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MARINE INSURANCE FOR BANKERS

R . GANATRAM.A.,M.COM., LL.M., F.I.I.I., D.M.M.T.

MARIRAJ ASSOCIATES098211 40676

grajkal@yahoo.co.in

`

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MARINE INSURANCE

1. Introduction

2. Scope of Cover & Exclusions

3. Warehouse to Warehouse Clause

4. Claim Procedure/Documents

5. UCPDC 600 & Marine Insurance

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MEANING

INSURANCE OF GOODS IN TRANSIT BY VARIOUS MODES OF

TRANSPORT [Cargo Insurance] SHIPS CARRYING CARGO/GOODS [Hull

Insurance] SHIPS DURING CONSTRUCTION (HULL Insurance) SHIPS DURING BREAKAGE [Hull Insurance] FREIGHT INSURANCE [Hull Insurance] CERTAIN LIABILITIES E.G. COLLISION LIABILITY

[Cargo/Hull Insurance

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INTERNATIONAL

THE TERMS AND CONDITIONS CALLED ‘ CLAUSES’ ARE INTERNATIONAL IN CHARACTER- DRAFTED BY INSTITUTE OF LONDON UNDERWRITERS AND VERY WIDELY FOLLOWED.

OTHER CLAUSES BY AMERICAN AND DUETCH UNDERWRITERS.

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AGREED VALUE

AGAINST ‘ MARKET VALUE’ & ‘ RE- INSTATEMENT / REPLACEMENT VALUE’FOLLOWED IN OTHER BRANCHES, MARINE POLICY IS ‘AGREED VALUE’ POLICY.

VALUE ONCE AGREED FINAL. CIF + 10% INTERNATIONAL NORMS.

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INSURABLE INTEREST -1

INSURABLE INTEREST IS DIRECT RELATIONSHIP WITH PROPERTY / PERSON OF SUCH A NATURE THAT IF THAT PROPERTY OR PERSON SUFFERS LOSS THE HOLDER OF I.I. SUFFERS FINANCIAL LOSS.

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INSURABLE INTEREST- 2

I.I. DEPENDS UPON TERMS OF SALE – INCOTERMS 2010 AND SALES OF GOODS ACT.

UNDER INCOTERMS PASSING OF RISK IS IMPORTANT, INSURABLE INTEREST PASSES WITH THE RISK

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INSURABLE INTEREST - 3

EX- W BUYERS’ INSURABLE INTEREST FOB/FCA- BUYER + SELLER. CIF- BUYER OR SELLER, WHETHER

MONEY PAID OR NOT. UPTO CIF PLACE ONLY.

ASSIGNMENT- CARGO POLICIES GENERALLY FREELY ASSIGNABLE.

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ASSIGNMENT

POLICY CAN BE ASSIGNED EVEN AFTER LOSS IF THERE IS PRIOR AGREEMENT.

ASSIGNMENT VS. NEGOTIATION. ASSIGNEE DOES NOT GET BETTER

RIGHTS, BREACH OF WARRANTY EFFECTIVE AGAINST BUYER ALSO.

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EXCESS

THE AMOUNT WHICH IS TO BE DEDUCTED FROM EACH AND EVERY LOSS.

IF L/C SPECIFIES “ IRRESPECTIVE OF PERCENTAGE” THEN EXCESS NOT TO BE ACCEPTED, OTHERWISE AS PER UCPDC 600 EXCESS MAY BE ACCEPTED.

EXCESS GIVES DEDUCTION IN PREMIUM.

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ECGC VS. MARINE POLICIES

MARINE POLICIES COVER LOSS OR DAMAGE TO THE CARGO.

MERE NON PAYMENT BY BUYER NOT COVERED.

ECGC POLICIES COVER NON PAYMENT DUE TO ECONOMIC AND POLITICAL REASONS.

BOTH ARE COMPELMENTARY.

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INSTITUTE CARGO CLAUSES

SEA TRANSIT

I.C.C. (C) I.C.C. ( B) I.C.C.( A)

AIR TRANSIT

= xxx = xxx I.C.C.(A.C.)

