Marine Insurance

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 what is marine insurance?
Marine Insurance is a contract whereby the
insurer undertakes to indemnify the assured
in a manner and to the extent thereby agreed,
against maritime losses, that is to say, the
losses incident to marine adventure

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Marine Insurance: A generic term used to denote insurance
applicable to marine related exposures. The principal
divisions of marine insurance are:
1) Hull insurance which is insurance placed on ships and
their equipment;
2) Ocean cargo insurance, or ocean marine insurance,
which is insurance placed on goods shipped in
international trade;
3) Protection and Indemnity insurance which insures the
liabilities of a ship owner, or charterer, for liabilities
arising out of the operation of their vessels; and
4) Marine liability insurance which insures the liabilities of
persons involved in marine related services such as
stevedoring and warehousing. 3
 Cargo
• Cargo Insurance: “Ocean Cargo
Insurance” - In general, the insurance on
goods being shipped in international trade
by vessel, aircraft or overland conveyance.

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International Trade

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 Contract of sale

 Contract of payment

 Contract of carriage

 Contract of insurance

INTERNATIONAL TRADE

SALE PAYMENT CARRIAGE INSURANCE

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Main terms of trade

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 PURPOSE AND SCOPE OF
INCOTERMS
'Commercial Terms' developed by
International Chamber of Commerce in
Paris, to set rules for the interpretation of
the most commonly used terms in foreign
trade

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WHAT INCOTERMS DO - INCOTERMS
inform the sales contract by defining the
respective obligations, costs and risks
involved in the delivery of goods from the
Seller to the Buyer.

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 Incoterms©
INCOTERMS are grouped into two
classes:
One is for ‘Any Mode(s)of transport
Restricted to ‘sea and inland
waterway’(transportation between ports
only)

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 Standard incoterms in use
Abbreviatio Term
n
Rules for any modes of EXW Ex Works
transport
FCA Free Carrier (multimodal)
CPT Carriage Paid To (multimodal)
CIP Carriage & Insurance Paid To (multimodal)
DAT Delivered at Terminal
DAP Delivered at Place
DDP Delivered Duty Paid (multimodal)
Rules for sea and inland FAS Free Alongside (Sea and Inland waterway)
waterway transport
FOB Free On Board (Sea and Inland waterway)
CFR Cost & Freight (Sea), also known as C&F
CIF Cost, Insurance & Freight (Sea) 11
• DAP - DELIVERED AT PLACE (... named
place of destination)
– The Seller delivers when the goods are placed at the
Buyer's disposal on the arriving means of transport
ready for unloading at the names place of destination.
The Seller bears all risks involved in bringing the goods
to the named place.
• DDP - DELIVERED DUTY PAID (... named
place)
– The Seller delivers the goods -cleared for import - to the
Buyer at destination. The Seller bears all costs and risks
of moving the goods to destination, including the
payment of Customs duties and taxes.
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2. MARITIME-ONLY TERMS
• FAS - FREE ALONGSIDE SHIP (... named port of
shipment)
– The Seller delivers the goods to the origin port. From that point, the
Buyer bears all costs and risks of loss or damage.
• FOB - FREE ON BOARD (... named port of shipment)
– The Seller delivers the goods on board the ship and clears the goods
for export. From that point, the Buyer bears all costs and risks of loss
or damage.
• CFR - COST AND FREIGHT (... named port of
destination)
– The Seller clears the goods for export and pays the costs of moving
the goods to destination. The Buyer bears all risks of loss or damage.
• CIF - COST INSURANCE AND FREIGHT (... named port
of destination)
– The Seller clears the goods for export and pays the costs of moving
the goods to the port of destination. The Buyer bears all risks of loss
or damage. The Seller, however, purchases the cargo insurance.
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 Types of Contract of Sale
(INCOTERMS)
Free on Board (FOB)
The seller must:
deliver the goods ‘on board’ the vessel;
Provide a ‘clean on board’ receipt( clean bill of
lading); and
Bear the risk of loss or damage to the goods until
they have been loaded on the board the vessel ,that
is when they are over the ships rail
The buyer must pay for ocean freight and bear the
risks of loss or damage to the goods from the FOB
point to the final destination
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 Duties of buyer and sellers under common Incoterms©
Cost, Insurance & Freight (CIF)
The seller must:
Arrange and pay the freight to the named port of
destination;
Bear the risks of loss or damage to the goods until
they have been loaded on board the vessel, i.e. the
FOB point, as it is now described; and
Provide an assignable insurance document covering
the goods for the duration of the transit to the
agreed point of delivery.
The buyer must arrange transport from the named
overseas port to the final named destination.

