Know Marine Cargo Insurance and Its Benefits

'Marine Insurance at a Glance (what it covers)

Cargo Insurance covers transits by:

- Water

- Air

- Road or Rail

- Registered Post Parcel

- Courier

Or any combination of the above.

For Whom?

Buyers, Sellers, Import/Export merchants, Buying Agents, Contractors and Banks-in fact any one engaged in the business of movement of goods.

During the course of transit, the cargo may not always be at your risk. For instance, you can sell it to a buyer. Major Marine Cargo Policies cover your interest in the cargo insured and also extends to cover the interests of any third party to whom you have assigned interest upon transfer of ownership, as determined by the Terms of Sale.

Why Insure?

If there is one class of insurance that is an absolute necessity, it is Marine!

Your cargo can be damaged on exposure to a wide variety of risks, including an accident of the vehicle carrying the cargo, failure of the stevedores in the port area, and damage to the container that can be washed overboard. If you think Piracy is a thing of the past, you will be surprised to find that this is very much alive and well! To summarise, your cargo can be damaged by stranding, grounding, sinking, burning, collisions, faults or errors in navigation, heavy weather, entry of sea or river water, jettison, washing overboard, ship's sweat, condensation, improper stowage by the carrier, hook damage, theft or pilferage, war, strikes or natural perils. The Carrier pays for loss only when the Carrier causes damage. Again, the Carrier is only required to pay a limited amount per package and not for the full value of the cargo. This is another reason for insuring your cargo.

Responsibility for Arranging Insurance

Who arranges insurance-the buyer or the seller? Or do both need some protection?

The answer depends on the Sale Contract the two enter into. For each Sale Term such as FOB, CFR, DDP, DDU etc., Insurance companies have tailor-made policies for both the seller and the buyer respectively.

Marine Cargo Coverage

A vast majority of Marine Cargo policies are based on Institute Cargo Clauses, that appear in three versions viz., ICC (A), ICC (B) and ICC(C). ICC (A) is based on ''All Risks'' while (B) and (C) are based on named-perils.

All three clauses have certain exclusions.

What the Institute Cargo Clauses Cover

Marine Cargo Policies are based, in a majority of instances, on one or more of the Institute Cargo Clauses. The coverage available under these standard clauses include:

- Actual Total Loss

- Constructive Total Loss

- Particular Average i.e., Partial Loss by an insured peril

- General Average

- Collision Liability

- Expenses such as Survey Fees, Reconditioning Costs, Forwarding Expenses, Sue and

Labour etc.

Principal exclusions, which appear in the Institute Cargo Clauses, are:

- Loss or damage due to Inherent Vice

- Loss or damage due to Delay

- Loss or damage due to Insufficiency of packing

- Loss or damage due to insolvency, financial default of ship owners, etc.

Some insurance companies install, on request, software at your premises, so that Certificates of Insurance can be printed by you, thereby avoiding delays.

'