MARINE INSURANCE
1
Definition
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.
2
At the end of of this this session you will be able to explain; MARINE INSURANCE
PROPERTY PROPERTY
Marine Cargo
Marine
L LIABILITY IABILITY
Hull
3
At the end of of this this unit you will be able to explain; MARINE CARGO
OVERSEAS T TRANSIT RANSIT
INLAND INLAND TRANSIT
* O pen Cover
* O pen Policy
* S pecific Policies
* S pecial Declaration * Annual Policy
4
At the end of of this this unit you will be able to explain;
Contracts of Sale in Marine Overseas Transit (Insurable interest in Marine Overseas Cargo is based on the contract of sale)
FOB
C
CIF
&F
5
At the end of of this this unit you will be able to explain; OVERSEAS TRANSIT CLAUSES (These clauses define the terms and coverages in Overseas Transit)
Institute Cargo Clause C
Institute Cargo Clause B
Institute Cargo Clause A
6
At the end of of this this unit you will be able to explain;
INLAND TRANSIT CLAUSES
Inland Transit Clause C
Inland Transit Clause B
Inland Transit Clause A
7
Why
is Marine Insurance important?
The
Marine
cargo can be damaged on exposure to a wide variety of risks insurance relieves the traders of their financial exposure from physical loss or damage to their goods while in transit tr ansit
8
Types
of Marine Insurance
Marine
insurance can be broadly classified as either property or liability insurance i) PROPERTY
Cargo
Hull
ii) LIABILITY 9
Marine Mar ine Carg Cargo o Insu nsura rance nce
It
provides insurance cover in respect of loss of or damage to goods during transit by rail, road, sea or air.
10
Though the
Marine Cargo Insurance
Marine Cargo Insurance
It
name may indicate that the policy covers the transit of goods only by waterways, it it is not so includes all all forms of transit of goods ± By R oad, oad, R ailways, ailways, Water & Air intends to protect the insured against the risk of loss or damage to the goods in transit ransit nsit insu insura rance nce is also called tra
11
Insu nsurab rable le inte interrest 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?
A
The Sellers,
the buyer or the transporter?
12
Insu nsurab rable le Inte nterrest
13
Usually
This
it is the seller¶s responsibility for any loss or damage suffered by the goods until their ownership passes to the buyer applies to the normal sales within the country but not to export sales
14
Who
can buy a Marine Marine Insu nsura rance nce policy polic y??
Cont ontra ract ct of of ssale : 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 :
on Boar ard) d) (Cost ost & Frei eig ght) C & F (C (Cost, ost, Insu nsura rance nce & Frei eig ght) CIF (C
FOB (Free
15
Cont ontra ract ct of of Sa Sale le
FOB (Free
on Boar ard): d):
Seller
is bound to load the goods onto the carrying vessel, he does not need to arrange insurance. FOB : Buyer Pays
freight, Buyer arranges insurance
C&F (C (Cost ost and Frei eig ght): Same
as FOB. The only difference is that the freight should be paid by the seller C& F : Seller
pays freight, Buyer arranges insurance
16
Cont ontra ract ct of of ssale
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
insurance
17
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 18
Marine
The
policies are Valued Policies
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
19
Marine Mar ine Carg Cargo o Insu nsura rance nce
Provides
insurance cover in respect of loss of or damage damage to t o goods during transit by rail, road, sea or air
Consignm onsignments ents
Export
Coastal
Shipments
by rail, r ail, road etc
& import shipments shipments by inland vessels or country craft 20
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 mom ent the t he goods leave the point of start and remain continuously in force during transit and until the goods reach the destination. 21
Types Ty pes of of Mar Marine ine Carg Cargo o
Overseas Transit
O pen Cover
S pecific Policies
Inland Transit
O pen Policy
S pecial Declaration Policy
Annual Policy 22
Overse Ove sea as Tra Transit nsit Open co cov ve r
Large Export/ Import
oriented Industries usually prefer O pen 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.
