A STUDY ON VOYAGE INSURANCE (MARINE INSURANCE)

INTRODUCTION
A financial protection plan that provides coverage for goods in transit by sea. In order for
a voyage policy to be valid, the vessel transporting the cargo must be in good condition and
capable of making the journey, and the vessel's crew must be competent. This requirement exists
because a voyage policy, like any insurance policy, is intended to protect against unforeseen
risks, not against preventable risks. Voyage policies are important in the export business.
A voyage policy may also be called "marine cargo insurance."

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport
or cargo by which property is transferred, acquired, or held between the points of origin and final
destination. Cargo insurance discussed here is a sub-branch of marine insurance, though
Marine also includes Onshore and Offshore exposed property, (container terminals, ports, oil
platforms, pipelines), Hull, Marine Casualty, and Marine Liability. When goods are transported
by mail or courier, shipping insurance is used instead.
Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek
and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and
other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied
with intuitive estimates of the variable risk from seasons and pirates. [1] Modern marine insurance
law originated in the Lex mercatoria (law merchant). In 1601, a specialized chamber of
assurance separate from the other Courts was established in England. By the end of the
seventeenth century, London's growing importance as a centre for trade was increasing demand
for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house on Tower
Street in London. It soon became a popular haunt for ship owners, merchants, and ships'
captains, and thereby a reliable source of the latest shipping news.
Lloyd's Coffee House was the first marine insurance market. It became the meeting place for
parties in the shipping industry wishing to insure cargoes and ships, and those willing to
underwrite such ventures. These informal beginnings led to the establishment of the insurance

market Lloyd's of London and several related shipping and insurance businesses. The
participating members of the insurance arrangement eventually formed a committee and moved
to the Royal Exchange on Cornhill as the Society of Lloyd's. The establishment of insurance
companies, a developing infrastructure of specialists (such asshipbrokers, admiralty lawyers,
bankers, surveyors, loss adjusters, general average adjusters, et al.), and the growth of the British
Empire gave English law a prominence in this area which it largely maintains and forms the
basis of almost all modern practice. Lord Mansfield, Lord Chief Justice in the mid-eighteenth
century, began the merging of law merchant and common law principles. The growth of the
London insurance market led to the standardization of policies and judicial precedent further
developed marine insurance law. In 1906 the Marine Insurance Act codified the previous
common law; it is both an extremely thorough and concise piece of work. Although the title of
the Act refers to marine insurance, the general principles have been applied to all non-life
insurance. In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of
London company insurers) developed between them standardized clauses for the use of marine
insurance, and these have been maintained since. These are known as the Institute Clauses
because the Institute covered the cost of their publication. Out of marine insurance, grew nonmarine insurance and reinsurance. Marine insurance traditionally formed the majority of business
underwritten at Lloyd's. Nowadays, Marine insurance is often grouped with Aviation and Transit
(cargo) risks, and in this form is known by the acronym 'MAT'.

OBJECTIVE

This policy covers goods,freight and other interests against loss or damage to goods
whilst being transported by rail,road,sea and/or air.

Different policies are available depending on the type of coverage required ranging from
an ALL RISK cover to a restricted FIRE RISK ONLY cover.

This policy is freely assignable and is basically an agreed value policy.

Time and Voyage Policies

A marine policy may be a voyage or time policy. If it uses the words at and from or from a
particular place to another place it is a voyage policy. If it insures the subject matter for a period
of time it is a time policy. A voyage policy comes to an end at the conclusion of the voyage. A
time policy comes to an end upon the expiry of the time specified.
Special Rules For Voyage Policies
For a voyage policy there is an implied term that the marine adventure will commence within a
reasonable time and if it is not, the insurer may avoid the contract unless the insurer waived the
right to avoid or was aware of the circumstances causing the delay. (s.40 MIA)
A voyage policy will not attach if the ship sails from or to places different from those specified.
(s. 41 MIA)
Where after the commencement of the risk the destination of the ship is voluntarily changed the
insurer is discharged from all liability for any loss occurring on or after the time the intention to
change is manifested, unless the policy provides otherwise. (s.42 MIA)
A deviation without lawful excuse from the agreed course or customary course discharges the
insurer from liability for any loss occurring on or after the deviation. Failure to call at the ports
of discharge in the order specified or in their geographical order will be a deviation. (s. 43 MIA)

