KMD. K.M. Dastur Reinsurance Brokers Pvt.Ltd. The only Insurance Brokers in India to be ISO 9001/2000 certified BY TUV Germany

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1 KMD K.M. Dastur Reinsurance Brokers Pvt.Ltd The only Insurance Brokers in India to be ISO 9001/2000 certified BY TUV Germany K.M. Dastur Reinsurance Brokers Pvt.Ltd, Cambata Building, 5 th Floor, 42,Jamsetji Tata Road, Churchgate, Mumbai

2 Presentation On Marine cargo Insurance

3 types of Marine cargo policies Specific Voyage policy Covers one single journey at a time Taken by one time senders Open Policy/Open Cover Undertaking to cover all shipments that will be made during the year Features Cargo & Voyage Per Bottom Limit 200% Accumulation Clause Basis of Valuation Terms and conditions Warranties (Strictly complied with) Classification Clause 1/1/2001 Declaration/Bordereaux Annual Turnover Policy This is no different from any open policy except rate of premium is charged only on the sales turnover Does not give a free cover for transits of raw materials Rate for each leg of transit or weighted average of various rates for each transit No need to make monthly declarations to insurers Saving in administrative costs

4 Insurable interest /sum insured Insurable Interest must exist at the time of Loss and need not to have when the policy was issued. Make good the loss can not make profit from the loss Indemnity Agreed Value basis Also called Valued policies Most Popular Basis of Valuation CIF + 10% Increased Value Assignment of Marine Certificates/Policies

5 Allocations of costs to buyer/seller -Incoterms 2010 Incoterm 2010 Export customs declaratio n Carriage to port of export Unloading of truck in port of export Loading on vessel in port of export Carriage (Sea/Air) to port of import Insurance Unloading in port of import Loading on truck in port of import Carriage to place of destination Import customs clearance Import taxes EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer CPT Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer CFR (CNF) Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer CIP Seller Seller Seller Seller Seller Seller Buyer/Sell er Buyer/Sell er Buyer Buyer Buyer DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller/Not including VAT/FAT

6 Institute Cargo Clauses ICC A ICC B ICC C All Risk Named perils Named perils

7 Comparison between the Institute cargo clauses (A), (B) & (C) Type of risks - Covered ( ) not covered ( ) A B C Loss / damage reasonably attributable to: 1. Fire or explosion 2. Vessel/Craft being stranded, grounded, sunk or capsized. 3. Overturning/derailment of land conveyance. 4. Collision or contact of vessel, craft or conveyance With any external object other then water. 5. Discharge of cargo at a port of distress 6. Earthquake, volcanic eruption, lightning 7. General average and salvage charges incurred to avoid loss from any cause except those excluded 8. General average sacrifice 9. Jettison 10. Washing overboard 11. Entry of sea, lake or river water into the vessel

8 Continued A B C 12. Rainwater damage 13. Total loss of any package lost overboard or dropped whilst loading or unloading from vessel or craft. 14. Piracy. 15. Deliberate damage or destruction by wrongful act of any person or persons, (i.e. by malicious acts) (Can be covered by malicious Damage Clause for I.C.C (B) and (C) upon payment or extra premium) 16. In the event of frustration of the voyage resulting from a risk covered, extra charges incurred in unloading, storing and forwarding to destination 17. Reasonable charges for averting or minimizing loss recoverable under this insurance and also those incurred, to pursue recovery rights against carriers, bailees or third parties

9 Continued A B C 18. Other or extraneous perils all involving a fortuity and from external causes, for example: Damage as a result of shifting in heavy weather Improper stowage Rough handling Breakage, leakage, denting Heating and sweating Rust Hook and sling damage Contact with mud, oils and acids, damage by other cargo Shortage, theft, pilferage, non-delivery Other loss/damage caused fortuitously and from external cause or causes 19. Liability under Both to blame collision

10 Institute cargo clauses A - Exclusions Wilful misconduct of assured Ordinary leakage, ordinary loss in weight, volume or ordinary wear and tear Insufficiency of packing/unsuitability of packing Loss/damage or expenses caused by inherent vice or nature of the subject matter insured Loss/damage or expenses proximately caused by Delay Loss/damage or expenses arising from insolvency or financial default of the owners managers charterers or operators of the vessel Nuclear etc. exclusion

