Insuring Goods against Marine Risks :
In order to cover yourself against various risks while the goods are in transit, you should obtain a marine insurance policy. For banks extending finance to you this policy also works as a collateral security the cargo constituting the primary security.
Cargo can be got insured either by the seller or the buyer depending the type of sale contract. In case of CLF contract and in the absence of any specific advice from the buyer, you should arrange insurance of the c.i.f. value of the goods plus 5 to 10% towards incidental charges. Where the contract is C & F the responsibility of arranging insurance is on your buyer.
For C & I contract, you should arrange insurance.
For F.O.B. contract, the buyer is obliged to arrange insurance. As soon as you fix up the ship you
should advise the buyer immediately so that he could arrange for insurance before commencement of the risk (before the vessel sails).
In case of F.A.S., your obligation is to bring the goods at the shore of the side of the ship.
It is the responsibility of the buyer to arrange for shipment and insurance of the goods. The buyer should be properly and timely notified above movement of cargo so that risks can be insured.
You should obtain marine insurance policies from GIC or any of its four subsidiaries. You are not permitted to take marine insurance cover with insurance companies in foreign countries without prior permission.
Payment of premium on marine insurance policies can be made in your native currency on your furnishing a certificate (i) that insurance charges on shipment in question have to be borne by you in terms of the contract with the overseas buyer and that you are not making the payment on behalf of any non-resident or (ii) that you are defraying insurance charges on account of the overseas buyer of the goods and undertake to add the amount on the invoice and recover the payment so made from the buyer in an approved manner.
The different types of marine insurance policies can be divided into three broad groups
1. Individual Shipment Policy
2. Open Policy
3. Floating Policy
Individual shipment policy is taken for every individual shipment.
Under an open policy or open cover, you have the automatic protection for all shipments. Generally a maximum limit of cover is set for a shipment on any vessel. Under this cover you are duty bound to declare to the insurer all shipments. Big exporters prefer this method as it saves them the trouble of having to arrange for protection before shipment is made. It also enables their competitiveness by obtaining special premium rates.
Floating policy describes the insurance in general terms and leaves the name or names of the ship or ships and other particulars to be stated by subsequent declaration.
The risks covered in a marine insurance policy are represented by special clauses inserted for this purpose. These are Institute Cargo Clauses (C), Institute Cargo Clauses (B), Institute Cargo Clauses (A), Extraneous Perils, Trade Clauses War and SRCC Cover, etc.
It is important to note that marine insurance policies are freely assignable, the sum insured indicated in the policy is value agreed between the insured and the insurer and the duration of cover is subject to the transit clause of the respective policy.
The commonly used documents in marine insurance are Letter of Insurance, Broker's certificates, Insurance Certificate, Insurance Policy and Marine Insurance Declaration. The Marine Insurance Declaration and Marine Insurance Certificate are prepared in the Standardised Aligned Forms.
In case of any damage to cargo the insurance agency should be notified immediately. A surveyor is deputed by agency to assess the loss and on the basis of response of surveyor the damages are paid.
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