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 Duties of buyer and sellers under common Incoterms©
Cost, Insurance & Freight (CIF)
The seller must:
Arrange and pay the freight to the named port of
destination;
Bear the risks of loss or damage to the goods until
they have been loaded on board the vessel, i.e. the
FOB point, as it is now described; and
Provide an assignable insurance document covering
the goods for the duration of the transit to the
agreed point of delivery.
The buyer must arrange transport from the named
overseas port to the final named destination.

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 International Trade
Contract of carriage

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CARRIERS AT
SEA

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Different Types of Ship in the
World Merchant Fleet

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 Container ships
Container ships carry most of the world's
manufactured goods and products, usually
through scheduled liner services.

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CONTAINER SHIP

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 Containerization
Containerization is the term used to describe the
placing of goods in an enclosed steel box and
delivering the container to a buyer or a place of
unloading and distribution. Loading and unloading
of a container is known in the trade as stuffing
and destuffing

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 Containerization
• Open top containers do not have steel roofs.
The top can be left open to accommodate
oversize goods, or it can be covered with
weatherproof tarpaulin that is secured with
ropes. This type of container is suitable for
over-height cargo and heavy machinery

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 common container sizes
• Worldwide, containers come in three
common sizes

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 How containers are used
Containers are used in two basic ways:
• Full container load (FCL); or
• Groupage, also known as less than
container load (LCL)

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 Bulk carriers
these transport raw materials such as iron ore
and coal. Identifiable by the hatches raised
above deck level which cover the large
cargo holds.

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The vessel on the left is that rare beast called a "geared"
bulkcarrier, so called because it carries  
                                                                            

cranes - very
cargo handling equipment.
useful when visiting ports                 
                
it's own cargo
                                                                            

lacking portside

The vessel on the right is a more regular design of

"gearless" bulkcarrier.
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•
Tankers
transport crude oil, chemicals and petroleum
products. Tankers can appear similar to bulk
carriers, but the deck is flush and covered by
oil pipelines and vents.

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 TANKERS

  Tankers    
are designed to carry liquid                    
                               cargoes (not just oil) although
carriage of crude oil has brought the tanker unwelcome attention and
largely unjustified criticism. Oil tankers come in two basic flavours, the
crude carrier, which carries crude
                  oil, and the clean products
                         tanker,
which carries the refined products, such as petrol, gasolene, aviation fuel,
the
                 

kerosene and paraffin. Tankers range in all sizes, from the small
bunkering tanker (used for refuelling larger vessels) of 1000 DWT tons to
the real giants: the VLCC (Very Large Crude Carrier) of between 2-300,000 30

DWT and the ULCC (Ultra Large Crude Carrier) of over 300,000 DWT
SUEXMAX SIZE

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REEFERS
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 REEFERS

Refrigerated Cargo Carrying Vessels ("Reefers") are purpose built to

carry fruit, meat and other food products across the sea in a fresh and
clean manner.

Perhaps the most famous of these types of vessels are the banana
carriers, trading between the Caribbean and Europe. They are sleak and
fast, as their trade demands, with cooling (refrigeration) equipment to
keep their cargoes fresh. 33
LNG CARRIERS

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•The LNG carrier (Liquified Natural
Gas) and the LPG carrier(Liquified
Petroleum Gas) are not the easiest of
cargoes to be transported.

