A) WHAT IS MARINE INSURANCE ?

• MARINE INSURANCE is the OLDEST

branch of Insurance
• TECHNICAL Insurance as is being
Practiced today started in the COFFEE
CLUB of Edward Lloyds in 1779 A.D. with
MARINE UNDERWRITING. LLOYDS
POLICY FORM which was later on
modified to the S.G.POLICY FORM stood
the test of time for 200 YEARS
MARINE INSURANCE

• MARINE INSURANCE comprises of

1. CARGO
2. HULL
3. BUILDERS RISK
MARINE INSURANCE

• CARGO INSURANCE provides Insurance

cover for Loss/Damage to goods during transit
by Rail/Road/Air/Ocean/Post (Regd). It deals
with
A.EXPORT/IMPORT
B.COASTAL SHIPMENTS
C.SHIPMENTS BY SAILING VESSELS/
INLAND VESSELS
D. INLAND TRANSIT BY RAIL/ROAD/AIR
E. REGISTERED POST PARCEL.
MARINE INSURANCE

• HULL INSURANCE deals with

Insurance of Ships/ Fishing
Vessels/ Trawlers/ Dredgers/
Tugs/Barges etc.
MARINE INSURANCE

B) SALE CONTRACTS
WHO is responsible for effecting Insurance on
Goods will depend upon the SALE CONTRACT
• PRINCIPLE TYPES of Sale Contract for
Marine Insurance are
a. Ex-Works d. FOB
b. FOR e. C + F
c. FAS f. C I F
MARINE INSURANCE

Normal Practice in Import/Export Trade

• IMPORTER to OPEN L/C with a Bank in F/O
EXPORTER
• EXPORTER hands over B/E & other documents of
Title to Bank as & when goods are ready for
shipment
• EXPORTER gets the Bills Discounted with Bank
• Goods considered as PHYSICAL SECURITY for
Bill Discounting
• Therefore INSURANCE IS COMPULSORY AT
L/C OPENING stage.Terms & Conditions of
Insurance specified in L/C
MARINE INSURANCE

C) MARINE INSURANCE ACT 1963

• Provides Legal Framework for Marine Insurance
Transactions - Cargo & Hull. It deals with :-
I) Basic Principles
II) Basis of Valuation
III) Types of Losses & Settlement Basis
IV) Extra Charges/Particular Charges etc.
V) General Average & Salvage Charges
MARINE INSURANCE

D) MARINE POLICY FORM

CONTRACT OF MARINE INSURANCE is
evidenced by the Policy & Clauses attached to it.
MARINE POLICY form contains various details
such as -
* NAME OF INSURED & ADDRESS
* SUM INSURED & PREMIUM
* DETAILS OF CARGO/ PACKING
contd..
 MARINE POLICY FORM

* VOYAGE PARTICULARS- L/R NO. ETC.

* CLAUSES APPLICABLE
* PLACE WHERE CLAIMS ARE PAYABLE
* PLACE & DATE OF ISSUE OF POLICY
* STAMP DUTY
* VOYAGE - FROM … TO …
* SIGNATURE OF AUTHORISED PERSON
E) MARINE CLAUSES

The clauses define the scope of Cover &

Terms & Conditions of Insurance. They
primarily deal with the following aspects :-
*Risks Covered * Exclusions
* Duration * Insurable Interest
* Change of Voyage * Forwarding Charges
* Minimizing Losses * Reasonable Despatch
* Termination of Contract of Carriage
* Constructive Total Loss
 F) MARINE RATING & UNDERWRITING

• In Cargo Insurance ,Declaration Forms are used instead

of ‘Proposal Form’. The DECLARATION FORM elicits
the following Underwriting Particulars

I) Name of Shipper/Consignor/Insured
II) FULL DESCRIPTION of Goods (nature of Cargo)
III) METHOD and TYPE of PACKING
IV)VOYAGE/ MODE of Transit & Transhipment if any
V) PLACES : From and To
VI) Mode of Conveyance/ Vessel Particulars/COC details
VII) Insurance Cover required
VIII) Basis of Valuation & Sum Insured
F) MARINE RATING & UNDERWRITING

