Basics of Marine Insurance.

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 3

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.


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.


HISTORY OF MARINE
INSURANCE
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.

HISTORY OF MARINE
INSURANCE
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


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.

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 $.

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.


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.


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.

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’


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. Compiled by S. M.Gupta 18

WORLD’S BIGGEST
CARGO LINERS


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


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.

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.

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.


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’:


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.

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.

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.

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.

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.

INSURED PERILS
SOME OF THE INSURED PERILS ARE:
FIRE, EXPLOSION
BREAKAGE
ACCIDENT
DERAILMENT OF CONVEYANCE
THEFT
PILFERAGE
NON-DELIVERY
JETTISON…..

‘Wilhelm Gustloff’ SINKING, the biggest Maritime
disaster in the history. About 9,400 persons were killed in
this disaster in 1945.


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


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…..


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 Compiled by S. M.Gupta 40
RADIOACTIVE REACTION/ FORCE.

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.

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.

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….

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.

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


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 OF
INSTITUTE CARGO CLAUSES
ATTACHED TO THE POLICIES.

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 47

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.


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…..


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.


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.


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’.


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.

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.

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.

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.

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.


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.

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’.

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.

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.

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.

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.S. M.Gupta
Compiled by 68

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

DIFFERENT TYPES OF
MARINE LOSSES


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Basics of Marine Insurance.

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