11
MARINE INSURANCEMARINE INSURANCE
22
DefinitionDefinition
Marine Insurance covers the loss or damage of ships, cargo, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination.
33
At the end of this session you will be able to At the end of this session you will be able to explain;explain;
MARINE INSURANCEMARINE INSURANCE
PROPERTYPROPERTY LIABILITY LIABILITY
Marine CargoMarine Cargo Marine HullMarine Hull
44
MARINE CARGOMARINE CARGO
OVERSEAS TRANSITOVERSEAS TRANSIT INLAND TRANSITINLAND TRANSIT
* Open Cover* Open Cover * Open Policy* Open Policy
* Specific Policies* Specific Policies * Special Declaration* Special Declaration
* Annual Policy* Annual Policy
At the end of this unit you will be able to At the end of this unit you will be able to explain;explain;
55
At the end of this unit you will be able to At the end of this unit you will be able to explain;explain;
Contracts of Sale in Marine Overseas Transit Contracts of Sale in Marine Overseas Transit (Insurable interest in Marine Overseas Cargo is based on the (Insurable interest in Marine Overseas Cargo is based on the contract of sale)contract of sale)
FOBFOB C & FC & F CIFCIF
66
At the end of this unit you will be able to At the end of this unit you will be able to explain;explain;
OVERSEAS TRANSIT CLAUSESOVERSEAS TRANSIT CLAUSES
(These clauses define the terms and coverages in (These clauses define the terms and coverages in Overseas Transit)Overseas Transit)
Institute Cargo Clause CInstitute Cargo Clause C Institute Cargo Clause BInstitute Cargo Clause B Institute Cargo Clause AInstitute Cargo Clause A
77
At the end of this unit you will be able to At the end of this unit you will be able to explain;explain;
INLAND TRANSIT CLAUSESINLAND TRANSIT CLAUSES
Inland Transit Clause CInland Transit Clause C Inland Transit Clause BInland Transit Clause B Inland Transit Clause AInland Transit Clause A
88
Why is Marine Insurance important?Why is Marine Insurance important?
The cargo can be damaged on exposure to a wide variety of risks
Marine insurance relieves the traders of their financial exposure from physical loss or damage to their goods while in transit
99
Types of Marine Insurance
Marine insurance can be broadly classified as either property or liability insurance
i) PROPERTY Cargo Hull
ii) LIABILITY
1010
Marine Cargo InsuranceMarine Cargo Insurance
It provides insurance cover in respect of loss of or damage to goods during transit by rail, road, sea or air.
1111
Though the name may indicate that the policy covers the transit of goods only by waterways, it is not so
Marine Cargo Insurance includes all forms oftransit of goods – By Road, Railways, Water & Air
Marine Cargo Insurance intends to protect the insured against the risk of loss or damage to the goods in transit
It is also called transit insurance
1212
Insurable interestInsurable interest
A ship carrying cargo starts from India to Japan, on the way due to bad weather condition the ship meets with an accident and sinks. Who has insurable interest in the goods?
The Sellers, the buyer or the transporter?
1313
Insurable InterestInsurable Interest
1414
Usually it is the seller’s responsibility for any loss or damage suffered by the goods until their ownership passes to the buyer
This applies to the normal sales within the country but not to export sales
1515
Who can buy a Marine Insurance Who can buy a Marine Insurance policy??policy??
Contract of sale : Legal contract for exchange of goods, services or property to be exchanged from seller to buyer for an agreed upon value
The contract of sale determines who buys the policy
The most common contracts of sale, also called Incoterms (International Commercial Terms), are :
FOB (Free on Board) C & F (Cost & Freight) CIF (Cost, Insurance & Freight)
1616
Contract of SaleContract of Sale FOB (Free on Board):
Seller is bound to load the goods onto the carrying vessel, he does not need to arrange insurance.
