MARINE INSURANCE

Introduction of the subject: 

Importance of Marine insurance in commerce; Marine insurance plays a very important role in the field of overseas commerce and internal trade of a country. It is closely linked with Banking and Shipping. Banks generally finance the goods which are transported by ships or by other means of transport in the case of internal trade and Marine Insurance protects such goods against loss or damage. Without such protection the entire trade structure is bound to suffer. 

Marine Insurance can be divided broadly into two groups

  o Cargo Insurance  

  o Hull Insurance 

As stated earlier, Marine Insurance is closely linked up with the trade of a country internal as well as international. A sale contract which is an essential feature in the trade involves a seller and a buyer, apart from the other parties like the carrier, the bank, and the clearing agent. Whether the insurance of the goods in transits is to be the responsibility of the seller or the buyer depends on the type of the sale contract in any transaction. There are different types of sales contracts the most important of which, as affecting the Marine Insurance are:

* F.O.B. ( Free on Board) In this case, the seller is responsible for loss of or damage to the goods until they are placed on board the steamer for on carriage. Thereafter the buyer becomes responsible and he has, therefore, the option to insure where he likes.

* C.I.F. (Cost, Insurance and Freight) In this case the seller assumes responsibility for the insurance and the insurance charges are indicated in the invoice along with the other charges. 

* C & F (Cost and Freight) In this case, normally the buyers responsibility attaches from the time the goods are placed on board the vessel and he has therefore to take care of the insurance. 

* F.O.R. (Free on Rail) This is same as F.O.B. but it concerns mainly the internal trade transactions. 

Marine Cargo Policy: 

This policy covers goods, freight and other interests against loss or damage to goods whilst being transported by rail, road, sea and/or air.   

Highlights 

• This policy covers goods, freight and other interests against loss or damage to  goods whilst being transported by rail, road, sea and/or air.

 • Different policies are available depending on the type of coverage required ranging  from an ALL RISK cover to a restricted FIRE RISK ONLY cover. 

• This policy is freely assignable and is basically an agreed value policy.

Scope :

Transportation of goods can be broadly classified into three categories: 

i. Inland Transport 

ii. Import 

iii. Export 

The types of policies issued to cover these transits are: 

For Inland Transit 

a. Specific Policy

 - For covering a specific single transit 

b. Open Policy 

-For covering transit of regular consignments over the same route. The policy can be taken for an amount equivalent to three months despatches and premium paid in advance. As each consignment is despatched, a declaration giving details of the despatch including GR/RR No. is to be sent to the insurer and the sum insured gets reduced by the amount of the declared despatch. The sum insured can be increased any number of times during the policy period of one year; but care should be taken to ensure that adequate sum insured is available to cover the consignment to be despatched. 

c. Special Declaration Policy 

- For covering inland transit of goods wherein the value of goods transported during one year exceeds Rs.2 crores.Although the premium for the estimated annual turnover [i.e. the estimated value of goods likely to be transported during the year] has to be paid in advance, attractive discounts in premium are available. 

d. Multi-transit Policy 

- For covering multiple transits of the same consignment including intermediate storage and processing. For e.g. covering goods from raw material supplier's warehouse to final distributor’s godown of final product.

For Import/Export 

a. Specific Policy 

- For covering a specific import/export consignment. 

b. Open cover 

- This policy which is issued for a policy period of one year indicates the rates, terms and conditions agreed upon by the insured and insurer to cover the consignments to be imported or exported. A declaration is to be made to the insurance company as and when a consignment is to be sent along with the premium at the agreed rate. The insurance co. will then issue a certificate covering the declared consignment. 

c. Custom duty cover 

- This policy covers loss of custom duty paid in case goods arrive in damaged condition. This policy can be taken even if the overseas transit has been covered by an insurance company abroad, but it has to be taken before the goods arrive in India.