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To buy marine open policyMarine Cargo Insurance
Marine Cargo Insurance is designed to secure losses related to goods and cargo transported on ships and other modes of water transport.
As with any other type of insurance, goods and products lost during a voyage can become a considerable expense for you and your business. By getting adequate insurance coverage for your marine cargo, you can ensure that your deliverables reach their destination securely and on time.
Keep all your cargo, as well as your ship, safe from unexpected losses and damages, and choose from a range of marine insurance policies from Tata AIG!
What is Marine Insurance?
Marine insurance covers maritime transport risks, including loss or damage to cargo and ships. However, marine insurance coverage is not restricted to only sea vessels and goods transported by waterways. It provides coverage to goods transported by air, rail and road as well.
The Marine insurance policy in India is governed by the Marine Insurance Act of 1963 and regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
Marine insurance can be broadly classified into cargo insurance and hull insurance. Cargo insurance covers the loss or damage to goods during transit by sea, air, or land. Hull insurance covers the physical damage to the ship or vessel, including machinery, equipment, and other parts.
The coverage provided by marine insurance in India may include perils such as fire, theft, piracy, collision, and weather-related risks like storms, hurricanes, and other natural disasters. The policy may also include additional liability coverage arising from damage to third-party property or injury to crew members.
In India, marine insurance is primarily provided by general insurance companies, and most offer a range of marine insurance policies to suit the needs of different businesses and individuals. The premium for marine insurance policies in India is usually based on factors such as the value and nature of the cargo or vessel, the type of coverage required, and the level of risk involved.
Marine insurance is an essential requirement for businesses involved in transportation of goods in international as well as domestic trade. It helps to protect businesses from financial losses due to unexpected events that may occur during transit, providing them with peace of mind and financial security.
How Does Marine Cargo Insurance Function?
Marine cargo insurance functions as a means of protection for the cargo owner or shipper against the risks associated with the transportation of goods by sea, air, or land. It provides coverage for physical loss or damage to the cargo during transit from the port of origin to the destination port.
Here's how marine cargo insurance functions:
The cargo owner or shipper can purchase marine cargo insurance from the insurance company before shipping the cargo. The policy can be tailored to suit the specific needs of the cargo owner, considering the type of cargo, the mode of transportation, the value of the goods, and the destination.
The policy typically covers loss or damage to the cargo due to various risks, including natural disasters like storms, lightning, and earthquakes, and man-made risks like theft, fire, and piracy. The policy may also cover loss due to improper handling or packaging of the cargo and errors or omissions made by the carrier.
The premium for the policy is determined based on the value of the cargo, the level of risk involved, the mode of transportation, and other factors. The cargo owner or shipper pays the premium to the insurance company.
In case of loss or damage to the cargo during transit, the cargo owner or shipper can file a claim with the insurance company. The claim should be accompanied by proof of loss or damage, such as bills of lading, cargo receipts, or other documents.
The insurance company investigates the claim and determines the compensation due to the cargo owner or shipper. The settlement amount is usually based on the value of the cargo and the extent of the loss or damage. The insurance company pays the settlement amount to the cargo owner or shipper.
Marine cargo insurance in India provides essential protection for cargo owners and shippers against the risks associated with transporting goods by sea, air, or land. By purchasing a marine cargo insurance policy, cargo owners and shippers can ensure they are financially protected in case of loss or damage to their cargo during transit.
Importance of Marine Insurance
Marine insurance is an essential aspect of the shipping industry and international trade. Here are some key reasons why marine insurance is important:
Protection against loss
Marine insurance protects against potential losses during transit, such as theft, damage, or loss of cargo, vessel, or equipment. These losses can result in significant financial damage to the parties involved, making marine insurance crucial to minimising the financial impact.
Compliance with legal requirements
Many countries require vessels and shippers to have marine insurance coverage to comply with regulations. For example, in India, it is mandatory for all vessels carrying cargo to have valid marine insurance coverage before embarking on their journey.
Risk management
The shipping industry faces several risks, including natural disasters, piracy, and accidents. Marine insurance allows shipowners and cargo owners to manage these risks and protect themselves against the financial losses that may result.
Facilitates international trade
Marine insurance is crucial in facilitating international trade by assuring buyers and sellers that their cargo will be protected during transit. This confidence can lead to increased trade volume and higher profitability.
