Definition Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or property by which

cargo is transferred, acquired, or held between the points of origin and final destination. Explaination
Marine insurance falls under commercial insurance. The policy is taken to reduce business risks. It caters to small scale business organisations to large corporates. Policy does not cover loss or damage due to willful misconduct, ordinary leakage, improper packing, delay, war, strike, riot and civil commotion.

Different types of Marine Insurance are available:

Marine import transit insurance Marine export transit insurance Marine inland transit insurance Marine insurance claim procedure Marine Hull

Calculation of Marine Insurance Amount/Premium:

Amount of premium depends on factors like nature of cargo, scope of cover, packing, mode of conveyance, distance and past claims experience. Premium can be paid on a monthly/quarterly/half-yearly/yearly basis.

Marine Insurance Claim Procedure:

In case of loss/damage in transit, a monetary claim should be lodged with the carrier within the time limit to protect recovery rights Appointment of surveyor or claim representative in agreement with the insurer to determine the nature, cause and extent of loss/damage The surveyor informs the insurer of the approximate value of loss incurred The claim procedure takes from one to three weeks

Documents Required for Marine Insurance Claim:

Original Invoice & packing List - if forming part of Invoice Document of declaration of consignment Damage Certificate from the carrier

The farmer must furnish area sown confirmation certificate, if required.

List of Some of Insurance Companies Offering Marine Insurance:

ICICI Lombard - Marine Import Transit Insurance Policy United India Insurance Co. - Marine Cargo The New India Assurance Co. - Marine Cargo Policy * Terms and conditions may vary in different insurance companies

Marine Cargo

Marine Insurance is the oldest form of insurance in the world. Though the name indicates that the policy covers the transit of goods only by waterways, it is not so. It covers transportation of goods by rail, road, air as well as couriers. During this entire process of transportation, storage, loading and unloading, the goods are exposed to a large number of perils. Goods are often lost or damaged due to the operation of these hazards and there is a financial loss to the exporter/ importer. It is this loss that is taken care of by marine cargo insurance or what is more popularly known as transit insurance. This policy covers all goods while in transit depending upon the needs of the insured. Three broad types of cover are available-Institute Cargo Clauses A, B, C. Institute Cargo Clause A is the widest cover that is available on an all risks basis.
Marine Sales Turnover Policy

Marine policies are generally either specific-voyage policies or declaration policies for either imports, exports, indigenous transits of raw material or finished goods, customs duty, transits from anywhere to anywhere in the world and to and from job works. While for a specific policy, the cover is issued from commencement to landing at the final destination, the other policies are generally continuous policies issued on an annual basis or for a specified period of time for an agreed value of transits based on the insureds estimate of goods movement for the specified period. It is mandatory for all transits in the agreed period to be declared. There have been operational lapses resulting in claims getting repudiated for declarations not made or insufficient balance of Sum insured at the time of claim and many a client has been caught unaware. Discovering that a particular damaged or lost consignment was unfortunately not covered, and hence the claim not payable, can be very frustrating for an otherwise diligent Insured. In this context, a marine turnover policy has come in as a blessing for companies. It covers a companys sales turnover unlike the other marine open policies which cover the value of goods which are offered for insurance. The companys annual estimated turnover can be covered as a single amount and all a company needs to do is to provide sales turnover figures periodically to the insurance company (usually quarterly). All the requirements of a companys Marine policies can be met by a single comprehensive policy.
Marine Hull

Marine Hull insurance covers nearly everything that floats and moves, starting with rowing boat to huge ocean going tankers. It covers loss or damage to hull and machinery. The hull is the structure of the vessel. Machinery is the equipment that

generates the power to move the vessel and control the lighting and temperature system such as boiler, engine, cooler and electricity generator. Just as a motor insurance policy is taken to cover the vehicles plying on the road, similarly a marine hull policy is taken to cover the vessels.

