Marine

Marine insurance is defined in the Marine Insurance Act 1906 (MIA 1906) as ‘a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure’.

Marine insurance policies cover loss or damage to vessels or cargo, or liabilities, depending on the type of policy. Different types of cover are available, according to the type of vessel being insured, the type of cargo being carried, and the routes being taken to transport the cargo.

The main types of marine insurance are:

  1. cargo insurance—this caters specifically to the cargo of the vessel, see Practice Note: Marine cargo insurance

  2. hull insurance—which insures the vessel itself, see Practice Note: Hull and machinery insurance

  3. liability insurance or P&I insurance—covering the insured’s liability to

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Lost in the war—Judgment in the Russian aircraft claims (Aercap v AIG)

Financial Services analysis: Following a mega trial spanning over 12 weeks, the court held that the aircraft lessors (including AerCap and DAE) were entitled to recover under their contingent War Risks (WR) cover, but were not entitled to recover under their All Risks (AR) cover, for aircraft and engines stranded in Russia following the 2022 invasion of Ukraine. Aercap made its primary claim under its AR cover while DAE advanced its primary claim under its WR cover. The lessors lost the aircraft on 10 March 2022, when the Russian government issued Government Resolution (‘GR’) 311–a decree prohibiting the return of aircraft to the lessors in response to Western sanctions against Russia. As a consequence, while AerCap originally claimed losses of over US$3.4bn under its AR cover (reduced after settlements to US$2.051bn), it failed against its AR cover and its recovery was confined to a US$1.2bn WR aggregate limit. By contrast, DAE succeeded in its primary claim under its WR cover. The case provides significant guidance on various issues. Key issues of interest include: the test for ‘loss’ by deprivation of assets; the scope of the Political Peril (‘act…for political…purposes’) and Government Peril (“by or under the order of any government”); the ‘grip of the peril’ doctrine; the causation analysis where there are concurrent or independent causes of loss; the distinction between Contingent and Possessed covers in lessor policies; and the scope of economic sanctions against Russia. Written by Aradhya Sethiya, pupil barrister at 7 King’s Bench Walk.

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