A voyage policy must be carried out with reasonable dispatch and the insurer is discharged from
all liability for any loss occurring on or after the time when the delay becomes unreasonable.
(s.44 MIA)
(a) authorised by any special term in the marine policy;
(b) caused by circumstances beyond the control of the master and the master's employer;
(c) reasonably necessary in order to comply with an express warranty or an implied warranty;
(d) reasonably necessary for the safety of the ship or subject-matter insured;
(e) for the purpose of saving human life or aiding a ship in distress where human life

Protection and indemnity

A marine policy typically covered only three-quarter of the insured's liabilities towards third
parties. The typical liabilities arise in respect of collision with another ship, known as "running
down" (collision with a fixed object is a "harbour"), and wreck removal (a wreck may serve to
block a harbour, for example). In the 19th century, shipowners banded together in mutual
underwriting clubs known as Protection and Indemnity Clubs (P&I), to insure the remaining onequarter liability amongst themselves. These Clubs are still in existence today and have become
the model for other specialized and noncommercial marine and non-marine mutuals, for example
in relation to oil pollution and nuclear risks. Clubs work on the basis of agreeing to accept a
shipowner as a member and levying an initial "call" (premium). With the fund accumulated,
reinsurance will be purchased; however, if the loss experience is unfavourable one or more
"supplementary calls" may be made. Clubs also typically try to build up reserves, but this puts
them at odds with their mutual status.Because liability regimes vary throughout the world,
insurers are usually careful to limit or exclude American Jones Act liability.

Actual total loss and constructive total loss

These two terms are used to differentiate the degree of proof where a vessel or cargo has been
lost. An actual total loss occurs where the damages or cost of repair clearly equal or exceed the
value of the property. A constructive total loss is a situation where the cost of repairs plus the
cost of salvage equal or exceed the value. The use of these terms is contingent on there being
property remaining to assess damages, which is not always possible in losses to ships at sea or in
total theft situations. In this respect, marine insurance differs from non-marine insurance, where
the insured is required to prove his loss. Traditionally, in law, marine insurance was seen as an
insurance of "the adventure", with insurers having a stake and an interest in the vessel and/or the
cargo rather than simply an interest in the financial consequences of the subject-matter's survival.

Specialist policies
Various specialist policies exist, including:

Newbuilding risks: This covers the risk of damage to the hull while it is under
construction.

Open Cargo or Shippers Interest Insurance: This policy may be purchased by a

carrier, freight broker, or shipper, as coverage for the shippers goods. In the event of loss or
damage, this type of insurance will pay for the true value of the shipment, rather than only
the legal amount that the carrier is liable for.

Yacht Insurance: Insurance of pleasure craft is generally known as "yacht insurance"

and includes liability coverage. Smaller vessels such as yachts and fishing vessels are
typically underwritten on a "binding authority" or "lineslip" basis.

War risks: General hull insurance does not cover the risks of a vessel sailing into a war
zone. A typical example is the risk to a tanker sailing in the Persian Gulf during theGulf War.
The war risks areas are established by the London-based Joint War Committee, which has

recently moved to include the Malacca Straits as a war risks area due topiracy. If an attack is
classified as a "riot" then it would be covered by war-risk insurers.

Increased Value (IV): Increased Value cover protects the shipowner against any
difference between the insured value of the vessel and the market value of the vessel.

Overdue insurance: This is a form of insurance now largely obsolete due to advances in
communications. It was an early form of reinsurance and was bought by an insurer when a
ship was late at arriving at her destination port and there was a risk that she might have been
lost (but, equally, might simply have been delayed). The overdue insurance of
the Titanic was famously underwritten on the doorstep of Lloyd's.

Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with
coverage on an A, B, or C basis, A having the widest cover and C the most restricted.
Valuable cargo is known as specie. Institute Clauses also exist for the insurance of specific
types of cargo, such as frozen food, frozen meat, and particular commodities such as bulk
oil, coal, and jute. Often these insurance conditions are developed for a specific group as is
the case with the Institute Federation of Oils, Seeds and Fats Associations (FOFSA) Trades
Clauses which have been agreed with the Federation of Oils, Seeds and Fats Associations
and Institute Commodity Trades Clauses which are used for the insurance of shipments
of cocoa, coffee, cotton, fats and oils, hides and skins, metals, oil seeds, refined sugar,
and tea and have been agreed with the Federation of Commodity Associations.

