Overview
What You Can Gain from This Topic
- Review of Marine Insurance
- How to Read an Insurance Policy
Review of Marine Insurance
Marine cargo insurance covers damage to cargo during international transportation due to unexpected circumstances.
Not only does it cover the damage to the cargo, but it also covers the profit the importer would have earned from the subsequent sale.
The exporter or the importer is responsible for insuring the shipment, determined by the agreed Incoterms.
Insurance Policy
Once you purchase insurance, the insurance company will issue an insurance policy.
It’s important to check all shipping documents match the information in the insurance policy, such as:
- Invoice
- Packing list
- Bill of lading
How to Read an Insurance Policy
1) Insured
The insured is a party who receives insurance benefits in the event of cargo damage.
If the term is like CIF and the exporter is the policyholder, they can claim the insurance benefits. However, it is typical for the policyholder (exporter) to assign the right to claim insurance to the importer.
2) Invoice number
The invoice number, the control number, which each company can determine at its discretion, is specified.
3) Insurance policy number
The insurance policy number that the insurance company assigns.
4) Insured Value
The insured value is typically set at 110% of the CIF value.
5) Insurance payout location
This is the location where the insurance proceeds will be paid.
6) Accident notifying party
It refers to the contact point in case of an accident.
- The insurance company
- The claims handling agent
Details above are specified, and it is stated that “the insurance proceeds will be paid through this designated notification contact.”
7) Insurance terms
Either of the following insurance terms are specified:
- ICC (A)
- ICC (B)
- ICC (C)
It outlines the extent of risk coverage provided by the insurance.
8) Transportation mode/method
If the transportation involves the journey from the shipping point to the loading port, and insurance is required for this interim transport, the mode of transportation is specified, such as:
- Truck
- Rail
9) Interior port or place of loading
The dispatch area is specified if the dispatching place differs from the loading port, and insurance is required for transportation between sites.
10) Ship or Vessel name
The planned vessel name for loading is specified.
11) Port of loading
The planned port for loading, where the shipment is intended to be loaded onto the vessel, is specified.
12) Date of departure
The scheduled departure date of the vessel intended for loading is specified.
13) Unloading Port
The port where the insured cargo is intended to be unloaded is specified.
14) Final destination and transportation mode/method
If the unloading port differs from the final destination, the final destination and the mode of transportation to that point are indicated.
15) Product names, quantity, etc
The following items are specified:
- Product name
- Quantity
- Packing
- Shipping marks, Numbers
“In container under &/or on deck,” as stated in the sample, indicates that cargo loaded on the deck is treated the same as cargo loaded inside the vessel.
16) Place of issue, issuing date, the number of printed copies
The place of issuance, publishing date, and the number of printed copies are specified.
17) Italicized clauses
Italicized clauses state that losses caused by war, strikes, riots, and disturbances are not covered, and the insurance company exempts these clauses.
18) Margin clause
The following clauses are specified:
- Grounding Clause
- Stranding Clause
- Other Insurance Clause
- Loss Notification Clause
19) Body of the policy
The policy document has remained unchanged for over 200 years, so the content is unsuitable for modern transactions.
Therefore, the following clauses are appended to address specific circumstances or risks.
- Margin clauses (such as Italicized clauses)
- Institute Cargo Clauses
- Institute War Clauses (Cargo)
- Institute Strikes, Riots, and Civil Commotions Clauses
Summary
The points mentioned above are vital aspects to check and keep in mind when entering into a contract. Please use them as a reference when obtaining insurance coverage.
Enhanced Learning with Videos
Test Yourself
Reinforce your understanding of this topic by working through the exercises. Attempting the exercises without referring to the material as much as possible is advisable.
