Marine Cargo Insurance is governed by Marine Insurance Act, 1963. Section 3 of the
Act defines a contract of Marine insurance as ‘an agreement whereby the insurer
undertakes to indemnify the assured in the manner and to the extent thereby
agreed to against losses incidental to marine adventure’.
INSURABLE INTEREST
Section 8(I) of the Marine Insurance Act states that the ‘assured’ must be
interested in the subject matter (goods) insured at the time of loss. Insurance is
effected either by shipper/exporter or buyer by virtue of their ownership of goods
or acquiring an interest in the goods respectively. The shipper /exporter has to
take the insurance in case the terms of the sale is on CIF basis and the buyer in
cases where the goods are consigned on C&F or FOB basis.
MARINE INSURANCE POLICY
A marine insurance policy must specify:
i) Name of the assured or person who effect the insurance on his
behalf.
ii) Subject matter (goods) insured
iii) Risk insured against
iv) Voyage or period or both covered by the insurance
v) Sum(s) insured
vi) Name(s) of insurer(s)
A Marine Cargo Policy is freely assignable to any one who may acquire an
insurable interest and can be assigned either before or after a loss.
RISKS NOT COVERED
The marine insurance policies normally do not cover the following risks
GENERAL EXCLUSION CLAUSES
i) Loss, damage or expense caused by delay and inherent vice or
nature of the goods
ii) Loss damage or expense attributed to willful misconduct of the
insured.
iii) Ordinary leakage/ordinary loss in weight or volume / ordinary wear
and tear of the insured goods.
iv) Insufficiency or unsuitability of packing.
v) Deliberate damage to / destruction of the goods.
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vi) Insolvency or financial default of the owners, managers, charterers
or operators of the vessel.
vii) Loss damage or expenses arising from use of atomic weapons or
nuclear fission and / or other like reaction or radioactive force.
PERIOD OF COVER
The insurance cover is available for the entire period of transit from the
time the goods leave the warehouse at the place of commencement and
continues during such transit including deviation. The cover terminates
on delivery of the goods, at the warehouse at the named destination or
on expiry of 60 days (sea consignment) / 30 days (air consignment) on
completion of discharge from the vessel at final port.
The Bank as a standard practice, specifies marine insurance to be taken
on ‘warehouse to warehouse’ basis. As per the ‘Transit Clause’, if goods
are not delivered within the time limit, cover ceases on expiry of 60/30
days and would have to be appropriately extended.
The Institute Cargo Clauses provides warehouse to warehouse cover,
unless specifically deleted.