Liability Insurance in Marine Insurance

The Marine Insurance policy may include liability hazards such as collision or running down.

Insurance can also be taken for the expenses involved in non-compliance of rules and regulations without any intention to deceive.

It should be clear here that the marine perils insurance covers not only the “ocean but also the inland perils”. The perils to be included in the policy are clearly defined and the insurer will be liable only for the insured perils.

Third Party Liability covers third party liability which insurer undertakes to indemnify the insured in respect of

(i) legal liability for accidental loss or damage to property of other persons, and
(ii) legal liability for fatal non-fatal injury to the third party directly consequent upon or solely due to erection operations.

There will be liability for damage where negligence is shown or where liability has been assumed under contract.

To succeed in an action in tort, the claimant plaintiff has the onus of showing one that the loss resulted from the defendant’s negligence.

Negligence has been defined as doing something which ought either to be done in a different way or not at all or omitting to do something which ought to be done.

The liability must arise as the result of tort committed by the insured vessel.

The clause does not extend to indemnify the assured against payments which arose out of contractual relationship and not in consequence of actionable fault committed by the insured vessel.

Form of Liability

There are two types of liabilities : Cross Liabilities and Single Liabilities

Cross Liability

Where both vessels are to blame, then unless the liability of one or both vessels become limited by law, the indemnity shall be calculated on the principle of cross liability.

When the respective owners had been compelled to pay each other such propositions of each other’s damages as has been properly allowed.

Exclusions : There is no liability under the clause in respect of:

(i) removal or disposal of obstructions wrecks, cargoes
(ii) any real or personal property
(iii) cargo or other property
(iv) loss of life , personal injury or illness
(v) pollution or contamination of any real or personal property

Single Liability

Single liability is only a liability on the parts of the vessel under the lesser damages to that with the greater.

When both vessels are to blame in a collisions, the court decides the legal liability by

  • ¬†assessing the degree of fault
  • apportioning the liability according to the degree of fault, and
  • deciding settlement on a single liability basis which is determined by the difference between the two liabilities

Limitation of Liability

The right to limit liability is based on the international convention relating to the limitation of liability of owners of Sea-going ship, 1957.

Under the 3/4 the collision liability of clause the principle of “Cross Liability” will not apply where wither ship or both ships limit liability.

In such instances, the indemnity under clause no.8 will be “Single Liability” principle upon which the case is adjusted at law between the respected owners.