A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, losses incident to the marine adventure.
21/09/2022
A marine adventure is where any ship, goods or other movables are exposed to maritime perils.
22/09/2022
Cargo is “goods or merchandise carried on board a ship, vehicle or aircraft.
23/09/2022
Marine Cargo Insurance Underwriting involves a decision to accept or reject a risk. And if accepted, the terms, conditions and rates that are applicable. Rating and Policy conditions depend on the risk profile.
24/09/2022
Maritime perils mean the perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seisures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like-kind or which may be designated by the policy
25/09/2022
Perils of the sea refer to only the fortuitous accidents or casualties of the seas. It does not include the ordinary action of wind and waves. The perils of the sea include stranding, collision, sinking, and extraordinary heavy weather.
26/09/2022
According to the Marine Insurance Act 1906, insurable property is any ship, goods or other moveables exposed to maritime perils. Goods mean goods like merchandise and do not include personal effects, provisions, or stores for use on board a ship. Deck cargo and living animals must be explicitly insured and not under the general denomination of goods.
27/09/2022
The underwriter needs to identify the cargo family to be insured to enable him to appreciate the hazard associated with the cargo and to give him an idea of the challenges involved in the transportation and insurance of the cargo. This will help in the choice of appropriate underwriting terms and conditions.
24/10/2022
Most Marine Insurance contracts are arranged on insured value or agreed value basis. The purpose of the valuation is to predetermine the worth of the insured item before the loss occurs.
28/09/2022
In marine insurance, the insured value removes all valuation complications at the time of loss.
29/09/2022
In fixing the insured value, the cost of transportation and anticipated profits are added to the original value so that in case of loss, the insured can recover the cost of goods or properties and a certain percentage of profit.
30/09/2022
Why do you need Marine Cargo Insurance? It does not make sense to ship goods, especially high-valued goods, without an insurance policy. One cannot fathom how a bank will lend money to a business to trade and will not insure its interest in the trade.
01/10/2022
Why do you need Marine Cargo Insurance? During a maritime adventure, there could be a General Average or salvage services that may be received. When these happen, the ship-owner and salvor will have a lien over the cargo. The ship-owner and salvor will exercise this lien unless the cargo owner provides security or guarantee, or they will insist on a cash deposit which could take a long time to recover. Marine Cargo Insurance may come to your rescue.
02/10/2022
The insurer is only liable for any loss proximately caused by a peril insured against. The insurer is not liable for any loss which is not proximately caused by a peril insured against
03/10/2022
A loss becomes a claim under a policy only when the cause of the loss is an Insured peril. The onus of proof that an Insured peril has caused the loss rests with the insured.
04/10/2022
On the principle that no man can profit by his wrongful act, the underwriters are not liable for any loss attributable to the willful misconduct of the assured.
05/10/2022
Losses caused by misconduct or negligence of the master or crew, however, do not release the underwriters of liability provided the proximate cause of the loss is an insured peril.
06/10/2022
General Average loss is caused by or directly consequent on a general average act.
07/10/2022
General Average Act is any extraordinary sacrifice or expenditure that is voluntarily and reasonably made or incurred in time of peril to preserve the property in danger or the common adventure.
08/10/2022
General Average complications may arise in the case of multiple ownership of contents in a container. The Carrier will only hand over the container when they receive deposits or General Average bonds from each owner or insurer.
09/10/2022
It makes sense to say that General Average and Salvage are two main reasons a cargo owner should insure his cargo. Besides General Average & Salvage, other maritime perils may cause damage to the shipment, which will be a financial loss to the cargo owner or any other party interested in the shipment.
10/10/2022
Who is Responsible for Insuring the Cargo? In an international sale involving an overseas seller or buyer, the question of who should arrange the marine cargo insurance depends on the terms of the sale. Incoterms 2020 enlists a set of terms that spell out the rights and obligations of the parties to a contract of sale. The incoterms include defining whose responsibility it is to arrange the marine insurance.
11/10/2022
Insurable Interest is important in Marine Cargo Insurance. One must have an Insurable interest at the time of loss to be indemnified. Taking a marine cargo insurance policy without reasonable expectation of acquiring an interest is gambling and is illegal. It would amount to the policy being void and unenforceable.
12/10/2022
An example of marine contracts that is effected with a reasonable expectation of acquiring an interest is the importation of goods by sea and inland waterways on the Incoterms Free Along Side Ship (FAS); Free On Board (FOB); Cost And Freight (CFR), Cost, Insurance, and Freight (CIF).
13/10/2022
For goods purchased under commercial terms FAS, the risk of damage or loss passes onto the consignee only when goods have been delivered alongside the ship. However, the consignee has contingent interest and can lawfully purchase insurance for the goods when they leave the warehouse.
