The concept of Insurance probably started with marine cargo insurance. It is indeed one of the oldest lines of insurance. Getting marine insurance is extremely important if you transfer physical products either through rail, road, train, air or sea. It essentially protects against damages/loss of goods during transit. Marine contracts are highly customizable and can be tailored as per needs. The contracts can be broadly classified into 2 types:
- Specific policy
- Open cover policy.
Specific policy is required if you are insuring a particular voyage. For example, if you are transferring your car from one location to another. In most businesses where frequency of voyages are high, this type of policy is not preferred as it becomes operationally challenging to get a seperate policy each time your goods are transferred.
Open cover policy is kind of blanket policy which covers your marine risks for a certain sum assured. Say for example, you are transporting goods worth Rs 1 Cr everyday to different parts of the country. So instead of taking 365 specific policies, you can take a single policy for a sum insured of 365 Cr. As you send goods, the limit on your policy will keep reducing. You just need to show the invoices for shipped goods.
Clauses: Marine insurance policies are usually either ITC-A, ITC-B, or ITC-C. The types of risks covered under each of these is as mentioned in the table below. ITC-A is the most preferred type of policy.
Institute Cargo Clauses:
Inland Transit (Rail/ Road Clauses):
Who should Insure:
Marine policy is a transferable policy, meaning that if the owner of the goods takes a marine policy and hands over the goods to the transporter, the insurance policy is still valid. The principal of indemnity applies…which essentially means that the insured will be compensated for the extent of loss incurred to him. Say for example, the goods worth Rs 1 Cr is lost in transit.
The transporter had an agreement with the owner that 40% of the damage incurred while transporting will be borne by the transporting company. In this case, even though the owner had bought a marine policy of 1 Cr, he will be compensated by the insurer by only 60 Lacs and the remaining will be borne by the transporting company. Insurance company will typically pay the entire 1 Cr to the owner and recover the 40 lacs from the transporter.
Therefore, in this case, if the owner had an agreement with the transporter, he should have mentioned to the insurance company which would have helped him reduce the premium. Also, the logistics company can take a separate insurance policy to the extent of their loss which in this case was 40 lacs.
Premium:
Premiums in marine policy are typically in the range of 0.05% to 0.15% depending on the type of goods, packaging, location, per location limit, per voyage limit, in transit storage.
Data Required:
The company typically requires the following information before underwriting marine risks:
Marine Open Cover Inland Policy
- Name of the Proposer:-
- Address :
- Phone No.
- Fax
- Cellular Phone
Risk Details:
- Nature of Goods
- Period of Insurance
- Nature of Packing
- Voyage: Ex: anywhere in india to anywhere in India.
- All metros (pune, Bangalore, hyd, amd, chandigarh)
- Mode of transport – Rail/Road/Air/Courier
- If the voyage is by sea, details of the vessel: –
- a) Name of the ship:
- b) Gross Registered Tonnage:
- c) Year of Built:
- d) Classification:
- e) Whether cargo is carried under deck or over deck
- f) Mode of transport for inland l transit from place of dispatch
- g) Mode of transport for inland transit at place of destination Rail/Road/Air
- Sum Insured: example: 20 crore per annum: 50 shipments of ASP 12000
- Annual Estimated Turnover:
- Limit Per sending: example: 2 lacs
- Limit Per Location: example: 2 lacs
- Terms of Cover:
- Terms of Sale – CIF, FOB, etc
- Custom Duty Value to be insured —
- Marine Premium for last three years –NA
- Claims figures / loss ratio for last three years –
- In case of liquid cargo contamination cover required or not:
- Additional information material to the cover:
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