Encourages investment
Marine insurance promotes investment in the shipping industry by mitigating the risks associated with owning, operating, and investing in ships. This protection can lead to increased investment in the industry and, in turn, better efficiency and modernisation.
Advantages of Marine Insurance
Marine insurance offers various advantages to individuals and businesses dealing with maritime transportation and shipping. Here are some of the key advantages of marine insurance:
Protection against financial loss
Marine insurance covers losses or damage to ships, cargo, and other maritime assets, protecting the insured against significant financial loss due to accidents, theft, or other unforeseen events.
Peace of mind
By having marine insurance, individuals and businesses can enjoy peace of mind knowing that their assets are protected against losses or damage during transportation, which can be especially important for high-value cargo.
Flexible coverage
Marine insurance policies can be tailored to meet the specific needs of the insured, with options for coverage of risks such as piracy, collision, and general average losses.
Prompt settlement of claims
In the event of a loss, your insurance provider will have a team of experienced experts who can quickly investigate the claim and work to settle it promptly, minimising the financial impact on you.
Compliance with regulations
Many countries require businesses to have marine insurance before they can transport goods, and having such coverage can help ensure compliance with regulations.
International coverage
Marine insurance can cover losses or damage during transportation across international waters, giving businesses and individual policyholders the confidence to engage in global trade and commerce.
Who Needs Marine Insurance?
Here are some of the people and businesses who may need marine insurance:
Ship owners are among the most obvious candidates for marine insurance. They need vessel coverage, including protection against damage, loss, and liability claims. Freight forwarders arrange the transportation of goods and are responsible for ensuring they are delivered safely to their destination. Marine insurance is essential for freight forwarders, as it covers any losses or damages that may occur during transit.
Marine insurance is critical if you are a business or individual shipping goods overseas. It can cover damage or loss of cargo during transport, including theft, piracy, or natural disasters.
Shipbuilders and repairers need marine insurance to cover them against any risks associated with the construction, repair, or maintenance of ships. This may include damage to vessels while they are in the shipyard or liability claims from third parties.
Port authorities and terminal operators are responsible for safely and efficiently handling cargo and vessels in ports. Marine insurance is essential to protect them against any damage, loss, or liability claims arising from their activities.
Port authorities and terminal operators are responsible for safely and efficiently handling cargo and vessels in ports. Marine insurance is essential to protect them against any damage, loss, or liability claims arising from their activities.
Marine contractors, such as those involved in offshore oil and gas exploration, need marine insurance to protect them against the risks associated with their activities, such as equipment damage, personnel injury, or pollution.
Charterers rent ships for a specific period and are responsible for the vessel's operation during that time. Marine insurance is necessary to protect them against any losses or damages that may occur while the vessel is under their control.
The specific type of marine insurance needed will depend on the individual circumstances and risks involved.
Why Should You Buy Marine Insurance?
Here are some reasons why you should consider buying marine insurance:
Liability protection
Marine insurance can also provide coverage for liability claims, including those related to cargo damage, personal injury, or pollution. This type of protection is particularly important for businesses that may be exposed to a high liability risk.
Protection against loss or damage
It can cover the loss or damage of vessels, cargo, or other marine equipment. This coverage can be critical in the case of accidents, natural disasters, or theft.
Peace of mind
A suitable policy can provide peace of mind for businesses and individuals involved in marine activities. Knowing that you have coverage in place can help you focus on your business or other activities without worrying about potential risks and losses.
Competitive advantage
Marine insurance can also give you a competitive advantage in the marketplace. For example, if you are a shipper or freight forwarder, having insurance coverage can help you attract clients looking for a reliable and secure transportation partner.
Legal requirements
In some cases, marine insurance may be required by law. For example, if you operate a commercial vessel, you may be required to carry liability insurance.
Customised coverage
Marine insurance policies can be tailored to meet the specific needs of different businesses and individuals. This means you can choose the coverage level appropriate for your specific risks and activities.
Marine Cargo Insurance Eligibility Criteria
Any company that is involved in the business of moving goods by sea can purchase marine insurance. This includes:
Manufacturers
Buyers
Import/export merchants
Sellers
Banks
Contractors
Buying agents
Marine insurance protects goods in transit by sea and helps to mitigate the financial risks associated with potential loss or damage to the cargo.
