KMDK.M. Dastur Reinsurance Brokers Pvt.Ltd

The only Insurance Brokers in India to be ISO 9001/2000 certified BY TUV Germany

K.M. Dastur Reinsurance Brokers Pvt.Ltd, Cambata Building, 5th Floor, 42,Jamsetji Tata Road, Churchgate, Mumbai 400020

Presentation onMarine cargo insurance

tyPes of Marine cargo Policies

Specific Voyage policy

• Covers one single journey at a time

• Taken by one time senders

Open Policy/Open Cover• Undertaking to cover all shipments that

will be made during the year

• Features – Cargo & Voyage• Per Bottom Limit – 200% Accumulation

Clause

• Basis of Valuation

• Terms and conditions• Warranties (Strictly complied with)• Classification Clause 1/1/2001

• Declaration/Bordereaux

Annual Turnover Policy• This is no different from any open policy

except rate of premium is charged only on the sales turnover

• Does not give a free cover for transits of raw materials

• Rate for each leg of transit or weighted average of various rates for each transit

• No need to make monthly declarations to insurers

• Saving in administrative costs

insurable interest /suM insured

Insurable Interest must exist at the time of Loss and need not to have when the policy was issued.

Make good the loss – can not make profit from the loss – Indemnity

Agreed Value basis – Also called Valued policies

Most Popular Basis of Valuation – CIF + 10%

Increased Value

Assignment of Marine Certificates/Policies

allocations of costs to buyer/seller -incoterMs 2010

Incoterm 2010

Export customs

declaration

Carriage to port of

export

Unloading of truck in

port of export

Loading on vessel in port of

export

Carriage (Sea/Air) to port of

import

InsuranceUnloading in port of

import

Loading on truck in port of

import

Carriage to place of

destination

Import customs clearance

Import taxes

EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer BuyerFCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer BuyerFAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer BuyerFOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer BuyerCPT Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer BuyerCFR(CNF) Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer

CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer

CIP Seller Seller Seller Seller Seller Seller Buyer/Seller

Buyer/Seller Buyer Buyer Buyer

DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer BuyerDAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller SellerSeller/Not including VAT/FAT

Institute Cargo Clauses

ICC A

All Risk

ICC B

Named perils

ICC C

Named perils

Type of risks - Covered () not covered () A B CLoss / damage reasonably attributable to:

1. Fire or explosion

2. Vessel/Craft being stranded, grounded, sunk orcapsized.

3. Overturning/derailment of land conveyance.

4. Collision or contact of vessel, craft or conveyanceWith any external object other then water.

5. Discharge of cargo at a port of distress

6. Earthquake, volcanic eruption, lightning

7. General average and salvage charges incurred toavoid loss from any cause except those excluded

8. General average sacrifice

9. Jettison

10. Washing overboard

11. Entry of sea, lake or river water into the vessel

coMParison between the institute cargo clauses (a), (b) & (c)

A B C

12. Rainwater damage

13. Total loss of any package lost overboard ordropped whilst loading or unloading fromvessel or craft.

14. Piracy.

15. Deliberate damage or destruction by wrongful actof any person or persons, (i.e. by malicious acts)

(Can be covered by malicious Damage Clause forI.C.C (B) and (C) upon payment or extra premium)

16. In the event of frustration of the voyage resultingfrom a risk covered, extra charges incurred inunloading, storing and forwarding to destination

17. Reasonable charges for averting or minimizing lossrecoverable under this insurance and also thoseincurred, to pursue recovery rights against carriers,bailees or third parties

continued…

A B C 18. Other or extraneous perils all involving a fortuity

and from external causes, for example:

Damage as a result of shifting in heavy weather

Improper stowage

Rough handling

Breakage, leakage, denting

Heating and sweating

Rust

Hook and sling damage

Contact with mud, oils and acids, damage by other cargo

Shortage, theft, pilferage, non-delivery

Other loss/damage caused fortuitously and from external cause or causes

19. Liability under “Both to blame collision”

continued…

institute cargo clauses a - exclusions

Wilful misconduct of assured

Ordinary leakage, ordinary loss in weight, volume or ordinary wear and tear

Insufficiency of packing/unsuitability of packing

Loss/damage or expenses caused by inherent vice or nature of the subject matter insured

Loss/damage or expenses proximately caused by Delay

Loss/damage or expenses arising from insolvency or financial default of the owners managers charterers or operators of the vessel

