2017-12-14 18:00:00 UTC
This article offers a brief description on the various marine covers offered by HDFC Ergo General Insurance Company limited.
Logistics and Shipping businesses carry significant inherent risks. The importing and exporting of goods can expose you to massive financial losses should your shipments be damaged or destroyed in transit. Due to the frequency of accidents with commercial vehicles, every business involved in shipping goods(by road, sea or air) runs a very real risk of losing shipments due to unforseen circumstances.
Marine Cargo Insurance provides protection for your cargo, and HDFC Ergo provides comprehensive covers for the same.
Catering to both importers’ and exporters’ needs, the coverage is comprehensive and flexible with both local & international shipments protected from the time the goods leave the seller’s warehouse until they reach the Buyer’s warehouse.
The party usually responsible for insuring the goods is determined by the sales contract. Perilwise has extensive experience in marine insurance, and can help you understand the various contracts in the industry i.e. ex-Works, Free on Board(FOB), Cost and Freight (CFR) and Cost Insurance and Freight (CIF).
FOB terms of sale establishes which party (vendor or retailer) will be liable for the transportation costs, which party is in control of the movement of the goods, and when (date/time) the title passes to the buyer. In most cases, the freight hauler or delivery company (such as DHL, bluedart etc) is not involved, but in some instances, the freight hauler is liable as well. A freight hauler, however, is always liable for damage it may cause in transit.
If the FOB terms of sale indicate that it is "FOB delivered" then this implies that the shipper will be responsible for all of the carrier’s costs. If the terms of sale show "FOB origin", or "FOB shipping point" then this means that the buyer will take the title of the goods when they are shipped and they will incur all the transportation costs from the shipping location to the final destination.
Marine Cargo Insurance in general offers three types of covers:
ICC-C is insurance on a named Peril basis.This is the most restricted clause and covers only loss or damage reasonably attributable to:
a. Fire or explosion
b. Vessel or craft being stranded grounded sunk or capsized
c. Overturning or derailment of land conveyance
d. Collision or contact of vessel craft or conveyance with any external object other than water
e. discharge of cargo at a port of distress and loss or damage caused by General Average Sacrifice / Jettison
ICC-B is Named Peril basis; this cover covers everything that ICC ‘C’ Clause covers, but also:
a. Earthquake, volcanic eruption or lightning
b. Washing Overboard
c. Entry of sea, lake or river water into the vessel, craft, hold, conveyance, container, lift, van or place of storage
d. Total loss of any package lost overboard or dropped whilst loading onto, or unloading from, vessel or craft
ICC-A is the widest form of cover under Marine Cargo Insurance in so far as it relates to the perils covered. ICC (A) is an unnamed perils clause; all risks except standard exclusions are covered.
• Various clauses can be added on depending upon the nature of the goods being carried. The Institute Cargo Clauses comprise a range of covers from the most comprehensive ones such as (A) Clauses to the basic minimum protection available termed (C) Clauses.
• Additional cover can also be provided for the following:
• Loading and Unloading
• Customs duty
• Removal of debris
Policies are customisable to your needs, with a specific policy to cover each single consignment. There are also other various types of policies:
This policy covers all the marine sendings(shipments) of a client in a 12 month policy period where the voyage involved is within a country (domestic/inland). Reach out to us for a quote here
This policy covers all the marine sendings of a client in a 12 month policy period where the voyage involved is import or export.Reach out to us for a quote here
These policies are issued to firms that require coverage for a specific voyage or trip. It is suitable for those firms who seldom require marine cargo policies in the course of their trade. Specific Voyage policies are issued on a "from and to" basis and the cover commences once the goods leave the place of origin named in the policy and terminates on delivery at the place of destination.Sometimes these policies are also issued in terms of duration of the voyage, in which case the cover commences on the date and time specified for the same in the policy. Inland specific transit will exclude terrorism. Reach out to us for a quote here
Customs duties form a major part of the cost of imported goods. Once the goods land at the port of destination custom, duty becomes payable. If the goods are damaged during the transit from the port to the importer's warehouse, the sum insured value(on Cost + Insurance + Freight (CIF)basis) is not sufficient to represent the actual value of the goods since the custom duties should have already been paid.This additional element of cost can be covered by a duty Insurance Policy. Claims under a duty policy are only payable if the claim is otherwise admissible in the marine cargo policy covering the goods.
In almost all export transactions where credit is allowed by the seller to the Buyer and the goods are not exported on CIF basis, responsibility for the goods passes to the Buyer when the goods are loaded on to the overseas vessel. but ownership does not change until the Buyer accepts the goods and relative documents. Thus, if the seller is allowing credit to the Buyer and has shipped goods on FOD terms, where the responsibility for loss or damage to the goods is passed to the Buyer when the goods are loaded on to the overseas vessel, the seller has no control over the conditions of the insurance cover arranged by the Buyer.
In the event of loss of or damage to the goods in transit from a peril insured against and the Buyer refusing to pay for such loss or damage, the seller could stand to lose financially. Seller's Interest or Contingency Interest cover could help to prevent this.
The cover is normally arranged as an extension of FOD cover. The seller's interest cover in effect retrospectively reinstates cover, as per Institute Cargo Clauses as provided for in the policy and allows the seller to be protected in an area where he has no control over the insurance arrangement.
Sum insured is generally set at 110% of CIF. This means the sum insured of a particular shipment should be set at 110% of the sum of the cost of the goods(as per invoice value), the freight charges paid by the shipper, and the insurance premium.
This policy does not cover loss or damage due to
• Wilful misconduct,
• Ordinary leakage,
• Improper packing,
• Inherent vice,
• War & War like activities,
• Strikes, Riot and Civil Commotion(aka SRCC, available as an add-on)
Perilwise provides all these policies on demand, just contact us below for a free quote and consulting session!