Cargo insurance is an insurance policy ta%en up to protect against loss of or damage to your goods while they are being transported.
/he policy is meant to indemnify you if there is any loss or damage to your cargo. Cargo
insurance would cover the goods while they are being transported over sea, air and land includes parcel post and carryings by courier service!.
8lthough the term Emarine cargo insuranceE is sometimes used, it actually includes cover for the land transit commencing from the moment the goods leave the storage until they arrive at the final warehouse.
:hy should ) buy Ocean Cargo )nsuranceU
:hile physical damage on transit claims may not be a problem, importers and exporters should be aware that over B1 voyages a year encounter heavy weather where shipping containers are lost
overboard.
Fue to the international policy of all shippers with safe-landed cargo contributing to the loss will require that the owner of the goods either put up a cash security, post a bond or will be unable to have the goods released from the carrier until a financial guarantee is given to respond for the contribution.
:ith an open cargo policy, the insurance company will post the bond and ensure the speedy release on owners4 cargo.
#ow much insurance do ) need to buyU
/he standard practice is to cover the invoice cost plus freight plus a percentage to cover the anticipated profit normally 1 to A1 is adequate!.
/he largest shipment anticipated with the added freight and the percentage of advance added is normally the policy limit.
/he shipments can be reported monthly to the Company and billed at the end of each month, so unli%e property policies, the cargo policy can be issued on a Epay-as-you-goE basis.
:hat is the difference between a single voyage policy and open coverU
!ingle *oyage Policy
/his is the most popular form of cargo insurance cover. 8 voyage policy, as its name implies, offers coverage for a particular voyage for which is is ta%en up.
)t offers coverage from the time the cargo leaves the seller, while it is in transit and until it reaches the buyer.
Often, the port of loading, transhipment and discharge are also required to be disclosed in the proposal form.
O"en over
8n open cover is not an insurance policy. )t is actually an agreement between the insured and the insurance company to insure all the shipments which fall within the terms and conditions agreed by both parties.
/hese terms and conditions which are agreed in advance include details of voyages, maximum value of cargoes carried in any one shipment, nature of cargo and pac%aging and rates applicable.
/he insured would then have to declare his shipments to the insurer on an individual or monthly basis.
8s long as the details of the shipment comes within the terms and conditions of the open cover agreement, the shipment is automatically covered.
/he insurer is also obliged to accept all declarations made by the insured under the open policy if they come under the terms and conditions of the open cover.
/he open cover is especially beneficial to those who ship goods frequently as it saves them the need to apply for cargo insurance for each of their shipments.
/here would also be no need to wait for these individual policies to tbe approved because, as mentioned, all shipments are automatically approved if they come within the terms of the open cover and a declaration is made for the shipment.
)f ) buy on terms of sale where ) am not responsible to insure the goods, how can ) insure the goodsU
)f you are the buyer and are importing goods from overseas on terms of sales such as C.).>.
)nvoice Cost, )nsurance plus >reight!, where you are not required to insure the goods, you may still have a EcontingentE exposure that you could cover if the seller placed coverage that was ElimitedE and not offering the broad terms available in the insurance mar%etplace in your country.
:hy isn4t this EcargoE exposure covered by my other policiesU
Cargo insurance is much different than other liability or property policies, the scope is
international and the extensions of coverage available are specific to the industry and broader than other lines of insurance.
8n example of an extension that is unobtainable in other lines of business is :ar 'is% Coverage.
/he Ecargo insuranceE is international and all coverages have been created to give the innocent shipper or importer the broadest protection available from most external causes of loss.
