Basics of Marine Insurance

2Compiled by S. M.Gupta

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INTRODUCTION

� INSURANCE CONNECTED WITH THE RISKS OF TRANSPORTATION OF GOODS, IS ONE OF THE OLDEST AND MOST IMPORTANT FORMS OF INSURANCE

� THE VALUE OF GOODS SHIPPED BY THE BUSINESS FIRMS EACH YEAR COST BILLIONS OF RUPEES

� THESE GOODS ARE EXPOSED TO DAMAGE OR LOSS FROM NUMEROUS PERILS ASSOCIATED WITH TRANSPORTATION

� THESE GOODS CAN BE PROTECTED BY MARINE INSURANCE CONTRACTS.

Compiled by S. M.Gupta

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INTRODUCTION

� IT IS AN IMPORTANT ELEMENT OF THE GENERAL INSURANCE INDUSTRY

� IT ESSENTIALLY PROVIDES COVER FOR THE LOSSES SUFFERED DUE TO MARINE PERILS

� IN INDIA, THE MARINE INSURANCE IS REGULATED BY:� THE INDIAN ‘MARITIME INSURANCE ACT,

1963’.

� WHICH IS BASED ON THE ORIGINAL ‘MARINE INSURANCE ACT, 1906. OF U.K.


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HISTORY OF MARINE INSURANCE

� MARINE INSURANCE AS WE KNOW IT TODAY, CAN BE DESCRIBED AS MOTHER OF ALL INSURANCES

� IT IS BELIEVED TO HAVE ORIGINATED IN ENGLAND OWING TO THE FREQUENT MOVEMENT OF SHIPS OVER HIGH SEAS FOR COMMERCE AND TRADE

� IN INDIA, MARINE INSURANCE HAS BEEN IN VOGUE FOR SEVERAL CENTURIES.


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� PRIOR TO THE DEVELOPMENT OF MARINE INSURANCE, THE PEOPLE ACROSS THE WORLD, HAD A SYSTEM OF:� POOLING THEIR CONTRIBUTIONS SO THAT IF

ANY ONE OF THEM SUFFERS LOSS DURING VOYAGE

� HE WOULD BE COMPENSATED FROM THE POOL.

� TODAY MARINE INSURANCE HAS ASSUMED A VAST DIMENSIONS DUE TO EVER EXPANDING TRADE ACROSS THE GLOBE.


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� IT INVOLVES LARGE SHIPPING COMPANIES THAT REQUIRE PROTECTION:� NOT ONLY FOR THEIR COSTLY FLEET AGAINST

THE PERILS OF THE SEA, BUT ALSO

� TO THE CARGO BEING CARRIED IN EACH OF THESE SHIPS.

� THE VALUE OF EACH SHIP AND THE CARGO CARRIED THEREIN, MAY BE COSTING MILLIONS OF RUPEES TO THE OWNERS.


World’s biggest Passenger-ship ‘MS Freedom of the Seas’ 4300 passenger Capacity Inside


World’s biggest Passenger-ship


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MARINE INSURANCE MARKET

� LLOYD’S, A CORPORATE ESTABLISHED IN LONDON, IS THE BIGGEST CENTRE FOR MARINE INSURANCE IN THE WORLD

� LLOYD’S WAS A COFFEE HOUSE FREQUENTED BY THE TRADESMEN, SHIP-OWNERS AND OTHERS

� THE COFFEE HOUSE BECAME THE MEETING GROUND FOR:

� BROKERS, INSURERS AND SHIP OWNERS FOR NEGOTIATING THEIR BUSINESS.


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LLOYD’S COFFEE HOUSE

� AT THE COFFEE HOUSE THEY WOULD DISCUSS VARIOUS ASPECTS OF THE SHIPPING BUSINESS INCLUDING CARGO AND SHIP INSURANCE AND: � ULTIMATELY IT STARTED TRANSACTING

MARINE INSURANCE IN A BIG WAY.

� WHEN THE BRITISH OCEAN LINER ‘TITANIC’ WHICH SANK IN 1912, DURING HER MAIDEN VOYAGE:� WAS INSURED BY LLOYD’S WHO PAID AN

INSURANCE CLAIM OF ONE MILLION US $.