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LOSS/ DAMAGE TO CARGO ;1) FIRE/ EXPLOSION2) STRANDING,GROUNDING,SINKING,CAPSIZING OF THE

VESSEL/CRAFT3) OVERTURNING/ DERAILMENT OF LAND CONVEYANCE4) COLLISION/ CONTACT WITH EXTERNAL OBJECTOTHER

THAN WATER5) DISCHARGE OF CARGO AT PORT OF DISTRESS6) GENERAL AVERAGE SACRIFICE7) JETTISONII G.A. CONTRIBUTION SALAVAGE CHARGESIII LIABILITY UNDER ‘ BOTH TO BLAME COLLISION’

CLAUSE

I.C.C.( C) COVERAGE

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ICC(B) COVERAGE

1 TO 7 O I.C.C.(C)8 EARTHQUAKE, VOLCANIC ERUOPTION OR

LIGHTNING9. ENTRY OF SEA, LAKE OR RIVER WATER INTO

VESSEL CRAFT HOLD CONVEYANCE CONTAINER LIFTVAN OR PLACE OF STORAGE

10. TOTAL LOSS OF ANY PACKAGE LOST OVERBOARD OR DROPPED WHILST LOADING ON TO OR UNLOADING FROM VESSEL OR CRAFT

11. WASHING OVERBOARD

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Institute Cargo ClausesExtraneous perils TPND Fresh water / rainwater damage. Hook/ oil damage. Heating & sweating. Mud, acid and other damages. Breakage. Leakage. Country damage. Bursting/ tearing of bags. Contamination. Etc.,

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I.C.C.(A) COVERAGE

1 TO 7 OF I.C.C.(C) 8 TO 11 OF I.C.C.(B) + ALL OTHER RISKS WHICH GIVE RISE

TO PHYSICAL LOSS/ DAMAGE TO CARGO &

ARE NOT SPECIFICALLY EXCLUDED

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GENERAL EXCLUSIONS-1

Willful misconduct. Ordinary losses. Insufficient packing. Inherent vice Delay Financial default of shipping co / airlines. Nuclear losses.

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GENERAL EXCLUSIONS -2

War perils Strikes, terrorism perils. Malicious / deliberate damage (only under

ICC ( C ) & ICC ( B ). Un seaworthiness/ unfitness of the

carrying vessel with privy/ knowledge of the exporter.

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INLAND TRANSIT CLAUSES(ITC)RISKS COVERED

PHYSICAL LOSS OR DAMAGE TO GOODS.CLAUSES( C)I. FIRE II. LIGHTNINGCLASUES (B)III. BREAKAGE OF BRIDGESIV. COLLISSION WITH/BY CARRYING VEHICLEV. OVERTURNING OF CARRYING VEHICLEVI. DERAILMENT OR ACCIDENT OF LIKE NATURE TO

CARRYING WAGON/VEHICLECLAUSES(A)VII. ALL OTHER RISKS WHICH ARE NOT EXCLUDED.

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EXCLUSIONS

WILFUL MISCONDUCT OF THE ASSURED ORDINARY LOSSES INSUFFICIENCY OF PACKING /PREPARATION INHERENT VICE DELAY, EVEN IF CAUSED BY INSURED PERIL NUCLEAR LOSSES WAR AND ALLIED PERILS STRIKES AND ALLIED PERILSADDITIONAL EXCLUSIONS: MALICIOUS DAMAGEEXTENSIONS AVAILABLE MALICIOUS DAMAGE(ITCB,C) S.R.C.C.(ALL)

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Inland transit Clauses- duration

Ware house to ware house After reaching final destination town/ city

7 days maximum If earlier policy is over earlier.

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MARINE UNDERWRITINGPAYMENT OF PREMIUM Premium on exports/ import to be paid in foreign

currency- exceptions for Indian Residents: Exports: insurance as per sales contract,

undertaking to recover full price. Imports: insurance as per sales contract,

undertaking to get licence endorsed. Between two foreign countries: If Indian acting as

mercantile agent.

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CLAIMS MANAGEMENT

R.GANATRA

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LAWS APPLICABLE IN INDIA

1. THE INDIAN CONTRACT ACT 18692. THE MARINE INSURANCE ACT 19633. THE INSURANCE ACT 19384. INSURANCE RULES 19395. THE CARRIAGE BY ROAD ACT 20076. RAILWAYS ACT 19897. CARRAIGE OF GOODS BY SEA ACT 19258. MULTIMODAL TRANSPORT OF GOODS ACT 19939. CARRAIGE BY AIR ACT 200710. AIRCRAFT ACT 193411. THE INDIAN PORTS ACT 1906- & BYE LAWS 12. MAJOR PORT TRUSTS ACT 1963 13. MERCHANT SHIPPING ACT 195814. CUSTOMS ACT 196215. INDIAN POST OFFICE ACT 1838 & GUIDE16. THE INDIAN STAMPS ACT 189917. GIM OF RBI