• In its natural state, LNG is a gas, so to

transport it, it needs to be either
pressurized into a liquefied form, or
kept as a liquid by reducing the
temperature! .
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LIVESTOCK CARRIERS

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•The carriage of live animals around the world is
performed by specialist vessels, designed (or
adapted) to transport large numbers of cattle and
sheep insecure but humane conditions.
One modern vessel may carry up to
125,000sheep.
This transport of live animals requires
experienced and specialized operators.
The dangers of disease, rejection, injury and
death to and from the animals is particularly high,
coupled with the current activities of animal rights
activists.
When a livestock carrier has a fire or sinks, the
loss of life of the animals can be appalling.
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39
 CAR CARRIERS
(P.C.C. &/or P.C./T.C vessels)

The car carrier or more correctly the P.C.C. (Pure Car carrier) or P.C./T.C.
(Pure car/truck carrier), could never be described as a beauty of the seas,
yet in it's rectangular design, is purpose built to carry large numbers of
cars.

Manufacturers of cars, mainly in Japan and Europe, use these vessels to

ship large quantities of their products around the world.

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 RO-RO VESSELS

The Ro-Ro, or more fully the Roll on - roll off vessel, comes in a number ofshapes
and sizes, but generally in two types; the passenger ro-ro and the Cargoro-ro.
Passenger ro-ros have become common sights wherever people want totravel
over water with their vehicles. It is probably the only type of cargovessel that
most people have travelled on. Usually a rear door (but sometimes abow door)
allows for vehicles to be driven on and off, stored on the car deckbelow the
passenger accommodation areas.
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TUGS
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 TUGS
The tugboat has a number of functions ranging from
towing vessels into berths,
firefighting,
salvage and

   
anchor handling/positioning.

Tugs range in size (and power) depending on the tasks that they
required to perform. A small harbor tug may only have 3 - 400 BHP
(Brake Horse Power), whereas a large ocean-going salvage tug may
have up to 10,000 BHP engines, capable of towing large cargo vessels
off sandbanks and rocks.
                                                                              
The European tug (as pictured below) is very different in shape and
size, from the U.S. "Push boat "which can be seen plying up and down
the Mississippi river system, and modern European style tugs are being
built with their engines amidships, propellers on the two sides of the
vessel, to allow 360 degree maneuverability, i.e. turning on a small
space, and sailing in any direction with equal ease -forwards - 43
backwards -sideways. They are great fun to steer
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 Transport contracts
Bills of lading and waybills

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 Bills of lading and waybills

Functions of the bills of lading

•It is evidence that a contract of carriage
•It is a receipt for goods
•It is a document of title

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 Types of bills of lading
Bills of lading are either clean or claused as follows
•A clean bill of lading is one on which no note has
been made relating to the condition or quantity of the
cargo when received by the shipowner for carriage.
Standard bills of lading usually bear the wording
‘shipped (or received for shipment) in apparent good
order and condition.’
•A claused bill of lading is one on which a note has
been made that a cargo has been damaged or is less
than the quantity shipped.
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 Through bills of lading
The through bill of lading concept allows
door-to-door shipments to be covered by a
single bill of lading. This evolved
following the development of
containerization. Thus, this type of bill may
cover ocean shipment and inland
transport by other modes, with the ocean
carrier subcontracting these other elements
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AIR CARGO CONTRACT

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51
 Air waybills
• The air waybill is a document of carriage issued by
airline to shippers of cargo.
• It is issued under the conditions in the Warsaw
Convention.
• It is not a document of title

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 Standard airway bill
• All members of the International Air Transport
Association (IATA) use the IATA Standard Air
Waybill.
• It embodies standard conditions associated to those set
out in the Warsaw Convention.
• When issued by an airline, the air waybill carries a
unique reference number which commences with a
carriers prefix the air waybill number is the key to
tracing the flight details of the consignment in
question and must be quoted when information is
being requested.
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 Other documents associated with the
transport of goods
Interchange receipt
•An interchange receipt is exchanged between
carriers when a container is handed over to another
carrier during transit. It is sometimes called a UNIT
Interchange Receipt (UIR) and one is issued for
each container to be delivered. For example, a
haulage contractor who collects a container from a
port will receive a UIR from the port authority. It is
a receipt for the container rather than the goods in it.