Introduction Since time immemorial, merchants engaged in maritime commerce have explored ways to ensure the security essential for the transportation of their merchandise. The onslaught of the perils of the sea has always threatened the safe passage of goods across the seas and frontiers. Respite from this burden of trade was only possible through mutual aid and assistance. Traders pooled together a fund that could be utilised in the contingency of their partner. Thus became the foundation of what today is popularly known as Marine Cargo Insurance. Marine Insurance is the oldest form of insurance in the world. In the olden days, London as the centre of the British Empire, had the greatest share of the world's trading and commercial activities and it was here that marine insurance principally developed. In fact, even today the London market is considered to be the premier insurance market. Need for Marine Insurance Capital or consumer goods are produced in one country whereas users or consumers are located in some other part of the country or elsewhere in the world. Therefore, there is a need for transportation or transit of such goods by rail, road, inland waterway, sea or air. During this process of transportation, the cargo is exposed to various hazards like theft, breakage or damage. In export/ import trade, goods are transported from the warehouse of the exporter at some interior place in one country and travel to the port for loading on the vessel. There is a trans-shipment of the goods from the land vehicle to the vessel. In some cases there may be intermediate storage at the port warehouse due to nonavailability of a vessel. The goods once shipped travel through oceans and seas confront the perils of the seas. At the destination port there is another phase of unloading, a probable storage at the port and then loading on the land vehicle for transportation to the interior part of the country where the consignee is located. During this entire process of transportation, storage, loading and unloading, the goods are exposed to umpteen hazards. Goods are often lost or damaged due to the

operation of these hazards and there is a pecuniary loss to the exporter/ importer. It is this loss that is taken care of by marine cargo insurance or what is more popularly known as transit insurance. Transit insurance is intended to cover the goods from warehouse of the consignor to the warehouse of the consignee. However, such insurance can be obtained from any nodal point of transit to another, depending upon the contract of sale and the requirement of the parties concerned. Almost all transport carriers are able to limit their liability for loss or damage to cargo under various International Conventions such as the Hague Rules, Hague Visby Rules, Warsaw Convention, CMR Conventions, etc. For inland transit, the limits of liability are governed by laws of the land. In India, there is the Indian Railways Act and the Public Carriers Act. In many instances, liability can be for a lower value than the actual value of the cargo or where for example the loss or damage is beyond the control of the carriers, the carriers may actually not have any liability. Therefore, although transit insurance is not compulsory, the need for it is very real. Even without such insurance the trader can proceed to recover any transit loss from the carriers by virtue of the transport contract which assigns the responsibility of safe delivery of the goods on the transporter. However, the limits of liability laid down by law and the cumbersome procedure of litigation against carriers for recovery and of course the uncertainty of the recovery itself makes the case for marine insurance sound. Basically, therefore, marine cargo insurance is required by the following: Exporters and Importers. Companies that have large internal movements to customers or between subsidiaries/ depots. Banks and other financial institutions may require the borrowing company to insure in order to safeguard the investment.

Click here to learn the Nature of Risks to Cargo. Nature of Risks to Cargo The nature of risks that cargo is exposed to during transit can be the standard risks of transport or exceptional risks like war, strike or similar events. The losses that these risks can cause are termed as particular average or general average. Particular average refers to physical loss or damage relating to loss in weight or quantity suffered by the insured goods in transit. Damage may occur during transit either by sinking, grounding, collision of a vessel, derailment of a train, collision or overturning of a truck, air-craft accidents or fire, affecting both the means of transport and the cargo. All these are major events causing heavy losses.

There may also be accidents that affect the cargo only like flood, wetting by sea water or rain or snow, condensation/ sweat, breakage/ damage due to shock, vibrations, acceleration and deceleration forces, turbulence, damage by odour, following contact with other goods, theft, pilferage. hijacking, etc. Other damages occur during handling such as loading onto the vessel, handling in the ship's hold, discharge, trans-shipment, etc. principally when transferring the cargo at various trans-shipment points or damages when the goods are stored in various intermediate warehouses. In addition to actual physical damage, expenses may be incurred owing to efforts to preserve the insured goods from further damage or loss, to minimise the extent of damage or to enable the insured goods to complete their journey. General Average is a loss that is specific to marine cargo insurance only and is in fact the oldest known form of insurance dating back to over 3000 years. Although the subject has developed today into an extremely complex one, the principle is fairly simple. The sacrifice of one person's goods in order to save a venture will be borne by those whose goods are saved. Therefore, if a vessel is in danger and the only way to prevent it from sinking is to throw one person's cargo overboard, then the rest of the cargo owners and the vessel owner will make up the loss to that person in proportion to the value of their goods in relation to the total amount saved. Click here to view the Scope of Cover under Marine Cargo Insurance.