Warranties and conditions

A peculiarity of marine insurance and insurance law generally, is the use of the
terms condition and warranty. In English law, a condition typically describes a part of the
contract that is fundamental to the performance of that contract, and, if breached, the nonbreaching party is entitled not only to claim damages but to terminate the contract on the basis
that it has been repudiated by the party in breach.
By contrast, a warranty is not fundamental to the performance of the contract and breach of a
warranty, while giving rise to a claim for damages, does not entitle the non-breaching party to

terminate the contract. The meaning of these terms is reversed in insurance law. Indeed, a
warranty if not strictly complied with will automatically discharge the insurer from further
liability under the contract of insurance. The assured has no defense to his breach, unless he can
prove that the insurer, by his conduct, has waived his right to invoke the breach, possibility
provided in section 34(3) of the Marine Insurance Act 1906 (MIA). Furthermore, in the absence
of express warranties the MIA will imply them, notably a warranty to provide a seaworthy vessel
at the commencement of the voyage in a voyage policy (section 39(1)) and a warranty of legality
of the insured voyage (section 41).

Type of policies
1.

Annual Turn Over Policy: ATOP by agreement covers transit of raw material, semi
finished & finished products pertains to insured's trade i.e. Export, Import, Inter Depot
movement incidental storage from originating point to destination point on seamless basis.
Key features of ATOP are:o

Sizeable saving in premium, which is charged only on your sales turnover.

Seamless cover with all movement of goods automatically covered.

No hassles of submitting periodical declaration of movements to the insurer. Only

monthly/Quarterly sales figures need to be submitted.

o
2.

Facility for payment of premium on half-yearly / quarterly basis.

Specific Voyage: In Marine Insurance specific policies are issued to cover a specific
single transit. Cover ends as soon as arrival of cargo at destination.

3.

Open Policy: It is an Annual Cargo Insurance Contract expressed in general terms and
effected for a round sum sufficient to cover a number of dispatches until the sum insured is
exhausted by declarations. The Open Policy, also known as the Floating Policy, saves the
assured the inconvenience of affecting individually the insurance of goods dispatched
within the country. The policy may cover both incoming and outgoing consignments from
anywhere in India to anywhere in India. The sum insured under the policy should
ordinarily represent the assureds estimated annual turnover of the goods.

4.

Annual Policy: Annual policy is granted in respect of goods belonging to the Assured
and or held in trust by the assured and not under contract of sale and or purchase which are

in transit by road or rail from specified depots /processing units to other specified depots
/processing units. Important features of Annual Policy areo

Insurable interest to remain with insured

Policy not assignable or transferable

Issue of Annual policy to transport operators/contractors, clearing and forwarding

agents

5.

Prohibited Policy is subject to the condition of average

Open Cover: An open cover is an agreement (not a policy) whereby the insurer will
accept insurance of all shipments made by the assured, within the terms of the cover for a
fixed period, usually for 12 months. Being an agreement, it is not stamped. However,
stamped policies or certificates of insurance are issued against the declaration made by the
assured. The open cover is of great convenience to the clients engaged in regular
import/export trade.

Add on covers
Inland transit policies can be extended to cover the following perils on payment of additional
premium :
1. SRCC - Strike, riot and civil commotion (including terrorist act)
2. FOB - Where the inland transit is required to be extended to cover the goods till they are
loaded on board the vessel , this extension can be taken.
Export /Import policies can be extended to cover War and /or SRCC perils on payment of an
additional premium.
Top

Who can take the policy?

The contract of sale would determine who buys the policy. The most common contracts are :
FOB (Free on Board)
C & F (Cost & Freight)

 CIF (Cost, Insurance & Freight)

In FOB AND C&F contracts, the buyer is responsible for insurance. Whereas in CIF contracts
the seller is responsible for insurance from his own premises to that of the purchaser.
Top

How to select the sum insured?

The sum insured or value of the policy would depend upon the type of contract. Usually, in
addition to the contract value 10/15% is added to take care of incidental cost.
Top

How to claim?
The following steps should be taken in event of a loss or damage to goods insured :
1. Take immediate steps to minimise loss.
2. Inform nearest office of the insurance company or claim settling agent mentioned on the
policy.
3. In case of damage to goods whilst on ship or port , arrange for joint ship survey or port
survey.
4. Lodge monetary claim with carrier within stipulated time period.
5. Submit duly assigned insurance policy/certificate along with the original invoice and
other documents required to substantiate the claim such as :
1. Bill of Lading / AWB/GR
2. Packing list
3. Copies of correspondence exchanged with carriers.
4. Copy of notice served on carriers along with acknowledgment/receipt.
5. Shortage/Damage Certificate issued by carriers.

6. Survey fees is to be paid to the surveyor appointed by the insurance company. This fees
will be reimbursed along with the claim if the claim is otherwise admissible.