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Final delivery receipt
The final delivery receipt is signed by the consignee to
indicate that it has received the goods. If there is damage
to the goods or a shortfall, this must be noted by the
consignee on the final delivery receipt.
Sales invoice
The sales invoice shows the price the buyer has
paid/will pay to purchase the goods being carried. Thus it
provides evidence of their values.
Packing list
The packing list usually accompanies the sales invoice
and confirms the weight, numbers and volumes of
goods and how they are packed. It should contain an
exact description of the cargo in each carton and any
relevant shipping marks and numbers
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Contract of insurance

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Art. 291. Particulars in the Policy of Insurance.
(1) The policy 0f insurance shall specify:
a) the place where the insurance is entered into;
b) the date and time of conclusion of the policy;
c) the names and domiciles ,of the parties, showing where
appropriate that the assured is acting on behalf of a third person;
d) the subject matter insured and the risk insured against;
e) the voyage or period of time or both, as the case maybe, covered
by the insurance;
f) the sum or sums insured;
g) the amount of premium;
h) the clause to order or to bearer, where agreed on.
2 The policy of insurance shall be signed by the underwriter or
his representative. The parties shall be entitled, at their own
expense's, to a true copy of the policy.

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Marine cargo insurance cover
clauses

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 Cargo Perils

• Cargo is extremely diverse and the

principal risks vary with the merchandise
the main ones being the following, among
others:

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 OCEAN TRANPORT
Contact with exterior items - contamination by taste, smell, color,
quality, vermin or other infestation; the mixing of grades or taint by
oil, chemicals, other cargoes; water in the guise of rain, fresh, sea
sweat or condensation.
Fire, smoke, heat, spontaneous combustion (especially soft coal) or
explosion.
 Piracy, pilferage or theft.
 Action of normal atmospheric conditions –wind, rain, sun and waves.
 General average sacrifice (e.g. jettison to lighten the vessel to enable it
to get off a sandbank).
 War, strikes, deliberate damage or destruction, radioactive
contamination.
 Washing overboard..
 Impact damage during loading or discharge, crushing breaking loose
during the voyage, denting, scratching, bruising, collapse of stow,
accident to mode of transport.
 Twisting and bending 60
OCEAN TRANPORT…..cont’d
 Shortage, short delivery, non-delivery,
mysterious disappearance.
 Splitting/tearing of bags, probably due to
hooks, slings, forklift truck prongs
 Breakage, cracking, chipping.
 Leakage, evaporation.

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 Specie
Specie encounter several of the list above, and in
particular the following:
Armed robbery.
Sleight of hand.
Falsification of valuation certificates, export licenses,
certificates of origin.
Substitution of goods by inferior copies.
Reduction in worth after repair of damage, even
minor.
Slashing, assault by ink, paint or chemicals
(vandalism).
Collision or 'an inside job'.
Forgery.
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INLAND TRANSIT (RAIL/ROAD)
• Fire
• Lightning
• Breakage of bridges
• Collision with or by the carrying vehicle
• Overturning of the carrying vehicle
• Derailment or accident of the like nature
AIR CARRIAGE AND POST
• All risks except exclusions mentioned in the
policy
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Marine Cargo Insurance Clauses

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Scope of cover: Marine cargo insurance

Institute cargo clauses (A), (B) and (C) form the

basis of all other clauses.

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Marine Cargo Insurance Clauses---------1

• Institute Cargo Clauses A, B,

& C;

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 Scope of cover
All ICC (A, B, & C) contain 19 clauses in eight separate
sections
Clause 1 to 3 – Risks covered;
Clause 4 to 7 – Exclusions;
Clause 8 to 10 – Duration of cover;
Clause 11 to 14 – Claims;
Clause 15 – Benefits of insurance;
Clause 16 & 17 – Minimizing loss;
Clause 18 – Avoidance of delay;
Clause 19 – Law and practice.
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 Institute Cargo Clauses (C)
1/1/2009
The Institute Cargo Clauses (C) insure a lesser number of
specified perils. They provide insurance against loss of or
damage to the subject matter insured reasonably
attributable to:
• Fire or explosion;
• Vessel or craft being stranded, grounded, sunk or capsized;
• Overturning or derailment of land conveyance;
• Collision or contact of vessel, craft or conveyance with
any external object other than water; and
• Discharge of cargo at a port of distress.

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 Institute Cargo Clauses (C)
The insurance also provides cover against loss of or
damage to the subject matter insured caused by:
• General average sacrifice; and
• Jettison.
• The insurance also covers the risks of general
average and both to blame collision liability in
exactly the same manner as offered under the
Institute Cargo Clauses (A) and (B).

