PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-3 | UNDERWRITING (PART 2)

PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-3 | UNDERWRITING (PART 2)

Insurance exams offered by the Insurance Institute of India (III), consist of various papers either in Life or Non Life or Combined. Here we are providing ONE LINER IC 67, Maine Insurance Chapter 3 “UNDERWRITING (PART 2) ” for para 13.2 and III exam . These questions will be very helpful for upcoming promotional exam in 2020.

IC 67, Maine Insurance is a very important topic in insurance promotional exam. This IC 67, Maine Insurance paper comes in all GIPSA exams which makes it very important.

♦UNDERWRITING (PART 2)

  1. Ex-Works (EXW), Ex Warehouse, Ex-Factory: the seller’s responsibility is to prepare the goods as per specification and pack the same and keep ready for delivery at his warehouse gate. Buyer has to arrange for taking delivery from seller’s warehouse and on his taking delivery the seller’s risk is over.
  1. During transit from seller’s warehouse to buyer’s warehouse, the goods are at buyer’s risk (Ex-Works (EXW), Ex Warehouse, Ex-Factory)
  2. Ex-Works (EXW), Ex Warehouse, Ex-Factory) In this terms transit insurance is to be taken by the buyer from seller’s warehouse to buyer’s warehouse
  3. Free on board (FOB): the responsibility of the seller is from his warehouse till loading of the cargo in the ship till the goods pass ship’s rails.
  1. Free on board (FOB): If the goods are lost or damaged before becoming FOB the seller has to replace the goods
  2. Cost and freight (CFR): For insurance purpose this is like FOB as the seller’s responsibility is only up to the ship’s rails, the difference being in the price
  3. Cost and freight (CFR): CFR value consists of sea freight also as the seller undertakes to arrange for services of shipment up to destination port also.
  4. Cost, insurance & freight (CIF): seller is supposed to give one more service and that is to arrange for insurance. If contract is silent the policy is required to be taken up to final port for ICC (C). only
  5. Cost, insurance & freight (CIF): In case of loss or damage to goods when they are rejected by the buyer or on his refusal to pay, insurable interest reverts to the seller who can claim in his own name under the policy
  6. Delivered to duty paid (DDP): DDP is reverse of Ex Works. For seller it is door delivery contract, his responsibility does note ceases till he delivers the good to buyer’s nominated place in buyer’s country.
  7. Delivered to duty paid (DDP): Seller is advised to take insurance on warehouse to warehouse basis but it is not compulsory. Buyer will not take insurance as he does not have any insurable interest during transit of goods
  8. Delivered at place (DAP): This is the new term which has been introduced in the ‘2010’ set of 11 terms
  1. Delivered at place (DAP): The seller is responsible for delivery of the goods, ready for unloading from the arriving conveyance, at the nominated place
  1. Delivered at place (DAP): There is no obligation on seller to arrange for any insurance but it is advisable to insure goods upto the agreed place as in the event of any loss he has to replace the goods, if they are lost/damaged before delivery.
  1. Delivered at place (DAP): If delivery place is short of buyer’s place, the buyer may arrange for insurance for balance of transit to safeguard his interest.
  2. Delivery at Terminal (DAT) : The seller is responsible to deliver goods (including unloading) at the agreed port or terminal. After delivery, the risk is transferred to the buyer. The insurance is not compulsory but both may insure their own part of responsibility to cover the risks.
  3. Marine cargo declaration form :There is no standard proposal form for marine cargo insurance, except in case of:
  • Special Declaration Policy
  • Annual Policy
  • Duty and Increased Value insurances etc.
  1. The Declaration form contains following details:
  • Name and address of the proposer and his business. If bankers have an interest in the transaction, as would be the case in documentary credits, the name and address of the concerned bank is also given.
  • Description of the goods to be insured, number of packages, nature of packing, marks and numbers.
  • Value for insurance, that is, the Sum Insured which is normally the CIF value plus 10%. Duty Increased Value components are indicated separately.
  • Name of the carrying vessel or mode of other conveyances, like rail, road or air, as applicable.
  • Description of voyage or transit and transhipments, if any.
  • B/L No., R.R. or L.R. No., Air Consignment Note No., etc. as applicable.
  • Type of insurance cover required.
  • Signature of proposer and date of declaration
  1. Marine cover note is a temporary document evidencing that insurance has been granted pending the issue of the policy.
  2. There is a contract of marine insurance from the time Cover Note is issued, but from a legal point of view, the Cover Note is only an advice and as such it cannot be used as a legally valid document in a lawsuit against the insurer until the contract is expressed in a Policy.
  3. 97. Cover Notes are not stamped and are initially issued when full details for the issue of a policy are not immediately forthcoming. Later, when full required details become available, a policy is issued, and, in the meantime, insurers consider themselves bound, in honour, by the contract evidenced by the Cover Note
  4. In the event of loss/damage prior to declaration and/or shipment, the basis of valuation shall be the prime cost of the goods plus charges actually incurred and for which the insured is liable. For example, if freight is not incurred, there is no liability for freight
  5. The Policy (also called MAR Policy Form) is a simple document containing the name of the insurer and a clause binding the insurer to the performance of the contract.
  6. The policy document must be stamped as required by the Indian Stamp Act, 1899.
  7. Stamp duty, which is shown on the policy, is recoverable from the assured
  8. The Schedule of the policy form shows following details:
  • Policy number, place and date of issue.
  • Name of the assured with address. When a transaction is financed by a bank, the name of the bank will also appear here, as the bank will have insurable interest in the adventure.
  • Name of the carrying vessel. If the name is not immediately available, the “Vessel” will be made subject to Institute Classification Clause.
  • Description of the voyage/transit, e.g. from Pune to Manchester via Mumbai and Liverpool.
  • The subject-matter insured and description of packing, e.g.100 cases said to contain cotton textiles.
  • Type of insurance cover granted and any special conditions and warranties.
  • Description of marks and numbers as also B/L No., Air Consignment Note No., Railway or Lorry Receipt No., Post Parcel Receipt No., as applicable. The purpose is to identify the insured goods.
  • The Sum Insured. The components of the Sum Insured may well be CIF value, plus 10% customs duty plus increased value.
  • The premium. War and Strikes premium is shown separately from marine premium.
  • Name and address of the Surveyor and Claims Settling Office at destination point, so that the claim could be surveyed, serviced, processed and ultimately settled on behalf of the insurer concerned.
  1. An endorsement is a memorandum attached to the policy document which records alterations in the contract.
  2. E-marine: If insured is given facility of e-marine, the insured can generate certificate through his computer against open policy/ open cover. The e marine will maintain the premium balance and other data

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