• The PREMIUM RATE will depend upon all the

above Underwriting Factors

•Company Guidelines for Cargo Rating &

Underwriting
 G) PRACTICE OF CARGO INSURANCE

THE VARIOUS TYPES OF DOCUMENTS ISSUED IN

MARINE CARGO INSURANCE ARE

* Cover Note * Certificate of Insurance

* Marine Policy * Annual Policy
* Open Cover * Duty Insurance
* Open Declaration Policy * Increased Value Insurance
* Special Declaration Policy * Special Storage Risk Insurance
H) MARINE COVER NOTE

• Cover Note is issued PROVISIONALLY

pending the Issue of a Regular policy
• Cover note is issued when all the details
required for the purpose of issuing the
policy are not available e.g. No. & date of
B/L/R/R/LR etc.
• Type of Insurance Cover, Description of
goods & period of validity must be
specified in the Cover Note.
I) MARINE POLICY

• EVIDENCE of the Marine Insurance

Contract & MUST be stamped as per Stamp
Act provisions.
• In Marine Insurance Stamp Duty to be
RECOVERED from the Insured.
• Policy makes specific reference to the
CLAUSES attached & specific
WARRANTIES applicable
I) MARINE POLICY

• Clauses mentioned on the face of the Policy

must NECESSARILY be attached. RED
IMPORTANT SLIP specifies procedure
for CLAIMS and PRESERVING Rights
of Recovery
J) MARINE OPEN POLICY

• Policy is also known as FLOATING

POLICY. It is worded in GENERAL
TERMS and is issued to cover ALL
SHIPMENTS/SENDINGS coming within
its scope and sent/received during the
Policy period.
• Declarations are made on a per despatch
/weekly /fortnightly/monthly basis & these
go to reduce the Sum Insured
J) MARINE OPEN POLICY

• SPECIAL FEATURES are as follows :

* Policy issued for ONE year
* Reinstatement of Sum Insured permitted
any number of TIMES subject to advance
payment of premium.
*REDUCING BALANCE Method for sum
Insured/Premium
 Special Features …. Contd..

*Premium REFUNDED on the

UNDECLARED BALANCE at the end of
the year.
* Generally issued to cover Inland Transits
* Automatic & Continuous Insurance Protection
* Clerical Labour reduced.
* Saving in Stamp Duty
K) OPEN COVER

• Issued to Cover Imports/Exports for a

period of ONE YEAR which is renewable
annually.
• Normally taken by big Firms having regular
Export /Import.
• This is an Unstamped Document & Specific
stamped Policies are issued as and when.
Despatches are made
OPEN COVER .. Contd..

• Open cover describes the Cargo, Voyage

and Insurance Cover in General Terms and
takes care automatically of all shipments
which fall within its scope.
• The cover is subject to cancellation by
either side after giving due Notice.
• Sufficient Premium Credit Balance to be
maintained at All TIMES.
L) IMPORTANT FEATURES OF OPENPOLICY
/OPEN COVER

A) LIMIT PER BOTTOM/CONVEYANCE

This indicates the UPPER LIMIT of the value of a Single
Shipment/Truck Load etc. It restricts the
COMMITMENT of Insurers on any one vessel.
B) BASIS OF VALUATION - Basis normally adopted is
CIF + 10%
C = Prime Cost of the Goods
I = Insurance Charges
F = Freight & other charges incidental to shipment
10% to cover Profits
 L) IMPORTANT FEATURES OF OPEN
POLICY /OPEN COVER

C) LIMIT PER LOCATION -

This limits the Liability of the Insurers at any One
Place/Location at any point of Time. It sets an
UPPER LIMIT to the ACCUMULATIONS at
Port/Transporters Godowns/ Railway Yards.
D) PREMIUM RATE : This must be shown
separately for the Basic ICC-A/B/C cover and
War & SRCC cover . The relevant clauses must
also be attached to the Open Cover
 L) IMPORTANT FEATURES OF OPEN
POLICY /OPEN COVER

