PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-5 | Cargo Insurance Coverage Part 2

PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-5 | Cargo Insurance Coverage 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 5 “cargo Insurance Coverage 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.

CARGO INSURANCE COVERAGES – PART 2

  1. Standard Clauses have been drafted and agreed between the Institute of London Underwriters (ILU) – now (IUA)* – and the concerned Trade Associations, in order to bring about uniformity of practice in international trading operations for selected trades and commodities
  2. Institute Commodity Trades Clauses (A), (B) and (C): These are agreed with the Federation of Commodity Associations for the insurance of shipments of:
  • Cocoa,
  • Coffee,
  • Cotton,
  • Fats and Oils not in bulk,
  • Hides,
  • Skins and Leather,
  • Metals,
  • Oil Seeds and Sugar (raw and refined), and

3. The Commodity Trades Clauses exclude loss caused by insolvency, etc. only where the assured are aware at the time of loading that insolvency or financial default of the shipowner, etc. could prevent the normal prosecution of the voyage.

4. In the treatment of unseaworthiness/unfitness, etc., this exclusion in the Commodity Trades Clauses applies only where the assured or their servants actually load the container, lift van, etc. or where it is loaded prior to the attachment of the cover.

5.The other difference is that the innocent assignee (for example, a bank, advancing payment for the goods under documentary credit) or buyer is protected against this exclusion

6.Institute coal clauses extend the Fire and Explosion cover to include heating even when caused by spontaneous combustion and inherent vice or nature of the subject matter insured.

7. Institute jute clauses: Earthquake, volcanic eruption and lightning are not covered

8.Institute jute clauses: The cover attaches only when jute is loaded on board the vessel

9.Institute jute clauses: The time limit of 60 days after discharge at destination port is reduced to 30 days in Jute clauses

10. Institute jute clauses: In the Termination of Contract of Carriage Clause, the time limit is reduced from 60 days to 15 day only

11. Institute bulk oil clauses: Cargo of bulk oil can be insured either under ICC (C), (B) or (A) or it can be also insured under Institute Bulk Oil Clauses (IBOC).

12. Institute bulk oil clauses: Covers Leakage from connecting pipelines in loading transshipment or discharge

13. Institute bulk oil clauses: Covers Loss and contamination of oil by negligence of master officers or crew in pumping cargo, ballast or fuel

14. Institute bulk oil clauses: Covers Contamination of the subject-matter insured resulting from stress of weather.

15.Institute bulk oil clauses: exclusion about packing (4.3) does not appear here as the bulk cargo is not supposed to be packed

  1. Institute bulk oil clauses: Duration is from Tank to Tank and not warehouse to warehouse. The time limit after vessel reaching final port is 30 days for the validity of the cover
  2. Institute bulk oil clauses: In claim, The shortage to be decided by comparing the quantity of oil leaving tank at the load port and the quantity of oil received at final port. The claim is to be calculated proportionately of these quantities.
  Coffee Cardamom Rubber
TYPES OF POLICY      
TYPE 1 Full Package Policy (with 120 days’ storage cover) Full package Policy with 120 days’ storage cover. Full Package Policy (with 120 days’ storage cover)
TYPE 2 Policies commencing from the time of plucking and continuing during transit up to the Curing House(s) – with 60 days’ storage
cover.
Policies commencing from picking to insured’s godown/ auction centres anywhere in India with 90 days’ storage cover Full Package Policy up to FOB point (with 120 days’ storage cover
TYPE 3 Policies commencing from Curing House(s) and continuing up to FOB point (with 60 days’ storage cover). Transit Policies Transit Policies of Centrifuged Latex to be issued to traders/buyers.
TYPE 4 Policies commencing from Curing House(s) and continuing till delivery to buyers any where in India (with 60 days’ storage
cover).
   