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MARINE INSURANCE IN INDIA

� THERE IS EVIDENCE THAT THE MARINE INSURANCE WAS PRESENT IN SOME FORM OR THE OTHER IN INDIA SINCE A VERY LONG TIME.

� IN EARLIER DAYS TRAVELERS BY SEA WERE PARTICULARLY AFRAID OF:

� LOSING THEIR VESSELS AND

� MERCHANDISE BECAUSE OF:

� PIRACY ON THE OPEN SEAS.


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SUBJECT MATTER OF MARINE INSURANCE

� THE INSURANCE IN THE CURRENT SCENARIO, HOWEVER IS, MUCH MORE THEN, WHAT WAS ENVISAGED EARLIER

� IT IS NOW REQUIRED TO PROTECT THE INTEREST OF: � THE OWNER OF THE SHIP

� OWNER OF THE CARGO

� THE PERSON INTERESTED IN FREIGHT

� FOR LIABILITIES AND IN RESPECT OF

� FINES IMPOSED FOR VARIOUS REASONS.


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SUBJECT MATTER OF MARINE INSURANCE

� IN CASE THE SHIP CARRYING THE CARGO SINKS:

� THE SHIP WILL BE LOST ALONG WITH:

� THE CARGO

� THE INCOME THAT THE CARGO WOULD HAVE GENERATED WOULD ALSO BE LOST

� IT MAY ALSO DAMAGE THIRD PARTY PROPERTY

� THIRD PARTY INJURIES OR DEATH.


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CLASSIFICATION OF MARINE INSURANCE

� BASED ON THE FACTS STATED EARLIER, MARINE INSURANCE CAN BE CLASSIFIED INTO FOUR BROADER CATEGORIES I.E:� HULL INSURANCE� CARGO INSURANCE� FREIGHT INSURANCE AND� LIABILITY INSURANCE

� HOWEVER OUR ENDEAVOUR WOULD BE LIMITED TO DISCUSSING THE ‘MARINE CARGO INSURANCE’ ONLY.


Types of ‘Hull’


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CARGO INSURANCE

� ‘CARGO’ REFERS TO:� THE GOODS AND COMMODITIES

CARRIED DURING TRANSIT BY:� RAIL, ROAD, SEA OR AIR FROM ONE PLACE

TO ANOTHER.

� THE ‘CARGO’ TRANSPORTED BY SEA IS SUBJECT TO MANIFOLD RISKS SUCH AS:� LOSS OR DAMAGE AT THE PORT AND

� LOSS OR DAMAGE DURING THE VOYAGE.


WORLD’S BIGGEST CARGO LINERS


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CARGO INSURANCE

� ‘MARINE CARGO INSURANCE’ PROVIDES THE INSURANCE COVER IN RESPECT OF:� LOSS OF OR DAMAGE TO CARGO DURING

TRANSIT BY:� RAIL, ROAD, SEA OR AIR.

� THUS ‘MARINE CARGO INSURANCE’COVERS THE FOLLOWING:� EXPORT AND IMPORT SHIPMENTS BY OCEAN� TRANSSHIPMENTS� SHIPMENT BY INLAND VESSELS� CONSIGNMENTS SENT BY RAIL, ROAD, AIR &� ARTICLES SENT BY POST.


WORLD’S BIGGEST PLANE ‘AIRBUS A380’ - 555 Passengers


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CARGO INSURANCE

� ‘MARINE CARGO INSURANCE’ COVERS THE SHIPPER OF THE GOODS, IF THE GOODS ARE DAMAGED OR LOST DURING TRANSIT

� THE ‘CARGO’ POLICY COVERS THE RISKS ASSOCIATED WITH THE TRANSSHIPMENT OF GOODS

� THE POLICY COULD BE ISSUED TO COVER A SINGLE SHIPMENT OR

� IF REGULAR SHIPMENTS ARE MADE:� AN ‘OPEN POLICY’ CAN BE ISSUED WHICH

INSURES THE GOODS/ CARGO AUTOMATICALLY WHENEVER A SHIPMENT IS MADE.


