Top 10 Special clauses in Marine Insurance policy | Explanation

Top 10 special clauses in Marine Insurance Policy

The following terms are used in Marine Insurance Policy.

1. Inchmaree clause
2. F.C & S clause
3. Suing and Labouring clause
4. F.P.A and F.A.A clause
5. Excepted peril clause
6. Arbitration clause
7. Salvage clause
8. Memorandum or N.B. clause
9. Collision or running down clause
10. Continuation clause

Lets look at them in detail

Explanation for the special clauses

1. Inchmaree clause: This particular clause was introduced when a ship got damaged due to a technical snag in the engine and the insurance company refused to compensate for non covering of such risks. Now, by introducing this clause, risks covered which are caused by negligence of ship crew or due to defective machinery such as hull or boiler are being covered.

2. F. C & S Clause: Free from capture or seizure of the vessel is the expansion for F. C R S clause. If this clause is inserted in the marine insurance policy, then the insurance company will not be liable for the capture or seizure of the vessel. For example, sometimes, the ship or vessel may be detained at the port for paying dues to the port authorities or any loans outstanding to banking company.

3. Suing and laboring clause: If the insured undertakes such acts by which the loss incurred is reduced, the expenses incurred towards such act can be recovered from the insurer if this clause is inserted. However, this clause will be applicable only when the damage is caused by such risks which are covered by the marine insurance company.

4. F.P.A and F.A.A clause: F.P.A refers to exemption of the insurance company from paying any compensation other than the loss incurred by a general average sacrifice. F.P A is Free from particular average clause. Similarly, if the insurance company wants to get away from both particular and general average, it can mention so in the policy. F.A.A clause means free from all average clauses. Thus, the insurance company is exempted from both particular and general average loss.

5. Excepted peril clause: Certain risks may be excluded from the coverage of insurance such as risks from pirates or pilferage at the port. So, the insertion of this clause exempts certain risks by the insurance company.

6. Arbitration clause: This clause provides an opportunity for the insurance company and the insured to settle their disputes through arbitration procedure whereby a common person will settle the dispute according to the provisions of the Arbitration Act of the concerned country.

7. Salvage clause: This provides an opportunity for the insurance company to salvage materials from the damaged goods or ship after’ indemnifying the insured.

8. Memorandum or N.B clause (Nota bene): This is a new clause introduced by insurance company to inform the insurer of bearing loss due to transportation of certain cargo like sugar, hemp etc., which tend to lose weight due to moisture during transport. The insurance company will agree for compensation of loss only when the percentage of loss suffered is greater than the anticipated loss.

9. Collision or running down clause: This clause will cover if ships collide with each other. Normally, the ship responsible for collision is supposed to compensate the other ship for the damage suffered. But the insertion of this clause will enable the insurance company to compensate three fourths the loss suffered by the insured.

10. Continuation clause: This clause is mainly to override the time policy. Under the time policy, marine insurance will cover a sea voyage undertaken by the ship up to a particular period after the expiry of which the insurer is not supposed to cover any risk. But the continuation clause will enable the insurance company to cover the ship and cargo till the voyage is completed. But an additional premium is paid for the insertion of this clause.