MARINE CARGO

INSURANCE
 Cargo
 Anything that is transported from one place to
another is called CARGO
 If it moves on its own it is not cargo. e.g. Car
being sent on truck, railways, ships, aircraft
will be cargo and can be covered under marine
policy.

 As long as Cargo is in Transit – Subject Matter

of Marine Insurance
 Scope of cargo insurance
 Ocean marine cargo insurance
 Overland transportation cargo insurance
 Air transportation cargo insurance
 Parcel post insurance
 1. Ocean marine cargo insurance
 1) risk
 Perils of the sea 海上风险 /海难
 a. Natural calamities: 自然灾害 Caused by
the forces resulting from the changes of nature,
e.g. vile weather, thunder, lightning, tsunami,
earthquake, flood, etc.

 b. Fortuitous accidents: 意外事故 The

accidents resulting from unexpected causes, the
carrying conveyance being grounded, stranded, or
in collision with floating ice or other objects, as
well as fire or explosion.
 Extraneous risks 外来风险
 a.General extraneous risks （一般外来风险） :
theft, shortage, leakage, dashed by fresh and rain
water, sweating and heating, intermixture and
contamination, taint of odor, hook damage, breakage
of packing, rusting, etc.
 b.Special extraneous risks （特殊外来风险） :

on deck, war, strikes, failure of delivery, rejection, etc.

 2. Ocean losses and expenses
 Total loss 全部损失
 It is classified into 2 kinds:
 Actual Total Loss: 实际全损
 The insured subject matter is totally and irretrievably
lost.
 Constructive Total Loss: 推定全损
 It is estimated that the actual total loss of cargo is
inevitable or the cost of salvage or recovery could have
exceed the value of the cargo.
 Partial loss 部分损失
 General Average: 共同海损
 It refers to a certain special sacrifice and extra expense
intentionally incurred for the general interests of the ship
owner, the insurer, and the owners of the various cargoes
abroad the ship.
 Particular Average: 单独海损
 It means that a particular cargo is damaged by any cause
and the degree of the damage does not reach a total loss, i.e.,
only a partial loss, which shall be borne by the owner of this
individual consignment.
 Expenses
Sue and labor charges: 施救费用
 The reasonable expenses to save, protect, or
reduce the loss by insured and the policy beneficiary.
It shall be covered by the insurer.
Salvage charges: 救助费用
 The expenses of the third party to save the cargo and
the ship successfully.
 According to the relative laws, the insurer shall pay to
the salver. But there is a principle, i.e., “no cure-no
pay”.
 Institute Cargo Clauses

 Sets of terms for marine cargo insurance policies

internationally recognized and voluntarily
adopted in 140 countries
 Latest 2009 version by Lloyd’s Market Assn. and
International Underwriting Assn. of London
 QTC in Vietnam by Ministry of Finance

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 Terms and coverage of ocean marine
cargo insurance in Vietnam
 Basic coverage and terms
 Basic risks 三大基本险别： ICC 1963-
QTC 1965
 There 3 conditions:
 F.P.A.
 Free from Particular Average ( 平安险 )
 W.A. or W.P.A
 With Average, With Particular Average （水渍
险）
 All risks ( 一切险 )
 ICC 1963/QTC1965
 MAIN CLAUSES

F.P.A.
W.A. All
Free from
Particular Risks
Average With
Average
Include
F.P.A.
and W.A.
 FPA ICC 1963/QTC 1965
8 circumstances:
(1) Actual total loss or constructive total loss from natural
calamity, i.e. vile weather, bore, earthquake, flood…
The Insured must authorize the insurer if it is the
constructive total loss.
(2) Total loss or partial loss caused by fortuitous accidents,
i.e. stranded, collision with floating ice or other
objects, fire or explosion……
(3) Partial loss caused from natural calamity again before
and after fortuitous accidents
(4) Total or partial loss of one or several pieces of cargo
dropping into the sea when shipment or transshipment.
(5) Reasonable expenses to save, protect, or reduce the loss by
insured, but no more than the insured value.
(6) Special expenses of unloading, storage and shipping in
harborage after ship getting perils of the sea.
(7) The sacrifice, sharing and the charges of general average.
(8) If the term of “collision with ships” is involved in transport
contract, the owners of the cargoes should compensate the loss
of the ship’s owner.
 W.A. or W.P.A. ( 水渍险 )
ICC 1963/QTC1965