Coverage The main coverage provide against risks to cargo are on the basis of Institute Cargo Clauses A, B and C. These were introduced by the London market but has been adopted in India. In addition, for insurance coverage on internal movements within India, Inland Transit Clauses are used. The covers available under these clauses can be enumerated as under: Institute Cargo Clause C or ICC 'C' This is the most restricted coverage and subject to the listed exclusions, covers loss or damage to the subject matter insured caused by Fire or explosions. Stranding, grounding, sinking or capsizing Overturning or derailment.

Collision or contact of vessel craft or conveyance with any external object other than water. Discharge of cargo at port of distress. General Average losses. Jettison.

This Clause covers major casualties during the land or sea transit and tends to be used for cargo that is not easily damaged like scrap steel, coal, oil in bulk, etc. Institute Cargo Clause B or ICC 'B' This cover is wider and apart from the risks covered under ICC 'C', it also covers loss or damage to cargo caused by Earthquake, volcanic eruption or lightning. Water damage by entry of sea/ river water. Total loss of package lost overboard. Total loss of package dropped during loading and unloading.

These is significant additional coverage against wet damage from sea, lake or river water and accidents in loading and discharge are covered but there is no coverage for theft, pilferage, shortage and non-delivery. Institute Cargo Clause A or ICC 'A' This option is the widest of all three and is generally summed up as 'All Risks' of loss or damage to the insured cargo. The words 'All Risks' have been the subject of careful examination in legal cases over the years and should be understood, in the context of the 'A' Clause, to cover fortuitous loss but not loss that occurs inevitably. The cover includes everything under both the foregoing Clauses and also Breakage. Scratching, chipping, denting and bruising. Theft, malicious damage, non-delivery. All water damages including rain water damage.

Exclusions The Institute Cargo Clauses incorporates the following exclusions from the scope of cover.

Wilful misconduct of the assured: Even if the loss is proximately caused by an insured peril it is excluded if it is attributable to the wilful misconduct (deliberate damage) of the Assured.

Ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear: Examples of the losses excluded in this category includes evaporation, natural shrinkage and pre-existing damages, for instance, machinery and secondhand motor cars.

Insufficiency or unsuitability of packing or preparation of packing of the insured cargo: It is the duty of the insured to act as if he is uninsured. Clearly, if goods are sent insufficiently packed to withstand the normal handling anticipated during transit, then any loss that arises as a result should not be for insurance companies to pay.

Inherent vice or nature of the cargo: Examples of excluded loss would include blowing of tins containing foodstuffs or spontaneous combustion of a cargo liable for self-heating.

Delay: The insurance company is not responsible for any loss, damage or expense caused by delay although the delay is caused by a peril insured against. Losses through delay could include loss of market or deterioration in respect of perishable goods that would be irrecoverable even if the cause of the delay was a peril insured such as a collision.

Insolvency or financial default of carriers: This exclusion was introduced to discourage the assured from shipping their goods on vessels whose owners, managers, charterers or operators might be in financial distress. In practice the clause would exclude all types of claims for recovery and forwarding of goods arising from abandonment of an insured voyage where the proximate cause was the financial distress of one of the aforementioned parties.

Un-seaworthiness and unfitness of the vessel or conveyance: This only applies where the assured or their agents were privy to this information prior to loading.

War, strikes, riots and civil commotion: These risks are excluded under all the clauses but can be insured by payment of an additional premium.