FOB : Buyer Pays freight, Buyer arranges insuranceFOB : Buyer Pays freight, Buyer arranges insurance C&F (Cost and Freight):
Same as FOB. The only difference is that the freight should be paid by the seller
C& F : Seller pays freight, Buyer arranges insuranceC& F : Seller pays freight, Buyer arranges insurance
1717
Contract of saleContract of sale
CIF (Cost – Insurance – Freight):
The seller is bound to provide insurance covering the whole voyage up to the final destination
CIF : Seller pays freight and seller arranges the CIF : Seller pays freight and seller arranges the insuranceinsurance
1818
In marine cargo insurance, the person having insurable interest at the time of loss can only recover
Marine cargo policies are freely assignable. Unlike other policies, there is no need to take insurance company’s consent for transferring policy to new buyer
1919
Marine policies are Valued Policies
The sum insured is negotiated between the insured and the insurer
i.e., the value is agreed upon and claims are settled on the basis of proportion to the agreed value and not on the market value or reinstatement value basis
2020
Marine Cargo InsuranceMarine Cargo Insurance
Provides insurance cover in respect of loss of or damage to goods during transit by rail, road, sea or air
Consignments by rail, road etc Export & import shipments Coastal shipments Shipments by inland vessels or country craft
2121
Marine Cargo insurance provides;
(1) Coverage of goods during Overseas Transit (2) Coverage for goods Inland Transit
Marine insurance cover starts right from the moment the goods leave the point of start and remain continuously in force during transit and until the goods reach the destination.
2222
Types of Marine CargoTypes of Marine Cargo
Overseas TransitOverseas Transit Open CoverOpen Cover Specific PoliciesSpecific Policies
Inland TransitInland Transit Open PolicyOpen Policy Special Declaration PolicySpecial Declaration Policy Annual PolicyAnnual Policy
2323
Large Export/ Import oriented Industries usually prefer Open cover agreement, as they have to make numerous regular shipments who would otherwise find it very inconvenient to obtain insurance cover separately for each and every shipment.
Overseas TransitOverseas TransitOpen coverOpen cover
2424
Overseas TransitOverseas TransitOpen CoverOpen Cover
A marine cargo open cover policy is an agreement between a merchant and an insurance company to insure all goods in transit within the agreement, until either party cancels the agreement
2525
Overseas TransitOverseas TransitOpen cover-FeaturesOpen cover-Features
An Agreement is made for a specific period, generally 12months
Rates, Terms & Conditions are agreed to in advance by both the parties
Premium is paid in advance for the projected exports to be made
Details of all shipments should be declared by the insured
Agreement ceases on expiry of period or when sum insured gets exhausted whichever occurs first.
2626
Overseas TransitOverseas TransitSpecific PolicesSpecific Polices
Specific Policies:
This agreement or policy is usually issued for one time transit of cargo
Covers only particular consignment. Insurance on case to case basis. To be arranged before commencement of
transit
2727
INLAND TRANSITINLAND TRANSITOpen PolicyOpen Policy
A manufacturer who in a year has many consignments for transportation, can take an open policy for the entire year instead of individual policy.
Open Policy is commonly used for dispatches within the country by rail, road, air, inland
waterways and registered post parcels. It is also known as the floating policy.
2828
INLAND TRANSITINLAND TRANSITOpen PolicyOpen Policy
The policy term is one year Policy issued for a substantial sum insured
based on the projected value of dispatches Declarations are made for each dispatch Policy ceases on expiry of policy term or when
sum insured gets exhausted whichever occurs first
2929
INLAND TRANSITINLAND TRANSITSpecial Declaration PolicySpecial Declaration Policy
Special Declaration Policy is a Special Declaration Policy is a Form of Open policy for those with large turnover and frequent dispatches by inland transit via Rail, Road, Air, Inland waterways and post parcels
Minimum estimated dispatches for an year should not be less than 2 crores
3030
INLAND TRANSITINLAND TRANSITAnnual PolicyAnnual Policy
Annual Policy:
This policy covers transit of goods from plant/ warehouse of origin to the buyer’s plant/ warehouse.
