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General Business MARINE INSURANCE DEFINITION: i. A contract of marine insurance is a contract whereby the insurer undertake to indemnify the assured in a manner and to the extent thereby agreed against marine losses, that is to say, the losses incident to marine adventure (M.I.A. 1906) ii. A contract of marine insurance may by its express terms, or by usage of trade, be extended so as to protect the assured against losses on inland waters or on any land risks which may be incident upon any sea voyage. However, for our practical usage here, when we talk of marine insurance, we include air travels i.e. marine and aviation. CLASSIFICATION: We can classify marine insurance as being broadly divided into two; (a) marine cargo (b) marine hull. Marine Cargo refers to the cargo i.e. the goods being carried by the vessels. In insurance cover, cargo includes the goods, the freight, handling charges, port duties on goods and insurance and a possible 10% of the cost of cargo. Marine Hull refers to the vessel itself (ship/boat or plane) the engine or machinery, the third party and crew/passenger liabilities. However, the liability aspects can be insured separately or even with another insurer. TYPES OF COVER AND VOYAGE AVAILABLE HULL POLICIES These can be arranged on voyage or time basis. Voyage policies provide coverage for the craft from a specific port to another named port. It covers the craft against all marine time perils for the entire voyage irrespective of the time it takes to cover the distance. Policies can also be arranged on time basis. In this case, the cover is for a specific period irrespective of the distance or the route. Within the agreed period, the vessel is held covered against marine time perils. CARGO POLICIES There are three types of voyage cover available to the Cargo merchant: a. The cover can be from the port of loading to the port of discharge- port to port cover b. Cover can be provided from the port of loading to the warehouse of the importer which may involve inland carriage of goods after discharge. c. Arrangement can be from the warehouse of the exporter to the warehouse of the importer. In which case inland carriage will be involved on both sides of the trip. This is a combination of both sea and air voyage and the land transit by rail or motor vehicles. The rates of these will vary according to the exposure. TYPES AND SCOPES OF COVER:- CARGO Since you are more likely to have more request for cargo cover we have to deal in greater details with the various types of cover available. There are three types of cover available as provided in the three institute clauses A, B and C. Clause ‘A’ has the widest cover replacing the former All Risks cover while clauses B and C replace the F.P.A. and Total Loss only cover . Each scope of cover can be issued to cover the cargo for any form of voyage. These three institute clauses are now considered in turn beginning from the least scope i.e. I.C.C. ‘C’ and progressing to the I.C.C. ‘A’ INSTITUTE CARGO CLAUSE I.C.CINSTITUTE CARGO CLAUSE (I.C.C) “C” The Institute Cargo Clause C provide the most limited conditions cover being granted against major casualties in the following way: 1. Loss of or damage to the subject –matter insured reasonably attributed to 2. Fire or explosion 1. Vessels or craft being stranded 2. overturning or derailment of land conveyance 3. collision or contract of vessels craft or conveyance with any external other than water 4. discharge of cargo at the port of distress 5. loss of or damage of subject matter insured cause by. 6. general average sacrifice. 7. jettisons It should be noted that the clause is framed of the named risks less exclusions and the onus of proof is on the assured to show that an insured peril has operated. EXCLUSIONS Exclude under ICC, c cover are the following risks, loss, or damage arising from them: 1- earthquake volcano or lighting 2- heavy weather 3- river or lake water entering into ship or container 4- total loss of the entire package during loading or/discharging 5- rats and vermin 6- assailing thieves 7- theft or pilferage 8- heavy weather other than washing overboard or sea water ship or container 9- inherent vice or the nature of the insured goods 10- ordinary breakage, leakage, wear and tear 11- attributed to the wilful misconducts of the assured 12- war risk, strike risk, (unless war risks and strikes clauses added ) 13- terrorist or person acting from political motive 14- insolvency or financial default of the ship owner 15- insufficient and/ or unsuitable packing 16- deliberate damage or destruction by wrongful act of any person 17- ordinary loss in weight or volume 18- use of any nuclear or similar weapon of war 19- unseaworthiness of the vessels