23
Overse Ove sea as Tra Transit nsit Open Cover
marine cargo open cover policy is an agreementt between a merchant and an agreemen insurance company company to t o insure all goods in transit within the agreement, agreement, until either party cancels the agreement A
24
Overse Ove sea as Tra Transit nsit Open co cov verr-Featu turres
An Agr Agreement eement is made fo forr a specific pe perriod, gene enera rall lly y 12months 12 months Rates, Terms & Conditions Rates, Conditions ar aree agr agreed eed to in adva vance nce by both the par arties ties Premium is paid in adva vance nce fo forr the projected expo exporrts to be made Deta Det ails of of a all shipments should be decl declar ared ed by the insu insurred Agreement ce Agreement cea ases on expi expiry ry of of pe perriod or when when sum insu insurred gets exh exha austed whiche hichev ver occu occurrs fi firrst. 25
Overse Ove sea as Tra Transit nsit Specific Polices
Specific Policies: This
agreement or policy is usually issued i ssued for one time transit of cargo
Covers
Insurance
To
only particular consignm consignment. ent. on case to case basis.
be arranged before commencement of transit 26
INLAND TRANSIT INLAND Open Polic Policy y manufacturer who in a year has many manufacturer consignments consignm ents for transportation, t ransportation, can take an open policy for the entire year instead of individual policy.
A
O pen Policy
is commonly 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. 27
INLAND TRANSIT INLAND Open Polic Policy y
The
policy term is one year
Policy
issued for a substantial sum insured based on the projected value of dispatches
Declarations
Policy
are made for each dispatch
ceases on expiry of policy term or when sum insured gets exhausted whichever occurs first
28
INLAND TRANSIT INLAND Speci pecia al Decl Declara aration tion Polic Policy y
S pecial Declaration Policy
is a Form of O pen policy for those with large turnover and frequent dispatches by inland transit via R ail, ail, R oad, oad, Air, Inland waterways and post parcels Minimum
estimated estim ated dispatches for an year should not be less than 2 crores
29
INLAND TRANSIT INLAND Annu nnua al Polic Policy y
Annual Policy:
This
policy covers transit of goods from plant/ warehouse of origin to the buyer¶s plant/ warehouse.
30
Sum Insu nsurred will rep eprresent the maximum va value lue of of rrisk tha th at may encounte encounterr du durrin ing g tra ransit nsit In case of of mo morre th tha an one tra ransit, nsit, sum insu insurred would be sum tot tota al of of the the aggr aggreega gate te maximum estim estima ated va value lue at risk isk in in tra ransit nsit at any gi given point of of time time Rating Ratin g would would depend on: - Dist Dista ance in inv vol olv ved - Sin ing gle carry arryin ing g limit - Turno nov ver No decl declara arations tions ar aree requi equirred
31
Some of of the the pe perrils the carg argo o may come across ar are; e;
32
Cargo Carg o Clauses
Institute Carg Cargo o Clauses ar aree st sta and ndar ard d te terrms and conditions which ar aree used inte interrnation tiona all lly y Dra rafted fted by the Institute of of L London Unde nderwr rwrite iterrs & are are interrnation inte tiona all lly y accepted accepted Cargo insu Cargo insura rance nce is usu usua all lly y provided by me mea ans of of IICC - A, B or C, C, plus War Cl Clauses and Strikes Clauses These cl cla auses define the Terms of of C Cover fo forr Expo ExporrtImpo mporrt Carg Cargo o Marine Carg Marine Cargo o Polic Policy y is NOT complete unless the rel ela ated Clause is att tta ached to it 33
OVERSEAS TRANSIT CLAUSES INSTITUTE CARGO CLAUSE( C )
Fire
or Explosion Explosion Vessel or cra raft ft bein eing g st stra randed, nded, sunk, gr grounded ounded or capsized (Oveertu (Ov turrn) Oveertu Ov turrnin ning g or de dera railment ilment of of lland con conv veya yance nce (Ra (Rail/lo il/lorry rry)) Collision or cont conta act of of v vessel/c essel/cra raft ft or con conv veya yance nce with any exte an wa wate exterrnal ob jects, othe otherr th tha terr Mish isha ap at the time of of disch discharg argee of of ccarg argo o at Po Porrt of of dist distrress dan ger, in Gene enera rall Av Aveerag ragee (When the entire venture is in danger, order to save the Ship and Cargo, certain sacrifices are made and/or certain expenses are incurred) sh ip to save Jettison (Throwing of cargo from above board the ship the vessel and/or other cargo) 34
OVERSEAS TRANSIT CLAUSES INSTITUTE CARGO CLAUSE ( B )
ICC C
Earthquake, volcanic eruption, lightning.
sea a wate waterr/wind/ ind/ba bad d weathe therr) Washing overboard (can be due to se
Entry
Total
+
of sea, lake or river water into vessel, craft, hold, conveyance, conveyance, container, lift van or place of storage loss of any package lost overboard or dropped whilst loading on to, or unloading from vessel or craft
35
OVERSEAS TRANSIT CLAUSES INSTITUTE CARGO CLAUSE ( A )
All R isk isk Cover Except
the specific exclusions
36
Coverag rages es ± ± IICC CC A A,, B, C Risks Risks
I I.C.C.(A) I.C.C. .C.C.( (A) A) I.C.C. I.C.C.(B I.C.C.(B (B) )
I.C.C. I.C I.C.C.(C) .C.(C) (C)
Fire F ire or or explosion explosion
Covered
Covered
C Covered overed
Vessel or craft being Vessel Stranded, grounded, sunk or capsized.