IMPORTANCE OF INSURANCE IN INDIA

Insurance is the only sector which garners long term savings
Insurers are increasingly introducing innovative products to meet the specific needs of the
prospective policyholders. An evolving insurance sector is of vital importance for economic
growth. While encouraging savings habit it also provides a safety net to both enterprises and
Individuals.
Insurance Companies receive, without much default, a steady cash stream of premium or
contributions to pension plans. Various actuary studies and models enable them to predict,
relatively accurately, their expected cash outflows.
Liabilities of Insurance companies being long-term or contingent in nature, liquidity is excellent
and their investments are also long-term in nature. Since they offer more than the return on
savings in the shape of life-cover to the investors, the rate of return guaranteed in their insurance
policies is relatively low. Consequently, the need to seek high rates of returns on their
investments is also low. The risk-return trade off is heavily tilted in favour of risk.
As a combined result of all this, investments of insurance companies have been largely in bonds
floated by GOI, PSUs, state governments, local bodies, corporate bodies and mortgages of long
term nature.

Generates Long term funds for infrastructure and strong positive correlation between
development of capital markets and insurance/pension sector
For GDP to grow at 8 to 10%, qualitative improvement in infrastructure is essential. Estimates of
funds required for development of infrastructure vary widely. An investment of 6,19,600 crore is
anticipated in the next 5 years. Tenure of funding required for infrastructure normally ranges
from 10 to 20 years. The insurance industry also provides crucial financial intermediary services,
transferring funds from the insured to capital investment, critical for continued economic
expansion and growth, simultaneously generating long-term funds for infrastructure
development.
In fact infrastructure investments are ideal for asset-liability matching for life insurance
companies given their long term liability profile. According to preliminary estimates published
by the Reserve Bank of India, contribution of insurance funds to financial savings was 14.2 per
cent in 2005-06, viz., 2.4 per cent of the GDP at current market prices. Development of the
insurance sector is thus necessary to support continued economic transformation. Social security
and pension reforms too benefit from a mature insurance industry.
The insurance sector in India, which was opened up to private participation in the year 1999, has
completed over seven years in a liberalized environment. With an average annual growth of 37
per cent in the first year premium in the life segment and 15.72 per cent growth in the nonlife
segment, together with the largest number of life insurance policies in force, the potential of the
Indian insurance industry is still large.

Life insurance penetration in India was less than 1 per cent till 1990-91. During the 1990s, it was
between 1 and 2 per cent and from 2001 it was over 2 per cent. In 2005 it had increased to 2.53
per cent.

Spread of financial services in rural areas and amongst socially less privileged
IRDA Regulations provide certain minimum business to be done
- in rural areas
- in the socially weaker sections
Life Insurance offices are spread over nearly 1400 centres. Presence of representative in every
tehsil deeper penetration in rural areas.
Insurance agents numbering over 6.24 lakhs in rural areas.
Policies sold in rural areas (2004-05) - No. of policies - 55 lakhs, Sum assured 46,000 crores.
Social security - No. of lives covered 2003-04 17.4 lakhs 2004-05 42.1 lakhs

Insurance has evolved as a process of safeguarding the interest of people from loss and
uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and
property.
Insurance contributes a lot to the general economic growth of the society by provides stability to
the functioning of process. The insurance industries develop financial institutions and reduce
uncertainties by improving financial resources.
1. Provide safety and security:
Insurance provide financial support and reduce uncertainties in business and human life. It
provides safety and security against particular event. There is always a fear of sudden loss.
Insurance provides a cover against any sudden loss. For example, in case of life insurance

financial assistance is provided to the family of the insured on his death. In case of other
insurance security is provided against the loss due to fire, marine, accidents etc.

2. Generates financial resources:

Insurance generate funds by collecting premium. These funds are invested in government
securities and stock. These funds are gainfully employed in industrial development of a country
for generating more funds and utilised for the economic development of the country.
Employment opportunities are increased by big investments leading to capital formation.
3. Life insurance encourages savings:
Insurance does not only protect against risks and uncertainties, but also provides an investment
channel too. Life insurance enables systematic savings due to payment of regular premium. Life
insurance provides a mode of investment. It develops a habit of saving money by paying
premium. The insured get the lump sum amount at the maturity of the contract. Thus life
insurance encourages savings.
4. Promotes economic growth:
Insurance generates significant impact on the economy by mobilizing domestic savings.
Insurance turn accumulated capital into productive investments. Insurance enables to mitigate
loss, financial stability and promotes trade and commerce activities those results into economic
growth and development. Thus, insurance plays a crucial role in sustainable growth of an
economy.
5. Medical support:
A medical insurance considered essential in managing risk in health. Anyone can be a victim of
critical illness unexpectedly. And rising medical expense is of great concern. Medical Insurance
is one of the insurance policies that cater for different type of health risks. The insured gets a
medical support in case of medical insurance policy.