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 Institute Cargo Clauses (B) 1/1/2009
covers loss or damage to the subject matter insured that is
reasonably attributable to the following named perils:
• Fire or explosion;
• Vessel being stranded, grounded, sunk or capsized;
• Overturning or derailment of land conveyance;
• Collision or contact of vessel, craft or conveyance with any
external object other than water;
• Discharge of cargo at a port of distress; and
• Earthquake, volcanic eruption or lightning

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 Institute Cargo Clauses (B)
The insurance also covers loss or damage to the subject
matter insured caused by:
• General average sacrifice;
• Jettison or washing overboard;
• Entry of sea, lake or river water into the vessel, craft,
hold, conveyance, container or place of storage; and
• Total loss of any package lost overboard or dropped
whilst loading or unloading from the vessel to craft

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 Institute Cargo Clauses (B)
The insurance also covers the risks of general
average and both to blame collision in
exactly the same manner as offered under
the Institute Cargo Clauses (A).
Exclusions 4, 5, 6 and 7 are almost the same
as those with same number in ICC(A),
except there is an additional exclusion

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 Institute Cargo Clauses

Institute Cargo Clause A covers all

risk of loss or damage to cargo

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• Exclusions
 loss due to deliberate act of the assured;
 ordinary leakage;
 ordinary loss of weight;
 wear and tear;
 loss due to inherent vice or nature of the subject matter;
 loss due to inadequate packing;
 loss due to unseaworthiness of the vessel;
 loss by delay;
 loss by war and war like operation;
 usage of nuclear device;
 loss due to the financial difficulty of the vessel owner, charterer or operator;
 loss or damage by strikers;
 malicious damage, theft – only for ICC_C and ICC_B.

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 6- Duration of cover
• Varies with the mode of transit employed;
• Cover attaches from warehouse of shipper and ends
at destination warehouse of consignee;
• 60 days after discharge at port of destination for sea
shipment;
• 30 days after discharge in case of Air transit;
• Period could be extended by additional premium;
 Sea shipment – 120 days;
 Air shipment – 60 days.

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 Comparison of covers between the (A),
(B) and (C) clauses
Compared to the (A) clauses, Institute Cargo
Clauses (B) does not provide any cover
against:
• Theft and pilferage:
• Non-delivery and mis-delivery;
• Accidental damage other than the dropping
risk referred to in the (B) clauses; and
• Malicious damage:
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 Institute Cargo Clauses (B)
Compared to the (A) clauses, Institute Cargo Clauses (B)
does not provide any cover against:
• Theft and pilferage:
• Non-delivery and mis-delivery;
• Accidental damage other than the dropping risk referred
to in the (B) clauses; and
• Malicious damage:

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 Institute Cargo Clauses (Air)
1/1/09

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 Institute Cargo Clauses (Air) 1/1/09
follow the wording of the Institute Cargo
Clauses (A). The only differences are the
references to aircraft and the maximum
number of days contained in the duration
clause to 30, compared to the 60 days in the
(A) clauses.

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Institute War Clauses (Cargo) 1/1/2009

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The Institute War Clauses (Cargo) provide insurance
against loss or damage to the subject matter insured
by:
•War, civil war, rebellion, revolution, insurrection, or
civil strife arising from these risks, or any hostile act
by or against a belligerent power;
•Actual or attempted capture, seizure, restraint or
detainment arising from these risks along with its
consequences; and
•Derelict mines, torpedoes, bombs or other derelict
weapons of war.
The Clauses also provide insurance against general
average and salvage charges incurred to avoid loss
from a risk covered under these Clauses 81
Duration clause in the war clauses
This clause differs from that applied as standard in the (A), (B) and
(C) clauses. Under the war clauses the insurance attaches only when
the subject matter insured is loaded on an oversea vessel and it
terminates when the subject matter insured is:
•Discharged from the oversea vessel at the final port or place of
discharge; or
•On expiry of 15 days counting from midnight of the day of arrival
of the vessel at the final port or place of discharge;
Whichever shall occur first
This wording reflects the intention of insurers to offer cover
against war risks only at sea.