Why Should You Buy Tata AIG’s Marine Insurance?
Global Presence
With AIG’s presence in more than 130 countries, we are truly a global network with local expertise. This local expertise ensures we can guide and issue covers while considering the local regulatory concerns. Our worldwide presence ensures that we are perfectly placed to respond swiftly and effectively in dealing with losses as and when they occur.
Financial Strength
The combined might of the Tata Group and AIG, coupled with strong reinsurance treaties, ensures that you are in safe hands.
MLCE
Specialised products need extra handling. Our Marine Loss Control Engineering (MLCE) can assist you in identifying potential hazards in your supply chain, develop loss prevention guidelines, and help you implement loss control and quality improvement programs.
Innovative Yet Simple Products
We have something for everyone - whether you are a small exporter, importer, trader, manufacturer, SME, large corporate house, or multi-national corporation. We offer innovative yet simple products such as Sales Turnover Policy, Stock Throughput, or the standard Marine Open Policy.
Flexibility
Our knowledge and expertise allow us to customise policies to suit your needs.
Knowledge
We are the only company with a dedicated marine cargo underwriters team.
Tech Advantage
We are the pioneers of the online issuance of marine certificates in India. Our E-marine is a unique and simple tool. Backed by a dedicated helpdesk, Emarine makes 24x7 insurance actually possible.
Benefits you get with TATA AIG Marine Cargo Insurance
- Automatic insurance protection
- Marine Loss Control Engineering
- Assistance in identifying potential hazards
- Cargo protection for specific voyage risks
- Multinational Cargo Transport Program
- Marine Cargo Underwriting Service
What is Covered in Marine Insurance?
Accumulation Clause
Airfreight Replacement Charges Clause
Attachment & Termination of Risk Clause
Average Clause (applicable to static risks only)
Brands Clause
Buyers Interest Clause
Cancellation Clause
Civil Authority Clause
Claused Bill of Lading Clause
Concealed Damage Clause
Debris Removal Clause
Declaration Clause
Deliberate Damage - Pollution Hazard
Duty Clause
Exhibition/Demonstration Risks Extension
Exhibition Abandonment Extension Clause
Fumigation Clause
General Average
Goods Purchased by the Assured upon "C.I. F." terms
Goods Purchased by the Assured upon "F.O.B." or "C.&F." terms or similar terms
Increased Value upon Arrival Clause
Insolvency Of Shipowners
Labels Clause
Letter of Credit Clause
No Survey Clause
On-Deck Shipments
Own Sheets & Ropes Clause
Own Vehicle Debris Removal Clause
Packing Clause
Packers Premises Extension
Pair & Sets Clause
Pollution & Contamination Exclusion Clauses
Repacking Clause
Rejected or Returned Shipments Clause
Seals Intact Clause (operative in respect of F.C.L. consignments only)
Sellers' Interest
Shortage from Containers, Trailers, and/or Vehicles Clause
Trade Marked Cartons
Testing & Sorting Clause
Theft Co-Insurance Clause
What is Not Covered in Marine Insurance?
These are some of the exclusions under the policy:
- Rust, oxidation, and/or discolouration of unpacked, unprotected, and uncrated goods, regardless of the cause.
- Electrical and/or electronic and/or mechanical derangement and/or breakdown unless caused by a peril covered by the policy.
- Unexpected disappearance and/or stock-taking losses of any kind.
- Unexpected disappearance and/or stock-taking losses of any kind from exhibition stands or locations if the exhibition stands are occupied during published opening hours.
- Theft or attempted theft from the policyholder's own vessels or premises unless it involves forcible and/or violent entry. Theft from all storage locations is excluded unless there is forcible and/or violent entry and/or exit.
- Theft attributed to collusion by employees.
- Losses or damages to the cargo due to climate or atmospheric conditions or changes in temperature cannot be covered.
- Damages caused to the goods due to changes in the water table level cannot be covered under the policy.
Under the Exhibition/Demonstration Risks Extension clause, the exclusions are:
- This insurance policy does not cover any loss or damage caused by hidden defects or poor assembly or construction of the insured property
- It also does not cover any loss or damage caused during the use of the property for demonstration or other purposes.