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DEFINITION OF MARINE INSURANCE

� MARINE INSURANCE IS A CONTRACT UNDER WHICH THE INSURER UNDERTAKES TO INDEMNIFY THE INSURED:

� IN THE MANNER AND TO THE EXTENT THEREBY AGREED

� AGAINST MARINE LOSSES, INCIDENTAL TO MARINE ADVENTURES.

� IT MAY BE DEFINED AS A FORM OF INSURANCE COVERING LOSS OR DAMAGE TO:� ‘VESSELS’ OR TO ‘CARGO’ DURING

TRANSPORTATION.Compiled by S. M.Gupta

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FEATURES OF MARINE INSURANCE

� IT IS BASED ON ‘UTMOST GOOD FAITH’ I.E. BOTH THE INSURED AND THE INSURER’S MUST DISCLOSE:� EVERYTHING WHICH IS IN THEIR KNOWLEDGE

AND

� CAN AFFECT THE CONTRACT OF INSURANCE.

� IT IS A CONTRACT OF ‘INDEMNITY’:� THE INSURED IS ENTITLED TO RECOVER ONLY

� THE ACTUAL AMOUNT OF LOSS FROM THE INSURER.


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INSURABLE INTEREST

� ‘INSURABLE INTEREST’ IN THE SUBJECT MATTER INSURED ‘MUST EXIST AT THE TIME OF THE LOSS’

� IT NEED NOT EXIST WHEN THE INSURANCE POLICY WAS TAKEN

� UNDER MARINE INSURANCE, THE FOLLOWING PERSONS WOULD DEEMED TO HAVE ‘INSURABLE INTEREST’:


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INSURABLE INTEREST

� THE OWNER OF THE SHIP� THE OWNER OF THE CARGO� A CREDITOR WHO HAS ADVANCED MONEY

ON THE SECURITY OF THE SHIP OR CARGO� THE MORTGAGOR AND MORTGAGEE� THE MASTER AND CREW OF THE SHIP HAVE

‘INSURABLE INTEREST’ IN RESPECT OF:� THEIR WAGES AND

� IN CASE OF ADVANCE FREIGHT:� THE PERSON ADVANCING THE FREIGHT HAS

AN ‘INSURABLE INTEREST’ IF SUCH FREIGHT IS NOT REPAYABLE IN CASE OF LOSS.


WARRANTIES

� A ‘WARRANTY’ IS A PROMISE BY THE ASSURED TO THE UNDERWRITER THAT SOMETHING SHALL OR SHALL NOT BE DONE OR CERTAIN OF AFFAIRS DOES OR DOES NOT ARISE

� A ‘WARRANTY’ MUST BE AND LITERALLY COMPLIED WITH, AS OTHERWISE THE INSURER MAY AVOID ALL LIABILITY, FROM THE DATE OF BREACH

� ‘WARRANTY’ IS IN EFFECT A ‘SAFETY VALVE’ OF THE INSURER’S. 27Compiled by S. M.Gupta

TYPES OF WARRANTIES

� WARRANTIES ARE OF TWO TYPES I.E.� ‘EXPRESS WARRANTY’ AND

� ‘IMPLIED WARRANTY’.

� AS EXPLAINED EARLIER, BOTH OF THESE WARRANTIES ARE TO BE LITERALLY COMPLIED WITH, BY THE INSURED

� THE EXAMPLES OF THESE WARRANTIES ARE…..


EXPRESSED WARRANTIES

� ‘EXPRESSED WARRANTIES’: THESE ARE APPEARING IN THE POLICY ITSELF AND NEEDS TO BE COMPLIED WITH. FOR EXAMPLE:� WARRANTED PACKED IN NEW GUNNY

BAGS� WARRANTED NEW DRUMS� WARRANTED PROFESSIONALLY PACKED� WARRANTED SAILING WITHIN SEVEN DAYS� WARRANTED SHIPPED UNDER DECK� WARRANTED SURVEYED BEFORE SHIPPING

ETC.29Compiled by S. M.Gupta

IMPLIED WARRANTIES

• ‘IMPLIED WARRANTIES’: THESE ARE NOT EXPRESSED BUT IMPLIED AND ARE THEREFORE TERMED ‘IMPLIED WARRANTIES’. FOR EXAMPLE:� SEAWORTHINESS OF THE VESSEL AT THE

COMMENCEMENT OF THE VOYAGE AND

� LEGALITY OF THE ADVENTURE.

