PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-6 | Types of Covers

PARA 13.2|IC 67, Marine Insurance One Liner|Chapter-6 | Types of Covers Part 1

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 6 “Types of cover ” 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.


  1. Specific policies cover specific transits only, on case to case basis and, as many policies are taken for as many dispatches
  2. As per Indian market practice the cover is to be arranged before commencement of transit; so the policy is to be taken in advance.
  3. In Specific policies the rates, terms and conditions are also not fixed; in fact, they will vary with market conditions, seasons etc., and till insurance is arranged, there is no certainty that the cover will be granted.
  4. an open cover is issued to provide automatic and continuous insurance protection to a regular exporter/importer engaged in international trade.
  5. Open cover is an agreement, whereby the insurer undertakes to insure all shipments declared by the assured, which come within the scope of the open cover.
  6. An open cover is not a policy and is, therefore, not stamped.
  7. Premium is payable on each declaration, against which specific stamped certificate/policy is issued covering the shipment declared.
  8. There is no sum insured in an open cover
  9. Limit per bottom: Meaning, limit of aggregate value of shipments/consignments per vessel or other conveyance at any one time, as per the requirements of the assured.
  10. 10. Limit per location: The Location Clause seeks to limit the value of pre-shipment accumulation which may happen, say, because of strikes or labour disturbances in the port area. Such accumulation of cargo in a particular location may create for the insurers, a catastrophic exposure in the event of, say, a conflagration at the docks or a hurricane, widespread riots, etc.
  11. an open cover is a convenient arrangement for clients engaged in substantial international trade and having considerable turnover
  12. The advantages of an open cover:
  • As the agreement is automatic and continuous, the insured is not exposed to the risk of any shipment remaining uninsured due to oversight, inadvertent omission or delayed receipt of shipment advices from abroad.
  • The necessity of buying specific policies for each individual shipment is obviated, resulting in savings in administrative costs both for insurers and their clients.
  • The premium rates are agreed at inception and this assists the insured in identifying his costs of insurance right at the outset, which he could include in his total costs for the goods under CIF contracts.
  1. Salient conditions of an open cover:

Following are some of the salient conditions that appear in an Open cover:

13.1. Basis of valuation: The basis of valuation is the prime cost of the goods plus expenses of shipping; freight, for which the assured is liable and cost of insurance, plus 10 percent

13.2 Loss prior to declaration and/or shipment: In the event of loss or damage prior to declaration and/or shipment on board the vessel, the basis of valuation shall be the prime cost of the goods plus charges actually incurred and for which the assured is liable.

13.3 Declaration

  • The assured is bound to declare each and every shipment individually or in batches and obtain a Certificate of Insurance from the insurer, as required, either for individual shipments or for groups of shipments.
  • The Certificates/Policies issued against declarations will bear stamp duty and show appropriate premium.
  • Unintentional failure to report shipments will not void the open cover and such shipments will be held covered.
  • 13.4 Inspection of records: The insurer has the right at any time during business hours to inspect the records of the assured as respect shipments coming within the terms of the open cover.

13.5. Under-deck warranty: “Warranted shipped under-deck. On-deck shipments held covered at rates and terms to be agreed upon”.

13.6Cancellation: Open cover may be cancelled by either party giving 30 days’ notice in writing for marine risk, provided the risk has not already attached. War and Strikes risks, are usually subject to 48 hours’ notice of cancellation.