Institute Marine &argo &lauses
# &lauses
RISKS COVERE
1. - Risks Clause
2. - General Average Clause
3. - "Both to Blame Collision" Clause E!C"#SIO$S
4. - General Exclusion Clause
. - !nseaorthiness an# !n$tness Exclusion Clause
%. - &ar Exclusion Clause '. - (trikes Exclusion Clause
#R%&IO$
). - *ransit Clause
+. - *ermination o, Contract o, Carriage Clause 1. - Change o, o/age Clause
C"%I'S
11. - 0nsurale 0nterest Clause 12. - orar#ing Charges Clause 13. - Constructive *otal oss Clause 14. - 0ncrease# alue Clause
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1. - ot to 0nure Clause 'I$I'ISI$( "OSSES
1%. - 5ut/ o, Assure# Clause 1'. - &aiver Clause
%VOI%$CE O) E"%*
1). - Reasonale 5es6atch Clause
"%+ %$ ,R%C&ICE
1+ - English a an# 7ractice Clause
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Institute Marine &argo &lauses 2
# &lauses
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RISKS COVERE
4
1. - Risks Clause
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0 /his insurance covers all ris%s of loss of or damage to the sub6ect-matter insured except as provided in Clauses H, B, 0 and D below.
A
2. - General Average Clause 7
6 /his insurance covers general average and salvage charges, ad6usted or determined according to the contract of affreightment and@or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses H, B, 0 and D or elsewhere in this insurance.
8
3. - "Both to Blame Collision" Clause )
7 /his insurance is extended to indemnify the 8ssured against such proportion of liability under the contract of affreightment E5oth to 5lame CollisionE Clause as is in respect of a loss
recoverable hereunder. )n the event of any claim by shipowners under the said Clause the
8ssured agree to notify the 9nderwriters who shall have the right, at their own cost and expense, to defend the 8ssured against such claim.
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E!C"#SIO$S ((
4. - General Exclusion Clause (2
8 )n no case shall this insurance cover (?
890 loss damage or expense attributable to wilful misconduct of the 8ssured (4
896 ordinary lea%age, ordinary loss in weight or volume, or ordinary wear and tear of the sub6ect-matter insured
(@
897 loss damage or expense caused by insufficiency or unsuitability of pac%ing or preparation of the sub6ect-matter insured for the purpose of this Clause H.G Epac%ingE shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the 8ssured or their servants!
(A
898 loss damage or expense caused by inherent vice or nature of the sub6ect-matter insured (7
89: loss damage or expense proximately caused by delay, even though the delay be caused by a ris% insured against except expenses payable under Clause A above!
(8
893 loss damage or expense arising from insolvency or financial default of the owners managers charterers or operators of the vessel
()
89; loss damage or expense arising from the use of any weapon of war employing atomic or nuclear fission and@or fusion or other li%e reaction or radioactive force or matter.
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. - !nseaorthiness an# !n$tness Exclusion Clause 2(
:
22
:90 )n no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft, unfitness of vessel craft conveyance container or liftvan for the safe carriage of the sub6ect-matter insured, where the 8ssured or their servants are privy to such unseaworthiness or unfitness, at the time the sub6ect-matter insured is loaded therein.
2?
:96 /he 9nderwriters waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the sub6ect-matter insured to destination, unless the 8ssured or their servants are privy to such unseaworthiness or unfitness.
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%. - &ar Exclusion Clause 2@
3 )n no case shall this insurance cover loss damage or expense caused by 2A
390 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power
27
396 capture sei2ure arrest restraint or detainment piracy excepted!, and the consequences thereof or any attempt thereat
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397 derelict mines torpedoes bombs or other derelict weapons of war.
2)
'. - (trikes Exclusion Clause
?0
; )n no case shall this insurance cover loss damage or expense
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;90 caused by stri%ers, loc%ed-out wor%men, or persons ta%ing part in labour disturbances, riots or civil commotions
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;96 resulting from stri%es, loc%-outs, labour disturbances, riots or civil commotions
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;97 caused by any terrorist or any person acting from a political motive.
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#R%&IO$
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). - *ransit Clause
?A
<90 /his insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either
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<9090on delivery to the Consignees4 or other final warehouse or place of storage at the destination named herein,
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<9096on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the 8ssured elect to use either
?)
<909690 for storage other than in the ordinary course of transit or
40
<909696 for allocation or distribution, or 4(
<9097on the expiry of 01 days after completion of discharge overside of the goods hereb y insured from the oversea vessel at the final port of discharge, whichever shall first occur.