- Theft or pilferage from an unattended exhibition/demonstration stand/trailer is covered, except in cases of forcible and/or violent entry and/or exit.
- This policy does not cover goods that are hired out by the insured for exhibition/demonstration unless agreed upon with the underwriters before the risk coverage begins.
Types of Marine Insurance Policies
These are the following types of marine insurance policies:
Import Insurance
Covers loss or damage to goods transported from another country to the policyholder's country. The policy provides coverage against risks such as damage during transit, theft, and non-delivery.
Export Insurance
Covers loss or damage to goods transported from the policyholder's country to another country. The policy provides coverage against risks such as damage during transit, theft, and non-delivery.
Inland Marine Insurance
This type of insurance protects the property in transit within a country. It covers goods transported by land, air, or inland waterways. This type of insurance covers loss or damage to goods caused by accidents, theft, or natural disasters.
Marine Cargo Insurance
Marine cargo insurance covers loss or damage to goods being transported by sea. It protects cargo owners against damage during loading and unloading, theft, piracy, and natural disasters.
Hull Insurance
This insurance policy covers the vessel itself, including its machinery, equipment, and fittings. It protects the owner against loss or damage to the vessel caused by accidents, collisions, fires, or other risks.
Freight Insurance
This policy provides coverage for the freight charges paid by the policyholder in case of loss or damage to the cargo transported. It covers the freight charges lost due to the failure to deliver the cargo or the cargo being damaged during transit. Shippers, carriers, and freight forwarders typically purchase freight insurance.
Type of Plans Under Marine Insurance Policy
Marine insurance policies can be categorised into two types of plans – open policy and specific policy.
Open Policy
This type of policy is suitable for businesses that frequently transport goods via sea. Under an open policy, the insured declares the estimated value of the goods to be shipped during a particular period, and the policy remains in force for that period.
The policy covers all shipments during that period, and the insured does not need to inform the insurer about each shipment. The insured can declare the value of the shipment after it is made, and the premium is calculated based on the value declared.
Specific Policy
This type of policy suits businesses with occasional shipments. Under a specific policy, the insured declares the value of the goods to be shipped for each shipment separately, and the policy remains in force only for that shipment.
The policy covers only the specific shipment declared by the insured, and the insured needs to inform the insurer about each shipment. The premium is calculated based on the value declared for each shipment.
Both types of policies cover risks such as loss or damage to the cargo, loss of freight, damage to the ship, and third-party liabilities. The policy can be extended to cover additional risks per the policy terms and conditions.
Types of Coverage Under Marine Insurance
The two main types of coverage under marine insurance are Inland Transit Clauses (ITC) and International Cargo Clauses (ICC).
Inland Transit Clauses (ITC)
Inland Transit Clauses (ITC) provide coverage for goods or cargo that are being transported within the country, usually by road or rail. Two types of Inland Transit Clauses are ITC A and ITC B.
- ITC A : This clause provides comprehensive coverage for goods transported within the country. It covers all risks of loss or damage to the goods except those expressly excluded in the policy.
- ITC B : The coverage under this clause is more limited than ITC A. It covers loss or damage to the goods only if caused by fire, collision, derailment, overturning, or any other accidental external means.
International Cargo Clauses (ICC)
International Cargo Clauses (ICC) cover goods or cargo transported overseas, usually by sea or air. There are two types of International Cargo Clauses - ICC A and ICC B.
- ICC A : This clause provides the most extensive coverage for goods transported overseas. It covers all risks of loss or damage to the goods except those specifically excluded in the policy.
- ICC B : This clause provides limited coverage when compared to ICC A. It only secures the loss or damage to the goods if caused by fire, explosion, sinking, stranding, or any other accidental external means.
In both types of coverage, there are specific exclusions that are not covered by the policy, such as losses due to war, strikes, riots, or wilful misconduct.
Principles of Marine Insurance
Several fundamental principles govern the operation of marine insurance, and understanding these principles is essential for both insurers and policyholders. Here are the most important principles of marine insurance:
Principle of Good Faith
The principle of good faith is the cornerstone of all insurance contracts, including marine insurance. It requires both the insurer and the insured to act in good faith and disclose all material information related to the risk being insured. The principle of good faith ensures that both parties have an equal understanding of the risks involved and helps to prevent fraud and other forms of misconduct.