11 Continued Unseaworthiness/unfitness of vessel craft conveyance container etc. Although the Underwriters are prepared to waive any breach of warranty where the insured is unaware that the vessel is unseaworthy or unfit to carry the goods, they are not prepared to cover loss arising from such unseaworthiness or unfitness of the vessel or craft if the assured is aware of such unseaworthiness or unfitness at the time the goods are loaded in the vessel or craft War Exclusion Strikes Exclusion

12 Additional clauses Accumulation Clause Paramount War Clause Termination of Transit Clause Claim Co-operation Clause

13 Accumulation Clause An accumulation of interest beyond the limits expressed in the contract By reason of any interruption of transit / temporary storage coverage prior to transit &/or any occurrence beyond the control of the Assured or By reason of any casualty &/or at a transshipping point &/or in a connecting vessel or conveyance, Then, the Underwriters shall be liable for the full amount at risk, but in no event shall they will be liable for more than twice the Contract Limit

14 PARTIAL LOSS (Particular Average) Marine cargo claims TOTAL LOSS GENERAL AVERAGE

15 General Average Where extraordinary sacrifices are made or expenses incurred at the time of peril for the benefit of the of common safety of the whole maritime adventure Intentional or Voluntary and not inevitable Adventure must be imperiled, sacrifice in anticipation not recognized Objective must be the preservation of adventure The most common types of Casualties giving rise to General Average &/or Salvage Services are: a) Jettison of Cargo b) Sacrifice of the Vessel s Equipment & Stores c) Damage to Ship &/or Cargo during operations to extinguish a Fire on board a ship

16 Procedure to follow in ga casualty Declaration of General Average Master of ship will usually be the first to be aware of a casualty giving rise to potential GA and will make declaration Shipowner will appoint Average Adjuster Average Adjuster determine which interest (Cargo/ship) will contribute to what extent in case of GA Adjuster will be responsible for collecting security and performing the adjustment Shipowners have a possessory lien over the cargo for GA GA Security Guarantee Consignee will have to sign an Average Bond which is basic contract between cargo owner and ship owner whereby the cargo owner agrees to pay GA contribution properly adjusted GA Guarantee different from GA Bond and guarantees the payment of GA contributions. The guarantee amount is determined by Average adjuster based on the estimate of GA. This will be expressed as a % of CIF value of cargo

17 Underwriting considerations Turnover Claim Experience Vessel Selection Per Bottom Limit/Per Location Limit Underwriting Considerations Description of Goods Any other relevant information Voyage Details

18 Frequently asked questions 1. We always imports goods on CIF basis. Do we still require some form of marine cargo insurance? 2. Are Storage risks covered under a standard marine policy? 3. Are the 60 days mentioned in the duration clause of ICC A, B and C automatically available? 4. Are theft, pilferage and non delivery (TPND) covered? 5. What is warranty and how does a breach of warranty impact claim?

19 Shipping Documentation Required:- 1. Original Bill of Lading 2. Charter Party Agreement Claims Documentation 3. Shipping Invoice & Sales Contract including specification evidencing terms of sale & thereby title of ownership & insurable interest 4. If purchased & then sold, copy of purchase invoice evidencing the terms of purchase & change of ownership 5. Copy of claim on ship-owners &/or charterers &/or Third Parties 6. Insurance Certificate or Insurance Declaration 7. Statement of Claim 8. Load Port & Discharge Port Quality & Quantity Survey, which should contain the following:- Independent Load Port Survey Independent Discharge Port Survey

20 Guidance Notes In Case of Shortage:- Assured should immediately notify their Insurer as soon as they become aware of a Loss Checks should be made that vessel has discharged all liquid cargo & had performed discharge operations satisfactorily. If not protest should be lodged If possible Assured to obtain Letter of Guarantee from Ship-owner or their P&I Club covering the shortage & assist in protecting recovery rights against ship-owners

21 Guidance Notes In Case of Contamination Assured should immediately notify their Insurers so that Surveyor can be appointed. If need be even a hydrocarbon analyst All Samples to be kept for an Indefinite Period & action to be taken against ship-owners / P&I Clubs to obtain guarantees Source of Contamination should be found out as quickly as possible & immediate action should be taken Suppliers should also be informed & invited to attend any re-testing in case contamination or specification failure is due to a pre-shipment condition. In such circumstances, any claim would then normally be for the account of Suppliers rather than Insurers

22

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