6. Spreading of risk:
Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of
insurance is to spread risk among a large number of people. A large number of persons get
insurance policies and pay premium to the insurer. Whenever a loss occurs, it is compensated out
of funds of the insurer.
7. Source of collecting funds:
Large funds are collected by the way of premium. These funds are utilised in the industrial
development of a country, which accelerates the economic growth. Employment opportunities
are increased by such big investments. Thus, insurance has become an important source of
capital formation.
The economic development of India was dominated by socialist influenced policies, stateowner
sector, and red tape and extensive regulations, collectively known as License Raj. The Indian
economic development got a boost through its Economic reforms in 1991 and again through its
renewal in the 2000. Insurance serves a number of valuable economic functions that are largely
distinct from other types of financial intermediaries. Insurance contribution materially to
economic growth by improving the investment climate and promoting a more efficient mix of
activities then would be undertaken, in the absence of risk management instrument. Insurance
sector in India is one of the most booming sectors of the economy and is growing at the rate of
15-20 percent per annum. In India, insurance is a flourishing industry, with several national and
international players competing with each others and growing at rapid rates. Indian insurance
companies offer a comprehensive range of insurance plans, a range that is growing as the
economy matures and the wealth of the middle classes increases. Due to the growing demand for
insurance, more and more companies are now emerging in the Indian insurance sector. The
economy of India is the eleventh largest in the world by nominal GDP and the forth largest by
Purchasing Power Parity (PPP). KEYWORDS: License Raj, Economic reform, financial
intermediaries, Investment climate, Risk management instrument, Comprehensive range,
Nominal GDP, PP.

For economic development investments are necessary. Investments are made out of savings. Life
Insurance Company is a major instrument for the mobilization of savings of people, particularly
from the middle and lower group. All good life insurance companies have huge funds
accumulated through the payments of small amounts of premium of individuals. These funds are
invested in ways that contribute substantially for the economic development of the countries in
which they do business The system of insurance provides numerous direct and indirect benefits
to the individuals and his family as well as to industry and commerce and to the community and
the nation as a whole. Present day organization of industry, commerce and trade depend entirely
on insurance for their operation, banks, and financial institutions lend money to industrial and
commercial undertakings only on the basis of the collateral security of insurance.
SCOPE OF THE INSURANCE IN INDIA
Insurance is a nice-looking option for investment but most people are not aware of its advantages
as an investment option. Remember that foremost and first, insurance is about risk cover and
protection. By buying life insurance, you buy peace of mind. Insurance also serves as an
excellent tax saving mechanism. The Government of India has provided tax incentives to life
insurance products in order to facilitate the flow of funds into productive assets
.
The insurance sector has opened up for private insurance companies with the enactment of IRDA
Act, 1999. A large number of companies are competing under both general and life Insurance.
The FDI cap/equity in this sector is 26% and the proposals have to be cleared by Insurance
Regulatory and Development Authority (IRDA) established to protect the interest of holder of
Insurance policy and act as a regulator and facilitator in the industry.
Some of the major players in this sector are LIC, Max New York Life Insurance, Bajaj Allianz,
ICICI Prudential, HDFC Standard Life, Metlife Insurance, Birla Sun Life Insurance, etc
various types of instruments and policies are coming up in the market to attract more clients.
Most of the population of India is not insured, hence there is a lot of scope in this sector and a
number of companies are planning to enter the sector.

Life insurance is a financial cover for a contingency linked with human life, like death, disability,
accident, retirement etc. It provides a definite amount of money in case the life insured dies
during the term of the policy or becomes disabled on account of an accident.138
When a human life is lost or a person is disabled permanently or temporarily there is loss of
income to the household. So everyone who has a family to support and is an income earner needs
life insurance. The idea underlying the concept of life insurance is that when your family
members or dependants depend on you financially: you need to secure their future. Having your
life insured is akin to promising your family that they wont ever face a financial problem,
whether you are there or not because your responsibilities do not end with you. It means buying
life insurance is like buying peace of mind for lifetime
Thus, the significance of having a life insurance lies in the peace of mind that it brings along.
Apart from this it promotes savings, assist the family in odd situations, gives tax benefits and
facilitates easy loans thereby securing the future of insured. But in order to have 138
http://www.pnbmetlife.com/downloads/policyholderhandbook.pdf. Accessed on 14/10/13 at 8:30
P.M. 58 a financially secured future, you have to pay the insurer a life insurance premium,
which is either a regular annual payment or onetime payment as the case may be.
There are several types of insurance plans for specific needs. One of the categories is traditional
insurance plans such as term insurance, endowment and many back up plans. Such plans offer
multiple benefits in terms of life cover and returns, providing security and safety to insured. The
other category is market linked plans, also known as ULIPS. These plans provide both
protection and savings combined with flexibility to the covered person. As these products are
linked to capital markets, they may have the potential to deliver better returns than tradition plans
Life Insurance is the most popular form of Insurance as it transfers the financial risks associated
with your death to an insurance company. General Insurance like fire, marine, property, vehicle
etc. transfer the risk associated with your property to an insurance company so that you dont
have to pay out of pocket for any property damage covered under the terms of the insurance
policy. The central point of difference between the two is that life insurance is a non-indemnity
policy and the event insured is certain.

