Nicholas
Magens, an English merchant writing in 1755 wrote at length of a policy of
Marine Insurance dated at London in 1744.
.. ‘touching the adventures and perils which we the Assurers are
contented to bear and take upon us, in this voyage, they are of the seas, men
of war, fire, enemies, pirates, rover, thieves, jettisons, letters of mart and
countermart, surprisals, takings at sea, arrests, restraints and detainments,
of all Kings, Princess and people,
barratry of masters and mariners, losses, misfortunes and other perils
detrimental or damage of the ship…. ..even as I felt
so exhausted – there was this peril of the sea that Chennai and many parts of
the globe nearer witnessed on that black Sunday of Dec 2004 – later too well
known as ‘tsunami’…
The
word is now a commoner …. Around a decade or two ago – not many here knew its
pronunciation nor its meaning … all that changed on that Black Sunday !! –
perhaps it occurred earlier too but not known by that name – perhaps a similar
thing only undid Dhanushkodi – and earlier in 1930s …. ‘tsunami’ (from Japanese – a harbour wave) - a
series of water waves caused by the displacement of a large volume of a body of
water, generally an ocean or a large lake. Earthquakes, volcanic eruptions and
other underwater explosions, landslides, glacier calvings, meteorite impacts
and other disturbances above or below water all have the potential to generate
a tsunami. Tsunami waves do not resemble
normal sea waves, because their wavelength is far longer.
The
2004 Indian Ocean earthquake was an undersea megathrust earthquake that
occurred at 00:58:53 UTC on Sunday, 26th December 2004, with an epicentre off the west
coast of Sumatra, Indonesia. The earthquake was caused when the Indian Plate
was subducted by the Burma Plate and triggered a series of devastating tsunamis
along the coasts of most landmasses bordering the Indian Ocean, killing over 230,000
people in fourteen countries, and inundating coastal communities with waves up
to 30 meters (100 ft) high. It was one of the deadliest natural disasters in
recorded history. Indonesia was the hardest-hit country, followed by Sri Lanka,
India, and Thailand.
In Insurance Law,
the peril insured against may be any peril, which the assured seeks and the
insurers are willing to give protection. The concept of insured perils
signifies a very central issue under marine insurance where the assured’s
property or profit are put at risk by maritime perils and the insurer agrees to
indemnify the assured against any loss caused by those perils. The courts have
attempted to draw a line between ‘perils of the sea’ and other perils like
unseaworthiness, negligence, ordinary wear and tear, barratry, wilful
misconduct, etc.
An earthquake (also
known as a quake, tremor or temblor) is the perceptible shaking of the surface
of the Earth, resulting from the sudden release of energy in the Earth's crust
that creates seismic waves. Earthquakes can be violent enough to toss people
around and destroy whole cities. The seismicity or seismic activity of an area
refers to the frequency, type and size of earthquakes experienced over a period
of time. At the Earth's surface, earthquakes manifest themselves by shaking and
sometimes displacement of the ground. When the epicentre of a large earthquake
is located offshore, the seabed may be displaced sufficiently to cause a
tsunami. Earthquakes can also trigger landslides, and occasionally volcanic
activity.
The
Standard Fire and Special Perils Policy among other perils covers ‘wind and
water perils’ – specifically stated as “Storm, Cyclone, Typhoon, Tempest,
Hurricane, Tornado, Flood and Inundation”.
The coverage however, excludes
those damage resulting from earthquake, Volcanic eruption or other convulsions
of nature. Under the present Tariff, earthquake cover is ‘add-on’ and whence so
added, the words "excluding those resulting from earthquake volcanic
eruption or other convulsions of nature" stand deleted.
The Indian Ocean
tsunami caused widespread havoc killing thousands of people and many properties
were damaged too. Many Insurers went out
of the way to ensure expeditious settlement supporting their policy
holders. This week, in many Press, came
the news of Madras High Court overruling an Insurance Company’s decision in
denying the claim of a Shipping Company for losses caused by tsunami .. .. mind it, it was not property insured under Fire Insurance but Marine
Hull Policy covering barges !!