� IN THE VOYAGE POLICY ON GOODS, THERE IS NO IMPLIED WARRANTY THAT THE GOODS INSURED ARE SEAWORTHY.


SUBROGATION/ CONTRIBUTION

� THE TERMS ‘SUBROGATION’ AND ‘CONTRIBUTION’ ARE COROLLARY TO THE PRINCIPLE OF INDEMNITY. THEY APPLIES TO POLICIES, WHICH ARE CONTRACTS OF INDEMNITY

� THE PURPOSE OF BOTH OF THESE ARE, TO ENSURE THAT THE ASSURED SHALL NOT MAKE PROFIT OUT OF A LOSS, EITHER WHOLLY OR PARTLY, FROM ANOTHER SOURCE.


MEASUREMENT OF SUBROGATION

� THERE IS A DISTINCTION BETWEEN SUBROGATION RIGHTS UNDER ‘TOTAL LOSS’ CASES AND ‘PARTIAL LOSS’CASES.

� UNDER ‘TOTAL LOSS’, THE INSURER IS ENTITLED TO TAKE OVER WHAT EVER MAY REMAIN OF THE SUBJECT MATTER, AFTER PAYMENT, WHEREAS

� IN CASE OF ‘PARTIAL LOSS’, SUBROGATION IS TO THE EXTENT OF LOSS PAID, EXCESS RECOVERY IF ANY, IS TO BE DISBURSED TO THE INSURED. 32Compiled by S. M.Gupta

PROXIMATE CAUSE

� ‘PROXIMATE CAUSE’ : IS THE ACTIVE, EFFICIENT CAUSE THAT SETS IN MOTION A TRAIN OF EVENTS WHICH BRINGS ABOUT A RESULT, WITHOUT THE INTERVENTION OF ANY FORCE STARTING AND WORKING ACTIVELY FROM A NEW AND INDEPENDENT SOURCE.

� INSURER’S ARE LIABLE ONLY, IF AN INSURED PERIL IS THE ‘PROXIMATE CAUSE’ OF THE LOSS.


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MEANING OF MARINE PERILS

� ‘MARITIME PERILS’ UNDER LAW IS DEFINED AS:� THE FORTUITOUS (AN ELEMENT OF

CHANCE OR ILL LUCK) ACCIDENTS OR CASUALTIES OF THE SEA

� WITHOUT THE WILLFUL INTERVENTION OF HUMAN AGENCY

� THE PERILS ARE INCIDENTAL TO THE SEA JOURNEY AND

� THAT ARISES IN CONSEQUENCE OF THE SEA JOURNEY.


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INSURED PERILS

� SOME OF THE INSURED PERILS ARE:

� FIRE, EXPLOSION

� BREAKAGE

� ACCIDENT

� DERAILMENT OF CONVEYANCE

� THEFT

� PILFERAGE

� NON-DELIVERY

� JETTISON….. Compiled by S. M.Gupta

‘Wilhelm Gustloff’ SINKING, the biggest Maritime disaster in the history. About 9,400 persons were killed in

this disaster in 1945.


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INSURED PERILS

� COLLISION OF ONE SHIP WITH ANOTHER SHIP/ AGAINST ROCKS

� BURNING AND SINKING OF THE SHIP

� SPOILAGE OF CARGO FROM SEA WATER,

� MUTINY, PIRACY OR

� WILLFUL DESTRUCTION OF THE SHIP AND CARGO BY:

� THE MASTER (CAPTAIN) OF THE SHIP OR

� THE CREW.


Typical Marine Loss of Hull


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UNINSURED PERILS

� SOME OF THE UNINSURED PERILS ARE:� ORDINARY LEAKAGE, ORDINARY LOSS

IN VOLUME OR WEIGHTS OR ORDINARY WEAR & TEAR OF THE SUBJECT-MATTER INSURED

� LOSS OR DAMAGE CAUSED BY INSUFFICIENCY OR UNSUITABILITY OF PACKING

� INHERENT VICE…..