42
<96 )f, after discharge overside from the oversea vessel at the final port of discharge, but prior to termination of this insurance, the goods are to be forwarded to a destination other than that to which they are insured hereunder, this insurance, whilst remaining sub6ect to termination as provided for above, shall not extend beyond the commencement of transit to such other
destination.
4?
<97 /his insurance shall remain in force sub6ect to termination as provided for above and to the provisions of Clause 7 below! during delay beyond the control of the 8ssured, any deviation,
forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers under the contract of
affreightment.
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+. - *ermination o, Contract o, Carriage Clause 4@
1 )f owing to circumstances beyond the control of the 8ssured either the contract of carriage is terminated at a port or place other than the destination named therein or the transit is otherwise terminated before delivery of the goods as provided for in Clause J above, then this insurance shall also terminate unless prompt notice is given to the 9nderwriters and continuation of cover is requested when the insurance shall remain in force, sub6ect to an additional premium if
required by the 9nderwriters, either 4A
190 until the goods are sold and delivered at such port or place, or unless otherwise specially agreed, until the expiry of 01 days after arrival of the goods hereby insured at such port or place, whichever shall first occur, or
47
196 if the goods are forwarded within the said period of 01 days or any agreed extension thereof!
to the destination named herein or to any other destination, until terminated in accordance with the provisions of Clause J above.
48
1. - Change o, o/age Clause 4)
02 :here, after attachment of this insurance, the destination is chang ed by the 8ssured, held covered at a premium and on conditions to be arranged sub6ect to prompt notice being given to the 9nderwriters.
@0
C"%I'S
@(
11. - 0nsurale 0nterest Clause
@2
. )n order to recover under this insurance the 8ssured must have an insurable interest in the sub6ect-matter insured at the time of the loss.
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0096(ub6ect to . above, the 8ssured shall be entitled to recover for insured loss occurring during the period covered by this insurance, notwithstanding that the loss occurred before the contract of insurance was concluded, unless the 8ssured were aware of the loss and the
9nderwriters were not.
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12. - orar#ing Charges Clause
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06 :here, as a result of the operation of a ris% covered by this insurance, the insured transit is terminated at a port or place other than that to which the sub6ect-matter is covered under this insurance, the 9nderwriters will reimburse the 8ssured for any extra charges properly and reasonably incurred in unloading storing and forwarding the sub6ect-matter to the destination to which it is insured hereunder. /his Clause A, which does not apply to gen eral average or salvage charges, shall be sub6ect to the exclusions contained in Clauses H, B, 0 and D above, and shall not include charges arising from the fault negligence insolvency or financial default of the 8ssured or their servants.
@A
13. - Constructive *otal oss Clause
@7
07 ;o claim for Constructive /otal $oss shall be recoverable hereunder unless the sub6ect-matter insured is reasonably abandoned either on account of its actual total loss appearing to be
unavoidable or because the cost of recovering, reconditioning and forwarding the sub6ect-matter to the destination to which it is insured would exceed its value on arrival.
@8
14. - 0ncrease# alue Clause
@)
H. )f any )ncreased ?alue insurance is effected by the 8ssured on the cargo insured herein the agreed value of the cargo shall be deemed to be increased to the total amount insured under this insurance and all )ncreased ?alue insurances covering the loss, and liability under this insurance shall be in such proportion as the sum insured herein bears to such total amount insured. )n the event of claim the 8ssured shall provide the 9nderwriters with evidence of the amounts insured under all other insurances.
A0
0896 :here this insurance is on )ncreased ?alue the following clause shall apply< /he agreed value of the cargo shall be deemed to be equal to the total amount insured under the primary insurance and all )ncreased ?alue insurances covering the loss and effected on the cargo by the 8ssured, and liability under this insurance shall be in such proportion as the sum insured herein bears to such total amount insured. )n the event of claim the 8ssured shall provide the
9nderwriters with evidence of the amounts insured under all other insurances.
A(
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A2
1. - ot to 0nure Clause A?
0: /his insurance shall not inure to the benefit of the carrier or other bailee.