At present, life insurance enjoys maximum scope because the life is the most important property
of the society or an individual. Each and every person requires the insurance. This insurance
provides protection to the family at the premature death or gives adequate amount at the old age
when earning capacities are reduced. The insurance is not only a protection but is a sort of
investment as a certain sum is returnable to the insured at the death or at the expiry of a period.

To understand life insurance we have to first understand the scheme of insurance. Insurance is a
co-operative device to spread the loss caused by a particular risk over a number of persons who
are exposed to it and who agree to insure themselves against the risk.4 Under the plan of
insurance, a large number of people associate themselves to share different types of risks
attached to human life and property. The aim of all types of insurance is to make provision
against such risks. In other words, it is a provision which a prudent man makes against inevitable
contingencies, loss or misfortune.5 In this way, life insurance is a social device to share the risk
of loss of life.
The whole idea of insurance has developed on the fact that human life is full of uncertainties and
the life of a person itself is very uncertain. Eventualities do cast their shadows, and therefore one
has to equip oneself with possible means so as to face the unforeseen. It is well said that Life is
full of risks. For property, there are fire risks, for shipment of goods, there are perils of sea, for
human life, there is the risk of death or disability and so on and so forth.
Life insurance is a husbands privilege, a wifes right and a childs claim.2 The scheme of life
insurance provides an assurance that if such an event happens, the person or his dependents
would get financial assistance to bear the loss
It has been aptly said that life insurance offers the safest and surest means of establishing a
socialistic pattern, perhaps not without a lot of sweat but certainly without blood and tears. It
stabilizes the economic security of the policy holder and at the same time contributes its might to

promotion of industry by providing the necessary capital and supports various social security
measures.3

Coverage
The Policy is an agreement whereby the insurance company undertakes to indemnify the assured,
to the extent as mutually agreed by the insured and insurer, against losses incidental to marine
voyage exposed to the cargo in transit from one destination to other by sea, rail, road, air, courier
and others. Generally it is the cost price of goods plus 10% as Over Heads Charges.

Inland transit policy

Exports Voyage policy
Imports Voyage policy
Types of marine insurance: Hull and Machinery Insurance:- covers the insurance of the vessel and its equipment
Cargo Insurance:- includes the cargo or goods contained in the ship.
Liability Insurance:- indemnify against the loss which the insured may suffer on
account of liability to a third party caused by collision of the ship.
Kinds of Marine Insurance Policies: Specific Voyage policy:- for specific voyage
Valued policy:- is a policy in which the value of the subject matter insured is agreed
upon between the insurer and the insured,

 Open / Floating policy:- is a policy which only mentions the amount for which the
insurance is taken out and leaves the name of the ship(s) and other particulars to be
defined by subsequent declarations.
STOP Policy: Sales turnover Policy:- by agreement covers transit of raw material, semi
finished & finished products pertains to insured's trade i.e. Export, Import, Inter Depot
movement incidental storage from originating point to destination point on actual basis.

Export Cargo

Cargo policies are freely assignable

Existence of Insurance Interest needs to be established only at the time of loss

Most of the marine policies are agreed value policies

An element of profit can also be included in the sum insured which is allowed by the
insurers. This is referred to as mark up in Marine Insurance parlance

Marine policies are transit / voyage policies and not limited to any specific period

The interpretation and applicability of various statutes, the legislation in various

countries, the port conditions, customs procedures and the legal systems in various parts of the
world, govern the operation and interpretation of a Marine Insurance policy
Types of Policies

Specific Policy - The policy issued for a specified transit. The coverage under the policy
will cease on completion of the transit contemplated