Principle of Insurable Interest
The principle of insurable interest states that an individual must have an insurable interest in the insured property to obtain coverage. In marine insurance, an insurable interest means the policyholder must have a legal or financial interest in the cargo, vessel, or other transported property. Insurable interest ensures that the policyholder has a vested interest in the property's safe transport and helps prevent fraud and over-insurance.
Principle of Indemnity
The principle of indemnity means that insurance aims to restore the insured party to their pre-loss financial position. In marine insurance, the insurer is only responsible for covering the actual financial loss incurred by the policyholder. Your insurer will not compensate you for any losses that exceed the value of the insured property or the value of the policy. This principle helps to prevent policyholders from profiting from a loss, which would encourage fraudulent activities.
Principle of Contribution
The principle of contribution applies when multiple insurance policies cover the same risk. In marine insurance, this can occur when multiple parties have an insurable interest in the same property, such as a cargo shipment. If a loss occurs, each policyholder's insurer will contribute proportionally to the loss. This principle ensures that policyholders are not over-insured and that each insurer bears a proportionate amount of the risk.
Principle of Proximate Cause
The principle of proximate cause is used to determine which peril is the cause of loss or damage. If the cause of the loss is not covered under the policy, the insurer is not obligated to pay for the loss. For example, the insurer will pay for the loss if a ship sinks due to an unforeseen event such as a storm. However, if the ship sinks due to an unseaworthy vessel, the insurer may not cover the loss, as it may be excluded under the policy.
Principle of Subrogation
The principle of subrogation enables the insurer to recover the amount of the claim paid to the policyholder from the party responsible for the loss or damage. For example, suppose a shipper fails to secure the cargo properly, resulting in damage during transport. In that case, the insurer may pay the claim to the policyholder and then attempt to recover the costs from the shipper. Subrogation helps to prevent moral hazard and ensures that parties responsible for the loss are held accountable.
Marine Insurance Act, 1963
The Marine Insurance Act of 1963 is legislation in India that governs marine insurance policies and contracts. It was enacted to provide a uniform and comprehensive set of rules and regulations for the marine insurance industry in India.
The Act provides rules for the formation and content of marine insurance contracts and the rights and obligations of the insurer and the insured. It also covers the payment of premiums, the assignment and subrogation of rights, and the settlement of claims.
Some of the Act's key provisions include the definition of marine insurance, the requirements for a valid marine insurance policy, the rights and duties of the insured and the insurer, and the procedure for settlement of marine insurance claims.
The Act also specifies the types of losses covered by marine insurance policies, such as losses due to perils of the sea, piracy, and other types of maritime accidents. It further provides for the regulation of marine insurance companies and agents and establishes a framework for resolving disputes between the insurer and the insured.
What Does the Institute Cargo Clauses (ICC) Cover?
For international transactions, there are three types of marine cargo insurance policies available, namely Institute Cargo Clauses (A), Institute Cargo Clauses (B), and Institute Cargo Clauses (C).
Each policy type covers a different amount of risk, with Institute Cargo Clauses (A) offering the highest coverage, Institute Cargo Clauses (B) offering medium coverage, and Institute Cargo Clauses (C) offering the minimum coverage.
Institute Cargo Clauses (C) cover a limited range of risks that must occur during carriage in the form of accidents. The risk coverage of this policy includes loss/damage to the insured property due to –
- Fire or explosion
- Grounding, sinking, capsizing of a vessel
- Overturning or derailment of a land conveyance
- Collision or contact of vessel craft or conveyance with any external object other than water
- Discharge of cargo at a port of distress
- General average sacrifice – unexpected measures taken during a voyage to secure the interests of the ship, cargo, and crew from danger.
- Jettison – throwing some of the ship's cargo overboard during a voyage to lighten the ship and prevent it from sinking during an emergency.
Institute Cargo Clauses (B) is a medium cover policy that covers more risks than Institute Cargo Clauses (C) but less than Institute Cargo Clauses (A). The risk coverage for this policy includes loss or damage to the insured property caused by the same risks as ICC (C), along with –
- Earthquakes, volcanic eruptions, or lightning
- Entry of sea, lake, or river water into the vessel, craft hold, conveyance, container, or place of storage
- Total loss of any package lost overboard or dropped while loading or unloading from the vessel or craft.