Term of policies ALL policies issued shall be Annual Policies only based on estimated turnover
and value of the crop. Premium adjustment will be based on actual turnover
and actual realised value for the crop
Basis of settlement The basis of settlement of claims shall be the market value of coffee insured
less unincurred expenses as per formula prescribed in the Tariff
In the event of loss before manufacture, 4 kgs. of raw cardamom shall be
considered equal to 1 kg. of dried cardamom
Market value less unincurred expenses
RISK COVERED The risks covered and exclusions are as per Inland Transit (Rail or Road) –Clause ‘A’. S.R.C.C. cover may be offered at prevailing Tariff rates

 

  1. Duration of cover for coffee: The risk commences from the time of plucking in the Estate, whilst stored in the Estate and continues whilst in transit to the Pulping House(s), whilst undergoing pulping and drying, whilst in transit to curing House(s) and during processing therein and whilst in transit to insured’s godown including storage therein. The risk also continues during further transit until delivered to buyers anywhere in India.
  1. Duration of cover for rubber estates: The insurance attaches from the time Latex is collected from collection centres/ estates named in the policy, whilst in transit to factory/smoke houses located at specified places, whilst during course of processing in the smoke-house or factory including storage therein and continues whilst in transit to insured’s godown including storage therein and further continues until delivered to buyers anywhere in India. The total period of storage at various places not to exceed 120 days. In case of Type II Policy, the insurance further continues during transit until placed on board the oversea vessel.
  2. Period of storage for coffee: The total period of storage not to exceed 120 days in case of Type I Policy and 60 days in case of other Policies
  3. Basis of valuation for cardamom estates: Basis of valuation shall be previous year’s average price, if available, or previous year’s average of maximum and minimum prices plus 10%, subject to final adjustment on the basis of actual realised value on the same
  1. Basis of Valuation for rubber estates: Invoice value plus 10%
  2. Warranties for cardamom estates: Insurance shall be subject to following special warranties:
  • Warranted that claims arising out of loss/damage caused by moth, mildew, vermin, insects and natural driage shall not be paid.
  • Warranted that the cardamoms shall be in customary packings.
  1. Declarations of Value in rubber estates: Total value shall be declared within 15 days of close of a month
  2. Tea Crop Insurance Policies shall be issued gardenwise only. In case of factories which do not have any gardens, policies may be issued factorywise.
  3. Tea Crop Insurance : TAC withdrew this policy effective 1st April 2004.
  4. Tea Crop Hail Insurance: Cover against the risk of hail damage to standing Tea Crops may be granted

only as an extension of the Tea Crop Policy at additional premium

  1. Tea Crop Hail Insurance cover may be granted limiting the liability of the Company either to 50% or 25% of agreed insured value of the crop so damaged, calculated on the basis of 4 Kgs. of Green Leaf being equivalent to 1 Kg. of made Tea
  1. Crop Insurance Department of GIC issues a Comprehensive Policy for Standing Tea Crop against All Risks, including Hail damage cover
  2. Sailing Vessels include country crafts which are mechanised or nonmechanised.
  3. A mechanished Sailing Vessel is registered with government authorities as having auxiliary engines
  4. A variety of goods are carried by Sailing vessels, such as: Onions,Potatoes,Mangoes,Roof tiles,Sawn timber, Dates, etc.
  5. Three types of covers are available for Sailing vessels

1) Clause ‘A’ Total Loss Constructive Total Loss of cargo due to Total Loss or Constructive Total Loss of the vessel only

2) Clause ‘B’

  • Loss/damage to cargo reasonably attributable to:

Vessel being burnt

Vessel being sunk

  • Loss of cargo caused by jettison if necessitated by stress of weather only.

3) Clause ‘C’

  • Loss/damage to cargo reasonably attributable to:

Vessel being burnt

Vessel being stranded or sunk

  • Loss of cargo caused by jettison due to stress of weather, stranding or sinking or burning or collision at sea.
  1. Exclusions: These apply to all the 3 types of covers:
  • General Average contribution.
  • Loss, damage or expense wilfully caused by or due to unlawful conduct, negligence, misbehaviour of tindal, crew, owner of craft, shippers or consignees.
  • Loss, damage or expense arising out of detention or seizure by government in consequence of vessel being engaged in illicit or contraband trade. (Note: The other exclusions are as in ICC, (B) & (C) )
  1. Sailing Vessel: In the event of termination of adventure at an intermediate port short of destination following accident, mishap or stress of weather, the insurance ceases from the time the cargo is discharged at such port of refuge or directly into another vessel
  1. The insurance attaches from the time of loading of cargo onto the vessel, continues during the ordinary course of transit and ceases on landing of cargo at the final port of discharge or 8 days after arrival of the vessel at the final port of discharge, whichever occurs earlier.
  2. Expenses properly and reasonably incurred by the assured or their servants to avert or minimise loss are reimbursed by the insurers, if such loss is otherwise recoverable under the policy
  3. Insurance for containers is of two types :
  4. a) Inland b) Overseas
  5. In case of inland transits the containers are treated like cargo and they are insured under Inland Transit Clauses (ITC) generally ITC (B).
  6. As the containers do not belong to exporter the insurance is taken in joint names – of exporter and shipping company
  7. For overseas transits Containers are treated as Hull and insured subject to Institute Container Clauses (1.1.1987),
  8. Risk covered in Insurance of Containers: General average and salvage charges incurred to avoid a loss from any cause except those excluded.
  9. Risk covered in Insurance of Containers: There is a liability for loss/damage to the machinery of a container only under following circumstances:
  • When the container is a total loss (actual or constructive)
  • When such damage is caused by :

Fire or explosion originating externally to the machine;

Vessel or craft being stranded, grounded, capsized or sunk;

Overturning, derailment or other accidents to land conveyance or aircraft;

-Collision or contact of vessel or craft with any external object other than water;

General average sacrifices

  1. Exclusions in Insurance of Containers:
  • Willful misconduct of the assured.
  • Ordinary wear and tear, ordinary corrosion and rust or gradual deterioration of the containers.
  • Mysterious disappearances, unexplained loss.
  • Inherent vice or nature of the subject matter insured.
  • Proximately caused by delay even if such delay is caused by an insured peril.
  •  Arising from insolvency or financial default.
  • Unseaworthiness or unfitness of the vessel or craft or conveyance, where the assured or their servants are privy.
  • War, strikes or nuclear weapon exclusion
  1. 44. Each container is covered, including whilst on deck, within the sea and territorial limits specified in the Schedule of the policy. (Limits clause)
  2. If the insured container(s) is sold leased or hired to a party not named as the assured, the insurance in the container shall terminate automatically, unless the insurer agrees in writing to continue the cover.
  3. Claims for damage to a container, which is not a total loss, shall not exceed reasonable cost of repairing such damage.
  1. The deductible shall not apply to:
  • The total loss (actual or constructive ),
  • GA,
  • Salvage or salvage charges and
  • Sue and labour charges.
  1. The schedule of the policy shows the following detail( Insurance of Containers):
  • It is a condition of the insurance that each container bears clear and distinct marks o identification.
  • Type of container and value.
  • Sea and territorial limits.
  • Names of the overseas vessels which will carry these containers.
  1. The insurance is subject to the usual Sue and Labour clause.
  2. The insurance may be cancelled by either party giving 30 days’ notice
  Tea crop
Terms of cover The insurance is against all risks of physical loss or damage to tea subject to
specified exclusions
Risk covered Inland Transits are subject to Inland Transit (Rail or Road) – Clause ‘A’ and
Inland Transit (Inland Vessels) Clause, as applicable. Overseas shipments are
subject to ICC (A) or Institute Cargo Clauses (Air), as applicable
Exclusions: Special exclusions include the following:
i. Loss/damage caused by absence or shortage, withholding or withdrawal of labour.
ii. Loss/damage attributable to any fault/neglect/defect in the manufacturing process and/or packing materials used.
iii. Loss due to interruption in manufacture consequent upon stoppage of power supply or breakdown of machinery, howsoever arising.
iv. Any trade loss including chest allowance as agreed by the tea brokers.
v. Any loss/damage pertaining to previous season’s manufactured tea held back at garden.
vi. Any foreign acquired taint damage to teas arising from any established and proven external cause, except such taint damage as caused by an insured peril.
vii. No cover shall be granted for loss/damage to standing crops or Tea
bushes or plants arising out of whatsoever peril other than Hail

