Introduction to Marine Insurance in Malaysia
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What is the source of Marine Insurance law in Malaysia?
Malaysian marine insurance legal jurisprudence is covered by the Marine Insurance Act of 1906 which was recently amended by the Insurance Act 2015 (both being UK Statutes). This act is applicable in Malaysia by application of sections 3 and 5 of the Civil Law Act 1956 (Act 67). The UK Marine Insurance Act, as adopted in Malaysia through the Civil Law Act 1956, also governs the subrogation rights related to a marine insurance claim.
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What type of risks are there in marine insurance?
The typical risks open to vessels is that of perils of the sea. In order to circumvent or mitigate these risks, vessels registered in Malaysia must be insured. On the other hand, vessels entering Malaysian waters must also have a certificate of insurance or other financial security as per the Civil Liability Convention and the Bunkers Convention.
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What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?
The normal coverage given are the hull and machinery of the vessels covered by marine hull insurance and cargo covered by marine cargo insurance. Protection and indemnity clubs provide liability cover for cargo and other claims, including pollution cover.
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How are the insurance agreements implemented?
Most often than not, the contract of marine insurance is implemented via the various types of forms including the Institute Clauses provided for by bodies such as the International Underwriting Associations of London or the London Insurance and Reinsurance Market Association. These forms include Hull clauses, Voyage clauses, War and Strikes Clauses and the Cargo Clauses
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Are there any other forms of protection for ship owners?
Usually shipowners would align themselves with a protection and indemnity club (P&I Club). These clubs provide for protection to the shipowners depending on their standard rules of protection and indemnity. There are a number of P&I Clubs locally and internationally that a shipowner may align to.
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What are the type of insurance policies available under a contract of marine insurance?
Usually the type of policies in a contract for marine insurance are valued policies, unvalued policies, voyage and time policies, floating policies which may include obligatory open cover and facultative obligatory cover.
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What is the right of subrogation which is open to an insurer?
A right of subrogation is available to an insurer when the insurer pays out for a total loss of a subject matter insured and becomes entitled to take over the interest of the assured in whatever may remain of the subject matter so paid for, and he is subrogated to all the rights and remedies of the assured in and respect of that subject matter as from the time of the casualty causing the loss.
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What is reinsurance?
Reinsurance is an insurance of the original insurer for a certain cover provided by the original insurer. It is a coverage that original insurer may arrange with another insurer whereby the risk is shared and as such the insurance premium is also shared accordingly among the insurer and reinsurer.
This article is written by our Principal Associate, Chakaravarthi
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