Covered Covered
Covered
C Covered overed
Overturning or derailment of land conveyance.
Covered Covered
Covered
C Covered overed
Collision or contacts of vessel with any external object other than water.
Covered Covered
Covered
C Covered overed
37
Coverag rages es- Contd. esRisks Risks
I I.C. I. .C C.C. .C C.(A .( (A) A)
I.C.C I. I.C. C.C.( C.C. C.(B .(B) (B) B) )
I.C. I. I.C.C.(C) C.C. C.(C (C) )
Covered Covered
Covered
C Covered overed
Earthquake, Volcanic eruption or lightning.
Covered Covered
C Covered overed
Not Covered
General Gene Ge nerral Average Aver Ave verrag age e Sacrifice Sacr Sacrif ifice ific ice e
C Cove Co ov vere erred ed
Covered
C Covered overed
Jettison Jettison
Covered
Covered
C Covered overed
Washing W ashing Overboard Overboard
Covered
C Covered overed
Not Covered
Discharge
of cargo at
port
38
Coverag rages es ± ± Contd. Risks Risks
I.C C.C C. .C.(A)
I.C C.C. C. .C. C.( (B)
I I.C.C.(C) .C.C.(C)
Entry of sea, lake or river water into the vessel
Covered Covered
Covered
Not Not Covered Covered
Total loss of any package lost overboard ± loading, or, unloading from vessel or craft.
Covered Covered
Covered
Not Not Covered Covered
Any other risk not specifically excluded - AL ALL L Risks Risks Ris ks
Covered
Not Covered
Not Covered 39
Exclusions ± ± IICC CC A A,,B,C Exclusions
Willful Misconduct Ordinary Leakage, Loss
ICC - A,B & C Excluded
i n Weightin Weight W eight -Volume eight-
Excluded
Insufficient Packing
Excluded
Delay
Excluded
Inherent Vice
Excluded
Unfitness
Excluded
of Aircraftircraft-Container ontainer ± ± Van
Nuclear Perils
Excluded
War
& SRCC: SRCC:-Excluded , but BOTH INCLUD INCLUDED on Pay ayment ment of of E Ext xtra ra Premium 40
INLAND INLAN D TRANSIT CLAUSES
± C Inland Transit Clause ±
Fire
Lightnin htning g
41
INLAND INLAN D TRANSIT CLAUSES INLAND TRANSIT CLAUSE ± ± B
Fire
Lightning
Breakage
of bridges
Collision
with/ by carrying vehicle
Overturning
Derailment
of the carrying vehicle
or accidents of like nature 42
INLAND INLAN D TRANSIT CLAUSES INLAND TRANSIT CLAUSE ± ± A
All
risks with the following EXCLUSIONS
Willful misconduct
Ordinary losses
Defective packing
Inherent vice
War perils
Strikes
etc. perils 43
Coverag rages es ITC A, A , B, C Inland TransitTransit -A -A
Inland TransitTransit -B -B
F ir e Fire
Covered
C Covered overed
Lightning Lightning
Covered
C Covered overed
Breakage B reakage o off bridges bridges
Covered
C Covered overed
Collision - car carryi carrying rying ng v ve vehi ehicl hicle cle
Covered
C Covered overed
Overturning--carrying Overturning -carrying carrying vehicle. vehicle.
Covered
C Covered overed
or accident to the carrying vehicle.
Covered Covered
C Covered overed
Any other risk not specifically excluded--ALL excluded -ALL RISKS
Covered Covered
N Not ot C Covered overed
Risks
Derailment
Inland Transit
- C offers cover against loss by FIRE & LIGHTNING
ADD-On: Theft, Pilferage
& Nonon-Delivery (TPND) with Extra Premium 44
Exclusions ITC A, A, B Exclusions
Willful Misconduct Ordinary Leakage, Loss
Inl nla and Tra ransit nsit A&B Excluded
i n Weightin Weight W eight eight-
Excluded
Volume Insufficient Packing
Excluded
Delay
Excluded
Inherent Vice
Excluded
Unfitness
Excluded
of Aircraftircraft-Container ontainer ± ± Van
Nuclear Perils
Excluded
War R isks isks - Excluded; Strikes, R iot iot & Civil CommotionExcluded , but can be Included on Payment of Extra Premium 45
