MARINE UNDERWRITING

CONSIDERATIONS AND CLAUSES

Vimal Goyal
FIII, ACII (London),
Chartered Insurance Broker,
Director
SMC Insurance Brokers P. Ltd.
[email protected]
[email protected]
Cell +919899699304
An All risks
policy covers
All perils of
transit?
Marine policy
covers risk from
warehouse to
warehouse in all
cases?
 Introduction
Important
Add-on Clauses Clauses
and covers

Critical
Underwriting
Aspects

ICC Clauses :
1982 and 2009
Incoterms

Duration &
Exclusions
INTRODUCTION :
Understanding Marine cover
◼ Cargo, Container, Hull, Freight, Liability, GA
◼ Types of Policies : Specific, Open, SDP, STOP, Stocks
throughput, Multi-transit, Duty, Increased value, Third country
shipments, Cover for transporters on behalf of owners
◼ Inland, Coastal, Import/Exports : International nature
◼ War Risks, SRCC risk
◼ Mode of transit : Rail, Road, Inland waters, Private Carrier,
Public Carrier, Accompanied cargo, Postal, Angadia / Courier,
Vessel, Air cargo
◼ Agreed value / Basis of valuation, Insurable interest
◼ Cargo classification : General (Goods, Project, Machineries),
Containerized, Bulk (Solid, liquid, Gaseous), Over-dimensional
◼ Duration different from normal policies, Declarations
◼ Not under control of Assured, Inco-terms, Tail-end
CRITIAL UNDERWRITING
ASPECTS