SBK
Shipping Private Limited, Cuddalore Harbour entered into an insurance contract
with United India Insurance Company Limited, insuring its four barges. Clause
IV of the contract states that the insurance covers loss or damage to the
subject matter caused by perils of the seas, rivers, lakes or other navigable
waters. It also covers loss caused by other actions such as fire, violent
threat and piracy; Clause V of the
contract further states that the insurance shall not cover loss, damage,
liability or expenses caused by earthquake or volcanic eruption.
The
Insurers denied the claims for damage of barges suffered by the Shipping Coy
stating the losses fall under the category ‘Perils of the Sea’ and since an
earthquake (not the tsunami) was the ‘proximate cause’ (as distinct from
‘remote cause’), the losses suffered by the shipping company are excluded from
insurance claims.
The
division bench comprising Justice R Sudhakar and Justice S Vaidyanathan
dismissed United India Insurance Company’s appeal saying, “We are unable to
accept the argument of the Insurance company that the earthquake is the
proximate cause for the damage of the vessel. On the contrary, it is the remote
cause. If the tsunami, a peril of the sea, is the direct cause for the damage,
there is no need to embark on further enquiry as to what is the proximate cause
of tsunami. The proximity is in relation to the damage and if the claim answers
the same it is maintainable,” the Judges are quoted as stating. “Scientifically
it is stated that the earthquake was the cause of the tsunami, but for persons
who suffered the wrath of the tsunami in TN, the earthquake is virtually a
remote cause. The proximate cause for the damage caused to the property is
giant tidal waves of tsunami, a ‘peril of the sea’ and not the earthquake,” the
Judges stated.
Perils
of the sea could be defined as fortuitous accidents or casualties peculiar to
transportation over navigable waters; events such as unusual violent (but not
ordinary action) of waves or wind, collision of ships, striking a submerged
object, and sinking.
Not sure what the
policy was : if it were to be ITC Hulls Port risks : clause 4 is Perils :
4.1 This insurance covers loss of or damage to
the subject-matter insured caused by 4.1.1 perils of the seas rivers lakes, or
other navigable waters 4.1.2 fire lightning explosion 4.1.3 violent theft by
persons from outside the Vessel 4.1.4 jettison 4.1.5 piracy 4.1.6 breakdown of
or accident to nuclear installations or reactors 4.1.7 contact with aircraft or
similar objects, or objects falling therefrom, land conveyance, dock or harbour
equipment or installation.
4.2 This insurance
covers loss of or damage to the subject-matter insured caused by 4.2.1
accidents in loading discharging or shifting cargo or fuel 4.2.2 bursting of
boilers breakage of shafts or any latent defect in the machinery or hull 4.2.3
negligence of Master Officers Crew or Pilots 4.2.4 negligence of repairers or
charterers provided such repairers or charterers are not an Assured hereunder
4.2.5 barratry of Master Officers or Crew, provided such loss or damage has not
resulted from want of due diligence by the Assured, Owners or Managers. 4.3
Master Officers Crew or Pilots not to be considered Owners within the meaning
of this Clause 4 should they hold shares in the Vessel.
5. Earthquake &
Volcanic eruption exclusion that reads as : In no case shall this insurance
cover loss damage liability or expense caused earthquake or volcanic eruption.
This exclusion applies to all claims including claims under Clauses 7, 9, 11
and 13 – i.e., Collision liability, Protection & Indemnity, General Average
& Salvage and Sue & Labour.
As could be seen
from the foregoing, ‘tsunami’ is not any named peril and Earthquake is clearly
excluded peril. Though scientific
explanation could be of tsunami caused by earthquake and earthquake being the
proximate cause – the Court felt and directed that loss shall be attributable
to ‘tusnami’ and not earthquake which is an exclusion.
~ .. and by reading
the caption of newspapers, Insuring public may start thinking that ‘tsunami’ is
undoubtedly a peril covered under Property Insurance [Fire Policy] – while clearly
the case dealt at Madras High Court was a Marine (Hull) Policy.
With regards – S.
Sampathkumar
8th Apr
2016
photos credit : livemint.com