(a) List and describe four insurance policies available to a ship owner.
(b) Distinguish between indemnity and non-indemnity insurance and give two examples of each
Explanation
(a)(i) Hull Insurance voyage or Time Policy: This is a policy taken by the ship-owner to cover the hull of the ship which includes the machinery, against total damage or total loss by storm, collision, fire, stranding or other perils of the sea. Such a policy may be for a specific time or journey.
(ii) Cargo Insurance: This is a policy taken to cover loss at sea or damage to cargo while in transit. Cargo insurance is very vital in import and export trade as it gives confidence to importers and exporters to engage in foreign trade. It covers the cargo against all perils at sea, including piracy. It is usually a valued policy based on the value stated on the invoice.
(iii) Freight Insurance: This is a policy taken to cover against non-payment of charge for carrying cargo. Freight is normally paid in advance to the ship-owner. Where freight is paid on delivery of the cargo, it will be necessary for a cover against loss of freight should the cargo get lost before reaching the destination.
(iv) Ship-owners' liabilities: The liability of ship-owners include the cargo, passengers, crew, fixed installations at wharves and beaches liable to be damaged by the action of the ship. Claims arising from any or all of these are covered by the ship-owner's insurance liability.
(b) Indemnity Insurance; is the one in which the insured is restored to the position he was before the occurrence of the incident by compensation while non-indemnity insurance indicates that the insured cannot be restored to his former position for in case of death or accident, the insured cannot be brought back to life, or a lost limb replaced. Non-indemnity Insurance is not aimed at equating the loss with the compensation Examples of Non-Indemnity Insurance are: Life assurance/death, Sickness, Personal Accident Insurance. Indemnity Insurance include: Fire, Marine, Burglary, etc.