Marine Cargo Insurance Claims Procedure

Marine Insurance Claim

A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the
Assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the
losses incidental to marine adventure. The purpose of cargo insurance is to indemnify the cargo
owner in the event of losses proximately caused by a peril insured against.

Processing of any claim involves examination/verification of the following:

1. An insured peril.

2. An uninsured peril.

3. An excluded peril.

The procedures and formalities to claim Marine Insurance from Insurance Company.

A.      Duty of the Insured / Consignee / Its Agent or Representative

In case of any loss or damage to the cargo, it is a duty of the Insured / Consignee / Its Agent or
Representative to take following procedures

1.    Do not give clear receipt on the delivery order but to give such notice of loss or damage
2.    In case of containerised cargo:
-      Check carefully condition of the containers if  it was damaged or holed.
-      Check carefully condition of its seal if numbers is matched with the document or if it was
damaged or cut.
-      If it was found damage, Give such notice of loss or damage on the delivery order.
3.    Immediately contact the carriers or its representative to do survey.
4.    Immediately contact THE INSURANCE COMPANY to do joint - survey.
5.    Immediately notify Police in case of traffic accident, theft or other malicious acts.
6.    Take photographs showing details of container, its seal and numbers, its floor, wall and roof
where it was damaged and condition of the cargo.
7.    Write claim to the carriers holding them responsible for loss or damage.

B.    Survey & Claim Reporting to THE INSURANCE COMPANY

Claim shall be reported immediately to THE INSURANCE COMPANY or Its survey agent in
order to have the damage inspected to conclude the cause of loss or damage. Claim reporting
shall not later than 7 days from the time loss or damage noticed.

It is a duty of the Insured to give THE INSURANCE COMPANY or Its survey agent an
opportunity to inspect the damage, vessel, interview with the master and crews and other related
parties.

C.      Documentation
Claim Form
Original Insurance Certificate / Policy
Original Bill of Lading
Invoice
Packing List
Delivery Order
Official damage / Survey Report
Letter of claim against the carriers and their reply
Estimated cost of repair
EIR (Equipment Interchange Receipt)
Ship accident report and complete of its document
Police report (in case of theft or traffic accident)
Picture of damage

D.      Salvage
1.     It is a duty of the Insured / Consignee / Its Agent or Representative to mitigate the loss and
secure the salvageable cargo safe, do not destroy or sell them without THE INSURANCE
COMPANY’s written approval.

2.     THE INSURANCE COMPANY for and on behalf of the Insured have a right to sell on
tender the salvageable cargo and invite some buyers to quote.
3.     The Insured or Consignee can participate on the above tender.
4.     Terms and condition of the tender and to choose the winner are absolute right of THE
INSURANCE COMPANY
5.     Value of salvage is to be paid to the Insured and is to be deducted from amount of claim
payable.

E.      General Average

In case of GA the Insured / Consignee / Its Agent or Representative is not authorized to sign
Average Guarantee or to pay cash deposit without THE INSURANCE COMPANY’s written
approval.

 Notice to Insurer

 Intimating insurance company about the loss or damage of goods is the first step to be taken by
the insured under claim of Marine Insurance. In the event of loss or damage to the goods, insured
or his agent has to give immediate notice to the insurance company.

 Reasonable Care

 In a marine Insurance, it is a condition of the policy that the insured and his agents should act as
if the goods are uninsured and should take all such measures and actions as may be reasonable
and necessary to minimize the loss or damage. They must also ensure that all the rights against
carriers, baileys or third parties are protected. So Reasonable care is one of the measures to be
taken in to consideration under the procedures of claiming Marine Insurance against loss or
damage of export import goods of international trade.

 Survey and Claim

 Survey and claim is the next step to be followed under procedures and formalities to claim
Marine Insurance under export and import goods. In a Marine Insurance, at the time of taking
delivery, if any package shows signs of outward damage, insured or his agents must call for a
detailed survey by the ship surveyors and lodge the monetary claim with the shipping company
for the loss or damage to the packages. A certified marine surveyor can be appointed at the
location where damaged cargo is available.