◼ Nature of Cargo and hazards involved (e.g. Food, Pharma,

Cosmetics, Garments, High-Tech equipment, Electronics,
Hazardous chemicals), New or Second hand, Fragile
◼ Packing : Inner, outward, container, Pallet (Drum, Tin, Bags)
◼ Voyage : Distance, route, Africa, UN Sanctioned countries (eg
Iran, Iraq, Myanmar, N Korea, Afghanistan), Ports, Transhipment
◼ Per sending limit, Per location limit (RI Treaty limits)
◼ Annual Turnover, transfers, incoming, indigenous, exports
◼ Coverage : terms & conditions, Excess, Warranties, Restrictions
◼ Previous insurance and claims experience : of the insured, of
the cargo involved, of the countries
◼ Insured / Consignee : Moral hazard, Other business potential
◼ Vessel Age, classification, Flag
◼ Loading survey, supervision
◼ Season / Duration : Rainwater exposure and experience
IMPORTANT CLAUSES
◼ Institute Cargo Clause – A, B, C
◼ Institute Cargo Clause - Air
◼ War Clauses, Strike Clauses
◼ Inland Transit clause : A, B
◼ Institute Classification clause
◼ Cargo ISM Endorsement (Vessel ISM Code)
◼ Bulk Cargo clauses, Coal, rubber, jute, frozen food
◼ Important Clause : Claim procedure (Duties)
◼ TPND Clause
◼ Institute replacement clause (Excludes duty unless insured)
◼ Imported machinery clause (Territorial limit India)
◼ Overloading clause
IMPORTANT CLAUSES contd…
◼ Declaration Clause
◼ Seals intact clause
◼ Duty Insurance Clause
◼ FOB Clause
◼ On deck shipment clause
◼ Closed vehicle / covered by water proof material
◼ Courier clause or Parcel clause
◼ Limitation of Liability (Private Carrier) Climatic
Conditions Clause : ROD exclusion
◼ Labels clause, Pair and Set clause, Cutting Clause
◼ Electrical and mechanical derangement clause
◼ Second hand replacement clause
 Comparison between the institute cargo clauses (A), (B) & (C)
A comparative analysis of the institute Cargo Clauses (A), (B) & (C)
Type of risks
Covered () not covered () A B C
Loss / damage reasonably attributable to:
1. Fire or explosion   
2. Vessel/Craft being stranded, grounded, sunk or
capsized.   
3. Overturning/derailment of land conveyance.   
4. Collision or contact of vessel, craft or conveyance
With 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 to
avoid loss from any cause except those excluded   
8. General average sacrifice   
 A B C
9. Jettison   
10. Washing overboard   
11. Entry of sea, lake or river water into the vessel,
craft, hold, conveyance, container, lift van or
place of storage.   
12. Rainwater damage   
13. Total loss of any package lost overboard or
dropped whilst loading or unloading from
vessel or craft.   
14. Piracy.   
15. Deliberate damage or destruction by wrongful act
of any person or persons, (i.e. by malicious acts)   
(Can be covered by malicious Damage Clause for
I.C.C (B) and (C) upon payment or extra premium)
16. In the event of frustration of the voyage resulting
from a risk covered, extra charges incurred in
unloading, storing and forwarding to destination   
17. Liability under “Both to blame collision” Clause of
Bill of Lading   
 A B C
18. Reasonable charges for averting or minimizing loss
recoverable under this insurance and also those
incurred, to pursue recovery rights against carriers,
bailees or third parties.   
19. Other or extraneous perils all involving a fourtuity
and from external causes(s), for example:
◼ Damage as a result of shifting in heavy weather   
◼ Improper stowage   
◼ Rough handling   
◼ Breakage, leakage, denting, scratching, crushing,
◼ crumpling, chipping, chafage   
◼ Heating sweating   
◼ Infestation, mould, mildew, rust, country damage   
◼ 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   
Perils covered by ICC (A) :
Illustrative list
◼ Perils of Sea / Nature : Currents, Heavy weather,
Earthquake, Typhoon, cyclone, Volcano, Tsunami,
Sandbanks, Rocks, Tide, Magnetism
◼ Vessel or craft stranded, capsized, sunk or burnt
◼ Fire, Lightening, Smoke, Heat, Water used in fire-
fighting, Collision, Explosion, Malicious Damage (own
Spontaneous combustion excluded by Inherent vice)
◼ Contact with external items- contamination by taste,
smell, color, quality, vermin or other acquired infestation; the
mixing of grades or taint by oil, chemicals, other cargoes; water
in the form of rain, fresh, sea, ice, mud, grease (condensation
excluded).
◼ Piracy, pilferage or theft
◼ General average sacrifice
Perils covered by ICC (A) Contd..
◼ Jettison, Washing overboard
◼ Discharge of cargo at a port of distress
◼ Impact damage during loading or discharge,
breaking loose during the voyage
◼ Rust, oxidation,discoloration if caused by ITC-B perils
◼ Twisting, scratching, denting and bending, Breakage,
cracking, chipping
◼ Shortage, Non-delivery
◼ Splitting of bags, hooks damage, Damage by mice
◼ Sling loss
◼ Leakage (Evaporation, ordinary loss in weight,
volume excluded)
◼ Damage due to Jerks and Jolts, movement of cargo
inside conveyance (Packing exclusion in container)
◼ Improper stowage by carrier, rough handling
◼ Derailment, breakdown of bridges, overturning
INSTITUTE CARGO CLAUSES
2009 VS. 1982
◼ Exclusion of Packing amended :
➢ the packing or preparation is carried out by the Assured or
their employees
➢ the packing or preparation is carried out prior to attachment
of the risk.
◼ Loss damage or expense arising from insolvency or
financial default of the owners managers charterers
or operators of the vessel : Reduced in scope
◼ Unseaworthiness / Unfitness of carrying vessel :
Servants Changed to employees. Prior to attachment,
Privy to unfitness
◼ Duration clause : Movement for Loading and loading
included till completion of unloading (ag. Delivery)
Duration clause of ICC/ITC
◼ Cover is for actual time transit : Commencement,
Termination
◼ Warehouse to warehouse cover
◼ Period of 7 days of inland /30 days by Air /60 days
by Sea at destination port is not absolute
◼ Terminates earlier if comes under control of the
Assured for purpose of intentional Storage /
Allocation / Distribution : But covered if storage is in
ordinary course of transit (e.g. to arrange vehicle for
onward transit, awaiting transhipment)
◼ If transit is no longer in the ordinary course of transit
◼ If put in custom bonded warehouse
◼ If delivery is delayed due to non-payment of duty
◼ CIF (port) cover will terminate immediately on
delivery to destination port (Thereafter, storage at
port not covered)
Major Exclusions under ICC/ITC
◼ Packing : Insufficiency or unsuitability of packing or
preparation of the subject-matter insured to withstand the
ordinary incidents of the insured transit. “Packing" shall be
deemed to include stowage in a container.
◼ Loss damage or expense caused by inherent vice
or nature of the subject-matter insured.
◼ Loss damage or expense caused by delay, even
though the delay be caused by a risk insured against
◼ Unseaworthiness / unfitness of Vessel or container or
conveyance for safe carriage
◼ Insolvency or financial default of the owner,
managers, charterers or operators of the vessel
◼ Change of voyage (Prompt Notice)
◼ Termination of contract of carriage (Prompt Notice)
Major Exclusions under ICC/ITC
◼ Ordinary loss in weight and volume (without external
fortuitous cause)
◼ Wilful misconduct of Assured
◼ Abandonment of Cargo
◼ Non-acceptance of goods by the consignee
◼ Rejection of goods by customs
◼ Failure to pay or collect accounts
◼ Employee conversion or dishonesty
◼ Loss due to delay or loss of market
◼ Will not benefit the carrier or other bailee
◼ Short shipment / Loss only as per documents : not
physical loss or damage
◼ War and SRCC (Covered by separate clauses)
 Incoterms
◼ Insurable Interest is governed by Incoterms
◼ Policy operates only when Assured has insurable
interest as per INCOTERMS
◼ Under CIF consignments also, Sellers has to only
arrange insurance upto CIF either Port or destination
warehouse. Risk and liability of Seller is only upto FOB
point.
◼ Terms of sale as stated in Invoice / Purchase order and
its interpretation as per Incoterms prevails over
coverage by standard clauses
◼ If sold on FOB, Warehouse to warehouse NA
◼ EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP,DAP, DAT,
DDP
Add-on Covers and Clauses
◼ Sellers Contingency clause
◼ Buyers Contingency clause
◼ Brand Clause / Control of damaged goods
◼ Second hand goods / Capital items, even for repairs
◼ Sales Return / Purchase Return /Return Transit
◼ Cover for spares & capital goods (not part of project)
◼ High sea sale or purchase
◼ Expenses as a result of occurrence of insured peril
even for undamaged cargo, testing expenses
◼ CIF consignments : covered from FOB Point, Tail-end
transit cover on All risks basis
◼ Debris removal cover
◼ Container cleaning expenses cover
Add-on Covers and Clauses
◼ Concealed loss / damage for 30 days
◼ Intermediate storage cover 30/45/60 days : including
theft risk, no. of days to be specified
◼ Non GR/LR Transits : 75/85/90/100% cover
◼ Accompanied Baggage cover
◼ Amendment in overloading clause
◼ Refrigerated cargo cover : Variation in temperature
◼ Full Outturn Guarantee (FOG)
◼ Cover for empty containers
◼ Limited cover to extend : Coverage by ITC (B) + SRCC +
Rainwater damage + non delivery of entire Package + damage
by accidental external means
◼ Loss due to delay >30 days by insured peril
◼ Condensation cover (Grain, machinery)
Any questions?
THANK YOU

Vimal Goyal
FIII, ACII (London),
Chartered Insurance Broker
[email protected]
[email protected]
Cell +919899699304