Marine Cargo Insurance is the insurance of property as it moves from place to place.
The demand for marine cargo insurance grew significantly in the 17th century, to meet the needs of merchants sending goods abroad. The requirements of modern businesses have moved on, with the movement of goods by sea, road, rail and air, however the class of insurance is still referred to as marine cargo.
The word ‘marine’ doesn’t restrict the means of transportation.
Scope of Cover
We can provide quotes for bespoke insurance policies covering some, or all, of the following:
- Goods in Transit
- Commercial or Domestic Goods
- Annual or Single Shipment Policies
- Imports / Exports
- Worldwide Transits
- Stock Throughput
Ownership and Insurable Interest
Goods are constantly on the move, both within a country and to and from more distant points, and the actual ownership of goods can vary during a transit. In the event of loss or damage in transit, an insurer would establish when a loss occurred; if there had been a change of ownership or interest; and whose interest was affected at the time of loss. There are international standards of trade that seek to clarify where responsibilities lies.
In addition to the owner and the recipient of the goods, other interested parties may insure, up to the extent of their own insurable interest (liabilities), e.g. shipping or forwarding agents.
The policy wordings used by marine insurers are identical across the market, with any variation being by endorsement.
For single shipment sendings, the policy will state the subject matter, sum insured, where the item is being sent and the mode of transport.
In the main, annual marine cargo policies, are arranged on an ‘Open Cover’ basis, and the cover arranged reflects the types of goods sent; the destinations; and a maximum value any one consignment. The scope of cover will be determined by the worldwide recognised ‘Institute Cargo Clauses’ that apply. Clause A is the most comprehensive cover, whereas Clauses B and C have restrictions, including exclusions in respect of loss by theft and from taking at sea.
Cover under a marine policy applies in respect of all sendings which commence within the period of insurance, even if the voyage is not completed until after the policy expiry date.
Following on from Institute Cargo Clauses are ‘Trade Clauses’, which are used to further tailor a policy to reflect the nature of goods being carried.
Implied warranties in marine insurance include the following:
- That the ship is seaworthy and reasonably fit to carry the goods to the destination.
- That the insured venture is a lawful one and carried out in a lawful manner
If during, or at the end of a voyage, goods will be stored (other than in the ordinary course of transit) then a marine policy can be endorsed to cover the storage risk.
Unless specifically excluded, a marine insurance policy is capable of ‘Assignment’. This means that whilst the sender of goods is the name assured in the insurance document, if ownership passes to the recipient, during the period of the voyage (owing to commercial arrangements between the two), then the benefits and rights under the policy are automatically transferred.
Terms of Sale
There are various different terms of sale that may apply, including:
CIF (Cost Insurance Freight)
Under this type of arrangement, the seller arranges insurance cover, which includes the sending costs.
Certificate of Insurance
The key document in marine cargo insurance is the certificate of insurance. This sets out; the name of assured; the conditions under which the goods are being carried; details of the goods themselves; permission to assign; and destination.
Insurance Premium Calculations
Premium rating for marine cargo insurance is usually based on a rate percent on the value of goods, determined by:
- The nature of the goods
- Theft attractiveness
- The attendant risk aspects (where they are going and mode of transport)
- Quality or style of packing
- Previous claims/loss experience
Policies tend to be either arranged on a deposit basis, adjustable at the year end, or by monthly declaration.