Nuclear etc. exclusion

continued…

Unseaworthiness/unfitness of vessel craft conveyance container etc.Although the Underwriters are prepared to waive any breach of warranty where the insured is

unaware that the vessel is unseaworthy or unfit to carry the goods, they are not prepared to cover loss arising from such unseaworthiness or unfitness of the vessel or craft if the assured is aware of such unseaworthiness or unfitness at the time the goods are loaded in the vessel or craft

War Exclusion

Strikes Exclusion

additional clauses

Accumulation Clause

Paramount War Clause

Termination of Transit Clause

Claim Co-operation Clause

accuMulation clause

An accumulation of interest beyond the limits expressed in the contract

By reason of any interruption of transit / temporary storage coverage prior to transit &/or any occurrence beyond the control of the Assured or

By reason of any casualty &/or at a transshipping point &/or in a connecting vessel or conveyance,

Then, the Underwriters shall be liable for the full amount at risk, but in no event shall they will be liable for more than twice the Contract Limit

PARTIAL LOSS (Particular Average)

TOTAL LOSS

GENERAL AVERAGE

Marine cargo claiMs

general averageWhere extraordinary sacrifices are made or expenses incurred at the time of peril for the benefit of the of common safety of the whole maritime adventure

Intentional or Voluntary and not inevitable

Adventure must be imperiled, sacrifice in anticipation not recognized

Objective must be the preservation of adventure

The most common types of Casualties giving rise to General Average &/or Salvage Services are:

a) Jettison of Cargo

b) Sacrifice of the Vessel’s Equipment & Stores

c) Damage to Ship &/or Cargo during operations to extinguish a Fire on board a ship

Procedure to follow in ga casualty

Consignee will have to sign an Average Bond which is basic contract between cargo owner and ship owner whereby the cargo owner agrees to pay GA contribution properly adjusted

GA Guarantee – different from GA Bond and guarantees the payment of GA contributions. The guarantee amount is determined by Average adjuster based on the estimate of GA. This will be expressed as a % of CIF value of cargo

GA Security Guarantee

Average Adjuster determine which interest (Cargo/ship) will contribute to what extent in case of GA

Adjuster will be responsible for collecting security and performing the adjustment

Shipowners have a possessory lien over the cargo for GA

Declaration of General Average

Master of ship will usually be the first to be aware of a casualty giving rise to potential GA and will make

declarationShipowner will appoint Average Adjuster

underwriting considerations

Underwriting Considerations

Turnover

Vessel Selection

Description of Goods

Voyage Details

Any other relevant

information

Per Bottom

Limit/Per Location

Limit

Claim Experience

frequently asked questions

1. We always imports goods on CIF basis. Do we still require some form of marine cargo insurance?

2. Are Storage risks covered under a standard marine policy?

3. Are the 60 days mentioned in the duration clause of ICC A , B and C automatically available?

4. Are theft, pilferage and non – delivery (TPND) covered?

5. What is warranty and how does a breach of warranty impact claim?

claiMs docuMentationShipping Documentation Required:-

1. Original Bill of Lading

2. Charter Party Agreement

3. Shipping Invoice & Sales Contract including specification evidencing terms of sale & thereby title of ownership & insurable interest

4. If purchased & then sold, copy of purchase invoice evidencing the terms of purchase & change of ownership

5. Copy of claim on ship-owners &/or charterers &/or Third Parties

6. Insurance Certificate or Insurance Declaration

7. Statement of Claim

8. Load Port & Discharge Port Quality & Quantity Survey, which should contain the following:- Independent Load Port Survey Independent Discharge Port Survey

guidance notes

In Case of Shortage:-

Assured should immediately notify their Insurer as soon as they become aware of a Loss

Checks should be made that vessel has discharged all liquid cargo & had performed discharge operations satisfactorily. If not protest should be lodged

If possible Assured to obtain Letter of Guarantee from Ship-owner or their P&I Club covering the shortage & assist in protecting recovery rights against ship-owners

guidance notes

In Case of Contamination

Assured should immediately notify their Insurers so that Surveyor can be appointed. If need be even a hydrocarbon analyst

All Samples to be kept for an Indefinite Period & action to be taken against ship-owners / P&I Clubs to obtain guarantees

Source of Contamination should be found out as quickly as possible & immediate action should be taken

Suppliers should also be informed & invited to attend any re-testing in case contamination or specification failure is due to a pre-shipment condition. In such circumstances, any claim would then normally be for the account of Suppliers rather than Insurers