Marine Insurance


Marine Insurance

Marine insurance is of two types, namely Marine Hull insurance and Marine Cargo insurance. While the former deals with the vessels and ships etc., the latter deals in the transit risks of goods or cargo. Therefore various nomenclatures are used for Marine insurance such as Cargo insurance, Transit insurance etc. Many times mode of transit is also used to describe the transit insurance such as Air transit insurance, Air cargo insurance, Air marine insurance, Sea transit insurance of cargo is very common. Almost all the General Insurance companies provide cover for transit insurance. At times, these companies pre-fix their own name with the product such as Bajaj Allianz transit insurance, Tata-AIG marine insurance policy etc.

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Coverage

  • Institute Cargo Clause - ICC (A)
    Covers loss of or damage to goods due to:
    • Fire or explosion
    • Derailment of shipping vehicle on road
    • Vessel being stranded, grounded, capsized or sunk
    • Overturning or derailment of land conveyance
    • Collision or contact of vessel craft with external object (other than water)
    • Discharge of cargo at the distress port
    • Earthquake, volcanic eruption or lightning
    • Theft, piracy
    • Pilferage
    • Non-delivery
    • Rough handling
    • General average
    • Jettison - intentional throwing overboard of part of the cargo or some piece of the ship in order to save the ship or the cargo
    • Entry sea, river or lake water into the vessel
    • Total loss of package lost overboard or dropped whilst loading or unloading from vessel
  • Institute Cargo Clause - ICC (B)
    Covers loss of or damage to goods due to:
    • Fire or explosion
    • Derailment of shipping vehicle on road
    • Vessel being stranded, grounded, capsized or sunk
    • Overturning or derailment of land conveyance
    • Collision or contact of vessel craft with external object (other than water)
    • Discharge of cargo at the distress port
    • General average
    • Jettison - intentional throwing overboard of part of the cargo or some piece of the ship in order to save the ship or the cargo
    • Entry sea, river or lake water into the vessel
    • Total loss of package lost overboard or dropped whilst loading or unloading from vessel
  • Institute Cargo Clause - ICC (C)
    Covers loss of or damage to goods due to:
    • Fire or explosion
    • Derailment of shipping vehicle on road
    • Vessel being stranded, grounded, capsized or sunk
    • Overturning or derailment of land conveyance
    • Collision or contact of vessel craft with external object (other than water)
    • Discharge of cargo at the distress port
    • General average
    • Jettison - intentional throwing overboard of part of the cargo or some piece of the ship in order to save the ship or the cargo

General Exclusions

  • Loss caused by willful misconduct of the insured.
  • Ordinary leakage, wear and tear.
  • Loss caused by 'inherent vice' or nature of the subject matter. For example, perishable commodities like fruits, vegetables, etc. may deteriorate without any 'accidental cause'. This is known as 'inherent vice'.
  • Loss caused by delay, even though the delay be caused by an insured risk.
  • Deliberate damage by the wrongful act of any person. This is called 'malicious damage' and can be covered at extra premium, under (B) and (C) clauses. Under 'A' clause, the risk is automatically covered.
  • Loss arising from insolvency or financial default of owners, operators, etc. of the vessel.
  • Loss or damage due to inadequate packing.
  • War peril - This can be covered on payment of extra premium.
  • Strikes, riots, lock-out, civil commotions and terrorism (SRCC) can be covered on payment of extra premium.

Types of Marine Insurance Policies

  • Open cover — Covers all marine transits of the insured (client) in export or import during the 12 month's period of the policy.
  • Specific voyage polic — This policy provides coverage for only those specific voyages for which the client wishes to cover for. It is a customised policy as per the need of the client and is issued on the 'from and to' and the duration of the voyage basis.
  • Open Policy — An open policy is also known as 'floating policy'. This policy is issued to take care of all "shipments" coming within its scope. It is issued for a substantial amount to cover shipments or sending during a particular period of time. Declarations are made under the open policy and these go to reduce the sum insured.
  • Sales Turn Over Policy (STOP) — This is a unique insurance policy that covers transit of raw material, semi finished & finished products on a seamless basis to arrest any gaps in the risk of loss or damage of goods. Cover is provided from the time the raw material is purchased to movements to all intermediate locations including factory/manufacturing locations, storage units until it reaches the final destination. For more information, you can refer to Marine Sales Turnover Policy - STOP.

The policy can be issued to cover on a world-wide basis as well to protect movements including export, import, Inter-depot movement etc. There is flexibility provided to the insured where in specific declaration before each transit need not be provided. Premium is charged on the basis of the sales turnover.

Document checklist for Claim Settlement

Some of the important documents required for processing the claim are as under

  • Intimation to the Insurance company.
  • The original policy or certificate of insurance.
  • Bill of Lading: It is a document which serves as evidence that the goods were actually shipped. It also provides the particulars of cargo.
  • Invoice: An invoice evidences the terms of sale.
  • Survey Report
  • Copy of Protest: If the loss or damage to cargo has been caused by a peril of the sea, the master of the vessel usually makes a protest on arrival at destination.
  • Letter of Subrogation: This is a legal document (supplied by insurers) which transfers the rights of the claimant against a third party to the insurers.
  • Ship survey report lost over board certificate if cargo is lost during loading and unloading operation, short landing certificate etc.
  • Bill of entry

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