Chapter 3- Ocean Marine Insurance

Warranty of Seaworthiness

-In a voyage policy- there is an implied warranty that at commencement of the voyage the ship shall be seaworthy Seaworthy- when she is reasonably fit in all respects to encounter ordinary perils of the seas of the adventure insured

Held Covered Clause

Allows owners to recover for losses that arise from breach of warranty by owners agents if such events are without actual privily or knowledge of Assured and immediately homecoming aware they age immediate notice to underwriters

Insurable Interest

Every person has an insurable interest who is interested in marine adventure Interested= any legal or equitable relation to adventure or any insurable property

Wilburn Boat Co. v. Fireman's Fund Ins. Co.

Facts- -P bought a small house bout to use for commercial carriage of passengers from Texas and oklahoma; D insured them against loss from fire and other perils While moored, boat was destroyed by fire and D refused to pay Warranty on coverage- boat could not be sold and must be used solely for private pleasure purposes Rule- -Regulation of maritime insurance contracts is left to the states

Cusano v. Continental Cas. Co.

Facts- -P discusses insurance quotations for two vessels they owned; P never mentioned that one ship had sunk the year before during hind winds or that he replaced the engines because of damage -P struck a floating object and during process of adjusting the claim, P protested when Insurer applied depreciation provision b/c he argued engines were new having been replaced in 1999; as a result claim was denied and voided and P brought action Rule- MArine Insurance requires good faith; thus insured is obliged to volunteer all circumstances know to him that materially affect risk Whether the insurance company would provide the same coverage on the same terms Prior sinking may be material, but engine replacement is material P has not shown that replacement of engignes were part of regular maintenance that insurer would constructively know

Pacific Fisheries Corp. v. HIH Cas. & Gen. Ins.

Facts- -P operates fishing boat that embarked on fishing excursion; P purchased insurance from D under P&I and hull and machinery -Each policy contained warranty that vessel was confined to pacific ocean and was not to travel beyond that P travelled to Guam where there was a lawsuit and D was informed Rule- warranty was material to insurance policy and P deliberatly breached warranty Causation between breach of warranty and any loss claim is not required

United States v. The Marine Venture

Facts- Rechhi, Miami corp, contracted with BCP then with CMI, a virginia corp to two parts to delaware -P and I policy included Pay First provision This company hereby undertakes to pay the amount insured shall have become legally liable to pay and shall have paid on account of loss of, damage to or expense in connection with any fixed or moveable object -No Action Clause No action shall lie against the company for any loss sustained unless action is brought within one year after entry of any final judgement Rule- Most Significant Relationship test -Requires court to consider Place of contracting Place of negotiation Place of performance Location of subject matter domicile , residence, place of incorporation VA is applicable- State statute does not exclude ocean marine insurance and it applies to CMI's P&I policy and they are not shielded from liability as a result of bankruptcy

Good Faith

Marine Insurance Act - if not good faith, K can be void

All-risk vs. Named Perils

Named= enumerated perils All Risk- excluding risks or war, strickes, riots etc

Marine Insurance Act - Maritime Perils

Perils consequent on, or incidental to, navigation of the sea

Maryland Casualty Co v. Cushing

Towboat collided with railroad bridge and capsized and sank- owner and charterer commenced action to limit liability Rule-Limitation proceeding to be concluded first and owners liability settled under it ; Petitioners could then discharge this liability to extend their policies covered it

Cargo Insurance

insurance on goods in transit on land is a type of inland marine casualty insurance= it covers transportation loss and damage on land and water

Protection and Indemnity

policy provides coverage for a vessel owner's liabilities arising out of the operation of scheduled vessels such as damage to third party property, third party individual's bodily injury or death and injury or death to vessel passengers or crew. -nonprofit, mutual assurance

Hull and Machinery

provides coverage for physical loss or damage to scheduled vessels hull and machinery. As voyage or time policy