3131
Sum Insured will represent the maximum value of risk that may encounter during transit
In case of more than one transit, sum insured would be sum total of the aggregate maximum estimated value at risk in transit at any given point of time
Rating would depend on:- Distance involved- Single carrying limit- Turnover
No declarations are required
3232
Some of the perils the cargo may Some of the perils the cargo may come across are;come across are;
3333
Cargo ClausesCargo Clauses Institute Cargo Clauses are standard terms and conditions which
are used internationally
Drafted by the Institute of London Underwriters & are internationally accepted
Cargo insurance is usually provided by means of ICC - A, B or C, plus War Clauses and Strikes Clauses
These clauses define the Terms of Cover for Export-Import Cargo
Marine Cargo Policy is NOT complete unless the related Clause is attached to it
3434
OVERSEAS TRANSIT CLAUSESINSTITUTE CARGO CLAUSE( C )
Fire or Explosion Vessel or craft being stranded, sunk, grounded or capsized
(Overturn) Overturning or derailment of land conveyance (Rail/lorry) Collision or contact of vessel/craft or conveyance with
any external objects, other than water Mishap at the time of discharge of cargo at Port of distress General Average (When the entire venture is in danger, in When the entire venture is in danger, in
order to save the Ship and Cargo, certain sacrifices are made order to save the Ship and Cargo, certain sacrifices are made and/or certain expenses are incurred)and/or certain expenses are incurred)
Jettison (Throwing of cargo from above board the ship to save Throwing of cargo from above board the ship to save the vessel and/or other cargo)the vessel and/or other cargo)
3535
OVERSEAS TRANSIT CLAUSES INSTITUTE CARGO CLAUSE ( B )
ICC C + Earthquake, volcanic eruption, lightning. Washing overboard (can be due to sea water/wind/bad weather)
Entry of sea, lake or river water into vessel, craft, hold, conveyance, container, lift van or place of storage
Total loss of any package lost overboard or dropped whilst loading on to, or unloading from vessel or craft
3636
OVERSEAS TRANSIT CLAUSES INSTITUTE CARGO CLAUSE ( A )
All Risk Cover Except the specific exclusions
3737
Coverages – ICC A, B, CCoverages – ICC A, B, C
RisksRisks I.C.C.(A)I.C.C.(A) I.C.C.(B)I.C.C.(B) I.C.C.(C)I.C.C.(C)
Fire or explosionFire or explosion CoveredCovered CoveredCovered CoveredCovered
Vessel or craft being Vessel or craft being Stranded, grounded, Stranded, grounded, sunk or capsized.sunk or capsized.
CoveredCovered CoveredCovered CoveredCovered
Overturning or Overturning or derailment of land derailment of land conveyance.conveyance.
CoveredCovered CoveredCovered CoveredCovered
Collision or contacts of Collision or contacts of vessel with any external vessel with any external object other than water.object other than water.
CoveredCovered CoveredCovered CoveredCovered
3838
Coverages- Contd.Coverages- Contd.
RisksRisks I.C.C.(A)I.C.C.(A) I.C.C.(B)I.C.C.(B) I.C.C.(C)I.C.C.(C)
Discharge of cargo at Discharge of cargo at portport CoveredCovered CoveredCovered CoveredCovered
Earthquake, Volcanic Earthquake, Volcanic eruption or lightning.eruption or lightning. CoveredCovered CoveredCovered Not Not
CoveredCovered
General Average General Average SacrificeSacrifice CoveredCovered CoveredCovered CoveredCovered
JettisonJettison CoveredCovered CoveredCovered CoveredCovered
Washing OverboardWashing Overboard CoveredCovered CoveredCovered Not Not CoveredCovered
3939
Coverages – Contd.Coverages – Contd.
RisksRisks I.C.C.(A)I.C.C.(A) I.C.C.(B)I.C.C.(B) I.C.C.(C)I.C.C.(C)
Entry of sea, lake or Entry of sea, lake or river water into the river water into the vesselvessel
CoveredCovered CoveredCovered Not CoveredNot Covered
Total loss of any Total loss of any package lost package lost overboard – loading, overboard – loading, or, unloading from or, unloading from vessel or craft.vessel or craft.