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UNINSURED PERILS

� DAMAGES CAUSED WITHOUT THE INTERVENTION OF ANY EXTERNAL CAUSE

� WILLFUL MISCONDUCT OF THE ASSURED

� LOSS OR DAMAGE ARISING OUT OF INSOLVENCY OR FINANCIAL DEFAULT OF THE OWNERS OR OPERATORS OF THE VESSEL

� LOSS, DAMAGE OR EXPENSE ARISING OUT FROM THE USE OF ANY WEAPON OF WAR EMPLOYING:� ATOMIC OR NUCLEAR FISSION/ FUSION OR

OTHER LIKE � RADIOACTIVE REACTION/ FORCE.


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TYPES OF MARINE POLICY

� MARINE POLICIES ARE KNOWN BY DIFFERENT NAMES, ACCORDING TO THE MANNER OF THEIR EXECUTION, OR THE RISK THEY COVER SUCH AS:� VOYAGE POLICY

� TIME POLICY

� MIXED POLICIES

� VALUED POLICIES

� UNVALUED POLICIES

� OPEN POLICY

� FLOATING POLICY.


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INLAND TRANSIT/IMPORT & EXPORT

� IT CAN THEREFORE BE CONCLUDED THAT BESIDES OTHERS, THE MARINE INSURANCE REFERS BROADLY TO:� TRANSPORTATION RISK INVOLVING:

� MARINE HULL AND

� MARINE CARGO.

� FURTHER, RISK ASSOCIATED WITH THE MARINE INSURANCE, AT DIFFERENT STAGES, WOULD BE DURING:� INLAND TRANSIT OR

� IMPORT AND EXPORT. Compiled by S. M.Gupta

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COMMERCE/ TRADE

� MARINE INSURANCE IS MOST SIGNIFICANT INSURANCE IN:� OVERSEAS COMMERCE AND� DOMESTIC TRADE.

� IT PROVIDES INSURANCE PROTECTION AGAINST:� FORTUITOUS LOSSES LIKE:

� ACCIDENT, FIRE, THEFT, BURGLARY AND

� ALSO NATURAL VAGARIES:� WHILST THE GOODS ARE IN TRANSIT

AND….Compiled by S. M.Gupta

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MODE OF TRANSPORTATION

� THE GOODS MAY BE IN TRANSIT BY:

� RAIL

� ROAD

� AIR AND

� SEA.

� IT PROVIDES SECURITY FOR:

� VENTURING THE CAPITAL MORE FREELY, BY ALL CONCERNED AND

� EXPANDS THEIR AREA OF OPERATION. Compiled by S. M.Gupta

World’s biggest truck ‘Midnight Rider Tractor Trailer Limousine’


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IMPORT AND EXPORT

� FOR IMPORT & EXPORT� ‘INSTITUTE CARGO CLAUSES’ (ICC –

‘A’, ‘B’ OR ‘C’) ARE USED.

� THESE CLAUSES ARE FRAMED BY:

� ‘INSTITUTE OF LONDON UNDERWRITERS’

� MOST OF THE COUNTRIES OF THE WORLD INCLUDING INDIA, ARE USING THESE CLAUSES. � THE COVERAGE & THE EXCLUSIONS

ARE EXPLAINED BY WAY OFINSTITUTE CARGO CLAUSES ATTACHED TO THE POLICIES.


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INLAND TRANSIT

� FOR TRANSPORTATION WITHIN THE COUNTRY, THE CLAUSES USED ARE:� ‘INLAND TRANSIT CLAUSES’ (ITC –

‘A’, ‘B’ OD ‘C’)

� WHICH ARE PREPARED BY:� TARIFF ADVISORY COMMITTEE, ARE

ATTACHED TO THE POLICY AND� THE COVERAGE/ EXCLUSIONS ARE

EXPLAINED BY WAY OF ‘INLAND TRANSIT CLAUSES’ ATTACHED TO THE POLICIES.Compiled by S. M.Gupta



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MOVEMENT OF CARGO

� ONCE THE GOODS MOVES OUT FROM THE WAREHOUSE OF THE SELLER TO THE WAREHOUSE OF THE BUYER

� THEY ARE NO LONGER IN THE CUSTODY OF THE SELLER OR THE BUYER

� THE GOODS ARE ENTIRELY IN THE HANDS OF OPERATORS OF THE SHIP AND THEREFORE LARGELY DEPENDENT UPON:� FITNESS & SEA WORTHINESS OF THE SHIP� COMPETENCE OF ALL CONCERNED (CREW

MEMBERS ETC.) FOR SAFETY AND SOUND DELIVERY.


