Marine

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 * Marine Policy * Open Cover * Open Declaration Policy * Special Declaration Policy

* Certificate of Insurance * Annual Policy * Duty Insurance * Increased Value Insurance * 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 VESSEL/CRAFT BEING STRANDED/ GROUNDED/SUNK/CAPSIZED OVERTURNING/DERAILMENT OF LAND CONVEYANCE COLLISION/CONTACT OF VESSEL/ CRAFT/CONVEYANCE WITH ANY EXTERNAL OBJECT(OTHER THAN WATER) DISCHARGE OF CARGO AT A PORT OF DISTRESS E.Q./VOLCANIC ERUPTION/LIGHTNING

1.1.1 1.1.2. 1.1.3. 1.1.4.

1.1.5. 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 Actual Total Loss

Constructive Total Loss

Irretrievable Physical Loss Destruction Loss of Specie

Partial Loss Particular Salvage Loss Average Total Partial Loss Loss of of Part whole Extra Charges

General Average

Sacrifice Contribution

Charges Sue & Labour Charges

Particular Charges