 

  1. Inland transit clauses (Rail or Road): These clauses apply to insurance of goods during inland transit only, whether by rail or by road. There are three types of cover available:
  • Clause ‘A’ (All Risks)
  • Clause ‘B’ (Basic Cover)
  • Clause ‘C’ (Fire Risk Only)
    Inland Transit Clauses (Rail or Road)  
       
  Clause ‘A’ (All Risks) Clause ‘B’ (Basic Cover) Clause ‘C’ (Fire Risk Only)
Risks covered All risks of loss or damage to the subject-matter insured, except those
caused by risks expressly excluded. The loss or damage, in order to be
recoverable, must occur fortuitously
i. Fire
ii. Lighting
iii. Breakage of bridges
i. Collision
ii. Overturning of the carrying vehicle
iii. Derailment or accidents of like nature to the
carrying railway wagon / vehicle.
Physical loss / damage to the subject-matter insured caused by:
i. Fire
ii. Lightning
Exclusions .- Loss, damage or expense attributable to wilful misconduct of the assured;
– ordinary / inevitable loss or damage to the subject-matter;
– loss, damage or expense caused by insufficiency or unsuitability of
packing or preparation of the goods insured (“packing” shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the assured or their servants);
– Proximately caused by delay, even it the delay be caused by a risk insured against;
-Inherent vice or nature of the subject-matter insured;
– War perils exclusion;
-Direct as well as consequential loss caused by strikers, locked-out workmen or persons taking part in labour disturbances, riots or civil commotions or by terrorists or any person acting from a political motive.
These are identical to those appearing Clause ‘A’, PLUS
Deliberate damage / destruction of subject-matter insured by wrongful act of any person or persons. (An underwriter, at his discretion, may delete this exclusion by charging additional premium and making the insurance subject to the ‘Malicious Damage Clause’).
The exclusions are identical to those of Clause ‘B’
Duration of the cover The insurance attaches from the time the goods leave the warehouse for the commencement of the transit and continues during the ordinary course of
transit, including customary transhipment, if any-
– Until delivery at final warehouse at destination point, or
-In respect of transit by rail only or by rail and road, until expiry of 7 days after arrival of railway wagon at final destination railway
station, or
– In respect of transit by road only, until expiry of 7 days after arrival of road vehicle at the destination town, whichever shall occur,
The duration of cover is identical to the duration as in Clause ‘A’ The insurance attaches with the loading of each package into wagon / truck for the commencement of the transit, and continues during the ordinary course of transit, including customary transhipments, if any, and ceases immediately on unloading:
– At destination railway station in respect of rail transits, or
-At destination point in respect of transit by road.
  The period of 7 days to be reckoned from mid-night of the day of arrival of railway wagon / vehicle, as applicable   Monetary claims against railway / road carriers and bailees must be lodged within 6 months from the date of the railway / lorry receipts, as prescribed by relevant statutes.

 

  1. Strikes, riots and civil commotions clause: For inland transit not in conjunction with ocean voyage
  2. Risks covered in SRCC: Loss or damage to the subject-matter insured caused by –
  • Strike,
  • Locked-out workmen or persons taking part in labour disturbances,
  • Riots and
  • Civil commotions;
  • Any terrorist or any person acting from a political motive)
  1. Exclusions in SRCC
  • Loss, damage or expense proximately caused by delay or inherent vice of the subject-matter insured.
  • Loss, damage or expense proximately cause by the absence, shortage or withholding of labour during any strike, lock-out, labour disturbance or civil commotion.
  • Any claim for expenses arising from delay or other consequential or indirect loss of damage of any kind.
  1. In case of road transports, all Inland Transit Policies shall be subject to the warranty that the insurer’s liability shall be limited to 75 % of the assessed loss:
  2. Where the Consignment Note is issued by a Private Carrier (other than the vehicle belonging to the owner of the goods) or Freight Broker; or
  • Where the Consignment Note is issued limiting the liability of the carrier by special contract duly signed by the consignor, consignee or their duly authorised representative or agent.

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