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Institute Strikes Clauses (Cargo) 1/1/2009

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Other commonly used cargo clauses:-
Institute classification clause
Cargo ISM Endorsement JC96/019
Termination of Transit clause (Terrorism)
Institute Radioactive Contamination Chemical
Bio Chemical and Electromagnetic Weapons
Exclusion Clauses 10/11/03
Institute Cyber Attack Exclusion Clauses
10/11/03
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Other major cover clauses-----2

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Institute Classification Clause

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 Institute Classification
Clause
The purpose of the Classification Clause is to ensure that
the cover given by the marine cargo insurance applies
only to carriage in an approve ships.
These are ships that have been constructed to the
recognized standards of an approved classification
society which is a member or associate member of the
International Association of Classification Societies
(IACS).
 

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Members of the International Association of Classification Societies
Full members Internet address
ABS American Bureau of Shipping http://www.eagle.org
BV Bureau Veritas http://www.veristar.com
CCS China Classification Society http://www.ccs.org.cn
DNV Det Norske Veritas http://www.dnv.com
GL Germanischer Lloyd http://www.gl-group.com
KR Korean Register of Shipping http://www.krs.com.kr
LR Lloyd’s Register of Shipping http://www.lr.org
NK Nippon Kaiji Koyokai http://www.classnk.or.jp
RINA Registro Italiano http://www.rina.org
RS Russian Maritime Register http://www.rs-head.spb.ru/
IRS Indian Register of Shipping http://www.irclass.org

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There are recommended age limits on vessels that an
underwriter will accept at standard cargo rates. These are:
Ten years of age for bulk or combination carriers and 15
years of age for other vessels, unless they have been used for
carrying general cargo on a published and regular pattern of
trading between a range of specified ports and are not more
than 25 years old.
Thirty years of age for vessels constructed as
containerships, vehicle carriers or double skin open hatch
gantry crane vessels (WHGCs) and which have been used
continuously as such on an established and regular pattern of
trading between a range of specified ports.
Where an assured proposes sending their cargo on a vessel that
falls outside these parameters, they must give prompt notice to
insurers. This is so that the insurer has time to agree suitable
terms. Underwriters are not bound to accept any such vessel
but, if they do, they are free to determine the terms and
conditions under which they will accept the risk. 89
Cargo ISM Endorsement

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 INTERNATIONAL SAFETY
MANAGEMENT CODE
• The International Safety Management Code (known as the
ISM Code) came into effect
 on 1 July 1998 for all passenger ships., oil tankers, chemical
tankers, gas carriers, balk carriers and cargo high-speed craft of
500 gross tons or more, and
 on 1 July 2002 for other cargo ships and mobile off-shore
drilling units of 500 gross tons and upwards.

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 ISM code
• The Code contains a set of principles for
implementing a written safety management
system (SMS).
• The owner or manager must appoint a
'designated person' with direct access to the
highest level of management for evaluation and
communication

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 ISM code Cont’d…..
• The owner or manager must appoint a 'designated
person' with direct access to the highest level of
management for evaluation and communication
• Confirmation of approval of the SMS is made by
means of a Document of Compliance (DOC) and
by issuing each vessel with a safety management
certificate (SMC).
• The SMC demonstrates that the owner is acting in
relation to that specific ship in compliance with
the SMS

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The Safety of Life at Sea Convention 1974 (SOLAS)
requires all vessels to be ISM Code certified or her
owners to hold an ISM Code Document of Compliance.
This clause deals with the situation where, at the time of
loading the vessel, the owners of the goods were aware,
or in the ordinary course of business should have been
aware, that the vessel was not so certifies or that the
owners or operations did not have the document of
compliance, in these circumstances this clause states
that the insurance will not cover loss or damage or
expense to goods.

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 Institute Replacement Clause

 the amount that a cargo owner can claim for loss or damage to
parts of a machine is limited to the cost of replacing or
repairing the lost or damaged part.
 lost or damaged part of a machine does not constitute a total
loss chain.