Exclusions

The Institute Cargo Clauses incorporates the following exclusions from the scope of cover. Wilful misconduct of the assured: Even if the loss is proximately caused by an insured peril it is excluded if it is attributable to the wilful misconduct (deliberate damage) of the Assured. Ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear: Examples of the losses excluded in this category includes evaporation, natural shrinkage and pre-existing damages, for instance, machinery and secondhand motor cars. Insufficiency or unsuitability of packing or preparation of packing of the insured cargo: It is the duty of the insured to act as if he is uninsured. Clearly, if goods are sent insufficiently packed to withstand the normal handling anticipated during transit, then any loss that arises as a result should not be for insurance companies to pay. Inherent vice or nature of the cargo: Examples of excluded loss would include blowing of tins containing foodstuffs or spontaneous combustion of a cargo liable for self-heating. Delay: The insurance company is not responsible for any loss, damage or expense caused by delay although the delay is caused by a peril insured against. Losses through delay could include loss of market or deterioration in respect of perishable goods that would be irrecoverable even if the cause of the delay was a peril insured such as a collision. Insolvency or financial default of carriers: This exclusion was introduced to discourage the assured from shipping their goods on vessels whose owners, managers, charterers or operators might be in financial distress. In practice the clause would exclude all types of claims for recovery and forwarding of goods arising from abandonment of an insured voyage where the proximate cause was the financial distress of one of the aforementioned parties. Un-seaworthiness and unfitness of the vessel or conveyance: This only applies where the assured or their agents were privy to this information prior to loading. War, strikes, riots and civil commotion:

These risks are excluded under all the clauses but can be insured by payment of an additional premium. Sum Assured Unlike most insurance policies the marine cargo policy is an Agreed Value policy. These contracts, which are based on the value of the sales contract allow an element of profit to be included in the Sum Assured. Normally the value taken as Sum Assured is the C.I.F value plus a nominal extra of about 10 percent to accommodate any fluctuation in the market value of goods during the period of transit or an element of profit. Although the marine cargo policies are on agreed value basis it is useless to insure for a higher amount than the market value of the cargo, as the losses settled are on the basis of market value at the time and place of loss, subject to the maximum of Sum Assured selected. By insuring for a higher value, the assured would only land up paying a higher premium without any consequent benefit. Types of Policies Various types of policies are available in the Indian market to cater to the varied needs of a cross section of clients, such as Specific Voyage or Time Policies These policies are issued to firms that require coverage for a specific voyage. It is suitable for those firms who seldom require marine cargo policies in the course of their trade. These policies are issued on a "from and to" basis and the cover commences once the goods leave the place of origin named in the policy and terminates on delivery at the place of destination. Sometimes these policies are also issued in terms of duration of the voyage, in which case the cover commences on the date and time specified for the same in the policy. Open Policies Exporters/ importers, firms and companies that handle a large turnover of goods take such policies. It becomes extremely cumbersome for them to take specific voyage policies, each and every time they engage in transportation of their goods as they need to handle innumerable transactions during a given period of time. Instead, they take an Open Policy that is normally issued for a period of one year and insure a part of their annual turnover at the beginning of the policy and go on declaring the value of their consignments to the insurance companies each time they send them. For instance, an exporter's annual turnover is Rs.10 crores per year and approximately Rs.1 crore worth of goods is exported every month. Each

consignment is valued at Rs.5 lakhs. There are about 20 trips every month. It is impracticable for him to take 20 specific voyage policies every month and so he takes an Open Policy for Rs.2 crores, and goes on sending declaration slips, giving certain details about the transit and its value, to the insurance company. Every time the exporter sends a declaration the Sum Assured under the policy is reduced by the said amount. Before the entire Sum Assured is exhausted, the exporter again pays the premium to cover another Rs.2 crores and reinstates the Sum Assured and continues like this. At the end of the policy term, it is likely that a certain balance amount of Sum Assured remains pending, in which case the premium corresponding to the balance amount left over is refunded to him. In Open Policies it is a condition precedent to liability that each and every transit of the Assured are declared for insurance. This is essential since this policy gives an automatic protection to the transit of the Assured and in case he forgets to declare a particular transit and a loss takes place in that particular transit, the insurance company accepts the loss as covered in the policy, provided there is sufficient balance of Sum Assured at that time. A Special Declaration Policy is a particular variant of the Open Policy. This policy can only be taken by concerns with an annual turnover of Rs.2 crores and above. In this policy the entire annual turnover has to be declared at the commencement of the policy and the entire premium is paid in advance. Since the Assured has to pay the premium in advance they get a discount ranging from 20 percent to 50 percent on the premium. This policy is suitable for concerns having a very large turnover and it becomes administratively difficult for them to keep track of the Sum Assured for the purpose of reinstating the same once exhausted. In such policies, the Assured is allowed to make their declarations on a monthly or even quarterly basis. Duty Insurance Policy Customs duties form a major part of the cost of imported goods. Once the goods land at the port of destination custom, duty becomes payable. In case the goods are damaged during the transit from the port to the importer's warehouse, the c.i.f value is not sufficient to represent the actual value of the goods since the custom duties should have already been paid. This additional element of cost can be covered by a Duty Insurance Policy. Claims under a duty policy is only payable if the claim is otherwise admissible in the marine cargo policy covering the goods. Seller's Contingency Policy In almost all export transactions where credit is allowed by the seller to the buyer and the goods are not exported on c.i.f. basis, responsibility for the goods passes to the buyer when the goods are loaded on to the overseas vessel but ownership does not change until the buyer accepts the goods and relative documents.

