1.
UNDERSTANDING
MARINE CARGO INSURANCE
DATE: 02-12-2021 R JAYARAJ

2.
WHAT IS MARINE CARGO
INSURANCE?
General Terms
Marine Cargo Insurance provides cover for loss or
damage to your goods whilst being transported by road,
rail, sea or air.
Insurance Terms:
A Contract of Marine Insurance is an agreement
whereby the insurer undertakes to indemnify the
assured in the manner and to the extent thereby
agreed, against marine losses, that is to say, losses
incidental to Marine Insurance.

3.
VARIOUS MODES OF TRANSIT

4.
FEW HAZARDS -
CARGO UNDERGO IN TRANSIT
• DURING INLAND TRANSIT
Braking, acceleration, Vibrations, Road Shocks, Sway on curves
Impact, Rail/Road Accidents
• DURING SEA VOYAGE
Perils of the Seas, Rolling, Pitching, heaving, surging, Swaying,
Jettisoning.
• WHILE HANDLING
Rapid movement during lifting lowering and dropping, Tilting,
Pushing / Dragging, Dropping
• OTHERS
Sling Loss, Fire due to friction, Spontaneous combustion,
Carelessness, Theft & Pilferage, Water Damage, Contamination
by other cargo, Sweating and condensation

5.
BASIC MARINE INSURANCE
TERMINOLOGIES

6.
MARINE INSURANCE CONTRACT
• PARTIES INVOLVED
– CONSIGNOR (SELLER)
 Banker
 Insurer
 C&F Agents
 Carriers
– CONSIGNEE (BUYER)

7.
INCO TERMS
C
C&F
CFR
CIF
FOB
Ex-Works
- Cost
- Cost &Frieght
- CFR
- Cost, Insurance & Freight
- Free on Board
- Ex-Works

8.
DOCUMENTS INVOLVED
• Invoice / Proforma Invoice
• Packing List
• Lorry Receipt (LR)
• Railway Receipt (RR)
• Bill of Lading (BL)
• Airway Bill (AWB)
• Postal Receipt
• Courier Receipt

9.
SAMPLE
INVOICE

10.
SAMPLE
BILL
OF
LADING

11.
TYPE OF POLICIES
• Marine Open Cover
• Marine Open Policy
• Custom Duty Policy
• Annual Turnover Policy
• Specific Voyage Policy

12.
OPEN COVER
• Provides continuous cover
based on agreed terms of
coverage and at agreed
rates through out the policy
– normally a year.
• Usually given for Marine
Imports / Exports
• Advance Deposit of
premium.
CHARACTERSITICS
• FREELY NEGOTIABLE
• COLLATERAL SECURITY
• COVERS -
- COST
- INSURANCE
- FREIGHT
- CUSTOM DUTY
- INCIDENTALS UPTO 10%

13.
OPEN POLICY
• Usually given for Inland Transit
• Provides continuity of cover on
agreed terms
• Advance premium to be paid on the
basis of Estimated Turnover
• Despatch details to be furnished to
Insurer for each and every despatch
– but conveniently.

14.
ANNUAL TURNOVER POLICY
• No need to declare each and every
despatch individually - Quarterly
Declaration statements
• Premium to be paid in advance based
on estimated annual Turnover

15.
CUSTOMS DUTY POLICY
• It is not an agreed value policy
• It is a policy of pure indemnity
• Issued only in conjunction with cargo
policy
• Rate of premium 75% of cargo
premium rate.

16.
VARIOUS CLAUSES FOR COVERAGE
• Institute Cargo Clauses -A/B/C
• Inland Transit Clauses -A/B/C
• Institute Cargo Clauses -(AIR)
• Sendings by post
• WAR & Strike, Riot, Civil Commotion
• Strike, Riot, Civil Commotion
• Institute Radioactive Contamination
Exclusion Clause
• CLASSIFICATION CLAUSE

17.
DURATION OF POLICY – INLAND TRANSIT
ITC ‘A’ & ‘B’

18.
ITC A, B & C COMPARISON

19.
DURATION OF POLICY – IMPORT/EXPORT
ICC ‘A’ & ‘B’

20.
RISK CLAUSE ICC (A) 1.1.82
S 1. This insurance covers all risks of loss of or damage to the subject-
matter insured except as excluded by the
Provisions of Clauses 4, 5, 6 and 7 below.
All risk policy - ICC (A) 1.1.82
Named perils in - namely ICC (B) 1.1.82 and
ICC (C) 1.1.82
Stress upon “Subject Matter Insured”