Institute Cyber Attack Exclusion Clause

 A more recent form of terrorism : Introduction of viruses

into the computer system of businesses which enables the
perpetrators to either take control or render it inoperable.
 The Cyber Exclusion Clause excludes claims for such loss
or damage from the cover provided by the traditional
marine cargo insurance policy.
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 Termination of Transit Clause (terrorism)
Introduced with effect from 1January 2009
 to restrict claims for loss or damage to goods to acts of
terrorism arising during the ordinary course of transit
Includes temporary storage during ordinary course of transit
For the purposes for this clause terrorism is defined as:
An act of any person acting on behalf of, or in connection
with, any organization which carries out activities directed
towards the overthrowing or influencing, by force or
violence, of any government whether or not legally
constituted, or any person acting from a political, ideological
or religious motive

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Application of marine clauses

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 Application of marine clauses
these clauses are purely illustrative.
An insurer may extend or alter them to meet the individual requirements of an
assured.
the following new manufactured goods are suitable for insuring under the
Institute Cargo Clauses (A):
all newly manufactured.
Machinery;
Motor vehicles;
Domestic electrical goods;
Electronic goods and machinery;
Personal and business computers, including hardware and software;
Made up clothing;
Clothing materials in roll or length form;
Toys;
Furniture;
 And
Food in tins, cans, cartoons, and boxes but not temperature controlled…
etc 98
 Institute Cargo Clauses (A)
The ICC (A) provides the widest of the three sets of
cover and insurers on an all risks basis subject to
exclusions. This form is the preferred choice for:
consumer goods and finished products where
condition and appearance are important for final sale;
goods of high intrinsic value and quality, ranging
from textiles to precious metals to chemicals;
high valued and sensitive commodities such as coffee
and cocoa beans, tea, refined sugar, and refined
vegetable and mineral oils.
99
 Institute Cargo Clauses (B)
Typical cargoes suited to this cover would include robust
items and other goods normally resistant to more
general types of damage. Examples include
Heavy machinery, contractors` equipment, second-
hand vehicles, certain steel products, base metals etc.;
Raw cotton and piece goods and the like in press
packed bales;
Certain nuts, beans, seeds, rice and other produce in
bags and raw sugar;
Hides and skins, rubber in bales
Old and second hand machinery not suitable under
Clause(A) 100
 Institute Cargo Clauses (C)
A common use of the Institute Cargo Clauses (C) is in the insurance of some
goods transported in bulk, for example scrap metal carried in bulk vessels
or containers.
This is because the main threat to this type of commodity is that posed by the
perils of the sea, fire or explosion, sinking, grounding, capsizing and
collision.
Other Cargoes typically insured under the C conditions include:
Second hand machinery not suitable under Clause (A) or (B)
Copra, manioc and their by-products tapioca, jute, sisal, cereals etc.;
Coal and mineral ores;
Ingots, steel billets, unfinished steel products etc.;
 Cement. 
Insurers also apply the C Clauses where wider conditions consistently
produce poor underwriting results

101
Application of war and strikes clauses
Insurance for war risks at sea and strikes risks on land
and sea, is available for all goods in transit
The premium levels can vary quite considerably,
according to the political or industrial situation in any
country in the world at any one time
Cancellation
a seven day cancellation clause in respect of war and
strikes risks, except U.S.A.
strikes, riots and civil commotion risks on shipment to
or from the USA where the cancellation clause is
48hours. This reflects the vastly increase risk if the USA
is involved.
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Underwriting Marine cargo
Insurance

103
General approach to premium

Marine Rate Chart

Import Cargo
Export cargo
Inland transit/BSG

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Import Cargo

105
Premium rate vary also by type of cargo and packing,
containerized
1. Food stuff
2. Mineral water, squash, wins, spirits and liquors
3. Tobacco
4. Fibers
5. Machinery
6. Motor vehicles, accessories, etc
7. Chemicals
8. Fertilizers
9. Pharmaceuticals Including Veterinary Items
10. Electrical materials and appliances

106
 Premium rate vary also by type of cargo
and packing, containerized
11. Paper stationery and office equipment
12. Furniture & furniture items.
13. Kitchenware
14. Petroleum products
15. Rubber foam, rubber and plastic products
16. Textiles and wearing apparels
17. Building materials and hardware
18. Jewelry and gift articles
19. Cosmetics and cleaning preparations
20. Miscellaneous manufactured articles not
Classified elsewhere

