TYPES OF POLICES

(I) Specific policy: issued to cover single shipment.

(II) Open policy: a stamped document for sufficiently large amount of insurance turnover for a period of one year with premiums adjustable on declaration basis “cotton”.

(III) Floating policy: an unstamped document issued in advance of the policy to grant provisional cover adjusted on declaration basis.

Scope of Cover & Institute Cargo Clauses (ICC)

The scope of cover afforded under different types of policies is determined by the clauses attached to them, namely the Institute Cargo Clauses A, B & C.

(i) Institute Cargo Clause “C”

The risks covered under this clause are fire, explosion, stranding, sinking or grounding of the vessel, overturning or derailment of the conveyance, collusion of the craft, loss due to discharge of cargo at a port of distress, loss by jettison , general average expenses and both-to-blame collision losses.

(ii) Institute Cargo Clause “B”

In addition to those covers of ICC (C) this clause extends to provide cover for earthquake, volcanic eruption or lightening, washing over board, entry of sea water into the vessel, craft, hold, container, lift van at place of storage and total loss of any package lost over board of the vessel or dropped during loading or unloading operations.

(iii) Institute Cargo Clause “A”

Under this Clause the cover encompasses all the risks covered under B&C and any other risk not specifically excluded in the policy or by the General Exclusions Clause. It stands for three clauses; but it provides no cover for losses attributed to willful misconduct, wear and tear, unseaworthiness and unfitness of the vessel, craft, conveyance, container for safety carriage, insufficiency of packing, inherent vice, delay, ordinary leakage, ordinary loss in weight or volume in addition to the exclusions that can be covered on payment of additional premium such as war, strikes, riots and civil commotion.

Duration

The duration of marine insurance policy is that the cover starts from the time goods leave the warehouse of the seller up to delivery at final warehouse of consignee or expiry of 60 days after discharge from the vessel or 30 days in case of air transit, or 7 days from the date of arrival of truck/rail in case of inland transit.

The General Average

Under all clauses (A, B & C) the insurer is liable for General Average Losses that reasonably incurred to avert or minimize the loss under the policies which are voluntarily incurred and shared by all the parties concerned (the ship owner and the cargo interest) – example of general average are: 1- jettison or throwing of goods in order to lighten a ship 2-damage to goods on board of the vessel by water used to extinguish fire. 3-expenses incurred (salvage charge).

Three elements are required in general average (i) there should be common danger or risk that threaten all the concern parties. (ii) there must be a voluntary jettison or casting away & (iii) the attempts must be successful.

Special Features

There are special features of marine cargo insurance such as:

(I) Marine cargo polices freely assignable because the goods pass through various hands till the ultimate consignee takes the delivery, the cargo policy may be assigned either before or after a loss & the existence of the insurable interest passes through to the claimant.

(II) The sum insured indicated in the policy is the value agreed between the insured & the insurer hence the policies are on agreed value basis.

(III) The duration of cover in marine insurance is governed by the nature of transit, time of discharge, time of arrival at final destination.

(IV) The operation & interpretation of a marine insurance policy are governed by the applicability of various statutes, the legislation of various countries, port conditions, customs procedures & the legal system in various parts of the world.

Claims

Our company will be judged by it’s policy holder on how well it performs when difficulties are encountered, and if a claim arises the policy holder is required to make sure that immediate notice is given to the company and that all procedures set down in the policy are complied with.

A claim under marine insurance can be for either total loss or partial loss.

*The total loss itself should be actual or constructive (the cost of recovery may be large than the value of good after recovery).

*The partial loss is also divided into (i) general average sacrifice and expenditure (ii) particular average (loss of part or damage). In all cases reasonable dispatch is required from the part of the insured.