 It covers partial loss due to vile weather,

lightning, tsunami, earthquake and/or
flood as well as the risks covered under
F.P.A. condition as mentioned above.
 All risks ( 一切险 )
ICC 1963/QTC1965
 Aside from the risks covered under the F.P.A.
and W.A. conditions as above, it also covers
all risks of losses or damage to the insured
goods whether partial or total, arising from
external causes in the course of transit
(extraneous risks) .
 TRANSIT CLAUSE-ICC
1963/QTC1965
W / W Clause “ 仓至仓”条款
Warehouse to warehouse clause:
From the warehouse in departure to the final
warehouse in destination or 60 days after
unloading whichever shall first occur.
 W.P.A.(W.A.) = F.P.A. + Particular Average
caused by natural calamity

 All Risks = W.P.A. + General Additional

Risks
 Additional risks 附加险
This kind of risk can’t be covered
independently; they shall be
underwritten depending on one kind of
the basic risks.

General additional risks 一般附加险

1. Clash & breakage / 碰损破碎险
2. Taint of odor / 串味险
3. Fresh water &/or rain damage / 淡水雨林险
4. T.P.N.D. Theft, pilferage and non-delivery / 偷窃、提货不
着险
5. Shortage / 短量险
6. Leakage / 滲漏险
7. Intermixture & contamination / 混杂玷污险
8. Hook damage / 钩损险
9. Sweat and heating / 受潮受热险
10. Rust / 锈损险
11. Breakage of packing / 包装破碎险
Special additional risks 特殊附加险
1. War risks / 战争险 direct loss & general average of it; only
on board of ship or lighter, but not for loss of atom bomb.
2. Strike risks / 罢工险 direct loss & general average of it
3. Aflatoxin / 黄曲霉素险
4. Failure to deliver / 交货不到险 no after 6 months
5. On deck / 舱面险
6. Import duty / 进口关税险 total duty for damaged goods.
7. Rejection / 拒收险 rejected by importing government
8. F.R.E.C. Fire risk extension clause / 港澳存仓火险
险扩展条款
The newly revised London Insurance Institute Cargo
Clauses (I.C.C) include 6 kinds:

I.C.C.(B)
I.C.C.(C)
I.C.C.(A)
Malicious
Damage
Clause
Institute
War Clause Institute
Strikes Clause

The commencement and termination of I.C.C. follows the customary “W/W”

clause too.
 ICC 1982/QTC1990
 Inland Transit – By Rail/Road  Overseas Transit – By Sea
 ITC (A) All risk,  ICC (A) All risk,
named exclusions named
exclusions
 ITC (B) Basic cover,
 ICC (B) Named perils,
named exclusions
named exclusions
 ITC (C) Fire only,
 ICC (C) Basic maritime
named exclusions

perils, named
exclusions
 Risk Covered - Inland
 ITC-A: All Risk of loss or damage
 ITC-B: Physical loss or damage caused by
Fire, Lightning, Breakage of
Bridges, Collision, derailment or
accident
 ITC-C Physical loss or damage caused by
Fire & Lightning
 Duration of Coverage
As soon as the consignments leaves the seller’s
premises, continues during ordinary course of transit
and terminates either:-
 On delivery to consignee’s warehouse at destination
named in the policy, or
 In case of rail only or rail/road, until expiry of 7 days
after arrival of railway wagon at destination station or
 In case of road only, until expiry of 7 days after
arrival of vehicle at the destination town
Whichever shall first occur.
 Marine Cargo Insurance
Coverage
Three Levels of Coverage
 Institute Cargo Clauses (A):
 Similar to former AR (All Risks) coverage
 Institute Cargo Clauses (B):
 Similar to former WA (With Average)
coverage
 Institute Cargo Clauses (C):
 Similar to former FPA (Free of Particular
Average)
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 Institute Cargo Clauses (A)

 Covers all risks of loss of or damage to insured cargo

except as excluded by
 General Exclusion Clause
 Unseaworthiness & Unfitness Exclusion Clause
 War Exclusion Clause
 Strikes Exclusion Clause
 Broadest coverage: Loss or damage from any external
cause
 Similar to former AR (All Risks) coverage

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 Institute Cargo Clauses (A)
 General Exclusion Clause
 Willful misconduct of the assured
 Ordinary leakage, loss, wear & tear
 Insufficiency or unsuitability of packing or preparation
of insured cargo
 Inherent vice or nature
 Delay
 Insolvency or financial default of owners or operators
of vessel
 Weapon or device employing atomic or nuclear fission
and/or fusion or radioactive force