107
 Discounts
Container discount
20% by attaching the container clause.
Open cover discount
All enjoy an automatic 25% discount

Sum Insured Discount

a) Over Birr 500,000 and up to Birr 1,000,000 10%

b) Over Birr 1,000,001 and up to Birr 2,000,000 15%
c) Over Birr 2,000,001 and up to Birr 4,500,000 25%
d) Over Birr 4,500,001 and up to Birr 7,5000,000 25%
e) Over Birr 7,500,001 and up to Birr 10,000,000 30%
f) Over Birr 10,000,001 and over…………………………………
35%

Special discounts, Agreed rate or bid rate

108
Export cargo and inland
transit

109
Bandits Shifta & Guerilla
– B.S.G. Cover

*Charge 0.10% for B.S.G. cover for Inland

Transit/All Risks

110
 Policy types
Voyage policy
A voyage policy is one which insures goods from one
place to another. It is also known as a facultative or single
voyage policy. This type of policy is useful for:
•Sellers whose exports in any one year are too few to
justify taking out an annual policy;
•Sellers whose main market is their own country but which
sometimes exports goods; and
•Sellers who usually sell their goods on ex-works (EXW)
terms but occasionally sell them on CIF terms

111
Time policy
As it name suggests, a time policy covers a
defined period. Time policies are in common use
and, in the current market, tend to run for twelve
months from a given date. A common practice is
to issue an adjustable policy.

112
 Open cover
type of marine insurance policy is open cover.
The oldest form of premium collection in marine
inAnother surance, the open cover facility is a method of
placement that gives coverage for all the assured’s
shipments at pre-determined rates and conditions.
This type of policy opens from a specified date and
remains operable until either the assured or the insurer
cancels it, upon a number of days’ notice (e.g. 30 days’
notice).
Under this method the assured is required to declare
periodically the total value of sendings to or from the
agreed destinations in the policy.
The premium for the war and strikes cover is calculated
separately and is payable in addition to the basic cargo
premium 113
 Basis of valuation=the sum assured

It is also common practice to add uplift in the sum

insured in CIF sendings, to cover the buyer’s
administration costs in setting up the import, such as:
•Cost of import licenses;
•Bank charges and loan interest;
•Increase value of goods at discharge of vessel or
aircraft; and
•An element for the buyer’s potential from the sale of
the goods
Invoice value plus 10% x exchange rate at the time of
issuing the cover
114
 Basis of valuation----------
cont’d
the basis of valuation clause describes the
maximum sum an insurer will pay for loss or
damage to goods, when they are lost prior to
declaration.
However, charges for general average, salvage
or sue and labor can be paid in excess of this
maximum sum

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Cargo claim documents

 Original policy/certificate – proof of insurance;

 Original Bill of Lading / Airway Bill – proof of affreightment and title;
 Original Invoice – proof of value;
 Packing list - as the case may be;
 Survey report – proof of loss;
 Truck Way Bill – as the case may be;
 Vessel /Airplane arrival notification slip;
 Correspondence made with carriers and third parties;
 Short-landed certificate – proof of loss;
 Certificate of destruction – proof of loss;
 Customs final out-turn report;
 Copy of master protest;
 Letter of subrogation.
 Police Report

119
 FRAUD: MARITME AND
MARINE INSURANCE FRAUD

120
 FRAUD: MARITME AND MARINE
INSURANCE FRAUD

An international trade transaction involves several parties-

 Buyer,
 seller,
 ship-owner,
 Charterer
 ship's master or crew,
 Insurer,
 banker,
 broker or agent.

121
 What is maritime fraud?

Maritime fraud occurs when one of these parties

succeeds unjustly and illegally in obtaining
money or goods from another party to whom,
on the face of it, he has undertaken specific
trade, transport and financial obligations

122
 There are two types of cargo fraud
• Documentary Fraud
• charter party fraud

123
 Documentary fraud includes:
 issuance of forged or falsified documents pertaining to the
good or the ship said to be carrying such goods;
 concealment or misrepresentation of material facts;
 substitution of poor quality goods for proper goods;
 high -value cargo substituted by poor quality goods/rubbish;
 sending goods on non-existent ships;
short loading

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Thank
You
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