13.7 Closing particulars: To be declared to the underwriter immediately upon receipt of shipping documents.

  1. An Open Policy is also known as a Floating Policy.
  2. Clients having substantial turnover and a large number of dispatches can obtain continuous insurance cover under an Open Policy.
  3. An Open Policy is issued, duly stamped, for an amount representing the insured’s estimated annual turnover in respect of a series of consignments which may be declared against the open policy, with the result that the Sum Insured will gradually diminish by the amount of each declaration until the total Sum Insured under the Open Policy is finally exhausted.
  4. If the assured desires, unstamped Certificates may be issued against each declaration showing the values in respect of each dispatch and the balance of the Sum Insured remaining under the Open Policy
  5. Features of open policies
  • 1 The cover under an Open Policy ceases on expiry of one year from the date of its issue, or, exhaustion of the total sum insured prior to the expiry of the Open Policy period of 12 months, whichever first occurs. If the sum insured is likely to be exhausted prior to the expiry of the Open Policy period of 12 months, it may be increased by issuing an endorsement and charging appropriate extra premium.
  • 2 An Open Policy is usually issued for insurance of goods dispatched within the country by rail/road/air freight/registered post parcels.
  • 3 It is issued on the standard form of the policy subject to applicable rates and clauses.
  • 4 Premium is worked out and charged on the total sum insured.
  1. Basis of valuation in open policy: Invoice cost of goods, the freight for which the insured is liable, and the cost of insurance, plus 10%.
  2. Inspection of records: The insurer will have the right at any time during business hours to inspect the insured’s records of dispatches made within the terms of the Open Policy.
  3. Per conveyance limit in open policy: Warranted that the limit of insurer’s liability in respect of any one accident or series of accidents arising from the same event shall not exceed a specified sum, any one rail/road/air/postal dispatch transit, as applicable.
  4. Location limit in open policy: Underwriter’s liability in respect of any one accident or series of accidents from the same event in any one location shall not exceed a specified sum
  5. Declarations in open policy: It is a condition of this insurance that the assured is bound to declare each and every dispatch coming under the scope of the Open Policy within 24 hours (or as may be agreed) from the time of issue of the RR/LR/Airway Bill/Registered postal receipt, as applicable.
  6. Where a declaration of value is not made until after notice of loss or arrival, the policy must be treated as an unvalued policy as regards the subject matter of that declaration (i.e. the prime cost of the goods plus charges actually incurred and for which the assured is liable).
  7. Freight contingency insurance: When freight is on ‘to pay’ basis, invoice will not contain freight charges and accordingly it is not insured with cargo value.
  8. For some bulk cargoes like timber, freight is payable only when earned (cargo reaches) on arrival
  9. Freight may be insured separately under this policy, but the cover attaches only on cargo discharged i.e. when the freight becomes payable
  10. Total loss is not covered in Freight contingency insurance
  11. Institute Cargo Clauses A, B and C exclude loss, damage and expenses due to War and Strikes from scope of the cover. (Freight contingency insurance)
  12. When War and Strikes cover are taken as “Add Ons” Institute War Clauses and Institute Strikes Clauses are attached to the Policy. (Freight contingency insurance)
  13. War & Strikes Clauses cover only loss or damage to the cargo because of War and Strikes perils. They do not cover expenses arising out of War or Strikes etc. (Freight contingency insurance)
  14. In the event of port strike or war, nearby ship may have to be diverted or voyage may be terminated- extra expenses will then be incurred by the insured for onward carriage of cargo. (Freight contingency insurance)
  15. Special features of Freight contingency insurance
  • Cover is granted on annual basis.
  • Policy contains Non-cancellation Clause, i.e. once the cover is taken, it cannot be cancelled by the insured.
  • All shipments covered- no selection.
  • No standard clauses are there for the cover
  • Generally there is 20% cap on liability (of value of goods).
  1. Increased Value insurance features:
  • 1 The policy is taken mainly for commodity trade where sales on high seas is very common.
  • 2 When during the voyage, the high seas sales take place and with successive sales, if the price of the commodity increases, the purchaser takes policy for difference in the value i.e. his purchase price and the amount of insurance policy assigned to him.
  • 3 In case of loss or damage, the final buyer will claim under all assigned policies and policy taken by him independently, if any.
  • 4 In case of over insurance, contribution condition applies.
  1. Buyer’s contingency insurance: The policy is reverse of Sellers’ Contingency Interest Insurance
  2. Buyer’s contingency insurance: The cover is available for imports on CIF, CIP (Carriage and Insurance Paid to) or other similar terms of purchase. When the loss is not covered under the Seller’s Policy, which is assigned to the buyer, this policy pays subject to its terms
  3. Pre-shipment losses (concealed damages) which are not known at the time of shipment but are subsequently proved to have happened before shipment, are also covered.
  4. There are some important conditions for Buyer’s contingency insurance:
  • Existence of insurance not to be disclosed to seller or other parties. This will not be deemed to be double insurance.
  • Immediate notice of cover becoming effective.
  • Subrogation against seller and third parties
  1. Marine (advanced) loss of profits insurance policy is to be issued in conjunction with project insurance policy. The policy covers Loss of Profits arising out of operation of insured peril, delay in the project giving rise to loss of profits.
  2. Marine (advanced) loss of profits insurance policy basically covers delay in transit due to:
  • Loss/ damage to cargo
  • Loss/ mechanical breakdown/ damage to carrying vessel/ aircraft/ its machinery.
  • Loss/ mechanical breakdown of any conveyance in which insured property is being carried, conveyance involved in general average (GA) or salvage charges (SC) or life-saving operations.
  1. Marine (advanced) loss of profits insurance features and exclusions
Features Exclusions
i. There is no time limit anywhere and the cover is available upto property reaching final site.

ii. Time excess of 30 days.

iii. Indemnity for loss of profits. Cargo and other losses are not covered.

iv. Only one claim per project. All delays are to be combined, non-insured delays are excluded, and from that figure, excess of 30 days is excluded

and the loss of profits for the balance days is paid.



i. Loss / damage to property.