A4
'I$I'ISI$( "OSSES A@
1%. - 5ut/ o, Assure# Clause AA
03 )t is the duty of the 8ssured and their servants and agents in respect o f loss recoverable hereunder
A7
0390 to ta%e such measures as may be reasonable for the purpose of averting or minimising such loss, and
A8
0396 to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised and the 9nderwriters will, in addition to any loss recoverable hereunder, reimburse the 8ssured for any charges properly and reasonably incurred in pursuance of these duties.
A)
1'. - &aiver Clause 70
0; Measures ta%en by the 8ssured or the 9nderwriters with the ob6ect of saving, protecting or recovering the sub6ect-matter insured shall not be considered as a waiver or acceptance of abandonment or otherwise pre6udice the rights of either party.
7(
%VOI%$CE O) E"%*
72
1). - Reasonale 5es6atch Clause 7?
0< )t is a condition of this insurance that the 8ssured shall act with reasonable despatch in all circumstances within their control.
74
"%+ %$ ,R%C&ICE 7@
1+ - English a an# 7ractice Clause 7A
/his insurance is sub6ect to *nglish law and practic
nstitute Marine &argo &lauses 2
< &lauses
?
RISKS COVERE
4
1. - Risks Clause
@
0 /his insurance covers, except as provided in Clauses H, B, 0 and D below, A
090 loss of or damage to the sub6ect-matter insured reasonably attributable to 7
09090fire or explosion 8
09096vessel or craft being stranded grounded sun% or capsi2ed )
09097overturning or derailment of land conveyance (0
09098collision or contact of vessel craft or conveyance with any external ob6ect other than water ((
0909:discharge of cargo at a port of distress (2
09093earthqua%e volcanic eruption or lightning, (?
096 loss of or damage to the sub6ect-matter insured caused by
(4
09690general average sacrifice (@
09696 6ettison or washing overboard (A
09697entry of sea la%e or river water into vessel craft hold conveyance container liftvan or place of storage,
(7
097 total loss of any pac%age lost overboard or dropped whilst loading on to, or unloading from, vessel or craft.
(8
2. - General Average Clause ()
6 /his insurance covers general average and salvage charges, ad6usted or determined according to the contract of affreightment and@or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses H,B, 0 and D or elsewhere in this insurance.
20
3. - "Both to Blame Collision" Clause 2(
7 /his insurance is extended to indemnify the 8ssured against such proportion of liability under the contract of affreightment E5oth to 5lame CollisionE Clause as is in respect of a loss
recoverable hereunder. )n the event of any claim by shipowners under the said Clause the
8ssured agree to notify the 9nderwriters who shall have the right, at their own cost and expense, to defend the 8ssured against such claim.
22
E!C"#SIO$S 2?
4. - General Exclusion Clause 24
8 )n no case shall this insurance cover 2@
890 loss damage or expense attributable to wilful misconduct of the 8ssured 2A
896 ordinary lea%age, ordinary loss in weight or volume, or ordinary wear and tear of the sub6ect-matter insured
27
897 loss damage or expense caused by insufficiency or unsuitability of pac%ing or preparation of the sub6ect-matter insured for the purpose of this Clause H.G Epac%ingE shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the 8ssured or their servants!
28
898 loss damage or expense caused by inherent vice or nature of the sub6ect-matter insured 2)
89: loss damage or expense proximately caused by delay, even though the delay be caused by a ris% insured against except expenses payable under Clause A above!
?0
893 loss damage or expense arising from insolvency or financial default of the owners managers charterers or operators of the vessel
?(
89; deliberate damage to or deliberate destruction of the sub6ect-matter insured or any part thereof by the wrongful act of any person or persons
?2
89< loss damage or expense arising from the use of any weapon of war employing atomic or nuclear fission and@or fusion or other li%e reaction or radioactive force or matter.
??
. - !nseaorthiness an# !n$tness Exclusion Clause
?4
B. )n no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft, unfitness of vessel craft conveyance container or liftvan for the safe carriage of
B. )n no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft, unfitness of vessel craft conveyance container or liftvan for the safe carriage of