E) TERMS & CONDITIONS OF INSURANCE - These

must be clearly specified.
F) DECLARATION CLAUSE : Each & every shipment
coming within the scope of cover MUST be declared.
G) CANCELLATION CLAUSE :
* Cancellation of Basic Cover subject to 30 days Notice in
writing on either side.
* Cancellation of War & SRCC covers for Overseas
consignment subject to 7 days Notice in writing for Risks
that have not attached
* Cancellation of Inland SRCC subject to 48 hrs. Notice in
writing on either side.
M) CERTIFICATE OF INSURANCE

• Certificates are issued to satisfy the

requirements of Insured/Bank. Certificate
under Open Cover may act as a substitute
for specific Policy, provided it is stamped.
Certificates under Open Policy need not be
stamped.
• Certificate is a simple document containing
PARTICULARS of Cargo and Shipment
thereof.
N) ENDORSMENTS

• Endorsements are issued when it is

necessary to incorporate changes in the

* Sum Insured
* Interest
* Premium
* Terms & Conditions
Marine Cargo Policies are freely Assignable
O) TARIFF POLICIES

• TAC has formulated PACKAGE POLICIES

covering TRANSIT + STORAGE RISKS for Tea,
Coffee, Cardamom and Rubber.
• COVER UNDER TEA POLICY attaches from
the time Green Leaf is plucked at the Insured’s
estate, continues during processing at Factory &
during further Transit until delivered to Buyers in
India/Abroad.
• Cover for Coffee/Cardamom/ Rubber are more or
less on the same lines.
 ICC-A/B/C
• ICC-C/B------- RISKS COVERED
• LOSS/DAMAGE REASONABLY ATTRIBUTABLE TO:
CLAUSE No.
• FIRE OR EXPLOSION 1.1.1
• VESSEL/CRAFT BEING STRANDED/ 1.1.2.
• GROUNDED/SUNK/CAPSIZED
• OVERTURNING/DERAILMENT OF 1.1.3.
• LAND CONVEYANCE
• COLLISION/CONTACT OF VESSEL/ 1.1.4.
• CRAFT/CONVEYANCE WITH ANY
• EXTERNAL OBJECT(OTHER THAN WATER)
• DISCHARGE OF CARGO AT A PORT OF DISTRESS 1.1.5.
• E.Q./VOLCANIC ERUPTION/LIGHTNING 1.1.6.*
 ICC—A/B/C…….contd.
• ICC—C/B-------RISKS COVERED contd.
• LOSS OR DAMAGE CAUSED BY: CLAUSE No.
• GENERAL AVERAGE SACRIFICE 1.2.1.
• JETTISON 1.2.2.
• WASHING OVERBOARD(ICC-B only) 1.2.2.*
• ENTRY OF SEA/LAKE /RIVER WATER 1.2.3.*
• INTO VESSEL/CRAFT/HOLD/CONVEYANCE/
• CONTAINER/LIFTVAN/PLACE OF STORAGE
• TOTAL LOSS OF ANY PACKAGE LOST 1.3*
• OVERBOARD WHILST LOADING ONTO/
• UNLOADING FROM VESSEL/CRAFT
• (SLING LOSS)
• ICC—A--COVERS ALL RISKS OF LOSS/DAMAGE TO THE
INSURED SUBJECT MATTER (EXCEPT EXCLSNS 4,5,6,7)
 P) MARINE LOSSES - Marine Losses can
be categorized as follows
Loss

Total Loss Partial Loss

Actual Constructive Particular Salvage General

Average Loss
Total Total Average
Loss Loss
Total Partial
Loss Sacrifice Contribution
Loss
Irretrievable of
Physical of Charges
Loss Part whole
Destruction
Extra
Sue & Particular
Loss of Specie Labour
Charges Charges
Charges