ii. Delay because of unreasonable withholding of guarantee


  1. Sales turnover insurance : an open policy but without any obligation on part of insured to make periodic declarations and pay the premium on value of goods in transit.
  2. Sales turnover insurance : In this policy there is no need to make periodic declarations as Full Annual Sales Turnover (or projected turnover) is covered for which the premium is paid in advance.
  3. Sales turnover insurance Policy can cover imports, exports, inland transits, inter-depot transfers, incidental storages and depending upon the need of client it may cover other Clauses like Seller’s interest etc.
  4. Multi transit policy: Multi Transit Policy is to be issued, which can cover transit+ storage/ process + transit under the same policy without any break in cover. This policy can cover processing also.
  5. Multi transit policy: Basic rate for transit +50% (multi transit) + 0.01% per week or part thereof (Storage) / 0.03% for per week or part thereof (process).
  6. Stocks throughput insurance policy: The policy covers goods against physical loss or damage while in Insured’s control anywhere in the global supply chain, in transit, in storage as company owned inventory.
  7. Stocks throughput insurance policy: The policy combines traditional marine insurance and Fire & Allied perils insurance
  8. Stocks throughput insurance policy: The policy covers from the time raw materials are in transit upto delivery of final goods to the buyer’s place, including all incidental and non-incidental storages.
  9. Annual Policy (AP), the period of which is 12 months, is issued to cover goods belonging to the assured or held in trust by the assured, not under contract of sale or purchase, which are in transit by rail or road from specified depots/processing units to other specified depots/processing units.
  10. Annual policy: is not assignable or transferable
  11. Annual policy: are subject to appropriate Inland Transit (Rail or Road Risk) covers and clauses
  12. Annual policy: The depots from which the transit commences and at which the transit ends are owned or hired by the assured
  13. Annual policy: The Sum Insured represents maximum value of goods on risk at any one time during the policy period and remains constant in the event of no claim.
  14. Annual policy: The annual Policy shall be subject to a condition of average stipulating that if at the time of any loss/damage, the total value of goods in transit is more than the sum insured in respect of that specified transit, the assured shall be considered as being his own insurer for the difference, and shall bear a rateable proportion of the loss accordingly.
  15. Annual policy: Minimum rate of premium for the basic cover shall be 30 times the single journey rates
  16. Annual policy: Minimum premium for an Annual Policy is Rs.5,000
  17. Annual policy: Total liability of the insurer during the policy period shall not exceed twice the sum insured stated in the Annual Policy
  18. Basis of Valuation in Annual Policy: Prime cost plus expenses incidental to transit and charges of insurance.
  19. Duty and I.V. Insurances: Cover may be granted only in respect of goods imported in India.
  20. Duty and I.V. Insurances : The insurance shall be granted only if there exists insurance on CIF value of cargo itself and against the same risks as the basic cargo insurance.
  21. Duty and I.V. Insurances : The insurance should be granted only to the party in whose favour the import licence has been issued or officially endorsed.
  22. No insurance on “Duty” or “Increased Value” shall be granted after arrival of the carrying ship at the destination port
  23. Duty and I.V. Insurances : These policies are not assignable
  24. No claim shall be paid for Duty and Increased Value Insurances unless the claim under the CIF value insurance policy is payable and proof of liability for loss under that policy shall be furnished to the insurer.
  25. Duty insurance: This insurance is on increased value of cargo by reason of payment of customs duty at destination and is subject to the same clauses and conditions as the insurance on cargo and pays the same percentage of loss (excluding charges and expenses) as may be paid thereon
  26. Duty insurance excludes General Average, Salvage and/or Salvage Charges arising from any casualty occurring prior to Duty becoming payable
  27. Duty insurance: A “Duty” Policy is not a valued policy as defined in the Marine Insurance Act. Claims are payable on the basis of actual Duty paid or on the basis of the Sum Insured, whichever is less
  28. Duty insurance: The rate of premium for insurance of Duty shall be 75% of the rate charged (including 75% of the applicable extras and 75% of War and SRCC rates) for covering the CIF value of the cargo itself.
  29. Duty insurance: The assured should lodge a claim with the Customs Authorities within the stipulated time (6 months from the date of payment of Duty) for refund of Duty, where admissible, and with carriers or others as applicable, and any refund obtained should go to reduce the claim under the policy

Join Telegram Group: Click Link

Read More IC 67 Oneliners Chapter wise

Buy Online Mock Tests for GIPSA & Para 13.2 Exams


IC-01 Principles of Insurance Online Mock Tests Click Here
IC 92 Actuarial Aspects of Product Development Online Mock Tests Click Here
IC 86 Risk Management Online Mock Test Click Here
IC 85 Reinsurance Online Mock Tests Click Here
IC-90 HRM Online Mock Tests Click Here
IC-14 Regulation of Insurance Business Online Mock Tests Click Here
IC-11 Practice of General Insurance (Licentiate) Online Mock Tests Click Here
IC-57 FIRE Insurance Online Mock Test Click Here
IC-67 MARINE Insurance Online Mock Test Click Here
IC-78 MISCELLANEOUS Insurance Online Mock Test Click Here
IC-72 Motors Online Mock Tests Click Here
IC 02 Click Here
IC-26 Click here
IC-45 Very SOON
IC-22 Very SOON



Leave a Reply