6.2 Types of policies
Marine insurance is the oldest known form of insurance. Hull and cargo insurance today is usually written on forms whose wording has changed little since the 18th century. The so-called “perils” clause, enumerating the risks insured against, customarily includes not only the natural hazards to which a vessel is exposed but man-made perils such as capture or destruction by enemy forces as well.
The term average in insurance comes from the French avarie meaning damage. The consignor can insurance against general average which is damage done purposely. This happens when a ship has to jettison dangerous chemicals because of a fire. Particular average means partial loss or damage and there are two clauses: a policy that has a with average (WA) or with particular average (WPA) clause, covers the consignor against part loss in all cases. A free of particular average (FPA) clause only covers the consignor against total loss in the case of small risks like sea water damage and part loss against fire and sinking.
Cargoes can be insured under an unvalued or valued policy. Brokers and underwriters are still used to insure cargoes, as the goods transported at sea are exposed to different kinds of risks. Therefore policies are more complicated.