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THE VOYAGE OR TRANSIT

� THE MARINE POLICIES ARE GENERALLY KNOWN AS ‘WAREHOUSE TO WAREHOUSE’, THEREFORE EACH AND EVERY STAGE OF TRANSIT IS IMPORTANT FOR PROPER UNDERWRITING I.E.� CONDITIONS AT THE PORT OF ORIGIN/

DISCHARGE� DISTANCE INVOLVED� DIRECT OR BROKEN (INVOLVING TRANS-

SHIPMENTS)� PORTS OR LOCATIONS INVOLVED…..


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THE VOYAGE OR TRANSIT

� LOADING/ UNLOADING AND OTHER FACILITIES THEREON

� PAST EXPERIENCES AT THOSE PORTS

� GENERAL CONDITIONS THERE I.E. OVER BUSY OR NORMAL

� WEATHER CONDITIONS

� CARGO STORED ON-DECK/ UNDER DECK

� CURRENT WORLD EVENTS I.E.� POLITICAL TENSION

� CIVIL WARS

� LABOUR DISTURBANCES ETC. ETC.



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SPECIFIC VOYAGE POLICY

� UNDER THIS POLICY, THE SUBJECT MATTER IS INSURED AGAINST THE RISK OF A PARTICULAR VOYAGE I.E.� FROM THE ‘WAREHOUSE OF THE

CONSIGNER’ TO THE ‘WAREHOUSE OF THE CONSIGNEE’, FOR EXAMPLE:� ‘WAREHOUSE OF CONSIGNER AT

MUMBAI’ TO ‘WAREHOUSE OF THE CONSIGNEE AT NEW YORK’. THEREFORE:

� THE RISK COMMENCES FROM THE DEPARTURE OF GOODS FROM THE ‘WAREHOUSE’ NAMED IN THE POLICY AND

� TERMINATES ON ARRIVAL AT THE ‘WAREHOUSE’ NAMED IN THE POLICY.


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� THIS POLICY COVERS THE SUBJECT MATTER IRRESPECTIVE OF THE TIME FACTOR

� THIS POLICY IS NOT SUITABLE FOR ‘HULL INSURANCE’ AS:

� A SHIP USUALLY DOES NOT OPERATE OVER A PARTICULAR ROUTE OR VOYAGE.

� THE POLICY IS USED MOSTLY IN CASE OF ‘CARGO INSURANCE’.


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� TO SUM UP, THIS POLICY IS ISSUED FOR:� A ‘SPECIFIC VOYAGE’ (ONE

PLACE TO ANOTHER)� PERIOD OF INSURANCE NOT

VERY SIGNIFICANT HERE AND IS:� SUITABLE FOR CLIENTS HAVING

LIMITED NUMBER OF SENDING’S AND� EXPIRES ON COMPLETION OF THE

VOYAGE.



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OPEN POLICY

� AN ‘OPEN POLICY’ IS ALSO KNOWN AS ‘FLOATING POLICY’

� IT IS ISSUED FOR A PERIOD OF TWELVE MONTHS AND ALL CONSIGNMENTS SENT DURING THE PERIOD ARE COVERED BY THE INSURER’S

� THIS POLICY IS SUITABLE FOR BIG COMPANIES THAT HAVE REGULAR SHIPMENTS

� IT SAVES THEM THE TEDIOUS AND EXPENSIVE PROCESS OF ACQUIRING AN INSURANCE POLICY FOR EACH SHIPMENT.