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 Institute Cargo Clauses (A)

 Unseaworthiness & Unfitness Exclusion Clause

 Unseaworthiness or unfitness of vessel or craft: If the
assured are privy to unseaworthiness or unfitness at the
time the insured cargo is loaded

 Unfitness of container or conveyance: If the assured are

privy to unfitness at the time of loading

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 Institute Cargo Clauses (A)

 War Exclusion Clause

 War, civil war, revolution, rebellion, insurrection, or
civil strife
 Capture, seizure, arrest, restraint or detainment but
piracy is excepted, that is, covered
 Derelict mines, torpedoes, bombs or any derelict
weapons of war

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 Institute Cargo Clauses (A)

 Strikes Exclusion Clause

 Caused by strikers, locked-out workmen, participants
in labor disturbances, riots or civil commotions
 Resulting from strikes, lock-outs, labor disturbances,
riots or civil commotion
 Caused by any act of terrorism
 Caused by any person acting from political, ideological
or religious motive

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 Institute Cargo Clauses (B)

 Loss or damage reasonably attributable to

 Fire or explosion
 Vessel or craft being stranded, grounded, sunk or capsized
 Overturning or derailment of land conveyance
 Collision or contact with any external object except water
 Discharge of cargo at port of distress
 Earthquake, volcanic eruption or lightning

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 Institute Cargo Clauses (B)

 Loss or damage caused by

 General average sacrifice
 Jettison or washing overboard
 Entry of sea, lake or river water into vessel, craft, hold,
conveyance, container or place of storage

 Total loss of any package overboard or dropped

during loading or unloading

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 Institute Cargo Clauses (B)
 General Exclusion Clause
 General Exclusion Clause Items 1 to 7 of Institute
Cargo Clause (A)
 8. Deliberate damage or deliberate destruction of
insured cargo by wrongful act of any person (s)
 War Exclusion Clause
 All exclusions of War Exclusion Clause of Institute
Cargo Clauses (A) including Piracy
 Piracy is covered Institute Cargo Clauses (A) but not
under (B)
 Strikes Exclusion Clause
 The same as those of Institute Cargo Clauses (A)

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 Institute Cargo Clauses (C)

 Loss or damage reasonable attributable to

 Fire or explosion
 Vessel or craft being stranded, grounded, sunk or capsized
 Overturning or derailment of land conveyance
 Collision or contact with any external object except water
 Discharge of cargo at port of distress
 Earthquake, volcanic eruption or lightning not covered
under Clauses (C)

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 Institute Cargo Clauses (C)

 Loss or damage caused by

 General average sacrifice

 Jettison or washing overboard

 Entry of sea, lake or river water into vessel, craft,

hold, conveyance, container or place of storage is
not covered under Clauses (C)

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 Institute Cargo Clauses (C)

 General Exclusion Clause

 Unseaworthiness and Unfitness Exclusion
Clause
 War Exclusion Clause
 Strikes Exclusion Clause
 The same as those of Institute Cargo Clauses (B)

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 Institute War Clauses (Cargo)

 Loss or damage caused by

 War, civil war, revolution, rebellion, insurrection, or
civil strife
 Capture, seizure, arrest, restraint or detainment
 Derelict mines, torpedoes, bombs or any derelict
weapons of war
 General Exclusion Clause
 Unseaworthiness and Unfitness Exclusion Clause
 The same as those of Institute Cargo Clauses (B)

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 Institute Strikes Clauses (Cargo)

 Loss or damage caused by

 Strikers, locked-out workmen, or persons taking part in
labor disturbances, riots or civil commotions
 Any terrorist or any person acting from a political motive
 General Exclusion Clause: Additional exclusions
 Loss, damage or expense from the absence, shortage or
withholding of labor
 Loss, damage or expense caused by war, civil war,
revolution, insurrection or civil strife

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 Rejection Clause
 Covers the rejection of the goods by the
Government of importing country
 Fresh fruits, vegitables
 Foods

 Any good which must pass inspections by

federal or state government

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 Express Warranties
 Exceptive warranties indicating causes
expressly excluded from the coverage
(a) FC & S (Free of Capture & Seizure) Warranty
 To cover, stamp word “DELETED” over the
exclusion clause and attach Institute War
Clauses (Cargo)
(b) FSR & CC (Free of Strike, Riot and Civil
Commotion) Warranty
 To cover, stamp word “DELETED” over the
exclusion clause and attach Institute Strikes
Clauses (Cargo)

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 Warranties, Express or Implied
 Implied Warranties
 Warranties which are understood to apply
even though not actually printed in the policy
 Seaworthiness: Not older than 20 years,
over 1,000 net registered tons and classified
A-1 Seaworthiness is admitted because
cargo owners have no control

 No deviation: Covered with Marine

Extension Clause

 Legality: Voyage and cargo must be legal.