CoveredCovered CoveredCovered Not CoveredNot Covered
Any other risk not Any other risk not specifically specifically excluded - ALL Risksexcluded - ALL Risks
CoveredCovered Not Not CoveredCovered Not CoveredNot Covered
4040
Exclusions – ICC A,B,CExclusions – ICC A,B,C
ExclusionsExclusions ICC - A,B & CICC - A,B & C
Willful MisconductWillful Misconduct ExcludedExcluded
Ordinary Leakage, Loss in Weight-VolumeOrdinary Leakage, Loss in Weight-Volume ExcludedExcluded
Insufficient PackingInsufficient Packing ExcludedExcluded
DelayDelay ExcludedExcluded
Inherent ViceInherent Vice ExcludedExcluded
Unfitness of Aircraft-Container – VanUnfitness of Aircraft-Container – Van ExcludedExcluded
Nuclear PerilsNuclear Perils ExcludedExcluded
War & SRCC:War & SRCC:--ExcludedExcluded, but , but BOTH INCLUDED on BOTH INCLUDED on Payment of Extra PremiumPayment of Extra Premium
4141
INLAND TRANSIT CLAUSESINLAND TRANSIT CLAUSES
Inland Transit Clause – CInland Transit Clause – C
FireFire
LightningLightning
4242
INLAND TRANSIT CLAUSESINLAND TRANSIT CLAUSES
INLAND TRANSIT CLAUSE – BINLAND TRANSIT CLAUSE – B Fire Lightning Breakage of bridges Collision with/ by carrying vehicle Overturning of the carrying vehicle Derailment or accidents of like nature
4343
INLAND TRANSIT CLAUSESINLAND TRANSIT CLAUSES
INLAND TRANSIT CLAUSE – AINLAND TRANSIT CLAUSE – A All risks with the following EXCLUSIONS
Willful misconduct Ordinary losses Defective packing Inherent vice War perils Strikes etc. perils
4444
Coverages ITC A, B, CCoverages ITC A, B, C
RisksRisks Inland Inland Transit-ATransit-A
Inland Inland Transit-BTransit-B
FireFire CoveredCovered CoveredCovered
LightningLightning CoveredCovered CoveredCovered
Breakage of bridgesBreakage of bridges CoveredCovered CoveredCovered
Collision - carrying vehicleCollision - carrying vehicle CoveredCovered CoveredCovered
Overturning-carrying vehicle.Overturning-carrying vehicle. CoveredCovered CoveredCovered
Derailment or accident to the Derailment or accident to the carrying vehicle.carrying vehicle. CoveredCovered CoveredCovered
Any other risk not specifically Any other risk not specifically excluded-ALL RISKSexcluded-ALL RISKS CoveredCovered Not CoveredNot Covered
Inland Transit - C Inland Transit - C offers cover against loss by FIRE & LIGHTNINGoffers cover against loss by FIRE & LIGHTNING
ADD-On: Theft, Pilferage & Non-Delivery (TPND) with Extra PremiumADD-On: Theft, Pilferage & Non-Delivery (TPND) with Extra Premium
4545
Exclusions ITC A, BExclusions ITC A, BExclusionsExclusions Inland Transit - Inland Transit -
A&BA&B
Willful MisconductWillful Misconduct ExcludedExcluded
Ordinary Leakage, Loss in Weight-Ordinary Leakage, Loss in Weight-VolumeVolume
ExcludedExcluded
Insufficient PackingInsufficient Packing ExcludedExcluded
DelayDelay ExcludedExcluded
Inherent ViceInherent Vice ExcludedExcluded
Unfitness of Aircraft-Container – VanUnfitness of Aircraft-Container – Van ExcludedExcluded
Nuclear PerilsNuclear Perils ExcludedExcluded
War Risks - Excluded; War Risks - Excluded; Strikes, Riot & Civil CommotionStrikes, Riot & Civil Commotion--ExcludedExcluded, but can be , but can be Included on Payment of Extra PremiumIncluded on Payment of Extra Premium
Top Related