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OPEN POLICY

� THE RATES ARE FIXED IN ADVANCE

� THE ASSURED HAS TO DECLARE THE NATURE OF EACH SHIPMENT AND THE COVER IS PROVIDED TO ALL THE SHIPMENTS

� THE ASSURED NEEDS TO DEPOSIT A PREMIUM FOR:

� THE ESTIMATED VALUE OF THE CONSIGNMENT DURING THE POLICY PERIOD.


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DECLARATION

� EACH CONSIGNMENT NEEDS TO BE DECLARED

� ON EACH DECLARATION� THE SUM INSURED GETS REDUCED

� ‘OPEN POLICY’ IS ISSUED FOR AGGREGATE VALUE OF:� ANTICIPATED SHIPMENT DURING THE

PERIOD OF INSURANCE.

� SUM INSURED SHALL NOT BE LESS THAN:� SPECIFIED PERCENTAGE OF ANNUAL

TURNOVER AND� DEPENDING ON THE DISTANCE INVOLVED.


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PREMIUM

� AS AND WHEN THE CONSIGNMENTS ARE SENT, THE DECLARATIONS ARE GIVEN TO THE INSURER’S

� THE SUM INSURED IS ADJUSTED ACCORDINGLY

� IF THE PREMIUM IS EXHAUSTED DURING THE YEAR

� ADDITIONAL PREMIUM IS CHARGED ON:� THE RATES ALREADY AGREED UPON

FALLING WHICH:� THE POLICY STANDS TERMINATED.


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CERTIFICATE/ POLICY

� A CERTIFICATE IS ISSUED AGAINST EACH DECLARATION

� THE CERTIFICATE OF INSURANCE IS:

� UNSTAMPED WHILST

� THE POLICY IS STAMPED.

� CLAUSES FOR COVERAGE I.E. ‘ITC’ –‘A’, ‘B’ OR ‘C’, ARE ATTACHED TO THE POLICY.


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INCREASE IN SUM INSURED

� THE SUM INSURED UNDER THE ‘OPEN POLICY’ CAN BE INCREASED:

� BEFORE THE POLICY IS EXHAUSTED OR

� AFTER THE PREMIUM PAID IS EXHAUSTED.

� BALANCE PREMIUM IF ANY UNDER THE POLICY IS REFUNDED TO THE INSURED

� ‘OPEN POLICIES’ ARE GENERALLY ISSUED FOR ‘INLAND TRANSIT’.


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ADVANTAGES

� ADVANTAGES OF ‘OPEN POLICY’:

� AUTOMATIC AND CONTINUOUS INSURANCE PROTECTION

� SAVING IN ADMINISTRATIVE EXPENSES

� SAVING IN STAMP DUTY VIS A VIS:

� ‘SPECIFIC POLICIES’ BEING ISSUED FOR EACH AND EVERY DECLARATION AND

� STAMP DUTY IS CHARGED EVERY TIME.



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OPEN COVER

� ‘OPEN COVER’ GIVES THE INSURED AN AUTOMATIC AND CONTINUOUS INSURANCE PROTECTION SO THAT THERE IS NO RISK OF:

� ANY SHIPMENT REMAINING UNINSURED/ UNCOVERED

� EVEN THROUGH AN OVERSIGHT.

� THE RATES AND TERMS AND CONDITIONS ARE AGREED IN ADVANCE

� ‘OPEN COVER’ IS VALID FOR ONE YEAR.


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OPEN COVER

� IT IS OBLIGATORY ON THE PART OF THE INSURED TO DECLARE:� EACH AND EVERY SHIPMENT WITHOUT FAIL

AND

� NO ATTEMPT SHOULD BE MADE TO:� WITHHOLD ANY DECLARATION� TO SAVE PREMIUM.

� AN ‘OPEN COVER’ IS NOT A POLICY BUT IS AN AGREEMENT BINDING IN HONOUR. THE INSURER WOULD INSURE ALL SHIPMENTS AND THE INSURED SIMILARLY BOUND TO DECLARE EACH SHIPMENT.


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OPEN COVER

� AS PER THE PROVISIONS OF THE ‘INSURANCE ACT’, THE PREMIUM FOR THE RISKS HAS TO BE PAID IN ADVANCE AND THEREFORE:� THE PREMIUM IS REQUIRED TO BE

PAID ON EACH AND EVERY DECLARATION.

