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Marine Insurance and General Average in the United States: An Average Adjuster's Viewpoint, 3rd ed.

Several factors distinguish marine insurance issues from insurance issues in other areas of logistics. First, the ocean shipping industry is segmented into three main types of operations, the characteristics of which differ greatly from each other: liners, tankers, and dry bulk carriers. Second, there is an extremely wide range of vessel sizes, and the values of the largest vessels can run into the tens of millions of dollars. Third, the distances traveled are great, and vessels on the open sea can be isolated from assistance for long periods of time. Fourth, in the liner segment of the industry, a vessel may carry cargo for hundreds of cargo owners. Fifth, ocean shipping is truly an international mode of transportation, where ship owners of one country may register their vessels in other countries and man the ships with crews of yet other countries, and service may be provided to customers around the world. Add to all of this the fact that ocean shipping is the oldest mode of global transportation and many of the principles and rules governing liability have their origins several centuries in the past.

These factors contribute to a wide variety of situations that can endanger a ship and/or its cargo and make interpretation and resolution of marine insurance claims complex and difficult. This book represents a source of assistance for dealing with such complexities by providing a comprehensive, documented treatise on the topics of marine insurance and general average as interpreted by English and U.S. law.

The book includes thirteen chapters, which occupy approximately 500 pages. The chapters are preceded by sixteen pages of case citations and are followed by eight appendices. In the introductory chapter, the author emphasizes that although American marine insurance had its origins in English common law, there are distinctions between American and British marine insurance. Throughout the book, the author uses the English Marine Insurance Act of 1906 as a source of reference and explains the differences with United States marine insurance law (which rests on common law and recognized commercial usage) when appropriate. In Chapter 1 the author also defines some basic marine insurance terms and discusses the differences between insurance brokers and agents.

Chapter 2 sets forth some basic premises of the contract of marine insurance, such as insurable interest, relationship to terms of sale, stipulation of insurable value, warranties, duration of risk, and premiums. In Chapter 3 the risks covered by a policy of marine insurance are discussed, supported by numerous excellent examples of interpretations of policies. In Chapter 4, the conditions which constitute actual total loss versus constructive total loss are explained, and rights and responsibilities for removal of wrecks are discussed. Particular average coverage relating to temporary repairs, dry-docking, measure of indemnity on the vessel, and particular average on cargo and freight are discussed in Chapter 5.

A considerable portion of the text (a very lengthy Chapter 6) is devoted to discussion of general average, an old and interesting natural law of the sea. The author discusses the requirements for declaring general average, reviews interpretations and rulings regarding general average situations, and relates general average rules to international maritime rules and marine insurance laws of different countries.

Salvage expenses and the relationship to general average are discussed in Chapter 7. One recent change in salvage law pertains to environmental responsibility in the salvage actions. Chapter 8, which covers liabilities to third parties, also provides a detailed explanation of protection and indemnity insurance, with special attention given to liability for pollution control. Double insurance (insurance coverage by more than one underwriter) and subrogation, which is defined as "the right by which an underwriter, having settled a loss, is entitled to place himself in the position of the assured," are discussed in Chapter 9.

Chapter 10 is titled "Miscellaneous Insurances of a Special Nature" and covers the following areas: shipbuilding insurances, insurance of offshore oil drilling rigs, mortgagee's interest insurance, bills of lading insurance, insurance of containers, yachts and fishing vessels, loss of earnings insurance, and reinsurance. Chapter 11 discusses the unique collection of practices of claims adjustments that has evolved over the years on the North American Great Lakes waterway system. Marine insurance on other U.S. rivers, harbors, and coastal and inland waterways is also highly specialized and is covered in Chapter 12. The final chapter, Chapter 13, discusses a development that is occurring more and more frequently, especially in U.S. maritime insurance cases--that of punitive damage awards, or awards that exceed compensatory damages.

Eight appendices follow the main text chapters. They include several examples of marine insurance clauses, the Rules of Practice of Association of Average Adjusters of the United States, the Rules of Practice for the American Great Lakes (for both the U.S. Canada), the United Kingdom's Marine Insurance Act of 1906 (used as a point of reference throughout the book), the York/Antwerp Rules of 1974, and rules and agreements regarding salvage.

In summary, Marine Insurance provides thorough coverage of marine insurance, general average, and related topics. It is extensively documented with references to existing laws, conventions, and court rulings. One criticism of the book lies with its organization. Terms are sometimes used in the text before they have been defined or explained. A reader not familiar with the basics of marine insurance could therefore find the book a challenge. A glossary of marine insurance terms would be extremely helpful in this respect. Also, the nature of the material makes for difficult reading in places because of the legal and technical interpretations. It thus is not recommended for those who desire only a rudimentary introduction to marine insurance. However, it is a valuable reference for anyone requiring in-depth knowledge and/or a comprehensive reference source in the field.

Evelyn Thomchick, EM-AST&L Associate Professor of Business Logistics The Pennsylvania State University University Park, Pennsylvania 16803
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Author:Thomchick, Evelyn
Publication:Transportation Journal
Article Type:Book Review
Date:Dec 22, 1992
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