Open Policy - This is a policy intended to cover Export movement of consignments for
specified period of time which is usually one year. This policy is suitable for insured with
numerous transactions throughout the year. The availability of the open policy facilitates the
insured in having automatic and continuous cover and the insured is free to declare the
consignment movement subject to the terms and conditions of the policy. The open policy is

issued with an initial sum insured which can be enhanced at policy rate any time during the
currency of the policy

MARINE INSURANCE ACT, 1963

This Act defines the minimum rights, liabilities and immunities of a ship-owner in respect of loss
or damage to cargo carried. Broadly, speaking, the Act deals with three aspects of a ship owners
liabilities towards cargo owners. They are:
The circumstances when the ship owner is deemed to be liable for loss or damage to cargo. b)
The circumstances when the shipowner is exempted from liability, i.e. when loss or damage is
caused by events outside his control, e.g. perils of the seas. c) The limits of liability of a ship
owner for loss of or damage to cargo calculated in monetary terms per package or unit of cargo.
The Merchant Shipping Act, 1958
This Act also provides for protection to shipowners. The liability of a shipowner can be limited
to certain maximum sums for certain losses, provided the incident giving rise to such claims has
arisen without the actual fault or privity of the shipowner whether the claim relates to loss of life,
personal injury, or damage to property on land or water. The Act also confers an obligation on the
shipowner to send his ship to sea in a seaworthy and safe condition.
The Bill of Lading Act, 1855
This Act defines the character of the Bill of lading as an evidence of the contract of carriage of
goods between the shipowner and the shipper, as an acknowledgement of the receipt of the goods

on board the vessel and, as a document of title. The bill of lading is one of the documents
required in connection with settlement of Marine Cargo claims.

THE CARRIERS ACT

With the growth of industries movement of goods and property became an integral part of the
society. The carriers role for the movement of goods became very important. In the beginning
individual carriers came into existence and later many companies were formed. Tramways and
Indian Railway Companies were formed under the enactments and their role as common carriers
was of prime importance. While operating as common carriers loss or damage to the goods and
property being carried were occasioned by the negligence or criminal acts of themselves, their
servants or agents. It became necessary to make common carriers liable for the loss or damage so
caused. To enable common carriers to limit their liability for loss of, or damage to, property
delivered to them to be carried and also to declare their liability for loss of, or damage to, such
property occasioned by the negligence or criminal acts of themselves, their servants or agents a
Bill was introduced in the legislature.
Marine Cargo Insurance - covers the transit
Covers loss or damage to your goods while being transported by rail, road, air or by sea. The
policy compensates you for losses suffered and offers complete financial protection during the
transit of your goods

Stock Throughput Insurance - covers the transit and the storage

This insurance covers loss or damage to your goods while being transported by rail, road, air or
by sea and stored at Warehouse, Job Workers locations, Processing Units. The policy
compensates you for losses suffered and offers complete financial protection during the transit
and Storage of your goods.
This Policy which is also popularly known as 'Cradle to Grave', is in fact a Package Policy which
combines the risks of transit & storage under a 'Single Policy'.
Tea Crop Insurance - covers the transit and the storage of tea
The Tea Crop Insurance covers loss or damage to your goods while being transported by rail,
road, air or by sea, Processing Risk, Packing and storage at Warehouse, Job Workers locations,
Processing Units. The policy compensates you for losses suffered and offers complete financial
protection during the transit and Storage of your goods
Consequential Loss Insurance - covers loss due to delivery delay

Whilst in transit by road, rail, sea or air, machineries such as turbines, boilers, generators etc.
could be lost or may get damaged at any stage which may cause delay in the start-up of a
specified project. The SmartCargo Project Consequential Loss Insurance Policy relates to
consequential loss in business due to delay in the start-up of a specified project . This Policy is to
be obtained along with Project Cargo Insurance.
This is an overview of our Marine products. For further details and quotation, talk to us today at
1800-103-2292 (Toll free) or visit one of our branches

MARINE INSURANCE IN BAJAJ ALLIANZ

Introduction
With one of the largest, most experienced networks of marine underwriters, claims specialists
and risk consultants in the business, we deliver tailor-made local solutions to marine cargo risks.
Whether insurance cover is needed for a single shipment or for a multinational program, we can
create a flexible solution to your marine cargo insurance challenges
Our services
Our services in Marine Insurance include Comprehensive insurance for all stages of the
distribution chain and we offer the following coverages:

Project cargo

War and strikes (including terrorism)

Risk Management Services

Our solutions in Marine Insurance cater to the requirements across all sectors of the industry like