� ‘OPEN COVER’ IS SUITABLE FOR PERSONS ENGAGED IN:� REGULAR IMPORTS AND EXPORTS

AND� SEPARATE POLICY IS ISSUED FOR

EACH SHIPMENT.Compiled by S. M.Gupta





DUTY INSURANCE

� THIS INSURANCE IS ON INCREASED VALUE OF CARGO, BY REASON OF PAYMENT OF CUSTOM DUTY AT DESTINATION

� IT IS SUBJECT TO SAME CLAUSES AND CONDITIONS AS THE INSURANCE OF CARGO AND

� PAYS THE SAME PERCENTAGE OF LOSS AS MAY BE PAID THEREON, HOWEVER:� EXCLUDING CLAIM IN RESPECT OF:

� TOTAL LOSS OF WHOLE OR PART OF CARGO PRIOR TO DUTY BECOMING PAYABLE.


INCREASED VALUE INSURANCE

� THIS INSURANCE IS ON INCREASE VALUE BY REASON OF MARKET VALUE OF THE GOODS AT DESTINATION ON THE DATE OF LANDING

� IS HIGHER THAN THE VALUE OF CARGO INSURED

� THE TERMS AND CONDITIONS ARE SAME AS THAT OF THE ORIGINAL POLICY, HOWEVER:� THE INSURER’S PAYS 75% OF THE VALUE & � THE ASSURED HAS TO BEAR 25% OF THE

CLAIM AMOUNT.


SPECIAL DECLARATION POLICY

� IT IS A FORM OF ‘OPEN POLICY’ OR ‘FLOATING POLICY’ ISSUED TO CLIENT WHO HAVE A LARGE TURNOVER AND

� FREQUENT DISPATCHES OF GOODS ANY WHERE WITHIN THE COUNTRY BY:

� RAIL, ROAD OR INLAND WATERWAYS.

� THE POLICY IS ISSUED TO THE CLIENTS, WHOSE ESTIMATED ANNUAL DISPATCHES ARE FOR AT LEAST 2 CRS.


ANNUAL POLICY

� ‘ANNUAL POLICY’ UNDER THE MARINE DEPARTMENT IS ISSUED FOR:

� 12 MONTHS TO COVER GOODS BELONGING TO:

� THE ASSURED OR HELD IN TRUST BY THE ASSURED BUT:

� NOT UNDER CONTRACT OF SALE

� OR PURCHASE PROVIDED…..


ANNUAL POLICY

� SUCH GOODS ARE IN TRANSIT BY RAIL OR ROAD FROM:

� SPECIFIED DEPOTS/ PROCESSING UNITS TO

� OTHER SPECIFIED DEPOTS/ PROCESSING UNITS, HOWEVER:

� THE DEPOTS/ PROCESSING UNITS MUST BE OWNED OR HIRED BY THE ASSURED.

� THE POLICY IS NOT ASSIGNABLE OR TRANSFERABLE.


SPECIAL STORAGE RISK POLICY (SSRI)

� THE COVER UNDER ‘SPECIAL STORAGE RISK POLICY’ POLICY TAKES INTO CONSIDERATION:

� THE REQUIREMENT OF THE CONSIGNER OF THE GOODS FOR INSURANCE

� TO PROTECT HIS GOODS DURING STORAGE AT:

� RAILWAY YARD OR

� CARRIER PREMISES.


SPECIAL STORAGE RISK POLICY (SSRI)

� PENDING CLEARANCE BY THE CONSIGNEES ON

� TERMINATION OF COVER (7 DAYS) UNDER ‘OPEN POLICY’ OR ‘SPECIAL DECLARATION POLICY’ (SDP), HOWEVER: � THE COVER IS GRANTED IN

CONJUNCTION WITH ‘OPEN POLICY’ OR

� ‘SDP’ COVERING TRANSIT OF GOODS BY RAIL OR ROAD.


KINDS OF MARINE LOSSES

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DIFFERENT TYPES OF MARINE LOSSES





ANY QUESTIONS?

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Basics of Marine Insurance