21.
ICC A, B & C COMPARISON

22.
Stranding, Grounding, Sinking, or
Capsizing of Vessel or Craft
Overturning/Derailment of Land
Conveyance
Collision of Ship/Craft with another
Ship/Craft
Contact of Ship/Craft/Conveyance &
any object other than Ship/Craft
(excluding water but including ice)
Discharge of Cargo at Port of Distress
Fire or Explosion
Earthquake, Volcanic Eruption, or
Lightning
Theft / Pilferage / Malicious Damage*
General Average Sacrifice/Jettison
Washing Overboard (on deck cargo)
(A) (B) (C)
YES YES YES
YES YES YES
YES YES YES
YES YES YES
YES YES YES
YES YES YES
YES YES NO
YES NO NO
YES YES YES
YES YES NO
Perils cover under Institute Cargo Clauses

23.
Sea/Lake/River Water Entering
Vessel/Craft/Hold/Conveyance/Container/ YES YES NO
Lift Van/ or Place of Storage
Total Loss of Any Package Lost
Overboard or Dropped During Loading
Loading/Unloading of vessel or craft (Sling)
YES
YES for
total pkg
NO
Insufficiency / Improper Packing NO NO NO
Loss Caused by Delay/Consequential
Loss
NO NO NO
Perils cover under Institute Cargo Clauses
Continued....

24.
Institute Cargo Clauses–A [2009]
Duration of Cover
In 1982 Clauses there is ambiguity about the exact
time of commencement and ending of transit which
is now removed in 2009 Clauses which clearly state
that the transit commences on shifting of cargo in
the place of storage for commencement of transit
and ends on unloading of cargo at final destination
subject to above clauses and time limits.

25.
Institute Cargo Clauses–A [2009]
Packing
 Insufficiency or unsuitability of packing or
preparation of subject matter insured:
 In 2009, this Exclusion applies only when the
packing etc., is done by the insured. If it is done
by outside agency there is no exclusion.

26.
Institute Cargo Clauses–A [2009]
Unseaworthiness and Unfitness Exclusion
Excludes:
 Unseaworthiness of vessel or craft
 Unfitness of vessel, craft, conveyance, container or lift van for
the safe carriage of the subject matter insured.
 In 2009 Clause the word LIFT VAN has been removed.
 In 2009 Clauses this relaxation is given to the assignee of the
policy who is not aware about the unseaworthiness etc.
 In other words, in 1982 Clauses if seller is aware about
unseaworthiness and the buyer is not, the seller’s knowledge is
transferred to buyer on assignment even though he is innocent.
In 2009 Clauses innocent buyer gets protection.

27.
1. Wilful misconduct of assured/
2. Ordinary leakage, Loss of weight or volume,
Ordinary wear & Tear inherent vice.
3. Insufficiency of packing, sentimental damages
4. Loss/damage/by delay even though the delay is
caused by insured peril.
5. Insolvency/ financial default of vessel operator
6. War & Allied perils and loss/damage by
strikers/rioters/terrorist/nuclear risk
Exclusion in respect of Strike, Riot and Civil
Commotion losses can be covered by SRCC
Extension.
COMMON EXCLUSIONS

28.
IMPORTANT NUMBERS
• SUM INSURED
– Example: Sum Insured Basis CIF + 10%
• Invoice Cost- 1,00,000/-
• Insurance – 500/-
• Frieght – 5000/-
• Sum Insured = 1,05,500 + 10% = 1,16,050/-
• PREMIUM / RATING
• EXCESS/DEDUCTIBLE

29.
TYPES OF MARINE CLAIMS

30.
Actual Total Loss
 An Actual Total Loss occurs, when the subject
matter is completely destroyed or so
damaged that the property or subject matter
ceases to be the one insured (loss of specie)
 Actual Total Loss also takes place where the
insured is irretrievably deprived off the subject
matter. For example: Where the ship is
captured and seized by an enemy.

31.
CONSTRUCTIVE TOTAL LOSS
The above loss takes place in the following
circumstances.
Where the property is reasonably abandoned on
account of imminent actual total loss
The cost of recovering property or saving the
property exceeds the value of such property.
Eg : Cargo is badly damaged and the cost of repair
together with forwarding charges to the destination
exceeds the value of such goods

32.
PARTIAL LOSS
If the complete cargo is not destroyed, but
partly damaged, the loss is called partial loss.
Partial losses may be subject to particular
average or general average clause.
In case of particular average, the loss is to be
borne by the particular interest. For example,
in case of total loss to a part of the ship, the
ship owner has to borne the loss.