Power Generation

Oil & Gas

Chemical Facilities

Paper & Pulp

Wind Power

Machinery Upgrades

Bridges/Infrastructure

Mining Operations

Steel Mills

Printing

Manufacturing/Processing

MARINE INSURANCE IN UNITED INDIA ASSURANCE

We Cover
Any loss or damage to goods in transit by rail sea road air or post.
Who can Insure ?
Owners or bankers of goods in transit/shipment.
What is Insured ?
export and import shipments

goods in transit by rail sea road air or post

goods carried by coastal vessels plying between the various ports within the
country
cargo transported by small vessels or country craft over inland waters
goods moved from place to place by river transport
Types of Policies
Open Cover
Open cover is usually issued for import/export. The open cover is a contract
effected for a period of 12 months whereby the insurance company agrees to
provide insurance cover to all shipments coming within the scope of the
open cover. Open cover is not a policy. It is an unstamped agreement. As and
when shipments are declared specific policies are issued as evidence of the
contract and on collection of premium.
Open Policy
This policy is issued for transit of goods within India. Policy is valid for one
year and all transits during the policy period and declared are automatically
covered by the insurance company subject to the availability of the overall
suminsured
It is a stamped document. In this case specific policies are not issued for
each consignment . Premium can be collected in advance for the entire
estimated value during the policy period . Stamp duty is collected in advance
along with premium for despatches to be declared periodically
Specific Voyage Policy
This policy is valid for a single voyage or transit. The policy will be issued
before the voyage starts. The coverage will cease immediately on
completion of the voyage.

The specific voyage policy must show complete details of the risk..It should
contain particulars of conveyance/Vessel name/ Bill of Lading or Way bill and
date sum insured terms and conditions of cover voyage cargo description etc
like all other marine policies.
Annual Policy
This policy may be issued to cover goods in transit by road or rail or sea from
specified depots or processing units owned or hired by the insured. The
goods covered must belong to or held in trust by the insured .
These policies can not be issued to transport operators clearing forwarding
and commission agents or freight forwarders or in joint names.. They can not
be assigned or transferred. For such policies the sum insured should not be
less than Rs 5000/-.

MARINE INSURANCE IN UNITED INDIA ASSURANCE

Inland transit policies can be extended to cover the following perils on payment of additional
premium :
1.

SRCC - Strike, riot and civil commotion (including terrorist act)

2.

FOB - Where the inland transit is required to be extended to cover the goods till they are
loaded on board the vessel , this extension can be taken.

Export /Import policies can be extended to cover War and /or SRCC perils on payment of an
additional premium.
Top
Who can take the policy?
The contract of sale would determine who buys the policy. The most common contracts are :

FOB (Free on Board)

C & F (Cost & Freight)

CIF (Cost, Insurance & Freight)

In FOB AND C&F contracts, the buyer is responsible for insurance. Whereas in CIF contracts
the seller is responsible for insurance from his own premises to that of the purchaser.
Top
How to select the sum insured?
The sum insured or value of the policy would depend upon the type of contract. Usually, in
addition to the contract value 10/15% is added to take care of incidental cost.
Top

How to claim?
The following steps should be taken in event of a loss or damage to goods insured :
1.

Take immediate steps to minimise loss.

2.

Inform nearest office of the insurance company or claim settling agent mentioned on the
policy.

3.

In case of damage to goods whilst on ship or port , arrange for joint ship survey or port
survey.

4.

Lodge monetary claim with carrier within stipulated time period.

5.

Submit duly assigned insurance policy/certificate along with the original invoice and
other documents required to substantiate the claim such as :

6.

1.

Bill of Lading / AWB/GR

2.

Packing list

3.

Copies of correspondence exchanged with carriers.

4.

Copy of notice served on carriers along with acknowledgment/receipt.

5.

Shortage/Damage Certificate issued by carriers.

Survey fees is to be paid to the surveyor appointed by the insurance company. This fees
will be reimbursed along with the claim if the claim is otherwise admissible.

TYPES OF MARINE INSURANCE POLICIES

The shipper or insured covers the risks depending on the terms of letter of
credit/ export order. The Institute of London Underwriters has drawn up the
different clauses in marine insurance policy in respect of risk coverage. The
risk coverage is done in terms of various institute cargo clauses. Different
marine insurance policies with different risk coverage are :
Institute Cargo Clause A: This policy covers all the risks of loss or damage
to goods. This is the widest cover.
Institute Cargo Clause B: This policy covers risks less than under clause
A.
Institute Cargo Clause C: This policy covers lowest risks.
War and Strikes, Riots and Civil Commotion (SRCC) clause is excluded in all
the above policies. These risks can be covered by specifically asking for,
paying additional premium.