Warranties in Marine Insurance

A warranty is that by which the assured undertakes that some particular thing shall or shall not be done, or that some conditions shall be fulfilled or whereby he affirms or negatives the existence of a particular state of facts.

Warranties are the statement according to which insured person promises to do or not to do a particular thing or to fulfil or not to fulfil a certain condition.

It is not merely a condition but statement of fact.

Warranties are more vigorously insisted upon than the conditions because the contract comes to an end if a warranty is broken whether the warranty was material or not.

In case of condition or representation the contract comes to end only when these were material or important.

Warranties are of two types:

(i) Express Warranties
(ii) Implied Warranties

Express Warranties

Express warranties are those warranties which are expressly included or incorporated in the policy by reference.

Implied Warranties

These are not mentioned in the policy at all but are tacitly understood by the parties to the contract and are as fully binding as express warranties.

Warranties can also be classified as

(i) Affirmative
(ii) Promissory

Affirmative warranty is the promise which insured gives to exist or not to exist certain facts.

Promissory warranty is the promise in which insured promises that he will do or not do a certain thing up to the period of policy.

In marine insurance, implied warranties are very important. These are:

  • Seaworthiness of Ship
  • Legality of venture
  • Non-deviation

All these warranties must be literally, complied with as otherwise the underwriter may avoid all liabilities as from the date of the breach.

However, there are two exceptions to this rule when a breach of warranty does not affect the underwriter’s liability:

  1. Where owing to a change of circumstances the warranty is no longer applicable.
  2. Where compliance would be unlawful owing to the enactment of subsequent law.

Seaworthiness of Ship

The warranty implies that the ship should be seaworthy at the commencement of the voyage, or if the voyage is carried out in stages at the commencement of each stage.

This warranty implies only to voyage policies, though such policies may be of ship, cargo, freight or any other interest. There is no implied warranty of seaworthiness in time policies.

A ship is seaworthy when the ship is suitably constrained, properly equipped, officered and manned, sufficiently fuelled and provisioned, documented and capable of withstanding the ordinary strain and stress of the voyage.

The seaworthiness will be more clear from the following points:

1. The standard to judge the seaworthiness is not fixed. It is a relative term and may vary with any particular vessel at different periods of the same voyage.

A ship may be perfectly seaworthy for Trans-ocean voyage. A ship may be suitable for summer by may not be suitable for winter. There may be different standard for different ocean, for different cargo, for different destination and so on.

2. Seaworthiness does not depend merely on the condition of the ship, but it includes the suitability and adequacy of her equipment, adequacy and experience of the officers and crew.

3. At the commencement of journey, the ship must be capable of withstanding the ordinary strain and stress of the sea.

4. Seaworthiness also includes “Cargo-Worthiness”. It means the ship must be reasonably fit and suitable to carry the kind of cargo insured.

It should be noted that the warranty of seaworthiness does not apply to cargo. It applies to the vessel only. There is no warranty that the cargo should be seaworthy.

It cannot be expected from the cargo-owner to be well-versed in the matter of shipping and overseas trade. So, it is admitted in seaworthiness clause that the cargo would be seaworthy of the vessel and would not be raised as defence to any claim for loss by insured perils.

It should be noted that the ship should be seaworthy at the port of commencement of voyage or at the different stages if voyage is to be completed in stages.

Legality of venture

This warranty implies that the adventure insured shall be lawful and that so far as the assured can control the matter it shall be carried out in a lawful manner of the country.

Violation of foreign laws does not necessarily involve breach of the warranty. There is no implied warranty as to the nationality of a ship. The implied warranty of legality applies total policies, voyage or time.

Marine policies cannot be applied to protect illegal voyages or adventure. The assured can have no right to claim a loss if the venture as illegal.

The example of illegal venture may be trading with an enemy, violating national laws, smuggling, breach of blockade and similar ventures prohibited by law.

Illegality must not be confused with the illegal conduct of the third party e.g., barratry, theft, pirates, rovers.

The waiver of this warranty is not permitted as it is against public policy.

3. Other Implied Warranties

There are others warranties which must be complied in marine insurance.

(a) No Change in Voyage

When the destination of voyage is changed intentionally after the beginning of the risk, this is called change in voyage.

In absence of any warranty contrary to this one, the insurer quits his responsibility at time of change in voyage.

The time of change of voyage is determine when there is determination or intention to change the voyage.

(b) No Delay in Voyage

This warranty applies only to voyage policies. There should not be delay in starting of voyage and laziness or delay during the course of journey.

This is implied condition that venture must start within the reasonable time. Moreover, the insured venture must be despatched within the reasonable time.

If this warranty is not complied, the insurer may avoid the contract in absence of any legal reason.

(c) No deviation

The liability of the insurer ends in deviation of journey. Deviation means removal from the common route or given path. When the ship deviates from the fixed passage without any legal reason, the insurer quits his responsibility.

This would be immaterial that the ship returned to her original route before loss. The insurer can quit his responsibility only when there is actual deviation and not mere intention to deviation.

Exceptions

There are following exceptions of delay deviation warranties:

  1. Deviation or delay is authorized according to a particular warranty of the policy.
  2. When the delay or deviation was beyond the reasonable approach of the master or crew.
  3. The deviation or delay is exempted for the safety of ship or insured matter or human lives.
  4. Deviation or delay was due to barratry.