Marine Insurance: complex and much disputed (P1)

In the field of cargo insurance, the insurance of goods transported by sea is complex and caused many disputes when settling compensation.

Understanding the principles of compensation for marine insurance will help curb these disputes.

Importing and exporting activities of Vietnam has a strong growth in recent years, so the revenue of cargo insurance goes well. Insured clients are companies of exporting goods, logistics companies, shipping, the investor / contractor projects / works...

Risks for cargo insurance is not high, mainly risks are happening during transportation. The rate of loss at the average market is low, 2012 was 27%, was 21.6% in 2013 (excluding losses are resolved), with losses caused mainly by deficiencies and deterioration in shipping process.

However, in the field of cargo insurance, the insurance of goods transported by sea is rather complicated and causes many disputes when settling compensation. Understanding the principles of compensation for marine insurance will help curb these disputes.

Principles of compensation in marine insurance

In the maritime sector, since the value of goods often vary from one country to another, and the market value of the ship also fluctuates with relatively large amplitudes, most insurance policies of marine insurance are valued, or an insurance policy under the agreement value.

Accordingly, the amount of insurance is that the insurer and the insured agree upon as the real value of the insured assets. Once the value has been agreed, it cannot change, unless another agreement is reached, or the insurer can prove that is a fraud.

The term "compensation method" is often used in marine insurance practice in the sense that "the scope of the insurance liability for damage", that is the maximum amount that the insurer must pay for a claim under the insurance policy. Articles 67 to 71, 75 and 77 of the Marine Insurance Act 1906 UK (MIA 1906 - a law many countries acknowledge that international legal standards for the maritime insurance industry in the world) make provisions on compensation methods in marine insurance.

Compensation for total loss

For the part of the total loss insured, in case of a lost package all by crashing into the sea during loading, unloading and transportation of goods (covered under the Ministry ICC clauses (A) and (B) 01.01.82), method of compensation is the amount of parts that covers by total loss insured total loss.

Meanwhile, MIA 1906 provisions, "the value of the lost parts insurance ", rather than the insured amount, for the assumption that the insured amount of the whole insured object equals to the insurance value of the whole insured objects.