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 Types of Policies
 Specific Voyage Policy
 Open Policy
 Open Cover
 Annual Turnover Policy
 Duty Insurance
 Seller’s Contingency Insurance
 Increased Value Insurance
 Amount of Insurance
 Minimum amount of insurance coverage: 110%
of CIF or CIP value
 Insures against loss of expected profit
 120% or 130% if both exporter and importer
agree
 How to make a CIF value from FOB/CFR value?

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 To Determine Insurance Amount

 Insurance amount is the highest amount of

indemnity or benefit of an insurance contract
and also the basis which the insurer calculates
the insurance premium.
The insurance amount under CIF trade term includes:
①Invoice value which is made up of 3 parts, i.e., cost of
the goods, amount of freight, insurance premium.
②Markup percentage which is usually 10 percent of the
CIF value.

 The formula used to calculate the insurance amount

under CIF trade terms is shown as follows:
Insurance amount
= CIF price× (1+markup percentage)
 Under FOB or CFR terms, in order to simplify procedures,
foreign trade enterprises usually sign open policies with the
insurance company in which an average freight rate and an
average insurance premium rate are stipulated. The formula
is as follows:
 If under FOB trade terms

Insurance amount
=FOB price× (1+average freight rate + average premium rate)
 If under CFR trade terms

Insurance amount
=CFR× (1+average premium rate)
 To Make an Application and Pay
Insurance Premium
 Fill in the application form, state all the description of
goods and coverage, pay the premium.

 Formula of Insurance Premium computation:

Premium=Insurance Amount × premium rate
Premium=CIF price × (1+markup percentage) ×premium rate
Premium=FOB price× (1+average premium rate + average
freight rate) ×average premium rate
Premium=CFR price× (1+average premium rate) × average
premium rate
To Obtain an Insurance Document

Insurance Policy

Insurance Certificate

Open Policy

Combined Certificate

Endorsement
 Insurance Documents

 Insurance date not later than shipment

date
 Same currency as that of the L/C

 Insurance policy
 Issued by insurer (insurance company)
 Insurance certificate
 Issued by assured (exporter) under its open
cargo policy with insurer

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Marine Insurance Policy & Letter
of Credit
 Banks will not accept an insurance policy
or certificate:
 Coverage date later than the shipment
date
 Currency different from L/C

 Coverage less than 110% of CIF or CIP

 Different coverage from L/C

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 Claim for loss and damage
 To send out a loss notice
 To lodge a claim against the carrier or other
responsible parties
 To take reasonable measures to salve and
recondition the damaged goods
 To get all claim documents ready
 Right of subrogation
 Claims for Loss or Damage
 Initiated by the importer or consignee
 Ocean B/L, Airway Bill, Post Office Receipt
 Original Marine Insurance Policy
 A copy of the claim filed against the carrier
 A copy of the shipper's invoice
 A copy of delivery receipt showing exceptions
 Confirmation of non-delivery from the carrier if
not delivered
 Customs entry report
 Survey report

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 Risk Covered
Perils ICC-B ICC-C
Fire & Explosion Yes Yes

Vessel or craft being stranded, Yes Yes

grounded, capsized or sunk

Overturning or derailment of land Yes Yes

conveyance
Collision or contact of vessel, craft or Yes Yes
conveyance with any external object
other than water
Entry of sea, lake or river water Yes No
 Risk Covered
Perils ICC-B ICC-C

