFERENCE BETWEEN INSUANCE AND ASSURANCE
INSURANCE
Is a system of pooling risks together by contributing small sum of money to a common poolin which compasation takes place to those who suffer losses.
ASSURANCE
Is applied to these contract which guarantee the payment of a certain sum on the happening of a specified events which is sound to be happen sooner or later e.g. death.
INSURABILITY OF RISKS
Risks that can be insured should fulfill the following conditions
i. Loss must be foreseeable and subject to estimation of its value.
ii. The risk coverage must be spread over a large number of policy holders in order to average out the risk.
iii. The premium payable by insured must be within his ability to pay.
iv. The policy holders should be dispersed over a large geographical area .
HOW TO CALCULATE AMOUNT TO BE COMPANSATED ?
Example
Andrew Mwakibibi has insured his stock in trade at shs 60,000/= but the correct value of his stock is shs 80,000/=. A fire destroys a party of his stock value at shs 50,000/=
Calculate the amount to be compensated
Solution
Sum insured shs ………………………………. 60,000/=
Correct value in stock shs ……………….80,000/=
Value of stock lost shs ………………50,000/=
Amount compensated
= sum insured X value of stock loss
Correct value in store
= 60,000 x 50,000
80,000
Amount to be compensated = shs 37,500/=
Example 2
Samwel has the property valued 15,000,000/= while the insured amount to 10,000,000/= and 6,000,000/= lost after an event of fire occur how much will be compensated ?
6,000,000 x 10,000,000
15,000,000
= 4,000,000/= will be compensated
TERMS IN INSURANCE
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Re insurance
This is when an insurance company find the large number of people insuring against a specified risk. This may lead claims of risk from insured will be high therefore it decide to insure it self with another large insurance company against the risks that it is covering.
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Co insurance
This is where the property is insured by an insurer to various insurance company to spread the risks against valuable properties.
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Annuities
In this case the insurer promise to pay the insured periodically a fixed sum of money until he dies.
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Over insurance
Occurs when the insured states a value for the property being insured that is higher than the true value of the property. This means that the insured pays higher premium when risk occurs, compensation is based on the true value of the property that has been insured.
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Under insurance
Occurs where the insured states a value that is less than the true value of the property being insured. This results in lower premium for the insured. If the insured risk occurs, compensation will only be for the sum insured that is less than the value of the property.
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Insurable risk
These are common risks whose values are easy accepted by insurers.
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Non insurable risk / non calculatable risk
These are uncommon risks whose value are difficult to determine. Many insurers tend to avoid assuming.
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Sum insured
This is the amount of money stated at the time of taking out an insurance policy as the compensation to be paid to the insured where the insured risk occurs.
ix. Insurance poolThis is the sum of all the premiums paid by the clients of an insurance company at any time. It is from this pool that compensation is made.
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JETTISON
This is where the captain is forced to lighten the ship by throwing overbroad some of the cargo in order to safeguarding the ship, its crew and cargo.
Thus under jettison the cost involved is a general average sacrifice and as such it must be proportionally shared by the owner of the cargo and the ship, or by their underwriters.
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BARRATRY
This involves any wrong act which is fully committed by the master or crew of the ship which have a harmful effect (prejudices) on the owner in question.
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BOTTOMRY BONDS
Bottomry is a contract by which the owner or the captain of a ship borrows money and pledges the ship as a security for a loan. If the ship is lost all voyage, the bond is void.
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RESPONDENTIAL BONDS
It differs from a bottomry bond in that is only the cargo that is pledged as security interest rates of these bonds is very high because of greater risk involved.
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LOSS
This is the value of the property destroyed by the occurrence of the insured risk. It represents the loss suffered by the insured.