Thus, if the seller is allowing credit to the buyer has shipped goods of f.o.b. (free on board) terms, where the responsibility for loss or damage to the goods is passed to the buyer when the goods are loaded on to the overseas vessel, the seller has no control over the conditions of the insurance cover arranged by the buyer. In the event of loss of or damage to the goods in transit from a peril insured against and the buyer refusing to pay for such loss or damage, the seller could stand to lose financially. Seller's Interest or Contingency Interest cover could help to prevent this. The cover is normally arranged as an extension of f.o.b cover. The seller's interest cover in effect retrospectively reinstates cover, as per Institute Cargo Clauses as provided for in the policy and allows the seller to be protected in an area where he has no control over the insurance arrangement. Claims Procedure Once damage is discovered the Assured should make every effort to reduce the loss and/or prevent further loss to the consignment as provided under the sue and labour clause of the policy. This could include re-bagging, re-cooperating barrels, separating wet cargo from dry, etc. Reasonable expenses incurred in taking such steps are reimbursable by the insurance company in addition to the payment of the claim itself. In other words, the insurance company expects the Assured to do exactly what he would have done if the shipments were uninsured. After this is done the Assured should notify the insurance company so that survey of the damage can be arranged as promptly as possible if necessary. As stipulated in the Insurance Act, all claims amounting to Rs.20,000/- and above are required to be surveyed by a licensed surveyor. A survey report issued by the surveyors will attest to the circumstances, nature, origin, cause and extent of loss and damage. The carrier or his agent should also be notified immediately and advised of the time and place of the survey, so that they can be represented. It is also essential that a monetary claim be notified immediately in writing against the Carrier, Port Trust or any other responsible party, in whose custody the consignment was at the time of loss, as soon as the loss is known or upon taking delivery. This can be in any form, but must include the full transit details, a description of the loss or damage and should state that the Carriers or other party will be held responsible for the loss or damage with an indication of the estimated amount of loss. After payment of a claim on the basis of a Subrogation Letter and a Power of Attorney obtained from the Assured, the insurance company proceeds against the Carriers or any other responsible party for recovery of the amount as per the laid

down laws. If the rights of recovery against the liable parties are not protected, the amount recoverable from the liable party but prejudiced by the Assured, will be deducted from the claim amount and the balance amount will be paid. However, if the amount of recovery prejudiced is not ascertainable, the claim will be settled on non standard basis for an amount not exceeding 75 percent of the assessed loss.

We Cover

Any loss or damage to goods in transit by rail, sea, road, air or post.

Who can Insure ?

Owners or bankers of goods in transit/shipment.

What is Insured ? export and import shipments goods in transit by rail, sea, road, air or post goods carried by coastal vessels plying between the various ports within the country cargo transported by small vessels or country craft over inland waters goods moved from place to place by river transport

Insured against what Risks ?

The policy covers loss/damage to the property insured due to: Fire or explosion; stranding, sinking etc. Overturning, derailment ( of land conveyance) Collision Discharge of cargo at port of distress Jettison General average sacrifice, salvage charges Earthquake, lightning Washing overboard Sea, lake, river water Total loss of package lost overboard or dropped in loading or unloading War and SRCC is specifically covered

Premium Rating The normal basis of valuation for ocean/air consignment will be CIF + incidentals up to a percentage which is agreed upon at the inception of the policy ( normally this is 10 %)

Open Cover

Open cover is usually issued for import/export. The open cover is a contract effected for a period of 12 months , whereby the insurance company agrees to provide insurance cover to all shipments coming within the scope of the open cover. Open cover is not a policy. It is an unstamped agreement. As and when shipments are declared , specific policies are issued as evidence of the contract and on collection of premium.