14/10/2022
For goods purchased under FOB and CFR, the risk passes onto the consignee when goods are loaded onboard a vessel.
15/10/2022
With CFR and CIF sales, there could be double insurance where both the buyer and seller insure the same loss. Usually, the seller’s insurance would be on the minimum coverage, so the buyer would need a more comprehensive cover.
16/10/2022
In Ghana, it is a legal requirement to insure all imports other than personal effects with a local insurer.
17/10/2022
Marine Cargo insurance enjoys a considerable amount of contract freedom, but some countries have restrictive measures. One can visit the website of the International Union of Marine Insurance (IUMI) to find out details of the restrictive measures followed in some countries.
18/10/2022
In some of these countries (Ref. Lesson 29), restrictive measures are not strictly applied, or a dispensation can be obtained. It sometimes happens that importers can instruct their overseas suppliers to arrange insurance even though the measures appear to prevent this. When such enquiries are received from a seller, it should be pointed out to them by the insurer that restrictions exist and that they should obtain confirmation from the buyer in this regard.
19/10/2022
- Restrictive Legislation of a country can be any one of or a combination of the following:
- Prohibited for the seller to insure exports abroad
- Prohibited for the buyer to insure imports abroad
- Prohibited for the seller to export on FOB Basis
- Prohibited for the buyer to import on FOB Basis
- Special Taxes, extra charges
- Currency Restrictions
20/10/2022
One interesting problem that could arise is that both the exporting and the importing countries might have similar restrictive Legislation. The exporting country does not allow FOB sales, and the importing country does not permit imports on a CIF basis. Perhaps the only solution is for the seller and the buyer to obtain their local insurance.
21/10/2022
Sanctions Clause – Some insurers follow the American market’s lead on sanctions as and when imposed. Many open covers contain the following clause or a similar clause in respect of UN sanctions if any).
22/10/2022
According to William Packard, cargo can be grouped into various families. They include:
- Grain
- Agriculture
- Timber
- Coal
- Fertiliser
- Cement
- Ferrous Ore
- Minerals
- Metals
- Chemicals
- Reefer
- Livestock & Animal Products
- Liquid & gas
- Dangerous goods
23/10/2022
The underwriter needs to identify the cargo family to be insured to enable him to appreciate the hazard associated with the cargo and to give him an idea of the challenges involved in the transportation and insurance of the cargo. This will help in the choice of appropriate underwriting terms and conditions.
24/10/2022
You may apply different rating to different cargoes depending on how you perceive the risk, for example, different rates may apply to frozen foods and bagged commodities.
25/10/2022
The Underwriter should consider the voyage, whether long or relatively short, the possibility of transhipment, especially from the Far East to Europe or Africa; transhipment must attract an additional premium, the possibility of pirate operations, especially in the Gulf of Guinea, Horn of Africa and the Straights of Malacca and Java, port safety especially along the West Coast of Africa; Ghana and Nigeria in particular, the possibility of ice and fog in certain oceans at certain times of the year, the class and age of the vessel.
26/10/2022
The Underwriter should apply the appropriate wording, especially the use of “Warranties”, Cargo policy must be “Warranted Professionally packed” Pipes and rods could be subject to the “Cutting Clause.”
27/10/2022
The underwriter may discriminate in granting Institute Cargo Clauses {A}. Certain cargoes must be insured under ICC{C}; these include: Second-hand cargo, for example, used cars and machinery, Personal effects of various descriptions, Bulk cargo excluding bulk oil. The underwriter must also use the corresponding trade clauses for the various commodities, for example, Cocoa, coffee, shea nuts, fats and oils. Items in pairs must be subject to “ Pairs and Set Clauses. All machinery must be subject to “ the Institute Replacement clause”, and All metallic cargo must be subject to ROD & COR exclusion.
28/10/2022
A single transit or voyage policy is a one-off transaction covering a single voyage. A policy document is issued, and all the applicable clauses must be attached.
29/10/2022
The floating policy is a master policy covering a large consignment that must be shipped in stages or when needed. The proposer declares the total estimated insurable value to underwriters. The policy covers the whole consignment and its estimated total insurable value.
30/10/2022
A marine open cover is an arrangement or an automatic facility to insure all the shipments of an assured if they fall within the scope of predefined parameters contained in the open cover. Open covers can either be annual contracts or designed as always open’ or a permanent cover until cancelled.
31/10/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022
All shipments which come within the scope of the open cover terms and conditions are insured automatically. An inadvertent omission to declare a shipment does not prejudice the assured so long as such an omission is ratified as soon as it comes to their knowledge. The coverage starts at the same time the risk commences. Advance information regarding premium rates makes negotiating price and budgeting easier for the assured.
1/11/2022