(a) List and describe four insurance policies available to a ship owner. (b) Distinguish between indemnity and non-indemnity insurance and give two examples...

(a) Four insurance policies available to a ship owner

1. Hull insurance: Covers the ship itself against loss or damage from perils of the sea such as sinking, collision, grounding and storm.
2. Freight insurance: Protects the ship owner against loss of freight (carriage charges) where cargo is lost or the voyage is not completed.
3. Protection and Indemnity (P&I) / liability insurance: Covers the ship owner's legal liability to third parties for injury, death, or damage caused by the ship, and for pollution.
4. Cargo insurance: Covers loss of or damage to the goods carried on the ship while in transit, protecting the interest of the owner of the goods.

Other acceptable policy: crew (personal accident) insurance covering injury or death of the crew.

(b) Indemnity and non-indemnity insurance

Indemnity insurance restores the insured to the exact financial position he was in before the loss, without allowing him to make a profit. The compensation is measured by the actual loss suffered. Examples: fire insurance and marine (cargo) insurance.

Non-indemnity insurance pays an agreed fixed sum on the happening of the insured event, because the subject matter (human life) cannot be valued in money terms. Examples: life assurance and personal accident insurance.