Open Policy

This policy is issued for transit of goods within India. Policy is valid for one year and all transits during the policy period and declared are automatically covered by the insurance company subject to the availability of the overall suminsured. It is a stamped document. In this case specific policies are not issued for each consignment . Premium can be collected in advance for the entire estimated value during the policy period . Stamp duty is collected in advance along with premium for despatches to be declared periodically

Specific Voyage Policy

This policy is valid for a single voyage or transit. The policy will be issued before the voyage starts. The coverage will cease immediately on completion of the voyage. The specific voyage policy must show complete details of the risk..It should contain particulars of conveyance/Vessel name/ Bill of Lading or Way bill and date , sum insured ,terms and conditions of cover, voyage , cargo description etc like all other marine policies.

Annual Policy

This policy may be issued to cover goods in transit by road or rail or sea from specified depots or processing units owned or hired by the insured. The goods

covered must belong to or held in trust by the insured . These policies can not be issued to transport operators , clearing , forwarding and commission agents or freight forwarders or in joint names.. They can not be assigned or transferred. For such policies the sum insured should not be less than Rs 5000/-.

Note

Particulars of cover, liability and exclusion given above are not complete or exhaustive. Our nearest branch office may be approached for complete details.

We Cover

Any loss or damage to ships, tankers, bulk carriers, smaller vessels, fishing boats and sailing vessels.

Who can Insure ?

Owners or bankers of ships or vessels.

What is Insured ? The various vessels that are covered under this policy are : Fishing Vessels Ocean Going Vessels Sailing Vessels Other Vessels

Insured against what Risks ?

The policy covers loss/damage to the property insured due to: Fire or explosion; stranding, sinking etc. Overturning, derailment ( of land conveyance)

Collision General average sacrifice, salvage charges

What is not Insured ? The policy does not pay any loss/damage caused by, attributable to, due to Deliberate damage/destruction of the vessel by wrongful act of any person Use of any weapon of war employing atomic / nuclear fission and or fusion Insolvency or financial default of the vessel owner / operators / charterers War / civil war Strike, Riot or Civil Commotion Any terrorist or person/s acting with political motive

Note

Particulars of cover, liability and exclusion given above are not complete or exhaustive. Our nearest branch office may be approached for complete details. Marine Cargo Insurance Details Risks Covered and Premium rating Types of Policies Note

Types of Policies Open Cover

Open cover is usually issued for import/export. The open cover is a contract effected for a period of 12 months , whereby the insurance company agrees to provide insurance cover to all shipments coming within the scope of the open cover. Open cover is not a policy. It is an unstamped agreement. As and when shipments are declared , specific policies are issued as evidence of the contract and on collection of premium.

Open Policy
This policy is issued for transit of goods within India. Policy is valid for one year and all transits during the policy period and declared are automatically covered by the insurance company subject to the availability of the overall suminsured It is a stamped document. In this case specific policies are not issued for each consignment . Premium can be collected in advance for the entire estimated value during the policy period . Stamp duty is collected in advance along with premium for despatches to be declared periodically

Specific Voyage Policy

This policy is valid for a single voyage or transit. The policy will be issued before the voyage starts. The coverage will cease immediately on completion of the voyage. The specific voyage policy must show complete details of the risk..It should contain particulars of conveyance/Vessel name/ Bill of Lading or Way bill and date , sum insured ,terms and conditions of cover, voyage , cargo description etc like all other marine policies.

Annual Policy
This policy may be issued to cover goods in transit by road or rail or sea from specified depots or processing units owned or hired by the insured. The goods covered must belong to or held in trust by the insured . These policies can not be issued to transport operators , clearing , forwarding and commission agents or freight forwarders or in joint names.. They can not be assigned or transferred. For such policies the sum insured should not be less than Rs 5000/-.

The policy does not pay any loss/damage caused by, attributable to, due to
Deliberate damage/destruction of the vessel by wrongful act of any person Use of any weapon of war employing atomic / nuclear fission and or fusion Insolvency or financial default of the vessel owner / operators / charterers. War / civil war Strike, Riot or Civil Commotion. Any terrorist or person/s acting with political motive.