Innominate Terms or Express Warranty in Marine Insurance

Marine insurance is a type of insurance that covers maritime transportation risks, including the loss or damage to cargo, ships, and other vessels. In India, marine insurance is governed by the Marine Insurance Act 1963 and regulated by the IRDAI.

Marine insurance in India provides coverage against loss and damages caused by perils such as theft, fire, piracy, collision, storms, hurricanes, and other natural disasters. It also includes coverage for additional liabilities related to third-party damages and injuries to crew members.

Marine insurance includes various terms and warranties that apply to both the insurance company and the policyholder.

Terms that are not conditions or warranties are referred to as innominate terms. If the breach of an innominate term is sufficiently severe, a contract may be terminated. It is more of an intermediate term the breach of which will not directly result in a policy being terminated unless the breach is severe.

Express warranty in marine insurance refers to specific conditions or clauses clearly written in the insurance documents. These are precise promises made by the policy buyer regarding certain aspects of the insured object, such as the vessel, its condition, and the intended voyage it will cover.

Express warranties are straightforward and do not leave any room for vagueness, and they play a crucial role in shaping the terms and conditions of marine cargo insurance. These warranties are considered to be absolute and need to be followed by the policyholder to maintain adherence to the policy.

Any breach of express warranty can lead to nullification of the marine insurance policy, and the insured would not be able to make claims for any loss or damages that occurred to the insured object.

These are terms which are generally included in the express warranty.

Ship Seaworthiness: The warranty states that the ship is fit for the intended journey. A ship's fitness is determined by its structural integrity, equipment, and overall condition. It is the insured's duty to make sure that the ship is seaworthy and in the condition to travel the distance to its intended destination.

Law and Regulations: Insurance policies include warranties related to the compliance of applicable laws and regulations. It includes adherence to maritime rules, safety and operational standards, and other legal requirements related to maritime activities.

Usage and Purpose: The warranty may mention the vessel's usage and purpose in the insurance. Any breach or deviation from these can lead to the nullification of the policy.

Geographical Limits and Routes: Express warranty can mention the geographical limits within which the vessel can operate and the routes it is allowed to take. Deviation from the mentioned routes or geographical limits before getting necessary permissions can result in a breach of policy terms.

Crew Qualifications: Some policy terms also include warranties regarding the competency and qualifications of the crew to handle the vessel and meet the required terms and conditions of the policy.

It means the crew must have standard training and knowledge to satisfy the warrants of the policy otherwise, it can lead to a breach of terms.

Notification Warranties: Notification warranties state that the policyholder must notify the insurance company within a fixed timeline regarding specific issues. These issues can relate to the physical condition of the vessel or changes in the designated route of the voyage.

Express and implied warranties in marine insurance are two crucial aspects of the policy terms and conditions. While express warranties are clearly stated in the insurance documents and need to be adhered to strictly, implied warranties are different.

Implied warranties are the conditions which are not explicitly stated in the marine insurance policy documents but are understood to be inherent or assumed as part of the agreement.

These warranties are considered standard expectations of the agreement. They are termed as something that doesn't need to be in the document but is assumed to be there in the relationship between the insured and the insurer.

Here are some common differences between the express and implied warranties in marine insurance.

• Express warranties are explicitly stated. But implied warranties are assumed, thus not stated.

• Express warranties are outlined clearly in the marine insurance policy documents. Implied warranties are not mentioned in insurance documents.

• Both parties know express warranties, while implied warranties are based on industry customs.

• Implied warranties arise from customs and legal expectations. However, express warranties are specific to the insurance.

• There might be some room for flexibility for express warranties. However, implied warranties are standards.

Warranties and conditions are essential parts of any contract; this goes for the cargo insurance policy, which is a contract between the vessel owner and the marine insurance company.

They help maritime transport businesses understand the specific rules under a policy before purchase. Moreover, the warranties offered also depend on insurance providers; reputable marine insurance providers like Tata AIG clearly state their terms and conditions for the ease of policy buyers.

What is a breach of express or implied warranty?

Breach of express or implied warranties occurs when either party fails to fulfil any of the warranties stated or implied, and the insurance contract becomes void.

What are the eligibility criteria for marine cargo insurance?

Anyone involved in transporting goods via sea can buy marine insurance. This includes manufacturers, import/export merchants, sellers, buying agents, etc.

What are examples of express warranty in marine insurance?

Some common examples of express warranties are voyage warranties, usage and purpose warranties and cargo description warranties.