33.
GENERAL AVERAGE
General Average means any extraordinary sacrifice
or expenditure which is voluntarily and reasonably
made or incurred in time of peril for the purpose of
preserving the property imperilled in the common
adventure.
In case of GA loss, the party who suffers the loss is
entitled to obtain rateable contribution form the other
parties who are benefited by such sacrifice or
expenditure.

34.
GENERAL AVERAGE
The following conditions must be satisfied before a GA
contribution can be claimed.
 The common adventure must be in peril
 The peril must be real and not imaginary
 The sacrifice must be voluntary and reasonable.
 The peril must not be due to the fault of goods
destroyed.
 The sacrifice must be to preserve all the interest
commonly imperilled and not for the protection of one
particular interest.
 Owner of cargoes, which are not saved cannot be
called upon to contribute.

35.
JETTISONING
Jettisoned cargo is cargo dumped overboard intentionally to save
the ship, crew and the rest of the cargo that stays aboard. The
insurance companies of the ship and saved cargo, reimburse the
owner of the dumped cargo because his cargo was sacrificed to
save the ship and their cargo. This is calls General Average

36.
General Average?

37.
WHAT IS SLING LOSS?
Loss of cargo by falling from slings when being loaded or
discharged. This is generally a total loss of part. Sling losses are
particularly prevalent in surf ports where discharge is carried
out into lighters or small craft. The ICC (1982) B cover total loss
of an entire package dropped or lost overboard during
loading, transshipment or discharge. This cover is not provided
by the C clauses.

38.
Warranties
• Implied Warranty of legality & seaworthiness
• Express warranties
• Mechanical derangements excluded
• Tarpaulin cover
• No over loading
• Second hand Machinery replacement

39.
ADDITIONAL CLAUSES
 LABELS CLAUSE
 CARGO ISM ENDORSEMENTJC98/019
CARGO ISM FORWARDING CHARGES JC98/023
TERMINATION OF TRANSIT CLAUSE (TERRORISM)JC2009/056
COMPUTER MILLENNIUM EXCLUSION CLAUSE (CARGO)
CHANGE OF DESTINATIN / DEVIATION / DELAY
DECONSOLIDATION AND UNPACKING COVERAGE
RETURN SHIPMENTS CLAUSE
CRAFT CLAUSE
ON DECK SHIPMENTS
SUE AND LABOUR CLAUSE
CONTRACT (RIGHTS OF THIRD PARTIES) ACT 1999 EXCLUSION CLAUSE
DELIBERATE DAMAGE POLLUTION HAZARD CLAUSE
LETTERS OF CREDIT CLAUSE
REPLACEMENT CLAUSE
SECONDHAND REPLACEMENT CLAUSE
INSTITUTE CLASSIFICATION CLAUSE CL.354 (1/1/01)

40.
ADDITIONAL CLAUSES & WARRANTIES
INSTITUTE RADIOACTIVE CONTAMINATION,CHEMICAL,
BIOLOGICAL, BIO-CHEMICAL,ELECTROMAGNETIC WEAPONS
EXCLUSION CLAUSE CL.370 (10/11/03)
INSTITUTE CYBER ATTACK EXCLUSION CLAUSE CL.380 (10/11/03)
NON CONTRIBUTION CLAUSE
EXCLUDING RUSTING , OXIDATION, DISCOLORATION, WETTING,
STAINING, SCRATCHING, BRUISING, CHIPPING, DENTING, MARRING
AND THE COST OF REPAINTING AS APPLICABLE.
TEMPERATURE VARIATION
PAIRS AND SETS CLAUSE
PROCESS CLAUSE
ELECTRICAL AND MECHANICAL DERANGEMENT
EXCLUDING HEATING AND SWEATING
EXCLUDING INFESTATION ARISING FROM WEEVIL, GRUB OR WEB
EXCLUDING REJECTION RISKS
EXCLUDING ANY NATURAL LOSS IN WEIGHT
WARRANTED SHIPPED IN VENTILATED CONTAINERS
SANCTION LIMITATION AND EXCLUSION CLAUSE JC2010/014

41.
Can you identify the name of the perils
shown in the pictures?
1
2
3
4
5
6
7
Answers:
1. Capsize
2. Fire
3. Stranding
4. Jettisoning
5. Washing Overboard
6. Running Aground
7. Jettisoning

42.
THANK YOU
POINT TO THINK – ACCUMULATION OF RISKS!!!