 Outward Condition

 When the outward condition of the packages is apparent, the insured takes delivery
unsuspectingly. After reaching warehouse, one opening the packages, they find damages to
goods. In such an event, the insured and or agent should immediately inform the insurance
company and call for the ship surveyor for detailed survey. They should not make any delivery
of goods. They should not disturb the packing materials or the contents in packages. This is
important in claiming Marine Insurance under export and import trade.

 Missing Packages

 In case any package is found missing, the insured must lodge the monetary claim with the
insurance company and its baileys (shipping company) and obtain a proper acknowledgement
from them. This is one of the formalities to claim Insurance under import export of international
trade.

 Time Limit

 In a Marine Insurance, the time limit for filing suit against the shipping companies is one year
from the date of discharge of goods, which may change as per the rules and regulations of
insurer.

 Documents Required

 The following documents are to be submitted by the insured to enable the insurance company to
settle the claims expeditiously :

1. Original insurance Policy or Certificate.

2. Copy of Billing Lading.

3. Survey report / Missing certificate.

4. Original Invoice and Packing List together with shipping specification or weight notes.
5. Copies of Correspondence exchanged with the carriers or bailees.

6. Claim Bill.

 Precautions

 While procuring insurance, exporter should observe the following precautions in claiming
Insurance under export import goods:

 (i) Amount of insurance is 110% of C.I.F value of goods. 10% covers anticipated profits. In
other words, exporter is allowed to take a policy to cover profits up to a maximum amount of
10% of CIF value.

(ii) Insurance documents is not later than the date of shipment.

(iii) Amount insured must be in the same currency invoice to take care of the exchange
fluctuations.

(iv) Insurance document is issued by the insurance company or its agents or underwriters. The
document issued by the brokers is not a good document.

There are three types of insurance documents:

(a) Insurance Policy: The insurance policy sets out all the terms and conditions of the contract
between the insurer and insured.

(b) Certificate of Insurance: It is an evidence of insurance but does not set out the terms and
conditions of insurance. It is also known as ‘Cover Note’.

(c) Insurance Broker’s Note: It indicates insurance has been made pending issuance of policy or
certificate. However, it is not considered to be evidence of contract of insurance.

WHEN AND WHY TO INSURE

Before shipment of goods, exporter has to insure to goods. Date of coverage in insurance policy
should always be earlier o the date of shipment of goods, then only insurance covers totally.
Banks insist the date of insurance to be earlier to the date of shipment of goods, at the time of
negotiation of documents. Any person who has ‘insurable interest’ in the goods only can insure.
Exporter is said to have interest in the safe arrival of goods. Equally, its loss, damage or
detention will prejudice exporter. When the cargo is sent on CIF basis, exporter invariably takes
marine insurance, as it is his duty to cover the risk. Till ownership in goods is transferred, in his
own interest, exporter has to take the coverage. There is no obligation to the exporter to take
insurance, after transfer of ownership. Still, it will be wise for the exporter to take adequate
insurance policy till the goods reach the end of voyage. Here are the reasons:

 (A) Importers insurance may be inadequate.

(B) In case of insolvency of the importer, claim amount may go to the benefit of the importers
creditors and exporter would not receive the payment.

(C) Foreign exchange problems could complicate the remittance of insurance claim amount to
the exporter.

HOW TO INSURE

There are two ways to insure. First, take insurance policy as and when shipment is made. Those
exporters, who make shipment now and then, do this. The second and common mode is to take
open policy. Under open policy, the exporter does not have to take insurance contract , every
time, as and when shipment is made. He pays insurance premium, in advance, one year. The
insurance company undertakes to indemnify the insured up to the amount of the policy.
Shipment of goods to the extent of the policy amount is covered. A brief declaration by the
exporter about the basic facts of shipment would do. A great volume in exports business prefers
this method for the following obvious advantages:

(a) Exporter enjoys automatic and continuous protection. Even if there is delay in declaration or
exporter has overlooked to submit declaration, the shipment is covered provided the delay and
oversight are not intentional.

(b) Trouble of taking insurance policy, each time, is avoided.

(c) Exporter will have prior knowledge of the premium amount and so exporter can quote
competitive rate for this exports.

(d) Better relationship between the exporter and insurance company will be developed, so better
advice would be available. As the insurance company understands the requirements in a better
way, the insurance company can develop tailor-made protection to the exporter.