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CLAIM PROCEDURE

Intimation of loss - Carriers/ Bailees - Insurance Company

Survey - Ship Survey - Insurance Survey

Loss Minimisation Claim on Carriers/ Bailees Time Limits Claim Documents

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CLAIM DOCUMENTS

Proof of insurance Shipping documents Documents to prove loss/ damage Proof of loss minimising expenses Forwarding/ clearance documents Claim on carriers/bailees Other documents as required Claim bill

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TABLE OF TIME LIMITS(1)

AGENCY NOTICE OF CLAIM LODGEMENT OF CLAIM

SUIT BAR

STEAMER 3 DAYS IMMDLY 1 YEAR

M.T.O. IMMDLY 6 DAYS 9 MONTHS

PORTS 7 DAYS 6 MONTHS 6 MONTHS

AIRLINES

DOMESTIC

DAMAGE IMMDLY 7 DAYS 2 YEARS

NON.DEL IMMDLY 14 DAYS 2 YEARS

NOTE: TIME LIMITS FROM DATE OF DELIVERY

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TABLE OF TIME LIMITS (2)

AGENCY NOTICE OF CLAIM LODGEMENT OF CLAIM

SUIT BAR

AIRLINES

INTERNATIONAL

DAMAGE IMMDLY 14 DAYS 2 YEARS

NON DEL IMMDLY 21 DAYS 2 YEARS

ROAD WAYS IMMDLY 180 DAYS FROM DATE OF L.R.

3 YEARS FROM DATE OF L.R.

RAIL WAYS IMMDLY 6 MONTHS FROM DATE OF R/R)

3 YEARS FROM DATE OF R.R.

NOTE: TIME LIMITS FROM DATE OF DELIVERY

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UCP600 ARTICLE 28-a

a. An insurance document, such as an insurance policy, an insurance certificate or a declaration under an open cover, must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies. (issued by proper person)

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UCP 600 28 a, b

Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter. (signatory to write capacity)

b. When the insurance document indicates that it has been issued in more than one original, all originals must be presented. (no of originals)

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UCP 600 28 c ,d, e

c. Cover notes will not be accepted. (no C/N) d. An insurance policy is acceptable in lieu of an

insurance certificate or a declaration under an open cover ( Policy acceptable)

e. The date of the insurance document must be no later than the date of shipment, unless it appears from the insurance document that the cover is effective from a date not later than the date of shipment. (date of cover prior to shipment)

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UCP 600 28 f i ,ii

f. i. The insurance document must indicate the amount of insurance coverage and be in the same currency as the credit. (insurance currency & amount)

ii. A requirement in the credit for insurance coverage to be for a percentage of the value of the goods, of the invoice value or similar is deemed to be the minimum amount of coverage required.(Minimum sum insured)

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UCP 600 28 f ii (cont)

If there is no indication in the credit of the insurance coverage required, the amount of insurance coverage must be at least 110% of the CIF or CIP value of the goods ( CIF/CIP + 10%)

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UCP 600 28 f ii (cont)

When the CIF or CIP value cannot be determined from the documents, the amount of insurance coverage must be calculated on the basis of the amount for which honour or negotiation is requested or the gross value of the goods as shown on the invoice, whichever is greater. (OR Invoice Value)

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UCP 600 28 f iii

iii. The insurance document must indicate that risks are covered at least between the place of taking in charge or shipment and the place of discharge or final destination as stated in the credit. ( Min Cover between shipment place and port of discharge)

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UCP 600 28 g

g. A credit should state the type of insurance required and, if any, the additional risks to be covered. An insurance document will be accepted without regard to any risks that are not covered if the credit uses imprecise terms such as "usual risks" or "customary risks". (precise cover)

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UCP 600 28 h

h. When a credit requires insurance against "all risks" and an insurance document is presented containing any "all risks" notation or clause, whether or not bearing the heading "all risks", the insurance document will be accepted without regard to any risks stated to be excluded. (“ All Risks” a misnomer)

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UCP 600 28 i, j

i. An insurance document may contain reference to any exclusion clause. (Exclusions allowed)

j. An insurance document may indicate that the cover is subject to a franchise or excess (deductible allowed ).

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SUMMARY OF ARTICLE 28

Insurance document issued by proper person. Signatory to write capacity. All originals to be presented . Cover note not to be accepted. Policy can be accepted under open cover. Date of cover prior to shipment. Insurance currency and amount as per L/C. Minimum sum insured. CIF/CIP+10% Or Invoice value +10%. Places of cover. Precise description of cover. “All Risks” misnomer. Exclusions/ deductibles allowed.

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Thank you