Discharge of cargo at port of distress Yes Yes

Earthquake, Yes No
volcanic eruption or lightning

General Average Sacrifice Yes Yes

Jettison Yes Yes

Washing overboard Yes No

General Average & Salvage charges Yes Yes

 Exclusion
 Willful misconduct of the Insured
 Ordinary (inevitable) loss
 Improper packing
 Inherent vice
 Delay
 Insolvency/ financial default of carrier, manager, charters
or operator of vessel
 Deliberate damage/ destruction
 Nuclear weapons exclusion
 War and SRCC (Add On)
 Un-seaworthiness and unfitness of vessel / craft
 ICC-1982 & ICC-2009
Unseaworthiness & Unfitness Exclusion Exclusion applied if assured / his employees
Clause is privy or aware at time of loading. This
protects the innocent party.
War exclusion including piracy Piracy covered under ICC-A but not under
ICC-B & ICC-C
Loss damage or expenses due to financial This exclusion apply only when the party
default of the owners managers, charterers or claiming was unaware of the financial
operators of the vessel circumstances of the carrier
Terrorism excluded Still excluded but wider range of threats also
excluded (eg. State sponsored terrorism)
From time the goods leave the warehouse. From the time the subject matter insured is
Does not cover loading first moved in the warehouse…for purpose
of immediate loading”
Covers loading, but des not cover storage
prior to transit.
On delivery On completion of unloading
Insurance also terminates if the goods
remain in the carrying vehicle and the
assured / their employees elect to use it for
 INCO TERMS
 Deals with Risk
 Deals with Transfer of Risk
 Rights & Duties of Buyers & Sellers
 Deals with who organises the transport &
insurance
 INCO TERMS
Inco Terms Risk Transfer Exporter arranges insurance
ExW At seller’s premises after Exporter does not. Buyer to
loading arrange
FCA When delivered to carrier Upto delivery to Carrier
named
FAS When delivered alongside Upto Port till placed alongside
ship ship. Loading not covered
FOB When loaded on ocean going Upto loading on ocean Going
vessel Vessel. Loading Covered.
CFR When loaded on ocean going Upto loading on ocean Going
vessel Vessel. Loading Covered.
CIF When loaded on ocean going Till Delivery to buyer as per
vessel Contract of Carriage e.g.
destination port. Min. ICC-C
 Parties involved
 The seller (Consignor) and the buyer (Consignee)
 Bank
 The Insurance Company
 Port Authorities
 The Carrier (Ship, Air, Road, Rail)
 Custom Authorities
 Shipping Agents
 Clearing and Forwarding Agents (C & F Agents)
 Stevedores: Contractors appointed by Shipping
Company for loading and discharge of Cargo
One vessel (20mil) was transporting 200 container of
NamViet (seafood); 100 container of BTM (sofa) and 150
container of SamSung (electronic) in the sea. As the
storm came and blew away 20 container of NamViet; 10
container of Samsung, the Master decided to speed up the
vessel to navigate back to the port of destination. The
repair cost of engine at port of destination was
200,000USD. When they waited for the berth to discharge
cargo, 20 container of Samsung got fire. In order to
extinguish fire, the firemen pumped water (cost 20,000).
Master declared GA
Analyze this GA
Calculate the contribution (container of NamViet:
$20,000/cont; BTM: $30,000/cont; Samsung:
$40,000/c0n)
 . A company in Vietnam imported milk powder from
Australia with price of 200USD/MT CFR Cat Lai,
Incoterms 2010. The storm came suddenly during the trip
and 20% of cargo got wet as result of sea water. In order
to run faster to avoid the storm, the shipmaster decided to
throw cargo into the sea and speeded up the engine. Then,
he declared General Average. At the port of destination,
shipmaster asked shipper to pay bond for this G/A.
 1. Calculate this G/A and contribution of each party.
 More information: Insurance value of vessel is $2 mil.
Total cargo is 50,000 packages (50kg/p). Freight is
$28/MT FIO, to collect (I=O=S=T= 1USD/MT).
 Repair cost of engine is $80,000.Total cargo of jettison is
5,000 packages.
 10,000 MT of rice with insurance value of
$200.000USD, were insured with insurance
amount of $160,000. Partial loss of rice was
$100,000 by insurable risks. How much would
the insured be indemnified?
 a. 100,000USD b. 40.000USD
 c. 80,000USD d. 500USD
 A shipment of cargo by sea was insured with
insurance amount of $30,000. At the port of
destination, as waiting for the berth, the vessel
was anchored out of the port. At the time of
waiting, vessel was burned and all cargoes
were lost at actual total loss. How much will
the shipper be indemnified by the insurer?
 a. 33.000USD
 b. 30.000USD
 c. 30.000USD + firefighting cost
 d. No indemnity as waiting is an exclusion
 10,000 MT of rice with insurance value of
$500.000USD, were insured with insurance
amount of $250,000. Partial loss of rice was
$100,000 by insurable risks. How much would
the insured be indemnified?
 a. 125,000USD b. 100.000 USD
 c. 250,000USD d. 50,000 USD
A Malaysian Company imported 20,000MT from Vietnam, with price
of 350USD/MT FOB Cat Lai HCMC, Incoterms 2020. Rice was
packed with 100kg per package. At port of destination, some cargoes
were lost and damaged, survey report noted as follows:
-100 p were damaged because of fire