Institute Cargo Clauses (A), or All Risks insurance policies, offer the highest coverage and cover many risks.
The risk coverage for this policy includes loss or damage to the insured property caused by the risks covered under ICC (B) and ICC (C), as well as any accidental loss or damage that is not explicitly excluded under the policy.
Finding the Best Marine Insurance Policy Online
Finding the best marine insurance policy online can be challenging, but it is possible to make an informed decision with some guidance. Here are some tips to help you find the best marine insurance policy online:
Determine Your Needs
Before searching for a marine insurance policy, determine what kind of coverage you require. Think about the type of watercraft you own, the value of the boat, and how you intend to use it. Consider your risks, such as theft, damage, or liability.
Know your Insurer
Choose an insurer that has a good reputation and is financially stable. Apart from the reviews and ratings of the insurer online, also look into their claim settlement ratio.
Compare Policies
Look at different marine insurance policies offered by the insurance company of your choice and compare them to find the one that meets your specific needs. Be sure to look at the benefits, coverage, deductibles, and premiums.
Consider the Exclusions
Before purchasing a policy, ensure you understand the coverage details and any exclusions. These exclusions can help you prepare for risks not covered under the policy. Contact your insurer or their customer care team for clarification if you have any questions or concerns.
By following these tips, you can find the best marine insurance policy online that provides the right coverage and protection for your watercraft.
How is the Premium calculated for Marine Cargo Insurance?
Marine cargo insurance premiums are typically calculated based on several factors that can impact the level of risk associated with insuring the cargo being transported. Some of the factors that are commonly considered when calculating the premium for marine cargo insurance include:
Type of goods transported
Certain goods are more prone to damage or loss during transportation and may therefore require a higher premium. For example, fragile or perishable goods may require a higher premium than durable goods.
Mode of transport
Different modes of transport carry different levels of risk. For instance, sea transport is considered riskier than air transport, so marine cargo insurance premiums may be higher.
Type of vessel or ship
The type of vessel or ship used for transport can also impact the premium. For example, larger and more advanced ships may be considered safer and therefore attract a lower premium.
Age of the vessel
The age of the vessel or ship can also affect the premium, as older vessels may be more prone to damage or loss.
Cost of the transport vessel
The cost of the vessel or ship used for transport can also impact the premium, as a more expensive vessel may be considered to carry a higher level of risk.
Trading limit
The trading limit is the maximum amount of coverage provided for the goods being transported. A higher trading limit may require a higher premium.
Type of insurance cover
Different types of insurance coverage can also impact the premium. For example, an "all risks" policy that covers a wide range of risks may be more expensive than one that only covers specific risks.
Ownership terms
Ownership terms, such as who is responsible for the cargo during transportation, can also impact the premium.
Claim Process for Marine Insurance Policy
The assured and their agents should do what they can to prevent or lessen any damage or loss to their goods. They should also make sure to use their legal rights against anyone responsible for any problems.
This is how the claim procedure works:
Immediately inform the carriers, port authorities, and bailees responsible for shipping if any packages are missing.
If the goods appear damaged, do not accept them until you can provide written confirmation.
If the goods are delivered in a container, the responsible official should immediately check the container and the seals. If the seals are broken or missing, they must mention the same on the delivery form and keep aside any broken seals for later.
If there is any apparent damage or loss, the official should ask the shipping company to examine it and then file a claim for the damage or loss.
In case of any damage or loss found later on, the shipping company should be informed in writing within 3 days of receiving the goods.
The consignees should familiarise themselves with the port's rules where the goods are being delivered.
Documents Required to Raise Claim Under Marine Insurance
Given below are the documents needed to file a claim under marine insurance:
Original policy or marine insurance certificate
Original Bill of Lading and/or another contract of carriage.
Original copy of shipping invoices, with the packing list and/or weighment notes.
Landing remarks/account and weighment notes at the final destination
The survey report and other documentary evidence, if available, show the extent of the loss or damage.
Correspondence exchanged with the carriers and other parties regarding their liability for the loss or damage.
To enable claims to be dealt with promptly, the assured or their agents are advised to submit all the supporting documents without delay, including the items mentioned above.
Frequently Asked Question