or craft to carry the goods and unfitting of the container / lift van to the good when the assured or their servant are privy thereto at the time of loading therein INSTITUTE CARGO CLAUSE (ICC) B; The institute cargo clause B provide cover against the same peril as ICC-C but also insure against additional name risks so as to provide an assured with a kind of middle of the road,, set of condition the different between B and C clauses is much wider in comparison with the old WA and FPA clauses this being considered to serve the need of the assured more satisfactory. the additional cover can be summarised as followings: a. Loss or damages reasonably attributed to to earthquake, volcanic eruption or lighting (clauses 1.1.6) b. loss or damage caused by washing over loading (clause 1.2.3) c. loss or damages caused by entry of sea, lake, or rivers water into vessels craft, hold, conveyance, container lift van or place of storage (clause 1.2.3 ) d. total loss of any package lost overboard or dropped whilst loading on to or unloading from vessels or craft (clauses 1.3) e. it is important to mention that loss o the cargo over the sea side in the bad seas can only be the subject of a claim under the B, clauses if it is actually washed overboard , not if it is simply breaks lose. Compare with the old A and FPA clause there is a considerable extension of cover provided by the B clauses, in as much as the entry of the sea, lake, or river water into the means of conveyance or the place of storage can result to claims of flood damage which are not previously contemplated. EXCLUSION Except the first four of the exclusions listed under the ICC,, C above all other exclusion are equally applicable to ICC, B. INSTITUTE CARGO CLAUSE (ICC) A. The institute cargo clause (A) replaces the previous all risks clause, and therefore cover the goods against all risk or loss, or damages. the following additional risks are covered only under ICC, A - Assailing thieve - Theft or pilferage - Taking at sea - Any risks specifically excluded It should also be noted that since piracy has ceased to be one of the peril shown in the war clause, cover for this risk can only b e obtain under ICC,C and partly ICC, B all other exclusion cut across all the three set of clauses. RATING MARINE CARGO RATES
RISKS EXCLUDED FROM 1.10.83 (PRECIS ONLY) A, B AND C CLAUSES 1. Ordinary loss in weight or volume 2. Deliberate damage or destruction by the wrongful act of any person 3. Packing that is insufficient or unsuitable 4. Preparation of goods that is insufficient or unsuitable 5. Storage in a container or lift van, by the assured or their servant or prior to attachment of cover, that is insufficient or unsuitable. 6. War risks, etc, (unless war clauses added) 7. Strikes, etc, (Unless strike clauses added) 8. Terrorists or persons acting from political motive 9. Insolvency or financial default of the ship owners etc. 10. Use of any nuclear, or similar, weapon of war 11. Unseaworthiness of vessel or craft, where assured to their servants are privy thereto at the time of loading. 12. Unfitness of vessel or craft to carry the goods, where the assured or their servants are privy thereto at the time of loading 13. Unfitness of container/lift van to carry the goods where the assured or their servants are privy thereto at the time of loading therein. 14. Attributable to the willful misconduct of the assured. 15. Proximately caused by delay 16. Ordinary wear and tear 17. Ordinary leakage 18. Inherent vice or nature of the insured goods N.B. - Exclusion 2 is not specified in clauses “A” and we would expect cover to apply except where the owner of the goods (or his servant or agent) causes the damage. B AND C CLAUSES ONLY1. Rots and vermin 2. Assailing thieves 3. Theft or pilferage 4. Heavy weather other than washing overboard or seawater entering ship or container. 5. Piracy and/or taking at sea. 6. Non delivery 7. Any other risk not shown “covered” schedule attached CLAUSE C ONLY 1. Earthquake volcano or lighting 2. Heavy weather 3. River or lake water entering ship or container 4. Total loss of entire package during loading/discharge RATING The rates applicable to cargo is highly influenced by the nature of the cargo, the method of loading or packaging e.g. whether containerised or on planets. Also the amount of excess/ deductible, the volume of imports single transit or open cover , whether it is “ port-to-port” or warehouse to warehouse” – see cargo rate guide P.81 Note that marine cargo war rate is 0.0275 % while air war rate is 0. 02%. POLICY CONDITIONS: It is important to ensure that appropriate warranties and conditions are included – see specimen copies. The implications of each should be properly appreciated. |
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