Basis Of Valuation In Marine Insurance

A Basis of Valuation (BOV) helps you receive fair compensation for lost or damaged goods during shipping. The valuation is the basis of a predetermined agreement between the shipment owner and the insurer on the worth of goods at the time of insuring them.

BOV helps streamline the insurance process and helps you receive the appropriate compensation.

The Basis of Valuation in goods insurance policy offers many advantages. Here is what you can expect.

Accurate Payouts: In case of a loss during transit, you will be reimbursed based on the agreed BOV. It minimises any disputes about the value of your goods.

Smooth Transactions: International trade generally relies on intermediary banks for payment processing. These banks require an insurance certificate mentioning the correct BOV (which is generally 110% of CIF value) before releasing funds. Without a clear BOV, there can be delays in payments, and sometimes, payment rejections may also occur.

The chosen basis of valuation in marine cargo insurance impacts the claim settlement amount. The insured will only receive compensation for covered components as defined by the insurance policy.

-Section 67 (Extent Of Liability Of Insurer For Loss)

Section 67 explains the extent of an insurer's liability for loss. It states that the insured can recover up to the full extent of the insurable value, in case of an unvalued policy. For a valued policy, it is up to the full value fixed by the policy.

-Section 68 Total Loss

The passage deals with payouts for total losses in insurance policies. If the policy has a set value (valued policy), you get that amount. If the policy doesn't have a set value (unvalued policy), you get the actual value of the insured item.

-Section 71 Partial Loss of Goods, Merchandise

This section defines the compensation for partially lost or damaged goods. For valued policies, if part of the insured item is lost, the payout is a portion of the policy amount.

For unvalued policies, the payout is the actual value of the lost part. For any damaged goods delivered, the compensation is the item's value in good condition minus its value in a damaged state.

-Section 73 General Average Contributions and Salvage Charges

This section deals with insurance coverage for the General Average. It is shared to mitigate costs. If your insured item is fully insured for its contribution value, the insurer covers the full cost.

If the item is underinsured, the insurer pays a reduced amount based on the underinsurance ratio. If there is a Particular Average Loss cover, it is deducted from the insured value to determine their contribution amount.

Understanding the basis of the valuation of cargo insurance policy is essential to ensure your cargo has adequate financial protection throughout its maritime journey.

At Tata AIG, our marine insurance policy policies offer a variety of valuation options to fit your specific needs. We work closely with businesses to determine the most appropriate valuation method and provide tailored coverage that reflects the true value of your goods.

Don't let valuation ambiguities lead to underinsurance. You can contact Tata AIG today to discuss your requirements for marine cargo insurance and navigate the seas with peace of mind.