-150 p were lost during discharging at port of destination

-200 p were lost because carrier sold them to pay for fuel

-120 p were wet because of sea water entry

-200 p were lost because of broken packages, 50% loss

-50 p were wet because of rain damage

-100 p were got dirty because the hold of vessel was not clean.

1.Calculate the insurance amount and insurance premium (clause B

ICC 1982 with R= 1%; freight = 20USD/MT)
2.Calculate the indemnity payment. If cargoes were insured with A
ICC 1982?
 4. A company in Vietnam imported milk powder from Australia with price
of 200USD/MT CFR Cat Lai, Incoterms 2020. The storm came suddenly
during the trip and 20% of cargo got wet as result of sea water. In order to
run faster to avoid the storm, the shipmaster decided to throw cargo into
the sea and speeded up the engine. Then, he declared General Average. At
the port of destination, shipmaster asked shipper to pay bond for this G/A.
 1. Calculate this G/A and contribution of each party.
 More information: Insurance value of vessel is $2 mil. Total cargo is
50,000 packages (50kg/p). Freight is $28/MT FIO, to collect (I=O=S=T=
1USD/MT).
 Repair cost of engine is $80,000.Total cargo of jettison is 5,000 packages.
  Calculate the indemnity payment (B – ICC 2009, R= 1%)
A Malaysian Company imported 20,000MT from Vietnam,
with price of 550USD/MT CFR Klang Port Malaysia
Incoterms 2020. Sugar was packed with 100kg per package.
At port of destination, some cargoes were lost and damaged,
survey report noted as follows:
150 p were damaged because of washing overboard
250 p were lost during discharging at port of distress
180 p were lost because carrier sold them to pay for fuel
120 p were wet because of sea water entry
200 p were lost because of broken packages, 50% loss
50 p were wet because of rain damage
120 p were got dirty because the hold of vessel was not clean.
Calculate the insurance amount and insurance premium
(clause B ICC 2009 with R= 1%; freight = 20USD/MT)
Calculate the indemnity payment. If cargoes were insured
with A ICC 2009?
 Types of Marine Insurance
 Property Insurance
 Hull Insurance: Loss or damage to the vessel
itself
 Cargo Insurance: Loss or damage to the cargo
 Freight Insurance: Loss of freight income
 Indemnity Insurance: Liability of ship owners
 Collision liability insurance: Liability of insured
vessel for damage resulting from collision
 Protection and indemnity insurance: Liability for
bodily injury including death or property damage
and unexpected vessel related expenditures

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Risks Covered by Marine Cargo
Insurance
 Loss of or damage to the cargo occurred
during the insured voyage
 Loss: Disappearance of the cargo
 Damage: Arrived not intact. Not the same
condition as shipped by the seller
 Total loss:
 Actual total loss
 Constructive total loss
 Partial loss : Average

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 Partial Loss
 Particular average:
 Total loss of part of the shipment: one
container out of 5
 Partial loss to the whole shipment
 General Average
 Extraordinary sacrifice for the common
safety: Jettison of cargo, Damage from fire
fighting, Voluntary stranding, Repairing the
vessel
 To be borne proportionately by all interests:
owners of vessel and cargoes

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 Voyage Policy and Time Policy
 Voyage policy:
 Duration of a particular voyage in the policy

 Time Policy: Duration of a particular period of

time, usually one year
 Open cargo policy or Open policy
 A beginning date but no expiry date
 Cancelable by either party with 30 days written
notice
 All lawful merchandise
 All shipments from or to all countries except
those excluded in the policy such as
embargoed countries

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 Causes of Loss Covered
1. Heavy weather, lightning, barratry of the
masters and mariners & assailing thieves
2. Fire or explosion
3. Vessel being stranded, sunk or burnt
4. Collision or contact of vessel with any external
objects including ice except water
5. Jettison
6. Bursting of boilers, latent defect in the
machinery or hull
7. Faults or errors in the navigation or
management of the vessel
8. Discharge of cargo at a port of refuge or
distress
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