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compensated by dividing the loss among them. Thus,
marine insurance is believed to be the oldest form of
insurance. It may be defined as an agreement between
the insured and the insurer. The insurer undertakes to
indemnify the insured, in the manner and to the extent
they have agreed, the financial loss caused by sea perils
in consideration to a certain premium paid periodically
or in lump sum. It covers a large number of sea risks such
as sinking or burning of the ship, collision with rock or Ship accident
another ship, barratry, piracy, dacoities, sea storms, cargo
losses and other many perils of the sea as agreed between the insured and the insurer.
The following are some of important definition of marine insurance.
According to Indian Marine Insurance Act: 1963, “Marine insurance is a contract whereby
the insurer undertakes to indemnify the insured in a manner and to the extent thereby agreed,
against marine losses, that is to say, the losses incidental to marine adventures.”
According to M.N. Mishra, “Marine insurance has be defined as a contract between insurer
and insured whereby the insurer undertakes to identify the insured in a manner and to the interest
thereby agreed, against marine losses incident to marine adventure.”
There are mainly three components of marine insurance viz. cargo insurance, hull
insurance and freight insurance. Cargo insurance is the marine insurance of the goods
loaded on the ship for transportation purpose.

Hull insurance refers to the marine insurance of the full body of the ship against any sea
perils during a particular journey or for a specified period of time.
The charge receivable by a ship for transporting the cargo is known as freight. Generally,
the shipping freight is payable at the destination after the delivery of the goods. The
shipping company may not be able to receive the freight, if the goods cannot reach up to
the destination. The shipping company makes the insurance of freight for the security and
guarantee of its freight. Thus, freight insurance is the one, which provides the protection
from any loss of freight due to the sea perils during the shipping of the goods.

Key Point Marine insurance is the contract between the insurer and insured in which
the insurer promises to identify the insured against the loss or damage due
to sea perils against consideration of a certain amount of premium paid by
the insured.

ii. Fire Insurance
Fire insurance is a measure which provides security
against the risks of fire. The necessity of fire insurance
was felt for the first time in England in 1666 A.D.
when London was caught by fire and devastated. Fire
insurance is a contract, in which the insurer promises
to pay a certain sum of money for the loss of property
caused by fire during the stipulated time in consideration Building on fire

90 Aakar’s Office Practice and Accountancy - 10 Financial Institutions 91