Commercial Ocean Marine Insurance Expert Witness
Dating to the late 1600s, ocean marine is among the earliest formalized insurance contracts. Sea merchants gathered in groups at Edward Lloyd’s coffeehouse in London to arrange special contracts with each other – contracts that came to serve as the framework for modern ocean marine insurance policies. The merchants agreed that, in the event that one merchant lost a ship, every merchant in the group would assume a percentage of the loss – thus lessening each merchant’s individual risk for potential loss. The merchants formalized these early insurance policies by writing their names under the percentage of loss that each merchant had assumed. Such is the origin of the term underwriter, as well as Certain Underwriters at Lloyds London.
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While Ocean Marine insurance can be used to cover a wide variety of exposures, coverage is generally divided in to three main areas:
- Hull insurance protects the value of the vessel, its equipment and related machinery. Hull coverage can be used to insure offshore oil rigs and boats operating in inland waters.
- Cargo insurance covers waterborne shipments, and commonly covers shipments continuing onto dry land.
- Liability is known as Protection and Indemnity (P&I). It covers bodily injury and property damage to not only the third-party public, but may include injuries to the master and crew.
The long history of Ocean Marine insurance and the perils faced by ocean going vessels carrying property by sea has resulted in policy language strange to the untrained ear. Wording unique to Ocean Marine has specific meaning in determining coverage, including strange terms such as:
- Barratry - Willful sinking, casting away, or damaging a ship at sea or its cargo.
- F. O. B. (Free on Board) - Term of sale which determines at which destination seller’s responsibility ends and buyer’s responsibility begins.
- General Average - Maritime law principle in which ship and cargo owners share in a loss incurred voluntarily.
- Inchmaree Clause - Covers losses resulting from explosion, negligence of Master or crew; latent defect in the vessel, or equipment breakdown.
- Latent Defect - A defect not readily apparent.
- Sue and Labor Clause - Requires a policyholder, in the event of a loss, to protect property from further loss; insurer pays preservation costs plus attempted salvage costs.
Though manuscript policy forms can be found, Ocean Marine carriers generally utilize policy and endorsement forms with language promulgated by either the American Institute of Marine Underwriters or London based International Underwriting Association (Institute Clauses).
Mr. Daniel’s Ocean Marine experience includes coverage placement, policy management, and claims experience with: