New India Assurance

For Private Circulation Only

THE NEW INDIA ASSURANCE COMPANY LIMITED

MARINE CARGO INSURANCE

TECHNICAL INFORMATION MANUAL

October 2005

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PREFACE

6 he Marine Cargo manual was last updated in 1991. Since then marine cargo insurance has
seen turbulent times. The tariff was abolished in 1994, there was entry of private insurers in 2001
and London War Rating Committee was dismantled in 2003. The cargo portfolio has since then
been consigned to a secondary status by all insurers who were keen to write attractive property
business, which was protected by a tariff. The marine underwriting skills took a back seat while
emphasis shifted to how an insurer could navigate the cargo insurance to retain his property
premium.

This scenario is likely to change in the immediate future. The regulatory body IRDA has announced
the detariffing of property insurances in early 2007. Therefore, each portfolio will have to be
underwritten on merits. This is the period when marine underwriters will have to go back to the
basics, hone their underwriting skills, do business judiciously and relentlessly pursue recovery
from carriers.

To this end the manual has retained chapters on the Institute Cargo Clauses, added new topics
like recommended warranties/conditions, Incoterms, Recovery, Multi Transit policy. The manual
also includes the amended Classification Clause of 2001, the RACE, RACCBE Clauses, which
are mandatory for all marine insurance documents and the commonly used marine jargon. All
statutory Acts/Regulations have been reproduced with an aim to make the manual a complete
handbook for the marine underwriter.

The manual hopes to guide the marine insurers on underwriting and claims with a view to
take informed decisions which will help build up a profitable book of cargo business in every
operating office.

Comments and suggestions are welcome and they can be sent to

[email protected]

T. L. Alamelu
Manager

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CHAPTERS Page No.

FUNDAMENTAL PRINCIPLES OF CARGO INSURANCE .......................................................................... 7

INSTITUTE CARGO CLAUSES (A), (B) and (C) ....................................................................................... 11

THE INSTITUTE WAR CLAUSES (CARGO) ............................................................................................. 27

THE INSTITUTE STRIKES CLAUSES (CARGO) ...................................................................................... 30

THE INSTITUTE CARGO CLAUSES (AIR) (excluding sending by Post) .................................................. 31

THE INSTITUTE WAR CLAUSES (AIR CARGO) ...................................................................................... 32

THE INSTITUTE STRIKES CLAUSES ( AIR CARGO) .............................................................................. 33

INSTITUTE RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE (1-10-1990) ................................ 34

INSTITUTE EXTENDED RADIOACTIVE CONTAMINATION

EXCLUSION CLAUSE 01/11/02 (356A) RACE .......................................................................................... 35

INSTITUTE RADIOACTIVE CONTAMINATION CHEMICAL, BIOLOGICAL, BIOCHEMICAL

AND ELECTROMAGNETIC WEAPONS EXCLUSION CLAUSE 10/11/2003 (370) RACCBE .................. 36

CARGO TERMINATION OF TRANSIT CLAUSE (TERRORISM) .............................................................. 38

THE INSTITUTE CLASSIFICATION CLAUSE (1-1-2001) ......................................................................... 39

CLAUSES FOR SPECIAL TRADES ........................................................................................................... 41

CONTAINERISATION, VESSEL, BILLS OF LADING ................................................................................ 45

INCO TERMS ............................................................................................................................................. 51

INLAND TRANSIT (RAIL OR ROAD) CLAUSE AND S.R.C.C. CLAUSE ................................................... 53

MARINE CARGO UNDERWRITING DOCUMENTS ................................................................................. 56

UNDERWRITING LIMITS AND RETURNS ............................................................................................... 62

MARINE CARGO UNDERWRITING DOCUMENTS ................................................................................. 65

RECOMMENDED CONDITIONS AND WARRANTIES ............................................................................. 67

UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS ............................................. 77

INLAND VESSELS POLICY ....................................................................................................................... 78

INDIAN COASTAL TRANSIT POLICY ........................................................................................................ 79

F.O.B. (Coastal & Overseas) & SHUTOUT CARGO POLICY .................................................................... 80

SAILING VESSELS POLICY ...................................................................................................................... 81

BULLION, SPECIE, JEWELLERY (Including Securities and valuables) POLICY ..................................... 83

ANNUAL POLICY ....................................................................................................................................... 84

MULTI TRANSIT POLICY & SINGLE TRANSIT POLICY WITH MULTIPLE WAREHOUSING ................. 86

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DUTY AND INCREASED VALUE INSURANCE ........................................................................................ 88

SENDINGS BY POST ................................................................................................................................ 90

SENDINGS BY COURIER ......................................................................................................................... 91

SELLER’S INTEREST INSURANCE .......................................................................................................... 92

CLAIMS MANAGEMENT ............................................................................................................................ 94

RECOVERY .............................................................................................................................................. 105

CUSTOMS CLEARANCE PROCEDURE & REFUND OF DUTY ........................................................... 113

APPENDIX - ‘A’ - THE MARINE INSURANCE ACT, 1963 ....................................................................... 121

APPENDIX - ‘B’ - THE INSURANCE ACT, 1938 AND THE INSURANCE RULES, 1939 ........................ 151

APPENDIX - ‘C’ - POWER OF ATTORNEY .............................................................................................. 153

APPENDIX - ‘D’ - LETTER OF SUBROGATION ...................................................................................... 156

APPENDIX - ‘E’ - MARINE (CARGO) SURVEY FEES SCHEDULE ........................................................ 157

APPENDIX - ‘F’ - FOREIGN EXCHANGE MANAGEMENT REGULATION (RBI) ................................... 159

APPENDIX - ‘G’ - STAMP ACT ................................................................................................................. 167

COMMON MARINE CARGO TERMS ...................................................................................................... 168

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FUNDAMENTAL PRINCIPLES OF CARGO INSURANCE

(The Marine Insurance Act, 1963)

The fundamental principles of Marine Insurance are drawn from the Marine Insurance Act, 1963*
As in all contracts of insurance on property, the contract of Marine Insurance is based on the
fundamental principles of Indemnity, Insurable Interest, Utmost Good Faith, Proximate Cause,
Subrogation and Contribution. Practitioners of Marine Insurance must familiarize themselves with
the Act and uphold these Principles when negotiating Contracts and settling claims under the
contract.

INDEMNITY:

The object of an insurance contract is to place the assured after a loss in the same
relative financial position in which he would have stood had no loss occurred. By the
Marine Insurance Act, the indemnity that is provided is “in manner and to the extent agreed.”
A “commercial” indemnity is thus provided. Because insurers cannot undertake to reinstate or
replace cargo in the event of loss or damage, they pay a sum of money, agreed in advance,
that will provide reasonable compensation. In practice, this is achieved by agreeing in advance the
insured value, based on C.I.F., value of the goods to which it is customary to add an agreed ten
percent which is intended to include the general overheads and perhaps a margin of profit on the
transaction.

Upon total loss of the entire cargo by an insured peril the sum insured is paid in full, and if part of
the cargo is a total loss, the appropriate proportion of the insured value is paid.

Claims for damage are settled by ascertaining the percentage of depreciation and applying this
percentage to the insured value. The percentage of depreciation is calculated by comparing the
value the goods would realize in their damaged state with their gross sound value on the date of
the sale. The same date is used for both values in order to avoid distortion of the result arising
from fluctuations in the market prices.

In Marine insurance it is customary to issue agreed value policies. The agreed value is conclusive
between the Insurer and the Assured except in the event of the unintentional error or where fraud
is alleged.

“Duty” and “Increased Value” policies are not agreed value policies. They provide pure indemnity
only.

INSURABLE INTEREST:

The Marine Insurance Act contains a very clear definition of insurable interest. It states that there
must be a physical object exposed to marine perils and that the insured must have some legal
relationship to the object, in consequence of which he benefits by its preservation and is prejudiced
by loss or damage happening to it or where he may incur liability in respect thereof.

Whereas in fire and accident insurance an insurable interest must exist both at inception of the

* Refer Marine Insurance Act, 1963 in Appendix ‘A’

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 contract and at the time of loss, the interest in respect of a marine contract must exist at the time
of loss, though it may not have existed when the insurance was effected. This is necessary when
one considers the mercantile practice under which there is every possibility of sale and purchase
of goods in the course of transit. However, the MIA has provided that where the goods are insured
“lost or not lost” the assured may recover the loss, although he may not have acquired his interest
until after the loss, unless at the time of effecting insurance he was aware of the loss and the
insurer was not. If the assured had no interest at the time of the loss, he cannot acquire interest
by any act or election after he is aware of the loss. Arising from this, both a contingent and a
defeasible interest are insurable. A partial interest is also insurable.

A marine cargo policy is freely assignable either before or after loss provided of course the
assignee has acquired insurable interest.

The type of sale contract also determines the Insurable Interest. A separate chapter has been
devoted to most common terms of contracts known as “Inco Terms”. The terms dictate which of
the two parties to the contract, is responsible to insure the goods.

GOOD FAITH:

Every contract of insurance is a contract “uberrimae fidei” i.e. one which requires utmost good
faith on the part of both the insurer and the assured. In Marine Insurance, it is the duty of the
proposer to disclose clearly and accurately all material facts related to the risk. A material fact is a
fact, which would affect the judgement of a prudent Underwriter in considering whether he would
enter into a contract at all, or enter into it at one rate of premium or another and subject to what
terms. Apart from the duty of disclosure, the insured must act towards the insurer in good faith
throughout the duration of the contract.

It is customary to classify breaches of the duty of utmost good faith under four headings: non-
disclosure, concealment, innocent misrepresentation and fraudulent misrepresentation. The first
two are termed passive breaches and the other two are termed active breaches. The Marine
Insurance Act places a statutory duty on the assured to disclose to the insurer all material
circumstances known to him or which he should know in the ordinary course of his business.

Whether non-disclosure is intentional or inadvertent, the effect is the same and the policy may be
avoided, although deliberate and material non-disclosure would usually amount to fraud and
render the policy void.

Over-valuation, for example, must be communicated to the insurers; if it is not so communicated, it

is a concealment of a material fact and voids the insurance.

PROXIMATE CAUSE:

“Proximate cause means the active, efficient cause that sets in motion a train of events which
brings about a result, without the intervention of any force started and working actively from a new
and independent source.”

Insurers are liable if an insured peril is the proximate cause of the loss. If an insured peril is only
the remote cause of the loss, the proximate cause being an uninsured or excepted peril, the
insurers are not liable.

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The proximate cause is not necessarily that which is proximate in time, but that which is proximate
in efficiency. It is the dominant, effective and operative cause of the loss.

In case of concurrent causes, following rules apply: -

a) If one of the causes contributing to the loss is an insured peril, and no excepted peril is
involved, the loss is covered.

b) If one of the causes is an excepted peril, the loss is not covered at all, unless the consequences
of the insured peril can be separated from those of the uninsured peril, in which event the
former, but not the latter, is cover.

SUBROGATION:

“Subrogation is the right which one person has of standing in place of another and availing himself
of all the rights and remedies of the other, whether already enforced or not.”

Subrogation is a corollary of the principle of indemnity and the right of subrogation therefore
applies only to policies, which are contracts of indemnity. Subrogation is a matter of equity, the
purpose of which is to ensure that the insured is not over-indemnified for the same loss.

(a) In Marine insurance, where an insurer pays for a total loss:

i) he is entitled to take over the interest of the assured in whatever may remain of the
subject-matter so paid for (abandonment);

ii) and he is subrogated to all the rights and remedies of the assured as from the time of
the loss (subrogation)

(b) Where an insurer pays for a partial loss, he acquires no title to the subject-matter insured or
to such part of it as may remain, but he is subrogated to all the rights and remedies of the
assured as from the time of the loss, and in so far as the assured has been indemnified.

In marine insurance subrogation applies only after payment of a loss. The insurer is entitled to
recover only up to the amount, which he has paid, in respect of rights and remedies.

On payment of a total loss, the insurer is entitled to assume rights of ownership of the subject-
matter insured. The right is conferred upon him by virtue of abandonment (not by rights of
subrogation) and the effect is that if the property is subsequently salvaged or recovered the
insurer is entitled to retain the whole of the proceeds of sale even though they may exceed the
sum paid out under the policy, always assuming the property is fully insured and that the
assured was not bearing part of the risk himself.

In addition to this right of exercising ownership of the property, the insurer is subrogated to “all
rights and remedies of the assured” as from the time of casualty causing the loss. This simply
means that if the loss has been caused by the negligence of a third party, against whom the
assured has the right of action in tort – say, against a carrier or bailee – then the Insurer is entitled
to succeed to any recovery (whereby the loss is reduced) the assured may effect from such third
party. This principle applies equally to total and partial losses and has nothing whatever to do with
the doctrine of abandonment.

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 CONTRIBUTION:

Sometimes one risk may be covered by more than one insurer. In that case it is desirable not only
to ensure that the insured does not receive more than an indemnity but that any loss is fairly
spread between all the insurers involved. The principle of contribution is a method of distributing
fairly among insurers the burden of claims for which each shares some responsibility.

Following factors are required to exist before a loss is shared among the insurers

a) There must be at least two policies of insurance.

b) All insurances must be policies of indemnity.
c) The policies must cover: -
i) The same interest
ii) The same subject matter
iii) The same peril
d) A loss must occur.
e) The policies must be in force at the time of loss.
f) All policies must cover the loss.
g) The policies must be legally enforceable.

Marine Insurance Act provides that –

a) Were the assured is over-insured by double insurance, each insurer is bound, as between
him and the other insurers, to contribute rateably to the loss in proportion of the amount for
which he is liable under his contract.

b) If any insurer pays more than his proportion of the loss, he is entitled to maintain an action for
contribution against the other insurers, and is entitled to recovery from them of their share of
the loss.

c) Where the assured receives any sum in excess of the indemnity allowed, he is deemed to
hold such sum in trust for the Insurers, according to their right of contribution among themselves.

THE SUBJECT MATTER OF INSURANCE:

The subject matter of insurance may be any property of intrinsic value, or any event the happening
of which will cause the loss of a legal right or the creation of a legal liability. The subject matter is
described in the policy but it should be remembered that insurance is operative is respect of the
interest of the assured in the property concerned and it is this interest which is the subject matter
of the insurance contract. It is the pecuniary interest of the insured in the property exposed to peril
that is insured. Therefore, while the subject matter of the insurance may be property or liability, the
subject matter of the contract is the insurable interest therein.

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INSTITUTE CARGO CLAUSES (A), (B) and (C)

The first Institute Cargo Clauses were introduced to the London insurance market in 1912. They
were standardized in 1963 and replaced in 1982 by a fresh set of clauses with a proviso that
insurers should start using them with effect from 31.3.1983. The MAR policy form simultaneously
replaced the S.G.policy form. We, in India, started using the revised clauses and the policy form
from the same date.

The cargo clauses that are suitable for insurance of goods shipped by an ocean going (classed)
vessel are as follows:

1. A) Institute Cargo Clauses (A), (B) and (C)

B) Institute War Clauses (Cargo)

C) Institute Strikes Clauses (Cargo)

The below mentioned clauses are suitable for insurance of goods shipped by an aircraft and
should not be used to insure postal shipments by air.

2. a) Institute Cargo Clauses (Air) (Excluding sending by post)

b) Institute War Clauses (Air Cargo)

c) Institute Strikes Clauses (Air Cargo)

The only Institute Clause available for postal shipments is the Institute War Clauses (sending by
post).

The sequence of titles and clauses in both the categories is identical.

TITLES

i) Risks Covered

ii) Exclusions

iii) Duration

iv) Claims

v) Benefits of Insurance

vi) Minimizing losses

vii) Avoidance of delay

viii) Law and Practice

Goods shipped by a classed vessel can be insured, depending upon the nature of cover required
under any of the following three sets of clauses.

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 Short Title

1. Institute Cargo Clauses (C) _________ ICC (C)

2. Institute Cargo Clauses (B) _________ ICC (B)

3. Institute Cargo Clauses (A) _________ ICC (A)

ICC (C) and ICC (B) are named perils clauses, whereas ICC (A) is an unnamed perils clause.

Subject to the risks included and excluded by the clauses, the following types of losses are
recoverable under all three sets of clauses.

a) Particular Average i.e. partial loss of the subject matter insured proximately caused by an
insured peril.

b) General Average Sacrifice

c) Actual Total Loss

d) Constructive Total Loss

e) Expenses incurred by the assured

i) Extra charges of particular charges, which may include survey fees and reconditioning
costs in respect of a partial loss claim.

ii) Sue and Labour charges

f) General Average and salvage contributions

g) Collision Liability

Subject to the exclusions, ICC (A) covers all risks of loss of or damage to the subject matter
insured under the policy. However, it is not desirable always to think in terms of an all risks policy.
Covers suitable for a particular type of cargo can be granted by including any one or more of the
following extraneous perils in conjunction with ICC (C) or ICC (B).

a) Theft, Pilferage and/or Non-delivery.

b) Fresh water and/or rain water damage.

c) Hook and/or Oil damage.

d) Heating and Sweating.

e) Damage by mud, acid and other substances.

f) Breakage.

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g) Leakage.

h) Country Damage.

The list is not exhaustive and can never be complete. Other extraneous perils such
as denting, bending, cutting, scratching, chafing, etc., can also be specifically included in
the policy.

RISK COVERED (Clause No. 1)

The following chart lists the risks covered under ICC (B) and ICC (C) Clauses:

Risk Clause Clause

ICC (B) ICC (C)

Loss or damage reasonably attributable to:

Fire or explosion 1.1.1 1.1.1

Vessel or craft being stranded, grounded, sunk or capsized 1.1.2 1.1.2

Overturning or derailment of land conveyance 1.1.3 1.1.3

Collision or contact of vessel, craft or conveyance with 1.1.4 1.1.4

any external object other than water

Discharge of cargo at a port of distress 1.1.5 1.1.5

Earthquake, Volcanic eruption or lightning 1.1.6 *

Loss or damage caused by:

General Average Sacrifice 1.2.1 1.2.1

Jettison 1.2.2 1.2.2

Washing overboard 1.2.2 *

Entry of sea, lake or river water into vessel, craft, hold, 1.2.3 *
conveyance, container, lift van or place of storage

Total loss of any package lost overboard or dropped 1.3 *

whilst loading on to, unloading from, vessel or craft

(* Indicates the risk is not covered)

NOTES ON RISKS COVERED BY THE ICC (B) AND ICC(C) (Clause No.1)

Fire or explosion: Not only fire and explosion damage is covered but also damage by smoke and

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 by water used to extinguish fire. However, if fire is occasioned by spontaneous combustion, the
law holds that the proximate cause of loss is inherent vice or nature of the subject matter insured.
Any damage to other (“inoffensive”) cargo in consequence may be regarded as loss within the
policy terms. The cause of the fire or explosion is immaterial, provided it is not caused by one
of the excepted perils (e.g. war risks or willful misconduct of the assured). Loss arising from
efforts to extinguish fire to cargo which itself is not ignited is in nature of general average and,
as will be subsequently observed, forms a direct claim admissible under the cover for general
average sacrifice.

Vessel or craft being stranded, grounded, sunk or capsized: “Stranded” refers to contact with
the seabed or other obstruction and the vessel or craft must remain for a reasonable period of
time hard and fast. To be “sunk”, the vessel must have been effectively sunk. If she could have
been further immersed, she is not “sunk”. Capsized means “upset or overturned”.

The insured could recover for seawater damage under ICC (C) when loss is reasonably attributable
to the sinking or capsizing of the vessel or craft. In other circumstances, seawater damage
would not be recoverable under ICC (C) except in the event of collision or contact of vessel or
craft with any external object when the vessel or craft may be holed thus making entry of
seawater possible.

Overturning or derailment of land conveyance: The SG Policy did not contemplate overland
risks, and the cargo clauses attached thereto did not make it clear that underwriters were prepared
to extend the policy perils to embrace loss or damage resulting from accidents to land conveyances.
The ICC (B) and ICC (C) now clarify the situation, making the underwriter liable for such loss or
damage.

Collision or contact of vessel, craft or conveyance with any external object other than
water: It is obviously the intention to pay claims for loss or damage to the goods when it is
reasonably attributable to the carrying vessel, craft or conveyance striking anything; but it would
not include loss or damage resulting from movement of the cargo in the ship’s hold during heavy
weather, nor loss or damage resulting from jolting inside a road conveyance during transit.

Discharge of cargo at a port of distress: The intention is to cover discharge of the insured
cargo at a port of distress. The latter term relates to any port, short of the intended port of
discharge, at which the carrier discharges the cargo because the ship has encountered problems,
which prevent her from continuing transit of the goods. When the cargo finally arrives at its
destination it may be difficult to tell whether loss or damage was actually caused by the forced
discharge. For example, it may have happened during reloading, onward carriage or unloading at
the final port of discharge. Evidence must show that the loss or damage is reasonably attributable
to discharge of cargo at the port of distress.

General Average Sacrifice: This occurs when the insured goods are partly or totally sacrificed
in a general average act. Provided the GA act does not arise from any of the exclusions expressed
in the relevant ICC, the underwriter is liable for the sum insured if the sacrifice results in
total loss of the goods, or the proportion of the sum insured produced by applying the
percentage of depreciation caused by the sacrifice to the sum insured, if only part of the
goods is sacrificed.

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Jettison: The term relates to property that is thrown overboard in time of peril to save the
adventure from a total loss. When the ship and cargo are separately owned there are two parties
to the adventure, and jettison of the cargo or part thereof would constitute a general average
sacrifice. However, when a ship owner is carrying his own cargo only one interest is involved, so
there would be no grounds for claiming a general average act, and no claim could be made on the
policy for GA sacrifice. Nevertheless, the ICC provides that jettisoned cargo is covered, and this
would still be the case without a GA act.

NOTES ON ADDITIONAL RISKS COVERED BY ICC (B)

Earthquake, Volcanic eruption and Lightning: Since the SG policy did not cover overland risks,
earthquake and volcanic eruptions were not considered by the policy, these not being embraced
within terms ‘perils of the seas’. The old ICC extended the SG policy to cover overland risks, but
did not specify that earthquake or volcanic eruptions were covered (except with the term ‘all
risks’). These risks have been introduced into the new ICC as a possible cause of loss, but the
test of proximate cause is not applied. Whilst the goods were undergoing sea transit ‘lightning’
would be embraced in the SG policy as a peril of the sea during heavy weather, and if a fire
resulted from lightning striking a warehouse or the goods during land transit, such loss would be
treated as a loss by fire, and would be recoverable under the old ICC. The new ICC do not cover
‘all other perils’ (this term being interpreted in law to apply to perils similar in kind to those
expressed in the SG policy), so it is necessary to specify these risks. Under the ICC (B) lightning
damage to the goods, provided it is proximately caused thereby, would be covered whether or not
a fire resulted from the lightning, and the cover applies to both sea and land transit.

Washing overboard - The assured is required to prove that the cargo is actually washed overboard,
and not simply lost overboard. ICC (B) covers sling loss during loading or discharge (cl.1.3), but does
not extend this to cover cargo that may be lost overboard when the ship rolls in heavy weather.

Entry of water into vessel etc: This is the major difference in the cover provided by ICC (B) in
comparison with the cover provided by ICC(C). ICC(C) provide no cover for water damage or loss,
except when the ship or craft is stranded, grounded, sunk or has capsized and the loss is
reasonably attributable thereto, or where the water damage or loss may be reasonably attributed
to collision or contact of the vessel or craft with an external object, or in the case of the loss or
damage being proximately caused by GA sacrifice or jettison. ICC (B) on the other hand, provide
considerable cover for loss or damage caused by seawater, lake water or river water, but only
when the water actually enters into a place where the goods are stored or stowed during transit. It
is not necessary for heavy weather to exist for seawater, lake water or river water covers to exist.
This may appear to provide wider cover than under the old ICC, until one realizes that ICC (B)
does not cover other forms of heavy weather. For example, there is no cover for windstorm
damage, or for cargo lost overboard other than when it is washed overboard. Further, there is no
cover for damage or loss caused by shifting of cargo in the ship’s hold during heavy weather, nor
for water damage to goods not stowed inside the ship or craft, or in a container, lift van or place of
storage. The extension of cover to embrace river water, whilst it is intended, no doubt, to relate to
transit by river, can be interpreted to embrace flood water that enters a place of storage where the
goods, having commenced transit at an earlier point, are awaiting onward transit by river. Water
damage or loss to goods not in a container etc. would not be covered, so floodwater damage to
goods waiting on a quay would not be covered. One can see that contentious opinions will be

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 expressed in interpretation of the terms ‘container’ and a ‘place of storage.’ A ‘container’ in this
context is, obviously intended to mean the type of container that is used for unit carriage, and
does not mean the packing case or box in which the goods are contained. It is not clear what
interpretation should be placed on the term ‘place of storage’. No doubt, the drafters of the clause
meant it to be a warehouse, or similar covered area; but when goods are customarily stored in
enclosed uncovered spaces it might be considered that such place is a ‘place of storage’. There is
no cover for rainwater damage under ICC (B).

Sling Loss - There should be total loss of entire package(s). The term “loading / unloading” would
not be restricted to the original port of loading and the final port of discharge; it would embrace
also, loading and unloading during transshipment.

GENERAL AVERAGE CLAUSE (Clause No. 2):

The General Average Act can occur, “when, and only when, any extraordinary sacrifice or
expenditure is voluntarily and reasonably made or incurred for the common safety for the purpose
of preserving from peril the property involved in common maritime adventure”

The most common types of casualties giving rise to General Average and/or salvage services
are -

a) Jettison of cargo;

b) Sacrifice of the vessel’s equipment and stores;

c) Refloating operations following a stranding when ship and cargo are in a position of common
peril;

d) Damage to ship and/or cargo during operations to extinguish a fire on board a ship;

e) Salvage and/or towage assistance as a result of grounding, machinery breakdown and other
casualties.

f) Expenses of putting into a port of refuge for the common safety.

BOTH TO BLAME COLLISION CLAUSES(BTBC): (Clause No.3)

The clause appears in the ICC due to the peculiarities of the American Law governing the liability
for collision. In U.S.A. when both vessels are to blame for a collision, they are adjudged equally to
blame, but cargo owners can recover in full from the other vessel for any damage sustained.

This vessel then may include one-half of such amounts so paid in her claim for damages against
the ship carrying the cargo. So, despite the immunity in the contract of carriage, which invariably
provides that the carrier is not liable for damage to cargo caused by a peril of the sea or neglect in
navigation or management of the vessel-the carrying vessel does in effect pay indirectly one-half
of damage to cargo carried by her.

Owing to the exceptions in the Running Down Clause, these liabilities are not recoverable from
hull underwriters, nor are P&I Associations liable. Therefore the carrier has inserted Both to Blame

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Collision Clauses in his Bill of Lading stipulating that the cargo owners must indemnify him from
any amounts so paid. Cargo underwriters then agreed to assume this liability by a clause of the
same name in the Cargo Policy.

A theoretical illustration of how things might occur in sequence is as follows:

(a) Cargo owner suffers Rs.50,000 damage in consequence of a collision between vessels
A and B.

(b) He claims Rs.50,000 from his underwriter under say ICC(A).

(c) The underwriter meets that claim.

(d) Pursuing his rights of subrogation against vessel B, the underwriter recovers the full
Rs.50,000.

(e) Vessel B then proceeds against Vessel A and liability is apportioned 2/5 to Vessel A and 3/5
to Vessel B, so that Vessel B recovers Rs.20,000 from Vessel A. (2/5 x 50,000 = Rs.20,000/-)

(f) Under COGSA and Bill of Lading terms the carrier is not responsible for negligence in the
navigation and management of the vessel.

(g) Vessel A therefore seeks to recover such Rs.20,000 from the Cargo owner under the BTBC
clause.

(h) By Clause 3 of the ICC, the underwriter accepts liability for this claim. However this is not a
situation, which exists under the law of most of the maritime nations. For instance, by Sec.1
of the Maritime Conventions Act, 1911 a cargo owner will only recover in direct action against
vessel ‘B’ an amount that is in proportion to the vessel ‘A’ and ‘B’. Thus, where the Maritime
Conventions Act, 1911 applies, the chance of a carrier wishing to invoke the BTBC Clause is
much reduced.

EXCLUSIONS (Clause Nos. 4, 5 & 6)

There are three types of exclusions in the Institute Cargo Clauses:

a) General Exclusions

b) Unseaworthiness and unfitness Exclusion

c) War and Strikes Exclusion

Risks Excluded By Statute

The Marine Insurance Act (1963) states that, unless policy provides otherwise, a loss must be
proximately caused by an insured peril (risk) to be covered by the policy. In practice, the test of
proximate cause is waived only in respect of the risks listed in clause 1.1 of ICC (B) and ICC(C),
which provide that the loss need only be reasonably attributable to the named risk to be covered.
Thus the test of proximate cause is applied to any claim made under ICC (A) to ensure that the

17
 loss is not caused by an inevitable circumstance. One must remember that the term “All Risks”
does not embrace inevitable loss, even if such loss is not mentioned in the specified exclusions.

Section 55 of the Marine Insurance act (1963) reads as under:

Included And Excluded Losses.

(1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is
liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he
is not liable for any loss which is not proximately caused by a peril insured against.

(2) In Particular –

(a) The insurer is not liable for any loss attributable to the willful misconduct of the assured,
but, unless the policy otherwise provides, he is liable for any loss proximately caused by
a peril insured against, even though the loss would not have happened but for the
misconduct or negligence of the master or crew;

(b) Unless the policy otherwise provides, the insurer on ship or goods is not liable for any
loss proximately caused by delay, although the delay be caused by a peril insured
against;

(c) Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear,
ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or
for any loss proximately caused by rats or vermin, or for any injury to machinery not
proximately caused by maritime perils.

While most of the statutory exclusions are included in Clause No. 4 of the ICC, it must not be
assumed that because any of the exclusions is not included in this clause the underwriters are
prepared to waive statutory exclusions. For example, the underwriters are not liable for any loss
proximately caused by rats or vermin under ICC(C) or ICC (B), even though these are not
mentioned in the respective clauses. Similarly ordinary leakage would not be covered even under
an ‘All Risks’ policy, because it is an inevitable loss.

GENERAL EXCLUSIONS (Clause No.4)

The general exclusion clause is common to all the three Institute Cargo Clauses.

Willful misconduct of the assured (4.1) – It is included in section 55 of MIA (1963). Even a loss
damage or expense proximately caused by an insured risk is excluded if it is attributable to the
willful misconduct of the assured.

Ordinary leakage/loss in weight or volume/wear and tear (4.2) – Ordinary leakage refers to
evaporation of cargoes that have a liquid content. Ordinary loss in weight or volume is
complementary to the ordinary leakage exclusion and ensures that all forms of trade loss are
excluded from the policy. Ordinary wear and tear applies to second-hand goods and enables the
underwriters to make a deduction from the cost of repairs or depreciation allowance for a betterment
(new for old) enjoyed by the assured.

Improper packing (4.3) – A claim would not be recoverable under the policy if it can be shown

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 New India Assurance

that any loss, damage or expense was actually caused by insufficiency or inadequacy of packing.
This exclusion is also applicable to improper preparation of the goods and to stowage of the
goods in containers or lift vans. The exclusion however does not apply to losses caused by poor
stowage of the goods by container operator other than the assured, after commencement of risk.

Inherent vice (4.4) – it appears in Section 55 of the MIA (1963). Perishable goods are particularly
subject to loss by inherent vice following delay in delivery or even otherwise. A loss due to fire
resulting from spontaneous combustion in the insured goods would not be covered but fire
damage to the insured goods due to fire in some other goods which are stowed nearer them and
are subject to spontaneous combustion would be recoverable.

Delay (4.5) – The MIA (1963) provides that the insurers shall not be liable for loss proximately
caused by delay although the delay is caused by an insured peril. The words ‘damage or expense’
are added to this sentence in the cargo clauses. If the carrying vessel was delayed by a collision,
and the delay caused the cargo to deteriorate, there would be no claim for deterioration on ground
that it was reasonably attributable to collision. It is necessary to refer in this connection to sub-
clause 3 of the Transit Clause of ICC, which provides that the insurance shall remain in force
during delay beyond the control of the assured (but subject to 60-day limit). Such delay may occur
due to (a) port labour strike (b) cargo missing after landing (c) Customs calling for additional
information or chemical test. In respect of circumstances beyond the control of the assured, the
insurers may upon request, grant continuation of cover by charging additional premium (subject of
course to termination of cover as provided in the Transit Clause and provisions of Clause No. 9).

(f) Insolvency or financial default of carriers, owners, managers, charterers, operators of

the vessel (4.6) – This clause was introduced in 1982 to discourage the assured from shipping
his goods on a vessel whose operator is in financial difficulties. If the carrier is unable to complete
the voyage and discharges goods at an intermediate port, the insurers would not be liable for any
loss or damage to the goods caused by such discharge or by reloading into another ship nor for
any forwarding expenses.

Deliberate damage or destruction (4.7 – ICC(C) & ICC (B) only) – Insurers will not cover any
form of deliberate damage or destruction under ICC(C) or ICC (B) clauses, without due consideration
and additional premium. If cover is granted the following clause is attached to the policy.

1/1/82

(FOR USE ONLY WITH THE NEW MARINE POLICY FORM)

MALICIOUS DAMAGE CLAUSE

For use with Institute Cargo Clauses (B) and (C)

“In consideration of an additional premium, it is hereby agreed that clause 4.7 of the
Institute Cargo Clauses is deemed to be deleted and further that this insurance covers
loss of or damage to the subject-matter insured caused by malicious acts, vandalism
or sabotage, subject always to the other exclusions contained in this insurance.”

It is necessary to note that in addition to malicious damage the clause also covers loss or damage
caused by vandalism or sabotage.

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 This exclusion (4.7) is absent in ICC (A) because the risks of deliberate damage or destruction
would be embraced within the term ‘All Risks.’

Nuclear Weapons [4.7 in ICC (A) and 4.8 in ICC (B) & ICC(C)] – Any loss arising from the use
of nuclear and similar weapons is excluded in all forms of insurance. The exclusion is more
relevant in ICC (A) as it may not be interpreted as excluding loss arising from the use of a nuclear
weapon with no hostile intention (for example during a test).

UNSEAWORTHINESS AND UNFITNESS EXCLUSION (Clause No.5)

In every voyage policy (a cargo policy is normally a voyage policy) there is an implied warranty
that the ship be seaworthy at the commencement of each stage of the voyage. In the absence of
any provision to the contrary in the policy, the underwriter is discharged from liability for all losses
as from the date of breach of warranty if the ship sails in an unseaworthy condition. This applies to
all losses, not just to any loss connected with the unseaworthiness. The MIA (1963) in which this
provision appears (section 41) does not require any craft that carries the goods to be seaworthy.
The MIA also provides that the ship must be reasonably fit in all respects.

This exclusion is common to ICC (A), (B) and (C). Where the goods are carried, in an unseaworthy
ship or in a ship not fit to carry the goods, and the insured is unaware of the circumstances or
does not consent to such carriage the ICC waive the breach of this warranty by clause 5.2. It must
however be made clear that if the insured is privy to the fact that the goods are carried in an
unseaworthy ship or ship not fit to carry the goods, the breach of warranty will apply. Further, there
is no waiver of the breach of warranty if the goods are carried in an unseaworthy or unfit craft, as
clause 5.2 makes no reference to “craft” for this reason.

Although the underwriters are prepared to waive any breach of warranty where the insured is
unaware that the vessel is unseaworthy or unfit to carry the goods, they are not prepared to cover
loss arising from such unseaworthiness or unfitness of the vessel or craft if the assured is aware
of such unseaworthiness or unfitness at the time the goods are loaded in the vessel or craft.

It is important to note that the unfitness exclusion applies also to conveyance, container
or lift van.

In regard to container and liftvan the term “servants” would not include “container operators,” who
are agents rather than servants. Nor would the term include shipping agents, stevedores,
shipowners, craft operators and their servants, provided their actions are not directly controlled by
the insured.

Many claims for water damage might not have occurred were it not for the poor and substandard
condition of the container or lift van. Containers carried on deck are subjected to waves that break
over the ship during heavy weather. Water enters through holes in the roof of the container or
through cracks or loose worn-out fittings and remains inside the container, thus soaking the
contents until the container is stripped after arrival at destination. In the absence of exclusion
under clause 5.1 such loss would be recoverable under ICC (A) and ICC (B), which cover sea/
lake/river water damage. Of course the exclusion would apply if the insured or their servants were
privy, not otherwise.

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Note that the seaworthiness/fitness warranty under clause 5.2 applies to the commencement of
each stage of the voyage, whereas the exclusion under clause 5.1 applies solely to circumstances
where the assured or his servants are privy at the time of loading.

Claim in respect of a G.A. sacrifice or G.A. contribution would not be recoverable if it arises from
unseaworthiness of the vessel to which the assured was privy at the time the goods were loaded
on the vessel. The same principles apply to any other insured loss.

WAR AND STRIKES EXCLUSION (Clause Nos. 6 and 7)

These are common to all three sets of the Institute Cargo Clauses. It is important to note that their
deletion would not automatically incorporate war and strikes cover into ICC (B) or ICC(C). Similarly,
in absence of these two exclusion clauses, war and strike risks would be embraced within the
term ‘all risks’. Clause No. 7.3 is a new clause and excludes loss caused by any person acting
from a political motive and is not confined to detonation of explosives but would also include loss
caused by the goods being seized by terrorists etc. It is also necessary to note that expenses
incurred by the assured in connection with the excluded risks are not covered.

DURATION (Clause No. 8)

If the risk is covered under a specific policy, transit must commence within a reasonable time after
the insurers accept it. Even in this case the cover does not attach until the goods leave the
premises for commencement of transit. There is no cover during loading into conveyance at the
warehouse or during any period before transit actually commences. However, transit to a container
terminal for stuffing into a container would be considered as part of the overseas transit.

The insurance continues during ordinary course of transit. The term ‘ordinary’ is deemed to
embrace (1) customary method of carriage relevant to the type of goods and (2) the most direct
route to destination. It would include delays during or pending customs inspection and awaiting
arrival of the carrying conveyance or overseas vessel. But it would not include any delay that the
assured could avoid. Thus, if the assured elects to use a port warehouse for storage, this would
be outside the ordinary course of transit.

The insurance terminates either:

(a) on delivery to the consignee’s warehouse or other final warehouse at destination named in
the policy, or

(b) on delivery to any other warehouse whether prior to or at destination which the insured may
elect for storage other than in ordinary course of transit or for allocation or distribution; or

(c) on the expiry of 60 days after discharge over side of the insured goods from the overseas
vessel at the final port of discharge;

Whichever shall first occur

It is intended to cover the goods until they are delivered to the final warehouse at the destination

21
 named in the policy. This is subject to transit being within ‘Ordinary course’, which would include
normal delays at the port of discharge. It would not include delay within the control of the assured.
The time limit commences from completion of discharge, and if the goods are not delivered within
the time limit, cover ceases on expiry of 60 days unless the assured has negotiated an extension
of the time limit with the insurer. Sixty days are the limit and not a period of cover; so, once the
goods are delivered to the final warehouse, cover ceases, even if the 60 days have not expired.
There is no cover whilst the goods are in store at the final warehouse.

Sometimes, goods intended for a variety of destinations are shipped as one consignment to a
central point after discharge. From there, they are allocated / distributed to individual destinations.
In the absence of any prior arrangement to continue the cover to the final destination or individual
destinations on allotment from the central point, the cover will terminate as the goods are delivered
to the place where they are to be allocated and distributed. In such case, it is important to provide
evidence that the loss occurred prior to delivery at the point of allocation/distribution.

Change of destination may occur after discharge at the port of destination. In which event the
insurance shall not extend beyond the commencement of transit to such other destination, subject,
of course, to 60-day time limit, and restriction regarding storage and allocation or distribution.

If the destination is changed before the goods are discharged, this would be a “change of voyage”
and would be “held covered” by clause 10 of ICC.

If the carrier terminates the contract of carriage, at an intermediate port or place (in circumstances
beyond the control of the assured) clause 9 comes into effect. One example of such a circumstance
would be where a strike at the destination port compels the carrier to frustrate the voyage and
discharge the goods at an alternative port and thus terminate the contract of carriage, a
consequence which would exempt him from liability under COGSA as there is no actual fault or
privity on his part. In such an event, the insurance terminates automatically unless the assured
takes prompt and positive action to continue the insurance. As soon as the insured becomes
aware of the circumstance, he must promptly request insurers for continuation of the cover and
pay additional premium.

The insured must take prompt action to dispose off the goods, or to forward them to original
destination else the cover will cease on expiry of 60 days after arrival at such intermediate port or
place. The time limit may be extended subject to underwriter’s approval.

If the assured decides to sell the goods at the intermediate port or place, cover terminates when
goods are delivered to the buyer at such port or place subject to 60 days time limit.

If the goods are forwarded within the said period of 60 days to the destination named in the policy
or to any other destination – provided the assured has obtained insurer’s agreement to continue
the cover and transit to the alternate destination commences within time limit-cover continues
without interruption to terminate in accordance with the provisions of clause 8 (transit clause). It
must be remembered that all this apples only to discharge following frustration of a voyage, that is,
as a result of the carrier terminating the contract. This must not be confused with circumstances
where the assured elects to send the goods to an alternative destination following discharge at
the destination port. The latter is governed by clause 8.2 discussed above.

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It is important to note that if the reason to resort to the intermediate port or place-where the
contract of carriage is terminated – is due to the operation of an insured peril, the insurers would
be liable for unloading, storing and forwarding charges.

Delay in Transit: Section 50 of the MIA provides that the voyage must be prosecuted with
reasonable dispatch and the insurer is discharged from liability from the time any delay becomes
unreasonable. MIA is confined to the sea voyage only and therefore, the ICC incorporate the
following clause ensuring that the condition applies throughout the transit period:

Clause 18 – “It is a condition of this insurance that the assured shall act with reasonable dispatch
in all circumstances within their control.”

Provided delay is beyond the control of the assured, the cover continues during such delay.
However, loss proximately caused by delay is not covered, even if delay were caused by an
insured peril.

Deviation: A ‘deviation’ occurs when the route of transit is changed from the direct route
contemplated by the Policy but with the intention of returning to the direct or original route and
completing transit to the destination named in the Policy.

Clause 8.3 provides that the insurance remains in force during:

a) Delay beyond the control of the assured;

b) any deviation;

c) forced discharge;

d) reshipment;

e) transhipment;

f) any variation of the adventure arising out of the ‘Liberties Clause’ in the Bill of Lading.

Notice from the assured is neither required, nor is any additional premium charged.

Change of Voyage (Clause No. 10): Change of voyage occurs where, after attachment of the
insurance, destination is changed by the assured. This is a ‘held covered’ situation provided for by
Clause No.10 of the ICC.

Subject to prompt notice, the insurers will continue the cover or may decide whether the increase
in risk justifies changes in the policy cover at a reasonable additional premium.

Transhipment/Reshipment etc.: Under the MIA (Sec.59) cover continues during tran-shipment /
reshipment only following the operation of an insured peril.

Clause 8.3 provides automatic cover under the six contingencies described above. It will be noted
that neither the MIA nor clause 8.3 provide for circumstances where goods are transferred from
any conveyance to another conveyance (for example aircraft), other than a ship. Whilst any

23
 variation of the adventure that is within the control of the assured to avoid, would be treated as
outside the ‘Ordinary course of transit’, transfer of goods from one conveyance to another which is
customary-that is from road to rail; craft to ship etc., would be considered as being within ‘Ordinary
course of transit.’

It is important to bear in mind that an assured who is aware that a transhipment etc. will take
place other than in the ordinary course of transit must disclose this to the insurer while
effecting insurance, else, he will be guilty of breach of good faith and the contract could be
avoided entirely.

Inland Transit:

The scope of ICC is not restricted to voyage from port to port only. Inland transit in conjunction
with overseas voyage prior to shipment on vessel or after goods are discharged at the port of
destination can also be covered under the ICC. The Inland Transit Clause therefore should not be
attached to such policy.

Insurable Interest (Clause No.11):

Although the assured need not have an insurable interest at the time the insurance contract is
effected, it is necessary for him to have such interest at the time of loss. This is provided for by
Section 8 of the MIA and also by clause 11.1 of ICC.

Therefore, in the event of a claim being preferred, the insurer may require the assured to prove his
insurable interest in the subject matter of insurance at the time of the loss and if such interest
cannot be proved, the claim will not be met.

“Lost or not lost” (Clause No. 11.2): this relates to a long-standing practice under which
cover may be granted for shipments which had commenced transit and may have already
been lost, provided that neither the assured nor insurer is aware of the loss at the time of effecting
the insurance.

The importance of this provision lies in the fact that a contract of insurance may be effected after
the actual commencement of the risk. In such a case, the cover is retrospective to the
commencement of the risk as set out in the policy.

This provision is subject to the requirement that the assured and the insurer shall be in an equal
state of knowledge or ignorance.

The person effecting the insurance must be without any information that a loss had occurred.
If he did know of the happening of a loss and the underwriter did not, it would be concealment of a
material fact and a breach of good faith which would render the insurance contract void.

Or, conversely, if a person effected an insurance when the underwriter knew that the vessel has
safely arrived, though the person was ignorant of the fact, the premium is such a case would be
returnable.

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 New India Assurance

The cover envisaged under this clause should also be examined in the light of section 64-VB of
the Insurance Act, 1938.

Expenses incurred by the assured (Clause Nos.12 and 16):

The Insurer is not concerned with the ordinary expenses incurred in connection with the transit.
But where an expense is incurred relating to a loss recoverable or to prevent or minimize an
insured loss, the insurer pays such expenses as follows:

(a) Extra Charges: Also called “particular charges”, they would include ‘survey fees’ and
‘reconditioning costs’. These are recoverable as part of a claim for partial loss. In any event –
and this is important – the insurer’s liability does not exceed the sum insured under the Policy
for both the loss and the expenses.

(b) Sue and Labour Charges (Clause No.16) – “Duty of the Assured”: It provides that the
Insurer would pay particular charges incurred by the assured – reasonably incurred – during
transit to prevent or minimize loss / damage to goods for which Insurers would be liable. A
duty is imposed on the assured to take all reasonable measures to protect the goods from
the loss. Provided the assured carries out his duty, charges properly and reasonably incurred
would be paid in addition to any claim, even a total loss claim.

(c) Forwarding Expenses (Clause No. 12):

These expenses are reimbursed only when transit is frustrated (that is terminated short of
destination) by an insured peril, but such reimbursement is subject to the exclusions specified
in ICC.

“Not to Inure” (Clause No. 15):

The Carriage of Goods by Sea Act provides that the carrier may not exempt himself from liability
beyond the limits permitted to him by the Act. This prevents him from incorporating any clause in
the Bill of Lading that gives him benefit of the cargo owners’ insurance policy. In fact, the Act
states that any “benefit of insurance” clause in the contract of carriage is void.

This does not prevent any other carrier or bailee (whose contract is not subject to Carriage of
Goods by Sea Act) from inserting a “benefit of insurance” clause. So, the ICC provides that the
Insurance cannot be used for the benefit of the carrier or other bailee.

Increased Value (Clause No. 14):

The MIA – section 29 provides that ‘in absence of fraud, the value fixed by the policy is, as
between the Insurer and the Assured, conclusive of the insurable value of the subject matter
insured’. If the assured effects two policies, both of which are agreed value policies, on the same
interest it would become necessary to make sure that the ‘insurance value’ embraces the value
stated in both policies. This is made possible by the clause.

The clause is in two parts. The first part (14.1) applies to marine policy whilst the second part

25
 (14.2) applies to increased value policy. Both clauses have the same effect. The assured must add
together values expressed in each policy to provide one insured value to apply to both policies.
The claim will be settled proportionately.

Constructive Total Loss (Clause No. 13) and Waiver (Clause No. 17)

The right to claim CTL is given to the assured by the Marine Insurance Act, 1963. to avoid
misunderstanding the clause is incorporated in ICC.

To substantiate a claim for CTL the assured must give notice of his intention to abandon the
goods and claim a CTL from the insurer. The notice must be given without delay. If the insurer
accepts the notice formally, he admits liability for the claim and accepts responsibility for whatever
may remain of the goods. In practice, the insurer always rejects in the first instance, thereby
reserving his position until all facts are to hand.

Action taken by the insurer to reduce or prevent the loss may be construed as an acceptance of
abandonment, but, to prevent this from happening, a ‘waiver clause’ is incorporated in the ICC.

Carrier’s/Bailee’s Liability (Clause No. 16)

The ICC has imposed a duty on the assured to properly preserve and exercise all rights against
carriers etc. who may be responsible for loss/damage to the goods. The insurers would have no
right to proceed against those responsible for loss/damage to the goods until claim under the
policy is settled under a Letter of Subrogation. Moreover, the contracts of carriage are subject to
statutory time limits. Clause No. 16 therefore provides that in the event the assured incurs expenses
in pursuing these duties, the insurers will reimburse charges properly and reasonably incurred by
him to ensure that all rights against carriers, bailees and other parties are properly preserved and
exercised.

If the assured incurs expenses in performing this duty he may claim such expenses from the
insurers who will reimburse the same.

English Law and Practice (Clause No. 19)

The purpose is to provide a basis in law and practice that is compatible with the intentions of the
Technical & Clauses Committee of the I.L.U. who have drafted the ICC. To try to interpret the
clauses in conjunction with any other law and practice might lead to ambiguity, which the drafters
of the clauses have sought to avoid.

The ICC (A), (B) or (C) may be used in policies covering (a) imports to/exports from India and (b)
coastal shipments in India by classed vessels.

Though War & Strike risks are specifically excluded in ICC, it is customary under the cargo policy
to grant War/Strike risks cover by charging additional premium and attaching the relevant Institute
War and Strike clauses to the policy.

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 New India Assurance

THE INSTITUTE WAR CLAUSES (CARGO)

RISKS COVERED

Loss or Damage caused by:

(a) War, Civil war, revolution, rebellion, insurrection or civil strife, arising there from or any hostile
act by or against a belligerent power.

(b) Capture, seizure, arrest, restraint or detainment arising from risks covered under (a) above
i.e. warlike operation only. (There is no provision for non-warlike risks. Any arrest etc. as part
of a judicial process – e.g. confiscation by customs, smuggling – would not be covered).

(c) Derelict (meaning abandoned) mines, torpedoes, bombs or other derelict weapons of war.
Item (a) above refers to hostile/warlike acts but we must not forget that cessation of hostilities
does not necessarily mean that risks created by the hostilities will cease to exist after war is
over. A ship could strike a mine in peacetime as in war –a derelict mine.

(d) General Average and Salvage charges incurred to avoid loss from a risk covered.

THE EXCLUSIONS:

They are as in ICC (A) with addition of sub-clause no. 3.3, which reads as under: -

“Any claim based upon loss or frustration of the voyage or adventure.”

When goods are prevented from reaching their destination by reason of the operations of war
risks a CTL would occur and this is excluded from the cover. Also, no forwarding charges would
be payable.

DURATION

(a) i) War cover is restricted to the period whilst the goods are water-borne in ship or craft.
War risks are not covered on land.

ii) When goods arrive at destination port, a time limit is imposed in order to reduce the risk,
if the goods are not discharged within a reasonable period.

iii) In the event of transhipment, the waterborne rule is relaxed to a limited extent, subject to
restrictions in both location and time.

(b) The cover attaches as the insured goods are loaded onto the vessel or craft that is used to
carry the goods from the shore to ship.

(c) Cover terminates as the insured goods are discharged from the vessel or from the craft used
to carry the goods from the ship to shore.

(d) Full war cover is available when goods are on board the overseas vessel. However, the cover
during the time the goods are in the craft is limited to the risks of mines and derelict
torpedoes floating or submerged.

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 (e) Time limits for the war cover are as under:

i) At the port of discharge, whilst the goods remain in the vessel, war cover is limited to 15
days from midnight on the day the vessel arrives.

ii) There is no provision for extension of the 15-day’s time limit. This is left to the discretion
of the underwriter.

iii) If the vessel sails with the cargo on board for an alternate destination subject to the
provisions of clause No.6 (Change of voyage), cover would continue until the vessel
arrives at the alternate destination, and if she does not discharge cargo, time limit of 15
days as above will apply. It may be recalled that ‘change of voyage’ is a “held covered”
situation when after attachment of insurance; the destination is changed by the insured
at premium and conditions to be arranged and subject to prompt notice to underwriters.

iv) The time limit for goods in craft is 60 days after discharge from the overseas vessel.
Underwriters may agree to an extension of the time limit in regard to craft risk.

v) Transhipment: The Overseas vessel may arrive at an intermediate port or place to

discharge the goods for on-carriage by another overseas vessel or by aircraft. Or else, it
may be a port or place of refuge. Subject to additional premium, the insurance continues
until expiry of 15 days from midnight of the day of arrival. During the period of 15 days
the cover ashore continues only whilst the goods remain within the area of the transhipment
port or place. If the goods are removed from this area, cover is suspended, to reattach
as the goods return to the port area permitted – provided such return is within the 15-
day time limit. In any event, the cover ceases on the expiry of the time limit if the goods
are not loaded onto the on-carrying ship or aircraft within the time limit. The cover re-
attaches as the goods are loaded on an on-carrying vessel or aircraft. Where the on-
carriage is by an overseas vessel, the insurance continues subject to those same clauses.
Where the on-carriage is by aircraft, Institute War Clauses (Air Cargo) (excluding sending
by post) will apply to the on-carriage by air. The air war clauses attach when the goods
are loaded on the aircraft for the air transit and terminate when discharged subject to the
15-day time limit after arrival of aircraft at the place of discharge.

vi) Termination of the contract of carriage leading to frustration of the transit at a port other
than destination:

The Cover will terminate on discharge or on expiry of 15-day time limit, if the goods are
not discharged. If re-shipment is desired underwriters must be notified before the onward
carriage commences, else, there will be no further cover. Provided the underwriter is
notified before re-shipment occurs, cover will reattach, but still be subject to the ‘waterborne’
provision. It may be observed that the reattachment does not include craft risk where
goods have been discharged from the overseas vessel. However, this omission does not
matter where the loading on the on-carrying vessel takes place within 60 days (in craft)
after discharge from the original vessel, as clause No.5.4 would apply. However, if this
time limit is likely to expire, the assured may request extension of the period whilst the
goods are in craft.

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DELAY IN PROSECUTION OF VOYAGE: -

So far as the Marine risks are concerned, the ICC clauses provide that Insurance automatically
continues during delay beyond the control of the insured. There is no similar protection for the
insured in the war clauses. Therefore, the provision of MIA sections 48 and 49 will apply by which
the insurer is discharged from liability as from the time when delay becomes unreasonable.

If the fact of delay is to be construed as a variation of the adventure under the ‘Liberties Clause’ of
the Bill of Lading, the cover will continue subject to Clause 5.5 discussed below.

DEVIATION AND VARIATION OF ADVENTURE:

Subject to prompt notice to underwriters and an additional premium, if required, the insurance will
remain in force during any deviation, or variation of adventure arising from the ‘Liberties clause’ of
the contract of carriage.

Note:

War clauses; do not cover expenses resulting from the operation of war risks. Therefore, ‘forwarding
charges’ are not payable. This however does not affect liability for sue and labour charges and
recovery expenses under clauses 11 and 12 (minimizing losses.)

Following clauses, are identical with their counterparts in ICC and need no additional comment: -

i) Change of voyage Clause ii) Insurable Interest Clause

iii) Increased Value Clause iv) Not to inure Clause
v) Duty of Assured Clause vi) Waiver Clause
vii) Reasonable Dispatch Clause viii) English Law and Practice Clause

The rates of premium for war risks cover are additional.

29
 THE INSTITUTE STRIKES CLAUSES (CARGO)

RISKS COVERED

(a) Loss or damage caused by:

i) Strikers, Locked-out workmen or persons taking part in labour disturbances (for example
political activists who join picket lines) riots or civil commotions.

ii) Any terrorist or any person acting from a political motive.

(b) General average or salvage charges incurred to avoid loss from a risk in covered.

EXCLUSIONS

They are as in ICC with the addition of three sub-clauses, which read as under: -

3.7 Loss, damage or expense arising from the absence shortage or withholding of labour of any
description whatsoever resulting from any strike, lock-out, labour disturbance, riot or civil
commotion.

3.8 Any claim based upon loss of or frustration of the voyage or adventure.

3.9 Loss, damage or expense caused by war, civil war, revolution, rebellion insurrection or civil
strife arising there from or any hostile act by or against a belligerent power.

COMMENTS

Cover is limited to physical loss or damage to the insured goods. It does not extend to cover
expenses incurred by the insured arising from the risks covered (except sue and labour charges
and recovery of expenses under clause 11 relating to minimizing losses) Nor does it cover any
consequential loss suffered, nor are “forwarding charges” covered.

DURATION OF STRIKES RISK COVER

Unlike the war risk cover, the strike risk cover is ‘warehouse to warehouse’ and exists throughout
the whole period of transit on lines identical to the Transit Clause of the Marine Covers. Therefore,
the clauses relating to transit are identical to the Marine ICC and same comments apply.

The remaining clauses are identical to their counterparts in ICC. Hence they do not require
special comments.

The rates of premium for strikes risks are additional for all voyages.

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 New India Assurance

THE INSTITUTE CARGO CLAUSES (AIR)

(excluding sending by post)

These clauses are intended to cover carriage of goods by airfreight and therefore, postal sending
by air is excluded from the scope of the cover.

RISKS COVERED

The cover is against ‘all risks’ as in ICC (A). There is no Institute Clause for restricted cover such
as ICC(C) or ICC (B).

There is no ‘Both to Blame Collision’ and General Average & Salvage Charges Clause.

EXCLUSIONS

a) Willful misconduct of the assured.

b) Ordinary (inevitable) loss.
c) Insufficiency/unsuitability of packing etc.
d) Inherent vice.
e) Delay even if delay is caused by an insured peril.
f) Insolvency or financial default of the owners, managers, charterers and operators of aircraft.
g) Nuclear Weapons.
h) Unfitness of aircraft, conveyance, container, or lift van where the assured or their servants
are privy at the time of loading.
i) War and Strikes Risks.

War & Strikes risks can be covered by charging additional premium and attaching the relevant
clauses to the policy.

DURATION

The insurance attaches from the time the goods leave the warehouse for commencement of
transit, continues during the ordinary course of transit and terminates on delivery to the final
warehouse. Same provisions apply as in ICC as to allocation and distribution of the goods prior to
delivery, the only difference being in the time limit. The ICC (Air) provides a 3-day time limit after
unloading from the aircraft as compared to the 60-day time limit after completion of discharge
from overseas vessel in the ICC. The time limit of 30 days also applies to ‘termination of contract
of carriage’ clause, which otherwise, is the same as in ICC. For the type of goods sent by airfreight
(high value/less weight, susceptible to pilferage, urgent delivery, minimum handling) it is but
natural that the period of 60 days is reduced to 30 days.

The remaining clauses are identical with their counterparts in ICC and therefore need no further
comments.

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 THE INSTITUTE WAR CLAUSES (AIR CARGO)
(excluding sendings by post)

RISKS COVERED:

These clauses provide the same type of cover as in the Institute War Clauses (Cargo).

General average and salvage charges clause is naturally omitted from the aircargo war clauses. If
an aircraft comes down in the sea, possibility of salvage of the goods could arise. Of course, it is
possible to cover the expenses of salving the goods under ‘Duty of the assured’ clause No.9

EXCLUSIONS:

They are as in the Institute Cargo Clauses (Air) with addition of sub-clauses no.2.2.8, which reads
as under:

“Any claim based upon loss of or frustration of the voyage or adventure.”

Warranty of seaworthiness in MIA does not apply to aircraft even where the aircraft is designed for
landing on water.

DURATION:

The cover attaches as the insured goods are loaded on the aircraft for the commencement of the
air transit. War risks are not covered on land.

Cover terminates either, as the insured goods are unloaded from the aircraft at the final place of
discharge or on expiry of 15 days from midnight of the day of arrival whichever shall first occur.

Variations of transit-say, to substituted place of discharge are as in the Institute War Clause
(Cargo) but with a time limit of 15-days from arrival, subject of course to prompt notice and
additional premium.

Termination of contract of carriage at an intermediate place affects the cover in the same way, as
it would in the Institute War Clauses (Cargo). Same remarks apply to deviation or change of
transit.

In case of transhipment for on-carriage by aircraft or by sea i.e. overseas vessel, the insurance
continues until expiry of 15 days, but thereafter reattaches as the insured goods are loaded on the
on-carrying aircraft or overseas vessel. During this period of 15 days the insurance remains in
force after discharge only whilst the goods are at the intermediate place (e.g. at transhipment
airport)

Where on-carriage takes place on an overseas vessel, Institute War Clauses (Cargo) will apply.

The remaining clauses are identical with their counterparts in I.C.C. and therefore do not require
special comments.

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 New India Assurance

THE INSTITUTE STRIKES CLAUSES (AIR CARGO)

These clauses provide the same type of cover as the Institute Strikes Clauses (Cargo) but they
are suitably amended to relate to air transit. General Average and Salvage Charges clause is
omitted.

The only difference between the duration of cover in Institute Strikes Clauses (Cargo) and these
clauses is in the time limit after final discharge. In the former the time limit is 60 days but for air
transit it is 30 days after discharge. Otherwise cover is warehouse to warehouse.

RISKS COVERED

They are as in the Institute Strikes Clauses (Cargo) with addition of Sub-clause No.2.5, which
excludes liability for loss, damage or expense arising from unfitness of aircraft etc.

It should also be noted that frustration of adventure clause is not incorporated in the ‘Exclusions’

The remaining clauses are identical with their counterparts in the Institute Strike Clauses (Cargo)
and therefore do not require special comment.

33
 INSTITUTE RADIOACTIVE CONTAMINATION
EXCLUSION CLAUSE (1-10-1990) - CLAUSE 356
Despite the fact that there is a clause in the Institute Clauses excluding loss damage or expense
arising from the use of any weapon of war employing atomic or nuclear fission and / or fusion or
other like reaction or radioactive force or matter, following clause has to be applied to all marine
policies.

Institute Radioactive Contamination Exclusion Clause

(I.R.C.E.C) Dt.1-10-1990

This clause shall be paramount and shall override anything contained in this insurance inconsistent
therewith.

1. In no case shall this insurance cover loss, damage, liability or expense directly or indirectly
caused by or contributed to by or arising from:

1.1 ionizing radiations from or contamination by radioactivity from any nuclear fuel or from
any nuclear waste or from the combustion of nuclear fuel:

1.2 the radioactive, toxic, explosive or other hazardous or contaminating properties of any
nuclear installation, reactor or other nuclear assembly or nuclear component thereof:

1.3 any weapon of war employing atomic or nuclear fission and / or fusion or other reaction
or radioactive force or matter.”

RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE (USA ENDORSEMENT)

USEN91 - APPLICABLE TO CL 356

This contract is subject to the Institute Radioactive Contamination Exclusion 1/10/90 provided that

if fire is an insured peril and

where the subject matter insured or in the case of a reinsurance, the subject matter
insured by the original insurance, is within the U.S.A., its island, onshore territories or
possessions.

and

a fire arises directly or indirectly from one or more of the causes detailed in Sub-Clauses
1.1 and 1.2 of the Institute Radioactive Contamination Exclusions Clause 1/10/90 any
loss or damage arising directly from that fire shall, subject to the provisions of this contract
be covered, EXCLUDING however any loss damage liability or expense caused by
nuclear reaction nuclear radiation or radioactive contamination arising directly or indirectly
from that fire.

The clause should be incorporated in all marine open policies / open covers / special Declaration
policies etc. as well as in every specific policy covering transit insurance of goods irrespective of
the scope of cover.
There is no Held Covered provision and the clause cannot be deleted by payment of additional
premium.

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 New India Assurance

INSTITUTE EXTENDED RADIOACTIVE

CONTAMINATION EXCLUSION CLAUSE 01/11/02 (356A) RACE
This clause shall be paramount and shall override anything contained in this insurance inconsistent
therewith

1. In no case shall this insurance cover loss damage liability or expense directly or indirectly
caused by or arising from

1.1 ionising radiations from or contamination by radioactivity from any nuclear fuel or from
any nuclear waste or from the combustion of nuclear fuel

1.2 the radioactive toxic, explosive or other hazardous or contaminating properties

of any nuclear installation, reactor or other nuclear assembly or nuclear component
thereof

1.3 any weapon or device employing atomic or nuclear fission and/or fusion or other like
reaction or radioactive force or matter

1.4 the radioactive toxic, explosive or other hazardous or contaminating properties

of any radioactive matter. The exclusion in this sub-clause does not extend to radioactive
isotopes, other than nuclear fuel, when such isotopes are being prepared, carried,
stored or used for commercial, agricultural, medical, scientific or other similar
peaceful purposes.

U.S.A. & Canada Endorsement for the Institute Extended Radioactive Contamination
Exclusion Clause 01/11/2002

This policy is subject to the Institute Extended Radioactive Contamination Exclusion Clause 01/
11/2002 ((“RACE”). The inclusion of RACE in this policy is material to underwriters willingness to
provide coverage at the quoted terms, conditions and rates.

It is the intent of the parties to give maximum effect to RACE as permitted by law.

In the event that any portion of RACE may be found to be unenforceable in whole or in part under
the law of any state, territory, district commonwealth or possession of the U.S.A., or any province
or territory of Canada, the remainder shall remain in full force and effect under the laws of that
state, territory, district, commonwealth or possession, province or territory. Further, any such
finding shall not alter the enforceability of RACE under the laws of any other state, territory,
district, commonwealth or possession of the U.S.A., or any province or territory of Canada, to the
fullest extent permitted by applicable law.

The clause should be incorporated in all marine open policies / open covers / special Declaration
policies etc. as well as in every specific policy covering transit insurance of goods irrespective of
the scope of cover.
There is no Held Covered provision and the clause cannot be deleted by payment of additional
premium.

35
 INSTITUTE RADIOACTIVE CONTAMINATION CHEMICAL,
BIOLOGICAL, BIOCHEMICAL AND
ELECTROMAGNETIC WEAPONS EXCLUSION
CLAUSE 10/11/2003 (370) RACCBE

This clause shall be paramount and shall override anything contained in this insurance inconsistent
therewith

1. In no case shall this insurance cover loss damage liability or expense directly or indirectly
caused by or or contributed to by or arising from

1.1 Ionising radiations from or contamination by radioactivity from any nuclear fuel or from
any nuclear waste or from the combustion of nuclear fuel

1.2 the radioactive, toxic, explosive or other hazardous or contaminating properties

of any nuclear installation, reactor or other nuclear assembly or nuclear component
thereof

1.3 any weapon or device employing atomic or nuclear fission and/or fusion or other like
reaction or radioactive force or matter

1.4 the radioactive toxic, explosive or other hazardous or contaminating properties of any
radioactive matter. The exclusion in this sub-clause does not extend to radioactive
isotopes, other than nuclear fuel, when such isotopes are being prepared, carried,
stored or used for commercial, agricultural, medical, scientific or other similar peaceful
purposes.

1.5 any chemical, biological, bio-chemical, or electromagnetic weapon.

U.S.A & Canada Endorsement for the Institute Radioactive Contamination Chemical,
Biological and Electromagnetic Weapons Exclusion Clause 10/11/2003

This policy is subject to the Institute Radioactive Contamination, Chemical, Biological, Bio-Chemical
and Electromagnetic Weapons Exclusion Clause 10/11/03 (RACCBE). The inclusion of RACCBE
in this policy is material to underwriters willingness to provide coverage at the quoted terms,
conditions and rates.

It is the intent of the parties to give maxmium effect to RACCBE as permitted by law.

In the event that any portion of RACCBE may be found to be unenforceable in whole or in part
under the law of any state, territory, district, commonwealth or possession of the U.S.A... or any

36
 New India Assurance

province or territory of Canada, the remiander shall remain in force and effect under the laws of
that state, territory, district, commonwealth or possession, province or territory. Further, any such
finding shall not alter the enforceability of RACCBE under the laws of any other state, territory,
district, commonwealyh or possession of the U.S.A., or any province or territory of Canada, to the
fullest permitted by applicable law.

The clause should be incorporated in all marine open policies / open covers / special Declaration
policies etc. as well as in every specific policy covering transit insurance of goods irrespective of
the scope of cover.
There is no Held Covered provision and the clause cannot be deleted by payment of additional
premium.

37
 CARGO TERMINATION OF TRANSIT CLAUSE (TERRORISM)
This clause shall be paramount and shall override anything contained in this insurance inconsistent
therewith.

1. Notwithstanding any provision to the contrary contained in this Policy or the Clauses referred
to therein it is agreed that insofar as Policy covers loss of or damage to the subject matter
insured caused by any terrorist or any person acting from a political motive, such cover is
conditional upon the subject matter insured being in the ordinary course of transit and, in any
event, SHALL TERMINATE EITHER :

1.1 As per the transit clauses contained within the Policy

or

1.2 on delivery to the Consignee’s or other final werehouse or place of storage at the
destination named herein

1.3 on delivery to any other warehouse or place of storage, whether prior to or at the
destination named herein, which the Assured elect for storage other than in the ordinary
course of transit or for allocation or distribution.

or

1.4 in respect of marine transits, on the expiry of 60 days after completion of discharge
overside of the goods hereby insured from the oversea vessel at the final port of
discharge.

1.5 in respect of air transits, on the expiry of 30 days after unloading the subject matter
insured from the aircraft at the final place of discharge.

whichever shall first occur.

2. If this Policy or the Clauses referred to therein specifically provide cover for inland or other
further transits following on from storage, cover will re-attach, and continues during the
ordinary course of that transit terminating again in accordance with Clause 1.

The clause should be incorporated in all marine open policies / open covers / special Declaration
policies etc. as well as in every specific policy covering transit insurance of goods irrespective of
the scope of cover.
There is no Held Covered provision and the clause cannot be deleted by payment of additional
premium.

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 New India Assurance

THE INSTITUTE CLASSIFICATION CLAUSE (1-1-2001)

QUALIFYING VESSELS

1. This insurance and the marine transit rates as agreed in the policy or open cover apply only
to cargos and / or interests carried by mechanically self-propelled vessels of steel construction
classed with a Classification Society which is:

1.1 a Member of Associate Member of the International Association of Classification Societies

(IACS)*, or

1.2 a National Flag Society as defined in Clause 4 below, but only where the vessel is
engaged exclusively in the coastal trading of that nation (including trading on an inter-
island route within an archipelago of which that nation forms part).

Cargos and / or interests carried by vessels not classed as above must be notified promptly to
underwriters for rates and conditions to be agreed. Should a loss occur prior to such agreement
being obtained cover may be provided but only if cover would have been available at a reasonable
commercial market rate on reasonable commercial market terms.

AGE LIMITATION

2 Cargos and / or interests carried by Qualifying Vessels (as defined above) which exceed the
following age limits will be insured on the policy or open cover conditions subject to an
additional premium to be agreed.

Bulk or combination carriers over 10 years of age or

Other vessels over 15 years of age unless they :

2.1 have been used for the carriage of general cargo on an established and regular pattern
of trading between a range of specified ports, and do not exceed 25 years of age, or

2.2 were constructed as containerships, vehicle carriers or double-skin open-hatch gantry

crane vessels (OHGCs) and have been continuously used as such on an established
and regular pattern of trading between a range of specified ports, and do not exceed 30
years of age.

CRAFT CLAUSE

3 The requirements of this Clause do not apply to any craft used to load or unload the vessel
within the port area.

NATIONAL FLAG SOCIETY

4 A National Flag Society is a Classification Society, which is domiciled in the same country as
the owner of the vessel in question, which must also operate under the flag of that country.

PROMPT NOTICE

5 Where this insurance requires the assured to give prompt notice to the Underwriters, the right
to cover is dependent upon compliance with that obligation.

39
 LAW AND PRACTICE

6 This insurance is subject to English law and practice.

Current IACS Members and Associate Members are as under:

(A) Members of the International Association of Classification Society :

1. AB American Bureau
2. BV Bureau Veritas
3. CS China Classification Society
4. GL Germanischer Lloyd
5. KR Korean Register of Shipping
6. LR Lloyd’s Register of Shipping
7. NKK Nippon Kaiji Kyokai
8. NV Norske Veritas
9. RI Registro Italiano
10. RS Maritime Register of Russia

(B) Associate Members of the International Association of Classification Society (IACS)

1. HV Croatian Register of Shipping

2. IR Indian Register of Shipping

The Indian Register of Shipping (IRS) is considered as an approved Classification Society

and hence Indian Flag vessels classed by the IRS do not attract non-classification additional
premium for vessels not classed as per the Institute Classification Clause (01/01/2001)

* For a current list of IACS Members and Associate Members please refer to the IACS website at www.iacs.org.uk

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 New India Assurance

CLAUSES FOR SPECIAL TRADES

The basic clauses already examined have been designed to meet the needs of shippers of
general merchandise, affording a common type of cover acceptable to the insurance community
as a whole. Clauses drafted by the Technical and the Clauses Committee of the Institute London
Underwriters already discussed are intended to serve that purpose.

Shippers in specialized trades, however, may find inadequacies in the cover provided by the basic
clauses, and will find it desirable to negotiate special terms. Thus standard form of clauses,
agreed between a number of Trade Associations and responsible Underwriter’s Associations,
have been adopted for the insurance of particular commodities.

These “Trade Clauses” while having many features in common with the basic clauses, have
modifications which mainly concern the period of transit and the peril insured against.

Among the more important are the Trade Clauses for Bulk Oil, Coal, Corn, Jute, Rubber, Timber,
Frozen Meat and Frozen food.

Salient features of some of these clauses are mentioned below :

A) INSTITUTE COAL CLAUSES – Covers ICC (B) risks including fire, explosion or heating,
even when caused by spontaneous combustion, inherent vice or nature of the subject matter
insured. Cover terminates as the subject matter insured is discharged by the vessel at
destination.

B) INSTITUTE FROZEN FOOD CLAUSES (A) (Excluding Frozen Meat)– Covers all risks of
loss of or damage to the subject matter insured other than loss or damage resulting from any
variation in temperature howsoever caused but includes loss or damage resulting from variation
in temperature attributable to breakdown of refrigerating machinery resulting in its stoppage
for a period of not less than 24 consecutive hours.

C) INSTITUTE FROZEN FOOD CLAUSES (C) (Excluding Frozen Meat)– The scope of cover
is limited to the perils covered under ICC (C) only and specifically excludes loss, damage or
expense (1) arising from any failure of the assured or their servants to take all reasonable
precautions to ensure that the subject matter insured is kept in refrigerated or, where
appropriate, properly insulated and cooled space and (2) otherwise recoverable under the
policy unless prompt notice thereof is given to the Underwriters and, in any event, not later
than 30 days after the termination of cover.

Duration of cover under both the clauses is 5 days as against 60 days under the ICC. Frozen meat
should not be covered under either of these two clauses.

D) INSTITUTE FROZEN MEAT CLAUSES (A) – None of the Frozen Meat Clauses are suitable
for chilled, cooled or fresh meat. Cover is granted against ‘All Risks’ and does not have any of
the exclusions as in (C) above.

E) INSTITUTE FROZEN MEAT CLAUSES (A) 24 Hours Breakdown – Cover is similar to that
under (B) above.

41
 F) INSTITUTE FROZEN MEAT CLAUSES (C) AND 24 Hours Breakdown – Under which cover
is similar to ICC (C) but also includes loss / damage attributable to breakdown of refrigerating
machinery resulting in its stoppage for a period of not less than 24 consecutive hours.

G) THE INSTITUTE TIMBER TRADE FEREDERATION CLAUSES.

(Agreed with the Timber Trade Federation). 1.4.1986

RISKS COVERED :

Cargo Whilst Stowed On Deck : Loss / Damage by following Perils is covered :

i) Fire or Explosion

ii) Vessel being stranded, grounded, sunk or capsized

iii) Collision or contact of vessel with any external object other than water

iv) Discharge of cargo at a port of distress

v) General Average Sacrifice

vi) Jettison or washing overboard

vii) Theft or non-delivery

viii) Malicious act.

Cargo Whilst Not Stowed On Deck :

Cargo stowed in poop, forecastle, deck house, shelter deck, other enclosed space or in a container
is deemed to be cargo not stowed on deck.

The cover is against all risks of loss or damage for this part of the cargo subject to the exclusions.

EXCLUSIONS :

They are the same as in the Institute Cargo Clauses (A).

DURATION : The insurance attaches on or after loading of the timber on land / or water
conveyances or their floating at the mill, warehouse, factory, yard or premises from which the
despatch to the overseas vessel is made, continues during the ordinary course of transit and
terminates either :

i) On delivery by land or water into the mill, warehouse, factory, yard or premises at the final
destination or on delivery to any other warehouse which the assured may elect to use for
storage other than in ordinary course of transit, or

ii) On the expiry of 60 days after completion of discharge overside of the timber at the final port
of discharge, whichever shall first occur.

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 New India Assurance

COMMENTS :

Comments are necessary on the “insolvency or financial default” clause which is different from the
standard wording appearing in Institute Cargo Clauses.

There are several features of interest here :-

i) The assured has to be aware of the likelihood of insolvency but the extent of awareness
is restricted to the ordinary course of business.
ii) The awareness applies only at the time of loading.
iii) The likely insolvency has to be such as could prevent the normal prosecution of the
voyage.
iv) The above provisions do not apply to “innocent” buyers, who acquire the goods under a
binding contract.

If claims are presented, then some proof or evidence will be requested, where appropriate /
atleast routine inquiries were made about the quality of the overseas vessel or the financial
standing of the shipowner concerned.

H) THE INSTITUTE BULK OIL CLAUSES (1.2.1983)

Risks Covered – Loss of or contamination of the subject matter by :-

i) Fire or explosion;

ii) Vessel or craft being stranded, grounded, sunk or capsized;

iii) Collision or contact of vessel or craft with any external object other that water;

iv) Discharge of cargo at a port or place of distress;

v) Earthquake, volcanic eruption of lightning;

vi) General Average Sacrifice;

vii) Jettison;

viii) Leakage from connecting pipelines in loading, transhipment or discharge;

ix) Negligence of Master, Officers or Crew in pumping cargo, ballast or fuel;

x) Contamination of subject matter resulting from stress of weather;

xi) General average and salvage charges incurred to avoid loss from any cause other than
those excluded;

xii) Liability under Bill of Lading “Both to Blame Collision” Clause.

EXCLUSIONS :

They are the same in the Institute Cargo Clauses (A).

43
 DURATION OF THE COVER :

The insurance attaches as the oil leaves tanks for the purpose of loading at the place named for
the commencement of the transit, continues during ordinary course of transit and terminates
either –

i) as the oil insured enters the tanks on discharge to place of storage or to storage vessel at the
destination; or

ii) on expiry of 30 days after arrival of vessel at destination; whichever shall first occur.

If after discharge from the overseas vessel at final port of discharge, but prior to termination of this
insurance, the oil is to be forwarded to a different destination, the insurance shall not extend
beyond the commencement of transit to such other destination, unless otherwise agreed by the
underwriters upon receipt of prompt notice from the assured.

Subject to prompt notice and additional premium, if required, the insurance shall remain in force
during delay beyond the control of the assured, any deviation, forced discharge, reshipment or
transhipment and during any other variation of the adventure, provided such other variation is
beyond the control of the assured.

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 New India Assurance

CONTAINERISATION, VESSEL, BILLS OF LADING

The use of intermodal containers for the transport of a great variety of cargo has become
increasingly popular in recent years. Intermodalism – a concept which embraces the movement
and transfer of standardized cargo container by sea, air and land – has reduced cargo handling,
particularly in Door to Door shipments. Development of specialized containers has provided the
modern shipper with wide range of types, sizes and configurations, which permits containerization
of most cargo.

The chassis of an standard container is a fully-enclosed and rigid rectangular box 20ft. in length
and of 8ft. x 8ft. or 8 ½ ft. height fitted with a pair of hinged doors at the rear end. The container
may also have a length of 30ft. or 40ft. Such a container may be constructed of various materials,
for example :

(a) entirely of steel sides, ends, roof and floor constructed of flat panels or corrugated
sheets (general containers usually have a wooden floor);

(b) of various aluminium alloys in similar flats or profiles;

(c) of marine plywood of various thickness;

(d) of glass-reinforced plastic (GRP);

(e) of two or more materials.

A normal 20ft. Container has a tare weight of between 2 and 2.5 tonnes, a cargo weight (payload)
capacity of between 17.5 tonnes and 18.5 tonnes, with a maximum gross weight of about 22
tonnes. A 40ft. unit has a tare weight of between 3.5 tonnes and 4 tonnes, a cargo weight
(payload) capacity of about 26 to 27 tonnes, with a maximum gross weight of 30 to 31 tonnes.
Special 20ft. containers, are able to carry cargo of up to 27 tonnes weight. It is important that the
relevant recommended gross weights are not exceeded.

Once the shipper has decided on the container service with type best suited to his needs, he must
inspect the container to be sure of the following :-

Interior

a) free from splinters, snags, dents or bulges

b) free from residues from previous cargo particularly odours which may taint the cargo.

c) It is watertight and
d) Fittings are in good condition.

Exterior

a) free from dents, bulges or other damage

b) doors can be securely locked and sealed

45
 c) fittings are in working order and in use and

d) covers / panels are in good condition.

The container is essentially a ship’s hold on a reduced scale. The cargo stored in a container is
subject to the same motion forces and damage hazards while at sea that affect cargo shipped in
break-bulk fashion. Hence, the same principles and techniques which govern export packing is
applicable to cargo for container shipment and when stowing it in the container.

Most containers are designed to stock nine feet high when loaded and it is very rare that a sound
container will suffer a structural collapse. Occasionally however, container stows collapse when
the weight of containers and their contents placed in the upper layers of the stacks exceeds the
permissible limit and produces unacceptable loads on the containers in the bottom tier.

The stuffing of containers is not just a ship operator’s or the shipper’s problem. Containers are
often packed at places which may be many miles and sometimes even several days’ journey from
the port of shipment. It is therefore, important that everyone involved with containers (including
cargo insurers) at whatever stage in transit should be fully aware of the stresses that may be
generated in the structure of the container itself and in and around the cargo within it, during
transportation by road, rail or ship.

When a container is on road or rail it is subjected to forward, reverse and transverse movement
which in normal circumstances take place in the horizontal plane. A fast moving rail or road
vehicle breaking very suddenly can subject the contents of the container to stresses well in
excess of those to be expected from the normal handling operations.

Aboard a ship the stresses are generated in all directions included by the wave motion. A ship at
sea may move in six different directions simultaneously and the containers aboard the ship may
be rolling through arcs of as many as 70° or so, therefore, it is to be realized that securing of the
cargo within the container is as important as its stuffing / packing inside the container.

SPECIAL PURPOSE CONTAINERS

(a) Refrigerated : They are used for carrying chilled cargo and to a more limited extent, living
cargo such as fruits and vegetables.

Following types of claims may occur when frozen / chilled meat and its by-products are
transported in containers.

i) Contamination by odour

ii) Soft condition – usually brought about by incomplete closure of the vents at the connection
point when the ship’s refrigeration has been disconnected.

(b) Dry bulk : Designed for carriage of dry bulk cargoes such as dry chemicals and grains.

(c) Liquid bulk : Tank type containers for carriage of liquids.

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 New India Assurance

(d) Flat rack : They are used for timber, milk products, large heavy or bulky items, machinery
and vehicles.

(e) Automotive : Used for carriage of vehicles. Available in enclosed or open versions.

(f) Livestock : Made to order for the nature of livestock carried.

(g) Ventilated : Their use is restricted to cargoes which have a negligible moisture content or for
hygroscopic cargoes carried on short voyages.

CONTAINER SECURITY :

A notable difficulty sometimes experienced in containerization is in identifying where

losses occur during transit. These losses may not be discovered until a container is unpacked
at the final destination after having traveled hundreds, may be thousands of miles through
several countries.

The most valuable aid in identifying the location where a loss occurred and indeed in deferring
potential thieves is an effective sealing system. Sealing can be effective, if the right type of seal for
the operation is chosen and certainly before stripping at final destination are implemented.

The following guidelines may be of assistance in obtaining the maximum benefit from the use of
seals.

a) Use stronger seals on containers carrying high value and high rate cargoes.

b) Seals should be numbered and identified. It should be impossible to alter the identification
marks in order to prevent the substitution of one seal for another.

c) One of the characteristics of a seal should be that any forceful removal would bring
disintegration of the seal or obvious mutilation.

CARRIERS LIABILITY :

Three problems arise where containers are involved :

a) The per package limitation.

b) Carriage on deck.

c) The condition of the contents.

The container is a package, so is a carton of books. So, it is necessary to define if a package as

referred in the Hague Rules (4.5) for purpose of limitation, is the container itself or the package/s
inside.

Art, 4 (3) (b) of the Rules, enables the shipper and the carrier to decide the correct position. If the
number of packages or pieces inside the container are listed in the Bill of Lading or the attached
sheet then the pkgs/pcs inside are the basis for the limitation.

The same ruling may also hold good if the packages are listed on some document other than the
B/L, such as the shipping note. But if the B/L only mentions the container, then the container is the
package for limitation purposes.

47
 A container carried on deck without a declaration to that effect on the B/L is a violation of the
Hague Rules and a fundamental breach of contract of carriage. But courts have held that this was
not an unreasonable deviation of COGSA. There are also two reasons for this view, viz;

a) There is no greater risk for containers on deck in a container ship than in the holds.

b) Technology innovation and vessel design may justify stowage other than below deck.

The Hague-Visby Rules have solved the per package limitation by stipulating that if the packages
are enumerated on the B/L, each object so enumerated is a package for limitation.

THE VESSEL:

The ship (or vessel) may be described as a floating box made of steel in such a manner that it can
safely travel in water in most weather conditions when carrying her load or empty.

The front end of the ship which facilitates forward movement is called the Bow and her
rear end which may be further blunter, rounded or squared off is called the Stern. The flat
roof over the ship’s hull (body) is known as the Deck which may have one or more openings called
as Hatches. Below the Hatches are Holds or cargo spaces. The Stern is fitted with the Rudder
which provides steering control and the propeller or screw which rotates at great speed to drive
the ship.

There are ocean going vessels which carry cargo or passengers or both. Cargo ships may be
Liners or Tramp (a ship having no regular sailing or route). Tankers are designed to carry liquid
cargoes, colliers to carry full cargo of coal in bulk, Ore carriers to carry ores, and grain-carriers to
carry grain.

Vessels may be employed on Liner Trade, where the owner retains full control over the ship or
under a voyage charter, time charter, Bareboat or Demise Charter.

A marine underwriter may be convinced about seaworthiness of a vessel from its classification
certificate. There are many classification societies in the world. (every maritime country may have
one but only those societies which are members of the International Association of Classification
Society are included in the institute Classification Clause (01/01/2001)

LASH / RO-RO VESSEL :

Since 1969, a new method of carriage of cargo overseas has been developed. Large capacity
sealed barges are loaded at river, lake or smaller ports and then towed to ocean ports where they
are lifted abroad an ocean going mother vessel for the trip overseas. On arrival at the destination
ocean port the barges are unloaded by the mother vessel and towed to their destinations (inland)
where they are opened for discharge of cargo. After the cargo is discharged, the barges are ready
to load export cargo.

This type of service called LASH (Lighter aboard ship) is available for the movement of a wide
range of cargo. A typical Lighter or barge measuring approximately 60 feet x 30 feet x 11.5 feet

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 New India Assurance

has a cargo capacity of 375 tonnes / 550 cubic meters and the mother vessel may accommodate
upto 90 such barges. LASH barges can only be lifted by an identical LASH vessel.

Yet another method of cargo movement is called “RO-RO” (Roll On, Roll Off) in which wheeled
cargo vehicles are directly driven on and driven off on specially designed ocean going vessels. By
rolling cargo on board these vessel, and rolling it off at its destination, shippers can reduce not
only the handling of cargo but speed up the loading and unloading process.

BILL OF LADING :

The Bill of Lading is a document under which cargo is carried on board the vessel. It contains
certain admissions by the carrier as to the quantity and condition of goods when they were put on
board. It is a receipt for goods signed by the Master of the Vessel or other duly authorized person
on behalf of the shipowner and constitutes a document of title to the goods specified therein.

The Bill of Lading is a commercially negotiable document which can be bought and sold in
exactly the same manner as the goods themselves. It is a document by means of which property
in the goods may be transferred and money advanced by the bankers, etc. It contains the terms of
the contract itself. The contract is made when the shipper offers the cargo for shipment and its
acceptance by the carrier. Delivery of goods cannot normally be obtained without the Bill of
Lading.

The Bill of Lading contains particulars of goods shipped (Marks and Numbers, No. of packages,
Description of goods and their weight / measurement), Vessel’s name and her voyage
number, Port of Loading and Discharge, Port of Transhipment if any, Shipper’s name, Consignee’s
name or Order of, Notify party, Statement regarding payment of freight, Number of negotiable
Bills of Lading issued and Master’s / Authorised person’s signature with date and place of
issue.

Bill of Lading is prepared from the Mate’s Receipt given to shipper when goods are actually
loaded on board. The Mate’s Receipt is signed by Chief Officer of the vessel. If goods are in
imperfect or damaged condition when loaded, the fact is noted on the Mate’s Receipt and thereafter
on the Bill of Lading.

If a Bill of Lading is issued stating that the goods are in apparent good order and condition with
out qualification, it will be called a clean Bill of Lading.

The Bills of Lading are signed in ‘sets’ and the number of negotiable Bills of Lading constituting a
set is mention in the Bill of Lading. There is a clause in every Bill of Lading to the effect that the
Master has signed three Bills of Lading, all of which are of same tenor and date, one of which
being accomplished, the other stands void. Non-negotiable copies of Bill of Lading have no value
at all and are only for record purposes.

TYPES OF BILL OF LADING :

There are various types of Bills of Lading such as :-

(a) Combined transport document – when several modes of transport are used or ‘Door to
Door’ delivery is given for containers.

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 (b) Direct bill of lading – It does not mention that the goods will be transhipped.

(c) Through bill of lading – States that transhipment is required enroute. Journey may be by
sea and then by rail or road or sea.

(d) Received for shipment bill of lading – It is issued when cargo is still in the shed awaiting
loading. When cargo is loaded on board it will be converted into a ‘shipped’ Bill of Lading.
Such Bills of Lading are issued for goods emanating from land-locked countries, and they are
as legal as the shipped Bill of Lading.

An Under-Deck Bill of Lading is issued for cargo shipped under-deck and an On-Deck Bill of
Lading is issued for cargo shipped on deck.

TERMS & CONDITIONS OF CARRIAGE

Though the general terms and conditions of carriage are set out in a Bill of Lading, the most
important amongst them are :-

(a) Paramount Clause – States that the Bill of Lading will be subject to the Carriage of Goods
by Sea Act of a particular country. Normally, the shipping company will prefer to apply the law
of the country of shipment.

(b) Limitation of liability – It enables the claimant to ascertain the shipping company’s liability
based on package / unit limitation.

(c) Jurisdiction clause – states name of country in which disputes arising under the Bill of
Lading are to be decided.

It is also necessary to examine whether the Bill of Lading was issued subject to any Charter Party
Agreement.

Short Form of Bill of Lading

The ‘Short Form’ or ‘Blank back’ Bill of Lading is printed on one side of the paper only and can be
used by any shipping company accepting goods for carriage from country which has accepted this
type of Bill of Lading. The principal benefit is that instead of using the carriers own pre-printed
form, the shipper has only to type the name of the contracting carrier in the space provided. The
terms and conditions of the carrier’s Bill of Lading are applied to the contract of affreightment by
means of an ‘Incorporation’ clause. The text of this clause appearing on the document is common
to many carriers who will individually provide, on request, full details of their standard terms and
conditions. In general, it is no different from any other Bill of Lading except that the conditions are
not printed on the reverse side.

This type of Bill of Lading was developed to facilitate the shipper’s requirement of a number of its
copies which if necessary, he can print on his own, under license.

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 New India Assurance

INCO TERMS
INCOTERMS 2000 are internationally accepted commercial terms defining the respective roles of
the buyer and seller in the arrangement of transportation and other responsibilities and clarify
when the ownership of the merchandise takes place. They are used in conjunction with a sales
agreement or other method of transacting the sale. Some of the most commonly used Incoterms
are given below :

w EXW – EX Works – Title and risk pass to buyer including payment of all transportation and
insurance cost from the seller’s door. Used for any mode of transportation.

w FCA – Free Carrier – Title and risk pass to buyer including transportation and insurance cost
when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the
goods on the Buyer’s collecting vehicle; it is the Buyer’s obligation to receive the Seller’s
arriving vehicle unloaded.

w FAS – Free Alongside Ship – Title and risk pass to buyer including payment of all transportation
and insurance cost once delivered alongside ship by the seller. Used for sea or inland
waterway transportation. The export clearance obligation rests with the seller.

w FOB – Free On Board and risk pass to buyer including payment of all transportation and
insurance cost once delivered on board the ship by the seller. Used for sea or inland waterway
transportation.

w CFR – Cost and Freight – Title, risk and insurance cost pass to buyer when delivered on
board the ship by seller who pays transportation cost to the destination port. Used for sea or
inland waterway transportation.

w CIF – Cost, Insurance and Freight – Title and risk pass to buyer when delivered on board the
ship by seller who pays the transportation and insurance cost to the destination port. Used for
sea or inland waterway transportation.

w CPT – Carriage Paid To – Title, risk and insurance cost pass to buyer when
delivered to carrier by seller who pays transportation cost to destination. Used for any mode
of transportation.

w CIP – Carriage and Insurance Paid To – Title and risk pass to buyer when delivered to carrier
by seller who pays transportation and insurance cost to destination. Used for any mode of
transportation.

w DAF – Delivered at Frontier – Title, risk and responsibility for import clearance pass to buyer
when delivered to named border point by seller. Used for any mode of transportation.

w DES – Delivered Ex Ship – Title, risk, responsibility for vessel discharge and import clearance

51
 pass to buyer when seller delivers goods on board the ship to destination port. Used for sea
or inland waterway transportation.

w DEQ – Delivered Ex Quay (Duty Paid) – Title and risk pass to buyer when delivered on board
the ship at the destination point by the seller who delivers goods on dock at destination point
cleared for import. Used for sea or inland waterway transportation.

w DDU – Delivered Duty Unpaid – Seller fulfills his obligation when goods have been made
available at the named place in the country of importation.

w DDP – Delivered Duty Paid – Title and risk pass to buyer when seller delivers goods to
named destination point cleared for import. Used for any mode of transportation.

w Note : EXW, CPT, CIP, DAF, DDU and DDP are commonly used for any mode of transportation.
FAS, FOB, CFR, CIF, DES and DEQ are used for sea or inland waterway.

For more Inco terms visit www.incoterms.com

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 New India Assurance

INLAND TRANSIT (RAIL OR ROAD) CLAUSE AND

S.R.C.C. CLAUSE
Goods (merchandise) dispatched by rail or road from any place in India to any place in India
(not in conjunction with an overseas voyage) can be covered under the following three sets of
clauses :

Short Title

a. Inland Transit (Rail or Road) Clause – A (All Risks) - ITC-A

b. Inland Transit (Rail or Road) Clause – B (Basic Cover) - ITC-B

c. Inland Transit (Rail or Road) Clause – C (Fire only) - ITC-C

The clauses in ITC-A, ITC-B and ITC-C follow the same pattern as in the Institute Cargo
Clauses :

i) Risks Covered ii) Exclusions iii) Duration

iv) Claims v) Benefits of Insurance

vi) Minimising Losses vii) Avoidance of Delay

Subject to the risks included and excluded the following types of losses are recoverable under all
three sets of clauses :

a. Particular Average (Partial Loss) c. Extra Charges

b. Total Loss-Actual or Constructive d. Sue and Labour Charges.

ITC-B and ITC-C are named perils clauses whereas ITC-A is an unnamed perils clause. ITC-C
was introduced with effect from 1-7-1987.

RISKS COVERED :

ITC-A : Covers All Risks of loss or damage.

ITC-B : Covers Physical loss or damage caused by :

(a) Fire, Lightning, Breakage of Bridges

(b) Collision with or by the carrying vehicle, derailment or accidents of like nature
to the carrying railway wagon/vehicle.

ITC-C : Covers Physical loss or damage caused by (a) Fire (b) Lightning.

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 EXCLUSIONS

They are same as in the Institute Cargo Clauses but limited to :

a. Wilful misconduct of the assured

b. Ordinary losses.
c. Insufficiency or unsuitability of packing.
d. Delay.
e. Inherent vice or nature of the subject matter insured.
f. War Risks.
g. Strike (S.R.C.C.) Risks

Malicious Damage : Sub-clause no.4.4 in the S.R.C.C. exclusion (Deliberate damage to or

destruction of the subject matter insured or any part thereof by the wrongful act of any person or
persons) appears in ITC-B and ITC-C only. It is not an excluded peril in ITC-A.

DURATION

ITC-A and ITC-B grant warehouse to warehouse cover.

Insurance under ITC-A and ITC-B attaches and continues in the same manner as stated in the
Institute Cargo Clauses until :

(a) delivery to final warehouse at destination named in the policy.

(b) in respect of transits by rail only or by rail and road, until expiry of 7 days after arrival of
railway wagon at destination station, or

(c) in respect of transits by road only, until expiry of 7 days after arrival of vehicle at the
destination town,

whichever shall first occur.

Warehouse to warehouse cover is not available under ITC-C. Cover attaches with the loading of
each bale or package into the wagon/truck and ceases immediately on unloading of each bale or
package at the (i) destination railway station or (2) destination named in the policy in respect of
transit by road.

For comments on the remaining headings (Claims, Benefits of insurance, Minimising Losses refer
corresponding observations on Institute Cargo Clauses).

S.R. & C.C. RISKS

Risks of loss, damage or expense deleted under Strikes Exclusion Clause no.4 of ITC-A, ITC-B
and ITC-C may be covered by charging additional premium and attaching the following clause to
the policy :

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 New India Assurance

“STRIKES RIOTS AND CIVIL COMMOTIONS CLAUSE”

(INLAND TRANSIT NOT IN CONJUNCTION WITH OCEAN GOING VOYAGE)

RISKS COVERED :

1. Subject otherwise to the terms, conditions and warranties of the policy on goods against
transit risks, this insurance covers, except as provided in clause 2 below loss of or damage to
the subject matter insured caused by

1.1 Strikers, Locked-out workmen, or persons taking part in labour disturbances, riots or civil
commotions;

1.2 Any terrorist or any person acting from a political motive;

1.3 Persons acting maliciously.

EXCLUSIONS :

2. In no case shall the insurance cover

2.1 Loss, damage or expense proximately caused by delay, inherent vice or nature of the
subject matter insured

2.2 Loss, damage or expense proximately caused by the absence, shortage or withholding
of labour of any description whatever during any strike, lock-out, labour disturbances, riot
or civil commotion

2.3 Any claim for expenses arising from delay or other consequential or indirect loss or
damage of any kind

2.4 Loss, damage or expense caused by war, civil war, revolution, or civil strife arising
therefrom, or any hostile act by or against a belligerent power.

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 MARINE CARGO UNDERWRITING DOCUMENTS
While granting cover and before the policy is issued, every underwriting office should ensure that
they have complied with the relevant provisions of the following :-

a) The Marine Insurance Act, 1963

b) The Insurance Act, 1938

The Insurance Rules, 1939

c) Exchange Control Regulations

d) The Stamp Act

The documents used for marine underwriting are : 1) Declaration Form, 2) Policy, 3) Cover Note,
4) Open Cover, 5) Open Policy, 6) Certificate of Insurance, and 7) Endorsements.

1. DECLARATION FORM

There is no standard proposal form for Marine Cargo Insurance. The risk is assessed on the
basis of the information given on the Declaration Form which is to be completed and signed
by the proposer. A duly signed letter, giving all relevant details mentioned in the Declaration
Form, will also serve the purpose.

Declaration Form is not useful to consider proposal for issue of an Open Cover or an Open
Policy, but the insured may be allowed to make declarations thereunder by using the Declaration
Form separately for each shipment or despatch. In such cases, the Insured should be
advised to make sure that numbered Declaration Forms are used in their serial order, that is,
in the same order as that of the shipments or despatches.

In the column for “sum insured” the amount for which the goods are to be insured must be
clearly detailed. The amount of C.I.F. value should be shown separately from Duty and
Increased Value if they are also to be covered. If different commodities are declared, separate
values should be given for each with basic CIF value shown separately from the percentage
to be covered over and above the C.I.F. value.

2. POLICY

There is only one- the standardized MAR form for marine cargo insurance. The policy form
does not cover any risk on its own. The clauses, conditions and warranties attached to and/or
mentioned on the form determine the scope of cover. The policy form is suitable for insurance
of all types of goods, whether in transit by vessel, aircraft or on land. The policy will be issued
only when full details to insure the consignment are obtained and stamped as required under
The Stamp Act. The minimum premium for the policy inclusive of all extras and war/strikes,
S.R.C.C. risks is Rs.50/- but does not include the stamp fee which is separately charged and
recovered from the assured. When the policy is issued to cover a single consignment, it is
termed as the ‘Specific Policy’.

Section nos. 24 to 33 of the Marine Insurance Act are devoted to the policy.

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3. COVER NOTE

It may happen that the proposer is interested in a policy but is unable to provide all details
required to issue the policy. For example, he has placed or is about to place an order on a
shipper abroad for some goods which he wants to import to India, but is not aware when they
will be shipped. He may be an upcountry exporter in India, who is not likely to know, when the
goods leave his warehouse, name of the vessel and the bill of lading number. In such cases a
policy cannot be issued but the proposer’s interest may be protected under a Cover Note.

Cover Note is normally issued for a single consignment and not a series of shipments. It
should have a validity period, which reflects in case of imports, the time limit within which the
proposer expects that the goods will be despatched by the shipper. Validity period means that
the transit must commence during the said period. It is possible to extend the validity period,
for which no extra premium need to be charged, provided the assured requests in writing to
extend the period before its expiry and the underwriting office is satisfied that the reasons for
which the extension is required are genuine and beyond his control.

The underwriting office must remember that cover note is an unstamped temporary document,
granted provisionally, pending issue of the policy. The assured must submit the remaining
details to the insurers and get it replaced by a duly stamped policy. Cover note affords cover
to the assured if the shipment materializes and conforms in all respects with its details.

If it is intended to cover an overseas voyage by a classed vessel, the conveyance should not
be described as ‘first class’, ‘approved’, ‘conference’, or ‘G.I.C. approved’ vessel or by any
similar description. The correct method is to state, “vessel classed as per the Institute
Classification Clause (1.1.2001)”. A copy of the said clause should also be attached to the
cover note.

4. OPEN COVER

An open cover is an agreement (not a policy) whereby the insurer will accept insurance of all
shipments made by the assured, within the terms of the cover for a fixed period, usually for
12 months. Being an agreement, it is not stamped. However, stamped policies or certificates
of insurance are issued against the declaration made by the assured. The open cover is of
great convenience to the clients engaged in regular import/export trade.

An important difference between a cover note and an open cover is in respect of the sum
insured which is mentioned in the former but is absent in the latter. In absence of the sum
insured, which gets exhausted by declarations, the open cover will remain in force uninterrupted
during its period of one year, unless terminated by either side by a notice for cancellation.

The scope of open cover is very wide. It covers all shipments made by or to the assured for
their own account as principals or as agents for others and in which they have an insurable
interest.

Though the insurers are bound to accept all declarations falling within the terms of the open
cover, they would not like to be exposed to heavy commitments without prior notice from the
assured. Liability under the open cover is, therefore, restricted to a fixed maximum amount
under two clauses, namely (i) Limit per bottom and (ii) Limit per location.

57
 The limit per bottom for each type of conveyance (vessel, aircraft, post etc.) is determined
keeping in mind the assured’s requirements and the limits given to the underwriting office. If
higher limits are required, reference either to the Regional Office or Head Office of the
company, as the case may be and their prior approval is necessary. The limit per bottom
stands for the sum insured per declaration or consignment and not total value of the assured’s
declarations for more than one consignment shipped on the same conveyance. It means any
one vessel/conveyance under which the insurers liability is limited to an amount for any one
declaration.

The ‘Location Clause’ is used in the open cover, which is subject to a provision with regard to
value of each shipment, that is the ‘Limit per Bottom’. The per bottom limit arrangement works
satisfactorily but in the event of delay in arrival of the carrying vessels, strikes at the ports etc.
and because of extension of cargo cover from ‘warehouse to warehouse’, more than one
consignment, each within sum insured of ‘Limit per Bottom’ could be accumulated at the port
(location) awaiting shipment or delivery. In these circumstances, the insurers are faced with
the prospect of heavy liability in the event of a major fire or catastrophe occurring at the port
resulting in total loss of cargo stored therein. The insurers therefore avoid such exposure
under the ‘Location Clause’. The limit under the clause is fixed in consultation with the
assured but it should not be less than the limit per bottom.

It is necessary to be specific and precise in describing the subject matter insured. As the
rates, terms and conditions are agreed in advance, care should be taken to attach a ‘schedule’
to the open cover describing therein all commodities insured in serial order and for each
commodity, its nature of packing, voyage, terms and conditions of insurance and the rate of
premium.

Company’s form No. M20 (R) should be used to issue the open cover. Do not use the policy
form for this purpose.

All open covers are subject to the standard clauses, conditions and warranties and most of
them are printed on the form. When it is necessary to identify the applicable clauses, conditions
and warranties, they should be carefully selected and mentioned in the columns provided in
the form.

One of the most important conditions of the open cover is that the assured is bound to
declare to the insurers each and every shipment, whether arrived or not, but should he
willfully fail to report the shipments, then the open cover, as to all subsequent shipments, at
the insurers option, will become null and void. However, shipments which the assured fails to
declare unintentionally are held covered subject to open cover conditions.

The open cover format makes it necessary for the assured to declare each shipment
immediately upon receipt of the shipping documents. However, to comply with section 64-VB
of the Insurance Act, 1938, the assured is required to furnish declaration within 15 days from
the date of shipment in the case of imports and 72 hours of sailing of the vessel in the case
of exports from India.

It is advisable to issue a specific policy against each declaration for insurance of an export
shipment and a certificate of insurance for an import shipment. Minimum premium under the
policy is Rs.50/- and the certificate of insurance, Rs.30/-.

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 New India Assurance

The basis of valuation is C.I.F. cost of the goods plus 10% but in the event of loss prior to
declaration and / or shipment on board the vessel, it is limited to prime cost of the goods plus
charges actually incurred and for which the assured is liable. The open cover can be cancelled
by either side by giving 30 days notice in writing.

An open cover can be issued after collecting adequate provisional premium for compliance of
section 64-VB of the Insurance Act, 1938.

5. OPEN POLICY :

It is a long-term-usually 12 months Cargo Insurance Contract expressed in general terms

and effected for a round sum sufficient to cover a number of despatches until the sum insured
is exhausted by declarations. The Open Policy, also known as the Floating Policy, saves the
assured the inconvenience of effecting individually the insurance of goods despatched within
the country. The policy may cover both incoming and outgoing consignments from anywhere
in India to anywhere in India. The sum insured under the policy should ordinarily represent
the assured’s estimated annual turnover of the goods.

The Open Policy will expire when the sum insured thereunder is exhausted by declarations or
upon expiry of the 12 months period, whichever occurs earlier. If the sum insured is likely to
get exhausted before expiry of the policy period, the assured may increase the sum insured
suitably upon payment of additional premium. If the sum insured remains unutilized at the end
of the policy period, proportionate refund of premium is given to the assured.

An Open Policy is to be fully stamped. Therefore, Certificate of Insurance if issued thereunder,

need not be stamped. An open policy can be issued after collecting adequate provisional
premium for compliance of section 64-VB of the Insurance Act, 1938.

Open Policy Conditions

“Attaching to and forming part of Open Policy No. …….

1) Declaration :

It is a condition of this insurance that assured is bound and will declare each and every
despatch coming under the scope of the Open Policy without any exception within 24
hours or as may be agreed from the time of issue of the Railway Receipt / Lorry Receipt
/ Postal Receipt / Airway Bill.

2) Basis of Valuation :

Invoice cost of goods, the freight for which the insured is liable and the cost of insurance
plus ten percent.

3) Inspection of Records :

The Company and/or its Agents will have the right at any time during business hours to
inspect the insured’s record of despatches made within the term of the policy.

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 4) Notice of Cancellation :

This Open Policy is subject to cancellation by either party after giving 30 days notice in
writing, for transit risks and notice for S.R.C.C. risks without prejudice to any risk which
has already attached.

5) Limit of Company’s Liability :

Warranted that the limit of Company’s liability in respect of any one accident or series of
accidents arising from the same event shall not exceed:-

By Rail ——————— Rs.—————-

By Road ——————— Rs.—————-

Per Registered Post——— Rs.—————-

Per Air Freight ————— Rs.—————-

6) Policy Period :

This Open Policy is to remain in force for a period of 12 months from ____ to ___ unless
the sum insured is previously exhausted by declarations.

7) This contract is subject to such rates, rules and regulations in force at the time the risk
on each despatch attaches hereunder, subject also to the terms and condition of the
open policy.

NOTE :

A) Declarations received from the Insured should be promptly entered in serial order in the
Open Policy Control Book, after verifying that each declaration corresponds in all respects
with the scope of cover granted under the open policy i.e. interest, nature of packing, transit,
etc; that the date of despatch is within the open policy period; that there is adequate balance
of the sum insured to cover the risk and that the sum insured under the declaration is within
the prescribed limit.

B) In the event the assured is allowed to submit periodical declarations, amend the period is
clause no. (1) ‘Declaration’ suitably.

6. CERTIFICATE OF INSURANCE :

The Certificate of Insurance may be issued under an Open Cover or an Open Policy. If issued
under an Open Cover, it will have to be stamped, as the Open Cover is an unstamped
document. It may also be issued under an Open Policy to meet the banker’s requirements or
for accounting purposes.

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 New India Assurance

Service Tax

Service Tax need not be charged for any export consignments.

7. ENDORSEMENTS :

Endorsements may have to be passed for the following reasons :

1) To incorporate certain additional conditions in the contract of Insurance.

2) To exclude or cancel certain portions from the contract of insurance.

3) To rectify any omission or error on the part of Insurer/Assured/to allow refund of premium.

Before agreeing to issue an Endorsement the reason why an alteration in the terms of contract is
necessary should be carefully ascertained. There are two forms of Endorsements viz. Extra
Endorsement and Refund Endorsement. Any Endorsement must be attached to the original
document as otherwise the holder thereof who may be someone other than the original assured
will have no knowledge of the changes effected.

However, no office of the Company is authorized and should not endorse and/or alter Policy,
Certificate of Insurance or Endorsement issued by other office of the Company, unless written
permission of the Policy issuing office is obtained in advance.

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 UNDERWRITING LIMITS AND RETURNS
Marine underwriting limits for offices in India have been revised with effect from 15/02/2005.

The underwriting acceptance limits is as under:

Sr. Mode of Conveyance Underwriting

No. Acceptance Limits
(Rs. in crores)
1. Classed Vessels not over 20 years of age
and not under 5,000 GRT 10.00
2. Classed Vessels not over 25 years of age and
not over 5,000 GRT 8.00
3. Classed Vessels not under 1,000 GRT 4.00
4. Classed Vessels not under 1,000 GRT (Indian Flag only) 2.00
5. Postal Shipments 2.00
6. Air Craft 35.00
7. Land Transport including Rail/Road transit
7.1 Other than over dimensional cargo 5.00
7.2 Over dimensional cargo 20.00

From the above, you will find that limit has been revised downward from Rs.35 crores to Rs. 5
crores for land transport under Sr.No.7.1 (other than over-dimensional cargo) above and the limits
under Sr.No. 7.2 (over-dimensional cargo) above are fixed at Rs. 20 crores.

The following instructions are to be strictly adhered to, while exercising these limits:

1. Above-mentioned underwriting acceptance limits are only for Regional Offices and the
existing underwriting acceptance limit as per our Circular dated 10 May 1990, which is
meant for Divisional Offices will continue to remain unchanged and is reproduced below:

Mode of Conveyance Rs. in Lakhs

A) Classed vessels not over 15 years

and not under 5,000 GRT - 75
B) Classed vessels not over 25 years
and not under 5,000 GRT - 50
C) Other Classed vessels not under 1,000 GRT - 25
D) All other vessels - 10
E) Air Craft - 75
F) Postal Shipments - 10
G) Land Transport including Rail/Road Transit - 75

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 New India Assurance

2. The limits of acceptances as mentioned at Sr.No. 1 to 4 are only for the cargo to be
shipped per classed vessels as per Institute Classification Clause and not more
than 25 years of age. The cargo shipped on vessels having their classification
other than the classes mentioned in the aforesaid list and the classed vessels
below 1000 GRT having Foreign Flags are to be treated on declined list.

3. The cargo to be shipped on classed vessels which are within the purview of the
list of approved Classification Society but falling under more than 25 years of age
are to be considered, generally on declined list. However, to accept the proposals on
declined list the authority will rest with Regional In-charge only (proposals in
R.O’s acceptance limits). R.O. In-charge to exercise this authority with due diligence
and in respect of valued / regular clients only, after examining / satisfying themselves on
the antecedents of the vessel(s). The proposals beyond R.O’s limit to be referred to
M.C.T.D., H.O.

4. The limits as mentioned under Sr. No. 7.1 (other than over-dimensional cargo) above for
Land Transport are to be exercised with due care and underwriting precautions, keeping
in view the recovery aspect from the Common Carrier. The Carrier must be a reputed
registered common carrier with sound financial position. During the rainy season, the
cargo must be adequately protected by tarpaulins.

5. Limits as mentioned under Sr. No. 7.2 (over-dimensional cargo) above are to be exercised
subject to the following underwriting precautions :

a) Common Carrier to be a reputed transporter with sound financial position.

b) The over dimensional cargo to be properly loaded and sufficiently secured in presence
of the Surveyor as per their advises.

c) The load carried should be within the approved carrying capacity of the subject
vehicle.

d) The subject vehicle’s speed should be maintained as per the directions / advises of
the supervising Surveyor.

e) The supervising Surveyor to suggest to the Driver of the subject vehicle about the
road map of the contemplated transit, with special emphasis on the overhead bridges
/ road curves and electrical wires / high-tension lines etc.

f) Driving during night generally to be avoided.

g) Special precaution must be taken during rainy season and cargo must be adequately
protected by tarpaulins.

h) The outer extreme ends of the over-dimensional cargo to be put with enough
electrical light signals and both parking lights of the carrying vehicle and electrical
light signals of the cargo to be switched on in the night while the carrying vehicle
remains stationary.

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 6. The underwriting acceptances for un-classed vessels as mentioned at Sr. No. 1 to
4 above are to be treated strictly on declined list.

7. Whilst underwriting cargo business, Regional Offices should strictly abide by all the
underwriting criteria such as risk evaluation of nature of commodity, mode of transportation,
transshipment, type of packing, on deck cargo, climatic and geo-political environment in
the region, type and duration of transit, claims record and M.C.T.D. H.O’s underwriting
instructions etc.,.

It is also necessary that the loss control measures should also be kept in mind at the
time of acceptance of cargo business such as supervision of loading and unloading
operation, survey in case of large, bulk and valued risk. Normally, such surveys are
arranged preferably at Assured’s cost through underwriters nominated Marine Cargo
Surveyors / Experts.

8. Due care must be exercised and compliance to be ensured with regard to various provisions
like Insurance Act of 1938 and rules made thereunder, Marine Insurance Act of 1963,
Foreign Exchange Management Regulations (Insurance 2000/2004) Indian Stamp
Act 1899/2003 other relevant statutory requirements, Company’s Underwriting instructions
laid down from time to time and other existing regulations.

9. The underwriting acceptance limits as mentioned under Sr. No. 1 to 4 above are for
import / export of cargo to be accepted on ocean going vessels (Classes as per
Approved Classification Societies), if the cargo is full vessel load i.e. cargo of only one
Consignee / Consignor on board the vessel, the Vessel Operational Approval (VOA)
for the contemplated voyage must be obtained from M.C.T.D., H.O. as per procedure,
irrespective of the fact that the value of the cargo falls within the underwriting acceptance
limit of the Regional Office.

10. It is to be emphasized that though the acceptance limits are now revised as above,
all acceptances for risks over Rs. 2 crores should still continue to be communicated
to M.C.T.D., H.O. as per existing practice and thereafter details incorporated in M.8
and M.9 formats.

11. The above noted underwriting acceptance limits specifically exclude diamond business
and Marine Rejection Risk Insurance.

Whilst, it is expected that the revision in limits of underwriting acceptances as noted

above, shall enable Regional Offices to develop Marine Cargo business in a steady
and profitable manner, it is required to closely monitor, control and review cargo
business results from time to time so as to take effective loss control measures wherever
needed.

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 New India Assurance

MARINE CARGO UNDERWRITING DOCUMENTS

Insurers give as much importance to drafting of the policy as they give to underwriting of the risks.
Marine insurers in particular, shoulder greater responsibility in this regard, as the policy form does
not cover any risk on its own, The scope of cover granted is determined by the clauses, conditions
and warranties attached to/mentioned in the policy.

The assured has no hand in drafting of the policy but in the event he is using the Letter of Credit
to negotiate the shipping documents, he may pressurize the insurers to mention such terms and
conditions in the policy as are acceptable to his bankers, as in doing so, they may alter or widen
the coverage intended under the policy.

Assured is one who is covered under the policy. His full name and address should be mentioned
correctly. It is permissible to record the financial interest of a bank or other financial institution, but
if prohibited, it is not permissible to issue the policy in the joint names (more than one company).

The following should be borne in mind while issuing the policy :

Subject Matter Insured

Detailed description of the property covered should be mentioned alongwith the number of packages,
nature of packing and their identification (shipping) marks. As it is not our intention to guarantee
the accuracy of description of the insured property, it is advisable to use the expression ‘said to
contain’. For example ‘100 cases said to contain Cotton Textiles’. The importance of shipping
marks and numbers lies in the fact that in the event the packages are reported missing the
insurers will find them useful to institute inquiries to trace them or to identify them when traced.

If the goods are consolidated (Shipped in Units, Pallets or Containers) state the total number of
packages as well as the number of packages stuffed in each unit, Pallet or Container. The
Container number and Seal number should also be stated to facilitate identification of the insured
goods.

When shipment in bulk (dry or liquid) is insured, mention in the policy its volume / weight by which
the quantity insured can be ascertained.

From/To

Risk under the policy attaches from and terminates at a named port or place. When overseas
voyage by vessel or an aircraft is extended to include transit on land, there will be a combination
of sea/air/land transit by suitable modes of conveyance.

As marine policy is essentially a voyage policy, we must state in this column, correct names of the
port or place at which the risk would attach and terminate alongwith name/s of other known ports/
places at which the goods are likely to be transshipped during the course of transit. It is incorrect
to mention the names of countries or states only in the policy.

Sum Insured

The sum insured under the policies covering inland/overland transits from anywhere in India to

65
 anywhere in India or coastal shipment in India must be mentioned in Rupees. Policies on shipments
between India and other countries as also between two points outside India may be issued in
Rupees or in any foreign currency. If the Sum Insured is mentioned in foreign currency also state
matter insured is covered, it is necessary to describe each item and its sum insured separately, in
the policy.

Terms and Conditions

Policies must be issued against the standard clauses, terms and conditions as per company’s
underwriting instructions. The terms and conditions stated must be clear and unambiguous and
the clauses attached should be in conformity with the terms granted. If there is an ambiguity in the
drafting, it will be construed against the insurer. (Rule of contra proferentem).

Do not grant cover which is inconsistent with the nature of loss the commodity is likely to suffer
due to an insured peril. If iron sheets are covered against the risk of damage by water, it does not
serve any purpose to exclude rust damage.

When cover is granted against the widest possible risks, say All Risks, avoid mentioning super
added perils. For example, “ICC (A) including TPND, Breakage, Leakage…..”. When a risk is
specifically covered by its name, describe it by words ‘risk of’ such as ‘risk of breakage’. It is not
our intention to cover a loss unless it is fortuitous in nature. We do not cover ordinary or inevitable
losses.

Rate of Premium

The Rate of premium and amount of premium charged to cover War & Strikes/S.R.C.C. risk and
vessel extras must be stated separately in the policy, Survey / Claim settlement. There is a column
in our policy form which reads as under :

“In the event of loss or damage which may result in a claim under this insurance, immediate notice
be given to …………………………………………….

Who are the company’s agents at port of discharge, in order that they may examine the goods
and issue a survey report. Where the company has no agent the notice must be given to Lloyd’s
Agents”.

Payable at……………………………………………………………………..

BY…………………………………………………………………………….

The policy issuing office has to mention in the blank space (in the column) name and address of
the company’s office, agent or surveyor at the port of discharge or at the nearest place, to whom
the assured or the claimants may report loss/damage to the insured goods, request for survey
and submit documents in support of their claim.

Head Office is sending updated list of Settling Agents / Survey Agencies periodically to all R.Os
for exports. The correct name, address, phone number, email ID will assist in immediate survey.

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 New India Assurance

RECOMMENDED CONDITIONS AND WARRANTIES

The All India Marine Cargo Tariff became redundant with effect from 01/04/94.At present the rates
are market driven. However it is the responsibility of every ‘New Indian ‘ underwriting marine
business to maintain profitability of the portfolio by proper underwriting. To assist the marine
underwriter towards meaningful underwriting we give below recommended warranties /conditions
applicable vis-à-vis type of commodity. It is strongly recommended that each office creates a
database on the types of commodities underwritten by them; evolves its own warranties / conditions
based on experience.

Sr. Description of Conditions & Warranties applicable.

No. Commodity
1 Automobiles – Ø Excess of 1% on the value of the
a) Assembled consignment for each and every claim.
Automobiles, Tractors, Ø Exclusion of scratching, denting,
Scooters, Motor Cycles, rusting, peeling of paint.
Mopeds (Assembled) Ø Damage to tyres covered only if vehicle
is damaged due to insured perils.
1 Automobiles – Ø Exclusion of shortage loss from sound
b) Spares packages
Automobiles, Ø Claim for shortage shall be arrived by
Tractors, Scooters, comparing weight of damaged bag with
Motor Cycles, weight of arrived bags.
Mopeds in knocked Ø Minimum 1% excess on sum insured.
down condition
and spares.
2 Bulk Cargo Ø Minimum of 1/2% excess on sum insured.
Ø Exclusion of unexplained losses.
Ø Losses to be shared proportionately by
all buyers in case of co-mingled cargo.
Ø Loading /Unloading Supervision
3 Cotton Ø Warranty damaged portion, cut off
(Raw Material) and balance to be utilized.
4 Fragile & Brittle Articles Ø ITC B or ICC B cover to be given.
like Glass, granite, marble, Ø To be declined if only specific voyage
bricks, curios and any to be covered.
article of like nature Ø In case ICC A cover is given, the Insured to
bear minimum 25% of each and every claim.
5 Liquid Cargo and Liquid Ø Minimum of ½% excess on sum insured.
Chemicals Ø Exclusion of unexplained losses.
Ø In case drums are transporting liquid, the
same should be properly sealed.
6 Hazardous, Extra Hazardous Ø Warranty strict adherence to IMDG Code
Liquid Cargo (International Maritime Dangerous
Goods Code)

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 Ø Depending upon the nature of consignment
i.e. whether the same should be transported
in bulk, bags or drums, relevant warranty
pertaining to such packing should also be
used.
7 Finished Leather Ø Excluding Mold and Mildew damage
and Leather goods Ø If it is leather goods or garments, exclude
a) Leather goods shortage from sound bag / package / container.
b) Leather garments Ø Pair and set clause to be applied
8 New Machine / Precision Ø Subject to Institute Replacement Clause
Instruments / Electric, Ø Warrant properly treated and dried
Electronic Items. material used for packing.
Ø Warranted machinery treated with rust
preventives and properly secured.
Ø Excluding electrical and
mechanical derangement.
9 Secondhand Ø Cover to be restricted to ITC B or ICC B
Machine / Precision Ø Secondhand Machinery Clause
Instruments / Electric, Ø Warranty basis of valuation on the market
Electronic Items. value certified by qualified valuer.
Ø In case ICC A / ITC A cover given, in addition
to the above, the following warranties
to be applied:
Ø Warranted Machinery inspected by a
qualified engineer certifying sound and
working condition of item / machine etc.
Ø Warranted property treated and dried wood
used for packing.
Ø Warranted machinery treated with rust
preventives and properly secured.
Ø Excluding electrical and mechanical
derangement
10 Metal Bars Tubes, Sheets, Ø Exclusion of damage due to rusting, denting
Plates and other Structural and scratching.
Materials, All Metal Wares Ø Warranted damaged portion cut
incl. Utensils, Hardware off and balance to be utilized.
Items etc. Ø If rust damage is required following
warranties applicable.
a. Warranty that goods properly lacquered
and / or treated with anti corrosives.
b. Excess of at least ½% of Sum Insured.
c. Warranty damaged portion, cut off
and balance to be utilised.
11 Perishable Cargo – in non Ø Only ICC C or ITC B cover to be given,
refrigerated or non in case of perishable goods,
insulated van Ø Exclusion of rejection risk / loss.

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 New India Assurance

Ø Relevant commodity clause like Institute

frozen food clause to be used
12 Personal effects and Ø Only ITC B or ICC B to be given.
Household Goods Ø In case ‘All Risk’ is required to be covered,
minimum excess of Rs.15, 000/- applicable
on glasses and fragile item.
Ø Warranty of suitable depreciation would
be applied for all other items.
Ø Warranty of pre-inspection prior to packing.
13 Edible Cargo like food Ø Warranted mother / transhipment vessel
grains, edible oil and certified fit and clean by approved
similar cargo in surveyors at loading port
bulk or bags. Ø Warranty loading / unloading of cargo certified
by approved surveyor.
Ø Warranty applicable for cargo in bags
to be also used
Ø Applicable Institute Commodity Clause
to be used
14 Metal and Brass Ware/ Art ware Ø Only ICC B / ITC B cover recommended
Ø If ICC A cover to be given
a. Insured to bear 25% of each
and every claim
b. Exclusion of scratching, denting losses.
15 Wooden Art ware Ø Only ICC B / ITC B cover recommended
Ø If ICC A cover to be given, Insured to bear
25% of each and every claim
16 Metallurgical Coke / Coal Ø Exclusion of spontaneous combustion
Ø Warranty strict adherence to IMDG Code
(International Maritime Dangerous
Goods Code)
Ø ½ % Excess to be imposed
Ø Loading / Unloading Supervision to be done
Ø Institute Coal Clause to be used
17 Pharmaceutical Products Ø Exclusion of rejection risk
Ø In case of damage to packing, Insurance
Co.’s liability will be restricted to cost
of repacking only.
Ø Exclusion of sentimental loss / damage
18 Tinned and Bottle goods. Ø Exclusion of damage to only labels
on tinned and bottled goods
Ø Loss payable only if the contents of tin,
bottle is damaged at the same time.
19 Over Dimensional Cargo Ø Common Carrier to be a reputed
transporter with sound financial position.

69
 Ø The over dimensional cargo to be properly
loaded and sufficiently secured in
presence of the Surveyor as per their advises.
Ø The load carried should be within
the approved carrying capacity
of the subject vehicle.
Ø The subject vehicle’s speed should be
maintained as per the directions /
advises of the supervising Surveyor.
Ø The supervising Surveyor to suggest to
the driver of the subject vehicle about
the road map of the contemplated
transit, with special emphasis
on the overhead bridges / road curves
and electrical wires / high-tension lines etc.
Ø Driving during night generally
to be avoided.
Ø Special precaution must be taken
during rainy season and cargo must
be adequately protected by tarpaulins.
Ø The outer extreme ends of the
over-dimensional cargo to be put with
enough electrical light signals and both
parking lights of the carrying vehicle and
electrical light signals of the cargo to be
switched on in the night while the
carrying vehicle remains stationary.
20 Valuable cargo like Ø Warranted ...... % declared to Airlines / Postal
precious stones, authorities / Couriers
jewellery,etc Ø Warranted liability under the policy shall be
subject to admission of liability by Airlines /
Postal authorities / Couriers

RECOMMENDED WARRANTIES / CLAUSES (for any Cargo)

1. For C.I.F value insurance : “Warranted insured value herein does not exceed c.i.f cost plus
ten percent.”

2. For shipments per vessel :

a) “Warranted shipped under deck.”

b) “Warranted shipped under a clean Bill of Lading”

3. For containerized shipments per vessel / aircraft : “Warranted number of packages stuffed
in the container and / or their weight is clearly stated in the Bill of Lading / Air Waybill.”

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 New India Assurance

4. For insurance of foodstuffs, meat, fish and similar edible items : “Warranted excluding
the risks of rejection by government authorities at port of destination”

5. For insurance of grains, seeds and similar cargo: “Warranted excluding natural loss in
weight and/or trade shortage.”

6. For insurance of fragile goods such as glass, fabrics etc. : “Warranted excluding the risks
of loss or damage due to chipping, denting and scratching.”

7. For bagged cargo : “Excluding the risks of shortage from sound bags.”

8. Liability Termination Warranty for unattractive port of destination : “Notwithstanding any

provision contained in or endorsed on the policy/certificate of insurance, it is hereby expressly
warranted that the liability of the insurer terminates upon discharge overside of the goods
hereby insured from the overseas vessel at the port of destination stated therein.”

9. Cutting clause for goods such as cast iron pipes, asbestos sheets, etc. : “Warranted that
the damaged portion should be cut off and the balance utilized.”

10. Label clause for bottled, tinned, canned goods : “Excluding damage to labels unless the
goods themselves are damaged at the same time.”

11. Replacement Clause for insurance on machinery : “In the event of claim for loss or
damage recoverable hereunder, the Company only to pay the cost of repairing, or if necessary,
replacing the damaged part or parts, but such cost in no case to exceed the insured value of
the part or parts so damaged.”

12. Pair and Set Clause : “Where any item insured under this policy consists of articles in a pair
or set, the Company’s liability shall not exceed the value of any particular part or parts which
may be lost or damaged without reference to any special value which such article or articles
may have as part of such pair or set nor more than a proportionate part of the insured value
of the pair or set.”

13. Double Insurance Clause : “Warranted that no other insurance is or will be effected by or on
behalf of the insured on the same interest.”

14. For insurance of valuables: “Warranted insured with carrier for not less than Rs. ……… per
package or …… percent value per package, whichever is lower.”

15. Comprehensive Clause : “Including the risks of theft, pilferage, non-delivery, fresh water and
rain water damage, hooks, oils, mud, acid and other extraneous substances or heating and
sweating and damage by other cargo.”

16. “Warranted not shipped on board a vessel under the Flag of Convenience.”

17. “Warranted this contract is subject to such rates and regulations in force at the time the risk
on each despatch attaches hereunder.”

18. For Second-hand goods : “Where goods lost or damage are second-hand this insurance is
only to pay such proportion of the cost of repair or replacement plus charges for forwarding

71
 and refitting if incurred as the insured value bears to cost of the goods when new based on
present values.”

19. For acceptance under a specific policy :

a) “Warranted to sail within . . . .days.”

b) “Warranted the vessel has not sailed before date of issue of the Cover Note/Policy.”

20. For unattractive ports of call of the vessel : “Warranted not calling at ports or places in. . .
(mention here names of ports or countries).”

21. For shipment per vessel, if name of the vessel is not available : “Warranted shipped per
vessel classed as per the Institute Classification Clause (1-1-2001) (attach the said clause to
the document).”

22. If rate of Premium is applicable to goods despatched in closed wagons/covered vehicles :

“Warranted despatched in closed wagons/covered vehicles only.”

STANDARD ENDORSEMENT

As far as possible the following standard endorsement wordings should be used :

1) Correction in Assured’s Name :

It is hereby noted that the name of the assured under the above policy is . . . . . . . . and not as
mentioned originally therein.

2) Change in the description of goods :

It is hereby noted that the correct description of the goods insured under the above policy
should be . . . . . . . . . . and not as stated originally therein.

3) Change in Steamer’s Name :

The correct name of the Steamer under the above Policy should be S.S./M.V. . . . . . . . . . . . .
and not as originally mentioned therein.

4) Change in Destination :

It is hereby noted that the destination under the above policy is . . . . . . . . . . . . . . .and not as
mentioned originally therein.

5) Shut out Cargo :

It is hereby noted that the goods insured under the above policy have been shut out per S.S./
M.V. . . . . . . . . . . . . . . and the same have been shipped per S.S./M.V. . . . . . . . . . . under Bill of
Lading No. . . . . . . . dated.

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 New India Assurance

6) Increase in Sum Insured :

It is hereby agreed to increase the sum insured under the above policy from Rs. . . . . . . . to
Rs. . . . . . . . .(in words) with effect from . . . . . . . . . . . in consideration thereof an additional
premium as under is charged to the assured.

On Rs. . . . . . . . . .

Additional Premium @ . . . . . . . . . . Rs. . . . . . . . . .

7) Extension of cover to include extraneous peril :

At the request of the assured, it is hereby agreed to include the risks of . . . . . . . . under the
above policy with effect from . . . . . .

In consideration thereof an additional premium as under is charged to the assured.

On Rs. . . . . . . . . . . .

Additional Premium @ . . . . . . . . . . . Rs. . . . . . . . . . . .

8) Extension to cover rail transit :

It is hereby agreed to extend the insurance so as to cover the goods insured under the above
policy whilst is transit by rail upto . . . . . . . . with effect from . . . . . . . . in consideration thereof,
as additional premium as under is charged to the assured.

On Rs. . . . . . . . . .

Additional Premium, Marine @ . . . . . . . . . . Rs. . . . . . . . . . .

9) Covering Cargo shipped on deck :

The assured having declared that out of the consignment under the above policy. . . . . . . . . . .
valued at Rs. . . . . . . . . have been shipped on deck, it is hereby agreed to cover the same
against. . . . . .

In consideration thereof an additional premium as under is charged to the assured.

On Rs. . . . . . . . . . . .

Additional Premium, Marine @ . . . . . . . . Rs. . . . . . . . . .

10) Change in Destination :

It is hereby noted that the correct destination under the above policy should be . . . . . . . . . . . .
and not as originally stated therein.

In consideration thereof the marine rate is increased/reduced from . . . . .. ……….charged/

refund as under is made over to the assured.

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 On Rs. . . . . . . . . . . .

Additional Premium @ . . . . . . . . . . . Rs. . . . . . . . . . .

Refund, Premium @ . . . . . . . . . . . Rs. . . . . . . . . . .

11) Reduction in Sum Insured :

It is hereby noted that the correct sum insured under the above noted policy should be Rs. . . .
. . . and not Rs. . . . . . . . as shown originally therein.

In consequence whereof a refund premium as under is made over to the Assured.

On Rs. . . . . . . . .

Refund Marine @ . . . . . . . Rs. . . . . . . . .

S.R.C.C. @ . . . . . . . . . Rs. . . . . . . . .

12) Reduction in Rate :

It is hereby agreed to reduce the rate of premium charged under the above policy from . . . %
to . . .% with effect from . . . . . . . .

In consequence thereof a refund of premium as under is made over to the assured.

On Rs. . . . . . .

Refund Marine @ % . . . . . . . . . Rs. . . . . . . .

13) Restriction of Cover :

Notwithstanding anything stated to the contrary, it is hereby agreed to restrict the marine
cover under the above mentioned policy to terms only with effect from . . . . . . . . .

In consequence thereof refund of premium as under is made over to the assured.

On Rs. . . . . . . . .

Refund Marine @ . . . . . . . .Rs. . . . . . . .

14) Cancellation of ———————— Risks :

It is hereby agreed to cancel the ————————— risks from the scope of the cover under
the above policy with effect from . . . . . . . . . .

In consequence thereof a refund of premium as under is hereby made over to the assured.

On Rs. . . . . . . . . .

Refund @ . . . . . . . . Rs. . . . . . . . . .

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 New India Assurance

15) Cancellation from inception due to duplication :

It is hereby agreed to cancel the above noted policy from inception as it is duplicated by
Policy No. . . . . . . . .

In consequence thereof, a refund of premium as under is made over to the assured.

On Rs. . . . . . . . .

Refund @ . . . . . . . . Rs. . . . . . . . .

16) Refund for No Claim :

The assured having declared that there is no claim under the above policy, it is hereby
agreed to refund premium @ . . . . . . . . . . . . . . as under.

On Rs. . . . . . . . . .

Refund @ . . . . . . . . . Rs. . . . . . . . . .

17) Undeclared balance under Open Policy/S.D.P. :

The above open Policy/S.D.P. having expired leaving an undeclared balance of Rs. . . . . . . . .,
it is hereby agreed to refund premium as under on the said amount.

On Rs. . . . . . . . .

Refund @ . . . . . . . . . . . Rs. . . . . . . . .

18) Partial shut out Cargo :

It is hereby noted that out of the consignment insured under the above noted Policy. . . . . . . . . .
. . . . valued @ Rs. . . . . . . . . . have been shut out.

In consequence thereof the sum insured is reduced from Rs. . . . . . . . . . . . . to Rs. . . . . . . . .

and refund premium as under is made over to the assured.

On Rs. . . . . . . . . . .

Refund Marine @ . . . . . . . . . . . Rs. . . . . . . . . .

War / Strikes @ . . . . . . . . . . . Rs. . . . . . . . . .

NOTE : Where additional premium is charged the endorsement may also warrant stamp fee.

75
 THE LIST OF STANDARD FORMS AND CLAUSES USED TO ISSUE MARINE DOCUMENTS :

Description Form No.

Marine Declaration Form MN – 1

Marine Cover Note INSP – 18
Marine Policy (Cargo) MN – 2
Marine Open Cover (Cargo) M – 20 (R)
Institute Cargo Clauses (A) MNC – 310
Institute Cargo Clauses (B) MNC – 301
Institute Cargo Clauses (C) MNC – 302
Institute War Clauses (cargo) MNC – 311
Institute Strikes Clauses (cargo) MNC – 321
Institute Cargo Clauses (Air) (excluding sendings by post) MNC – 314
Institute War Clauses (Air Cargo) (excluding sendings by post) MNC – 308
Institute Strikes Clauses (Air Cargo) MNC – 323
Institute War Clauses (Sendings by post) MNC – 307
Institute War Clauses (Cargo) (including on-carriage by Air) MNC – 319
Inland Transit (Rail or Road – Clause A MNC – 325
Inland Transit (Rail or Road – Clause B MNC – 324
Inland Transit (Rail or Road – Clause C MNC – 327
Strikes, Riots & Civil Commotions Clause
(Inland Transit nor in conjunction with Ocean going voyage) MNC – 320
Sailing Vessels Clause MNC – 326
“Duty” Insurance Clause MNC – 316(N)
“Increased Value” Insurance Clause MNC – 317(N)
Institute Classification Clause (01/01/2001) MNC – 322
Theft, Pilferage and Non-Delivery (Insured Value) Clause MNC – 303
Replacement Clause MNC – 305
Comprehensive Clause MNC – 309
IMPORTANT (procedure in the event of loss or damage
for which underwriters may be liable – Liability
of Carriers, Bailees or other third parties) MNC – 312
IRCEC Clause 356
RACE Clause 356A
RACCBE Clause 370
Cargo Termination of Transit Clause (Terrorism) -

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 New India Assurance

UNIFORM CUSTOMS AND PRACTICE

FOR DOCUMENTARY CREDITS
The marine insurance policy and the bill of lading, being negotiable documents to be presented to
the bank by the shippers for receiving payment for the shipment may sometime lead to objections
from the bank if they do not conform with the terms stipulated in the Letter of Credit. In order to
make it easy for the parties involved to interpret the terms of the Letter of Credit the International
Chamber of Commerce (ICC) has laid down a set of rules known as Uniform Customs and
Practice for Documentary Credits (UCPDC). Some of these rules which should attract attention of
marine underwriter are mentioned below :

1. The date of Bill of Lading or the date of any other document evidencing shipment is considered
to be the date of shipment.

2. Bank will refuse insurance policy which bears a date later than the date of loading on board
the vessel. (It is for this reason that our policy is not accepted if its date of issue is later than
the bill of lading date)

3. The insurance policy must be expressed in the currency of the Letter of credit (The assured’s
request to issue the import/export policy in foreign currency arises for this reason and may be
accepted).

4. The minimum amount for which the insurance cover must be issued is CIF cost of the goods
plus 10%.

5. The letter of credit should stipulate the type of insurance cover required. Imprecise terms
such as ‘usual risks’ or ‘customary risks’ should not be used.

6. Bank will accept an insurance policy which indicates that the cover is subject to a franchise or
an excess (deductible) unless it is specifically stipulated in the letter of credit that the insurance
must be granted irrespective of percentage.

In Letter of Credit operations all parties concerned deal in documents and not in goods though
they are mentioned in such documents. The banker is required to take reasonable care to scrutinize
the documents and decide whether or not to accept them.

The banker needs a policy

i) Which is stamped, negotiable and endorsed in his favour.

ii) With date of issue not later than the date of bill of lading or the policy should specifically state
that risk commences not later than the date of shipment.

iii) Stating claim payable at destination in the currency of the draft.

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 INLAND VESSELS POLICY
This policy is for cargoes carried through rivers, canals or smooth waters including any land transit
incidental thereto; including F.O.B shipments.

The form of the clause to be used is called the “Inland Transit (Inland vessels) Clause (Basic
Cover)”

RISK COVERED is loss or damage to the cargo insured reasonably attributable to:

1) Fire or Explosion
2) Vessels or craft being stranded, grounded, sunk or capsized;
3) Overturning, collision or derailment of land conveyance (where policy is subject to warehouse
to warehouse clause to be attached).
4) Collision or contact of vessel, craft or conveyance with any external object other than water;
5) Discharge of cargo at a port of distress.

EXCLUSIONS: They are the same as in the Institute Cargo Clauses (C) but without clause no.4.6
(insolvency or financial default of the carrier).

DURATION: The risk attaches from the time the goods are handed over to the inland carriers
against receipt and continues during the ordinary course of transit and ceases on expiry of 7 days
from the time of arrival of the vessel at the destination named in the policy or on delivery,
whichever shall first occur.

The insurance is subject to “Sailing Warranty” which requires that the voyage shall commence
within 7 days from the date of handing over of the cargo to the inland water carrier. If it does not
so commence, the risk ceases on expiry of said 7 days, but shall reattach from the time the vessel
commences the voyage. The said period of 7 days may be extended on collection of additional
premium.

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 New India Assurance

INDIAN COASTAL TRANSIT POLICY

This policy applies to cargoes shipped by steamers and / or powered vessels of iron or steel
construction, excluding chartered vessels of other than Indian Flag, which are 15 years of age and
not under 450 G.R.T. and classed by one of the named classification societies including Indian
Register of Shipping.

The policy applies to all cargoes on coastal voyages in India. Extension of cover to include inland
transit by rail / road before loading and after discharge attracts additional rates, terms and
conditions. Where inland waterways are involved, terms and conditions as per Inland Vessels
Policy will apply and rate should be suitably loaded to take care of this risk.

Additional premium is charged for overage, under-tonnage, and non-classification of vessel and
for voyages from / to ports officially closed to traffic due to monsoon.

Cover against total loss of cargo following total loss of vessel only may be granted. However,
extras applicable shall be charged in full.

CATEGORIZATION OF PORTS:

‘A’ – Bombay, Nhava Sheva, Kolkata, Cochin, Kandla, Chennai, Vishakhapatnam, Haldia,
Mangalore, Marmagoa and Tuticorin.

‘B’ – Alleppey, Bedi including Rozi, Calicut, Kakinada, Mandvi, Navlakhi, Panaji, Paradeep,
Porbandar, Port Blair, Port Okha, Sikka and Veraval.

‘C’ – Bhatkal, Bhavnager, Coondapur, Honavar, Karwar, Machlipatnam, Pondicherry, Port Reddi,
Tellicherry and Trivandrum.

‘D’ – All other ports.

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 F.O.B. (Coastal & Overseas) & SHUTOUT CARGO POLICY
This policy applies to all cargoes while in transit by rail or road until placed on board the ocean
going vessel at any port in India for both coastal and overseas voyages. The cover is to be granted
as an extension of Inland Transit policy subject to following clauses. Exporters shipping goods
under FOB contracts of sale can protect their interests by obtaining an extension of cover to
include FOB risks under their Inland Transit policy.

(A) When Loading Is done directly from Wharf/Quay: -

(a) When inland transit cover is subject to Inland Transit (Rail or Road) Clause – B i.e. Basic
Cover with or without extraneous risks in addition to clause under item (A) above, the
following clause shall be applicable whilst the insured interest is water-borne in the
course of transit to the vessel:

i) “This insurance also covers loss/damage to the subject matter insured reasonably
attributable to:

— Craft, raft or lighter being stranded, grounded, sunk or capsized;

— Fire, lightning, collision or contact of craft, raft or lighter or conveyance with any
external object other than water;

— Total loss of any package lost in loading, transhipment or discharge.”

ii) Risk of jettisoning may be covered in conjunction with basic cover as above in which
event following clause will apply: -

“Including the risk of jettisoning due to stress of weather only.”

(b) When inland transit cover is subject to Clause A (i.e. All Risks Cover), the clause stated
above under item (A) will only apply.

SHUTOUT CARGO:

Goods which could not be loaded on the designated vessel for some reason or other and are
therefore detained at the port warehouse or docks or shut-out midstream due to strike or lock-out
require further extension of cover at additional rates.

N.B.:

(i) When the goods are returned to Shipper’s warehouse involving Rail or Road Transit, appropriate
full premium shall become chargeable for the return journey in addition to the above.

(ii) For Inland Water Transit (including river and back waters) until goods are placed on board the
vessel additional rate to be charged.

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 New India Assurance

SAILING VESSELS POLICY

All cargoes carried by sailing vessels (including country crafts, mechanized or non-mechanized)
are insured under this policy.

The policy is divided in two parts (a) overseas voyages and (b) voyages on East Coast and West
Coast of India.

Overseas voyage part covers shipments from ports in India to Karachi ports in Persian Gulf,
Middle East, East Africa and Sri Lanka and vice-versa.

RISKS COVERED

The following three types of covers are available under the Sailing Vessels Clauses. (Risks not
applicable should be deleted)

A. Total Loss or Constructive Total Loss of Cargo due to Total Loss or Constructive Total Loss of
the vessel only.

Or

B. (a) Loss / damage to cargo reasonably attributable to:

(i) Vessel being burnt.

(ii) Vessel being sunk

(b) Loss of cargo by jettison if necessitated by stress of weather only.

Or

C. (a) Loss/damage to cargo reasonably attributable to:

(i) Vessel being burnt

(ii) Vessel being stranded or sunk.

(d) Loss of cargo caused by jettison due to stress of weather, stranding or sinking or burning
or collision at sea.

EXCLUSIONS

(a) General Average contribution

(b) Loss, damage or expense wilfully caused by or due to unlawful conduct, negligence,
misbehavior of Tindal, crew, owner of craft, shippers or consignees.

(c) Loss, damage or expense arising our of detention or seizure by government consequent
to illicit or contraband trade.

(d) Ordinary leakage, ordinary losses in weight or volume or ordinary wear and tear.

(e) Insufficiency or unsuitability of packing, etc.

81
 (f) Inherent vice or nature of the subject matter insured.

(g) Proximately caused by delay even if delay is caused by an insured peril.

(h) Insolvency, financial default of owners, managers, charterers or operators of the vessel.

(i) Nuclear weapons.

(j) Unseaworthiness, unfitness of vessel, container or lift van if assured or their servants are
aware of same at the time cargo is loaded therein.

(k) War risks

(l) Strikes, riots, etc.,

DURATION

(a) Insurance attaches from the time of loading of cargo onto the vessel, continues during
the ordinary course of transit and ceases on landing of cargo at the final port of discharge
or 8 days after arrival of the vessel at the port, whichever occurs earlier.

(b) In the event of termination of adventure at an intermediate port short of destination

following accident, mishap or stress of weather, the insurance ceases from the time the
cargo is discharged at such port of refuge or directly into another vessel. If the voyage is
not abandoned and the cargo remains in the vessel, cover continues up to 30 days from
the time the vessel takes shelter.

MINIMIZING LOSSES

Expenses properly and reasonably incurred by the Assured or their servants to avert or minimize
loss are reimbursed by the insurers, if such loss is otherwise recoverable under the policy.

NOTICE OF LOSS

Immediate notice of loss should be given to the underwriters and the loss should be Proved
Without Delay (within 3 days).

Delivery of goods should be taken subject to survey and assessment of loss in the presence of
insurer’s representative or their appointed surveyor and customs or port officer.

TIME BAR

Unless the claim is the subject matter of a pending suit or legal action, there is no liability under
the policy after expiration of 12 months from the date of the occurrence of loss/damage.

NOTE

All insurances are required to be granted subject to condition that the vessel shall not sail earlier
than the date of issue of the Cover Note.

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 New India Assurance

BULLION, SPECIE, JEWELLERY

(Including Securities and valuables) POLICY
Bullion means raw gold or silver lump. Specie means metal in the form of minted pieces (e.g. gold
coins)

Great underwriting care should be exercised in the insuring of these risks and particular attention
should be paid to the security aspects of the risk and moral hazard of the assured.

In case of transit by air, the same is subject to at least 5% valuation charges are paid by the
Insured to the air carriers. It would be advisable to insist of export of such commodities through
reputed couriers like Brink’s Arya, Lemuir etc

In case of sending by registered insured post a minimum of Rs.500/- per package shall be insured
with postal authorities and the liability under the policy shall be subject to admission of liability by
Postal Authorities. The insurance should be made subject to the following clause: -

“This policy covers all risk from the time the parcel is delivered at the Post Office and
ceases immediately the same is delivered to the consignee at destination by the
Postal Authorities.”

Securities shall be insured for their face value or market value whichever is lower and the policy
shall include the following warranty: -

“Warranted that in the event of loss or damage to the securities, the indemnity will be
limited to the cost of obtaining duplicate securities unless it is established that the lost
securities have been encashed fraudulently.”

When door-to-door cover is required in conjunction with the transit risk, additional premium rates
to be charged.

Where the sum insured in any one transit is Rs.25,00,000/- and above, cover is to be provided if
carried under armed escort only.

Cover does not include the risk of infidelity of the assured’s employees. This may, however, be
covered at an extra premium.

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 ANNUAL POLICY
General Rules and Regulations

1. Cover is granted in respect of goods belonging to the Assured and or held in trust by the
assured and not under contract of sale and or purchase which are in transit by road or rail
from specified depots /processing units to other specified depots /processing units.

2. Insurable interest to remain with insured

3. Policy not assignable or transferable

4. Issue of Annual policy to transport operators/contractors, clearing and forwarding agents

prohibited

5. Policy is subject to the condition of average

Basis of Sum Insured

1. The Sum Insured should represent maximum value of goods on risk at any one time during
the Policy Period and remains constant in the event of no claim.

2. The aggregate Maximum estimated value on rail/road at any one time of all insured goods in
respect of each specified transit.

3. If several specified transits are involved the aggregate sum insured shall be the sum total the
aggregate maximum estimated value at any one time for each of the specified transits.

4. Specified Transits is the transit that commences from a named place and terminates also in a
named place.

5. The above is subject to minimum limits of Sum insured as stated below:

s Incase distance is 80 km or less, sum insured will be twice the single carrying limit
subject to a minimum of 1% of estimated annual turnover.

s Incase distance is more than 80 km and less than 500 km, sum insured will be four times
the single carrying limit subject to minimum of 2% of estimated annual turn over.

s Incase distance is more than 500 km sum insured will be 6 times the single carrying limit
subject to minimum of 3% of estimated annual turn over.

REINSTATEMENT

The sum insured shall stand reinstated on a valid claim arising subject to payment of pro-rata
additional premium on the reinstated amount by the assured counting from the date of the loss till
the expiry of the insurance.

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 New India Assurance

Total Liability of the insurer of the policy period shall not exceed twice the sum insured stated in
the policy.

CANCELLATION

30 days notice for transit risks and 48 hours notice for SRCC cover providing for pro rata refund of
premium

BASIS OF VALUATION

Prime cost plus expenses incidental to transit and charges of insurance.

IMPORTANT

Annual Policies should be accepted only at Regional Office.

NEED FOR ANNUAL POLICY

This policy is ideal for industries who have voluminous inter depot transfers of their stocks, raw
material, finished, semi finished products for reasons like processing, allocation, distribution –
most important in the course of such transits/operations ownership does not change hands. The
movement of goods is so organized that it is possible to identify the transits, the distance of each
transit and the value of goods at risk per transit, for a specified period. The value of goods at risk
at any one time is supposed to remain constant for a given transit and forms the basis of the sum
insured under the Annual Policy. The sum insured remains fixed during the policy period and will
not get exhausted by declarations in any form to the insurers. This policy is suited for clients
having large turnover but limited to number of specified transits.

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 MULTI TRANSIT POLICY & SINGLE TRANSIT POLICY WITH
MULTIPLE WAREHOUSING / STORAGE
1) Multi Transit Policy

a) Outside City Limits

b) Within City Limits

2) Transit Policy with Multiple Warehousing/Storages

1) Multi Transit Policy

Transit would commence from the time the goods leave the warehouse at the place
mentioned in the policy for commencement of transit and continue during ordinary course
of transit until delivered at final warehouse at the place mentioned in the policy for termination
of transit.

a) Outside City Limits :

At intermediate points if the insured goods come under the control of the assureds or
agents for processing the transit will be deemed to have come to an end and further transit
shall become the 2nd transit.

Rating Pattern

Basic rate .......................

Add : 50% loading to cover Multiple Transits

(irrespective of number of transits) .......................

Add : Extra rate for wider cover .......................

Add : @ 0.01% per week or part thereof to cover

intermediate storage (irrespective of storage points) .......................

Add : @ 0.02% flat to cover insured losses whilst

processing is being carried on at intermediate points .......................

Add : SRCC extra .......................

b) Within City Limits :

Once the goods leave the asureds factory/warehouse for delivery to several destinations
within the city limits this cover would operate. It is possible that the distribution/delivery of
the goods may not be over on the same day and it could be over a period of a week or
more. Insured would be required to maintain records of all such despatches by way of
invoices/gate passes/ledgers/other books of accounts which should be available for
examination by Underwriters any time.

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 New India Assurance

Rating Pattern

Basic Rate .......................

Add : 20% to cover risk of distribution within the same city .......................

Add : Extra for wider cover as per guidelines .......................

Add : @ 0.01% flat per week to cover intermediate storage .......................

Add : @ 0.02% flat to cover insured losses whilst

processing is being carried out at intermediate points .......................

Add : SRCC extra .......................

2) Transit policy is specifically designed for manufacturers who are required to send their
goods to their various depots/storage units/retail units anywhere in the country. Goods are
sent through carriers but at intermediate points these goods may come in the custody of
the assureds or their agents for allocation and distribution.

Rating Pattern

Basic Rate .......................

Add : 25% to cover allocation and distribution .......................

Add : Extra for wider cover as per guidelines .......................

Add : @ 0.01% per week or part thereof to cover intermediate

storage irrespective of storage points .......................

Add : SRCC extra .......................

Note :

This policy has to be issued very selectively after thorough vetting of underwriting
aspects.

The authority for approving there policies vests only with AGM / R.M. of Regional
Office.

The policy should be reviewed by Regional Office every six months.

87
 DUTY AND INCREASED VALUE INSURANCE
GENERAL REGULATIONS

i) Cover may be granted only on goods imported to India. The insurance shall be granted only if
there exists insurance on CIF value of cargo itself and against the same risks as the basic
cargo insurance and only on the basis of a signed proposal form. If cargo is imported on CIF
basis because of an unavoidable contractual obligation to insure abroad, insurance on
“Increased Value” and “Duty” may be granted on terms and conditions wider than overseas
CIF insurance.

ii) The insurance should be granted only to the party in whose favour the import license has
been issued/officially endorsed. In respect of imports by State Trading Corporation in India
and/or any other government body under their own import licenses, and allotment made to
various parties on “High Seas Sale Basis”, such allottees may be considered as actual
holders of the licenses provided an allotment letter or certificate from S.T.C. of India or
government body concerned is produced as a proof.

iii) In all cases a duly completed and signed proposal form must be obtained. In case where an
Open Cover is issued a master proposal form may be obtained if the facts mentioned therein
applied equally to all declarations under the open cover.

iv) No insurance on “Increased Value” or “Duty” shall be granted after arrival of carrying ship at
destination port. This however shall not apply where such insurances have been granted
under open covers.

v) “Increased Value” and “Duty” insurance policies may also be issued in favour of “Actual
Users” who purchase from recognized Export Houses under the Export Promotion Scheme,
provided an allotment letter/certificate from a recognized Export House is produced as a
proof. Alternatively, the Policy issued in favour of the Export House from which the goods
have been purchased may be assigned in favour of “Actual Users”.

vi) The cover is subject to all extras – (on account of overage, under-tonnage, non-classification,
etc.) applicable under the cargo policy.

“DUTY” INSURANCE

i) The sum insured for “Duty” is adjusted on the basis of actual assessed duty. The Policy is one
of pure indemnity.

ii) The rate of premium shall be 75% of the rate applicable for covering the CIF value of cargo
itself. Extras, as applicable, will also be charged on 75% basis. War and SRCC rates will also
be on 75% basis. Where the CIF insurance is effected with another insurer, the rate of
premium for covering Duty shall be 75% of the appropriate CIF value insurance premium rate
of the insurer covering Duty.

iii) The “Duty” Policy excludes claims in respect of :

- Total loss of whole or part of cargo prior to duty becoming payable.

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 New India Assurance

- General Average, Salvage and / or Salvage Charges arising from any casualty occurring
prior to duty becoming payable.

iv) In ascertaining the amount of claim recoverable credit should be given to any rebates or
refunds of duty which may become allowable.

v) The insurance is not assignable.

vi) Claims under insured risks are payable on the basis of actual duty paid or on the basis of the
sum insured, whichever is less.

vii) The assured should lodge a claim with Customs Authorities within the stipulated time
(6 months from the date of payment of duty) for refund of duty where admissible and with
carriers or other as applicable and any refund obtained should go to reduce the claim under
the policy.

viii) The Policy should be issued subject to the “Duty Insurance Clause”

“INCREASED VALUE” INSURANCE

i) The insurance is not for an agreed amount but for an amount not exceeding the actual
difference between market value at destination on the date of arrival of the goods in India and
the total of CIF value plus Duty, subject to establishment of a higher market value or controlled
price as notified by appropriate statutory authority.

ii) The assured is required to bear 25% of the claim amount payable under this component of
the Policy.

iii) “Increased Value” insurance shall not be granted for more than 100% of the CIF insurance
except in exceptional circumstances.

iv) The rate of premium shall be 100% of the normal rate applicable to CIF insurance.

v) The policy is not assignable.

vi) This insurance shall not pay any part of General Average contribution or Salvage Charges
arising from any casualty whatsoever.

vii) “Lost or not Lost” provision of the standard policy shall not apply unless the insurance has
been effected in terms of a standing Open Policy or Open Cover.

viii) The policy should be issued subject to the “Increased Value Insurance Clause”.

ix) No claim under “Increased Value” policy shall be paid until the claim under CIF value insurance
policy is payable but this provision need not apply to cases where CIF value is insured by
overseas insurers.

‘INCREASED VALUE’ INSURANCE ON CARGO IN INLAND TRANSIT

Insurance on cargo in inland transit (where not in conjunction with overseas transit) in excess of
the established market value or controlled price of the commodity concerned whichever is lower
shall not be granted under any circumstrances.

89
 SENDINGS BY POST
There is no standard set of clauses to cover postal sendings apart from the Institute War Clauses
(sendings by post). It is suggested that either the Institute Cargo Clauses (A), (B), or (C) or Inland
Transit (Rail/Road) Clause-A,B or C form the basis of cover, as may be applicable, subject to
following Warranty / Endorsements.

WARRANTY : For interests which are valuable and highly susceptible to pilferage in transit, the
insured should be advised to insure the parcel with post office for an agreed amount and the
policy issued subject to following warranty :

“Warranted that the parcel is insured with the post office for Rs…………”

DURATION : “Notwithstanding anything to the contrary in the Clauses attached, this insurance
attaches from the time the goods hereby insured are deposited / registered at the Post Office at
the place named in the policy and continues until the goods are delivered to the addressee or his
representative at the destination named in the policy or until the expiry of 15 days counting from
the midnight of the day on which the notice of arrival of the goods is given to the addressee by the
Post Office at the destination, whichever shall first occur.

Where notification by Postal/Customs/Government authorities is not required about arrival of

goods, the period of 15 days referred above shall be reckoned from the midnight of the day of
arrival of the goods at the destination named in the policy.”

For interests which are valuable, highly susceptible to pilferage/damage in transit, it is advisable to
restrict the aforesaid period of 15 days to 7 days or even 3 days.

CLAIMS :

(a) “In case of loss, claim in writing must be immediately filed against the Postal Authorities and
a copy thereof and the reply thereto must accompany any claim presented under this policy.

(b) Post Office receipt will be required as proof in case of a claim for non-delivery.

(c) No claim for loss or damage will be admitted if proved to be due to incorrect and/or ambiguous
and/or insufficient description of the address on the package, nor for loss or damage resulting
from any disposal by the postal authorities by reason of the interest having become
undeliverable to, or having been unaccepted by the addressee.

(d) No claim will be admitted for loss of contents from packages delivered with seals intact.

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 New India Assurance

SENDINGS BY COURIER

The sendings by courier can be divided into two categories.

1) UNACCOMPANIED BAGGAGE :

Insurance Cover against despatches made through couriers as unaccompanied baggages

may be granted only when courier has a Legal Liability Policy (Professional Indemnity Policy).

Marine Cargo Insurance Policy covering such despatches to the owners of cargo can be
granted only subject to the couriers complying with the following minimum requirements :

(a) The courier company must take out legal Liability / Professional Indemnity Policy for a
minimum Indemnity limit of Rs.2 lakhs for any one event.

(b) The cargo owners will not contract out with the courier allowing the courier to restrict his
liability to any amount less than the statutory liability of original carriers.

(c) Courier’s receipt issued to cargo owner should also contain the original carrier’s
consignment note / way bill / airway bill number and date or it can be agreed to be
declared later.

2) ACCOMPANIED BAGGAGE :

It was decided not to grant marine insurance cover for despatches made through couriers
carrying the cargo as Accompanied Baggage. If cargo was to be carried by courier as
Accompanied Baggage, the same could be considered by the Miscellaneous Department
and a suitable Baggage Policy be given. Such Policy may be given in the name of the Courier
itself.

GENERAL :

(a) No Marine Cargo Insurance Policy can be issued in the name of courier company in
respect of either accompanied or unaccompanied baggage.

(b) As far as Marine Insurance Cover for despatches sent as unaccompanied baggage is
concerned, whilst cargo can be insured on an agreed value basis, letter / documents and
similar items are to be insured only for reimbursement of the expenses reasonable
incurred for remaking such documents / such items. For documents / instruments the
following warranty will have to be incorporated in the Marine Cargo Policy :-

“Warranted that in the event of claim for loss or damage to documents or instruments
insured hereunder, the liability of the Insurer will be limited to the actual expenses
reasonably incurred for remaking such documents / instruments.”

(c) Miscellaneous Accident Deptt. can cover accompanied cargo sent through couriers, as
per usual conditions; if approached by cargo interests.

(d) No claim for consequential loss will be considered.

91
 SELLER’S INTEREST INSURANCE
We have seen in the chapter on Inco Terms how and when the title to goods is transferred from
buyer to seller. There are situations in which the seller will continue to have an insurable interest
though title to the goods has passed to the buyer. For example, the seller of the goods on FOB or
other terms under which the title passes to the buyer at some point in transit, will have a financial
interest in the goods until payment has been received. This kind of situation will arise when the
terms of payment call for sight draft against documents or for acceptance at 30-60 days sight.
There may be situations where the buyer is uninsured or his insurance coverage is inadequate
because of underinsurance or restricted conditions, in which case his desire to pay as originally
contemplated after loss or damage to the goods will be impaired. Moreover, the buyer’s insurance
company may be less liberal in claims settlement than the seller’s. At times, the total loss of a
consignment prevents the buyer from making payment for the goods as the law in his (importing)
country would not allocate him any foreign exchange unless the goods are actually landed and
cleared through customs. There are countries whose law requires that marine insurance on
imports must be placed with local insurance companies which in other words means that the
exporter has no alternative but to ship the goods on FOB or C&F terms only. In all these situations
the seller will find it necessary to protect his interest, which he can do by obtaining a ‘Seller’s
Interest Insurance Policy’ from his insurers. The cost of insurance will have to be borne by him and
is not recoverable from the buyer.

The policy covering the seller’s interest may be issued subject to the same Institute clauses, terms
and conditions as are applicable to a CIF export shipment insured by the seller, but it will also be
subject to the clause reproduced below:

SELLER’S INTEREST INSURANCE CLAUSE :

(a) This policy covers physical loss of or damage to the cargo insured, subject to the terms
and conditions of the policy, to protect only the interest of the insured mentioned therein.
This insurance is not assignable to any other person who may acquire insurable interest
in respect of property insured excepting a banker operating in India; any assignment
other than as stated shall render this policy void.

(b) Warranted that the insured shall not change the terms of the contract of sale relating to
goods insured hereunder, subsequent to the operation of a peril insured against for the
purpose of securing indemnity under the policy.

(c) Warranted that the insured shall safeguard all contractual and other rights against the
buyers, carriers and other parties concerned with the transactions and transport of the
goods covered therein.

(d) No claim shall be payable hereunder if either the named insured or the buyer of the
insured goods is entitled to indemnification under any other policy covering the same
goods, which may be in existence.

(e) Claims, if any, are payable in Indian currency only.

(f) Underwriters shall be subrogated to the assured’s rights against third parties.

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(g) This policy does not cover the risks which could be covered or which are insurable by
the Export Credit Guarantee Corporation of India Ltd.

Notes :-

i) Policies covering seller’s interest may be issued to valued clients only.

ii) Check whether prior written approval of your Regional Office is needed.

iii) While agreeing to issue such policies, it must be made clear to the assured that he
should not disclose to the consignee or any other party who may have interest in the
insured goods about the existence of the policy taken to cover the seller’s interest.

iv) Explain the implications of the terms and conditions of the clause to the assured.

v) Do not issue policy covering risks beyond the port of destination.

vi) Item No.9 of the clause refers to the risks covered or insurable by the Export Credit
Guarantee Corporation of India Ltd. (ECGC). ECGC is wholly owned by the Government
of India and functions under the Ministry of Commerce, Govt. of India. The following
chart will illustrate the difference between the risks covered under the Seller’s Interest
Insurance Policy and the cover granted by the ECGC to the exporter.

Sellers Interest Insurance Export Credit Guarantee

Applies normally to goods sold under No exact equivalent as CIF sales will
FOB or C&F terms (or similar) also be included.

Cover relates to physical loss or Loss or damage as such during transit

damage to goods normally restricted is not covered.
to the warehouse to warehouse period.

Buyer has to fail to pay for the goods Non payment by buyer because of
thus reinvolving the seller with an his insolvency, his country’s
interest or responsibility for such regulations prohibiting import of goods
goods which are lost or damaged. or release of currency to pay for them,
Insurance is for Sellers account only. his refusal to accept the goods.

Typical Exclusions Typical Exclusions

War on land, Interent Vice, Delay. Where goods are lost or damaged and
the seller holds a cargo policy. Buyer’s
failure to comply with Import Licence
Regulations and Sellers failure to fulfil
contract terms.

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 CLAIMS MANAGEMENT
PREAMBLE

Marine Cargo Department, unlike other Departments of Insurance, is very complex as one single
risk may involve multiplicity of type of transits, modes of conveyance, wide locational and climatic
variations and is involved with various segments of markets. Claims arising out of policies issued
by this Department cannot, therefore, be completely bound by specific Guidelines. Guidelines,
whenever essential have therefore, to be of a general nature and cannot be exhaustive by any
means. Focus should however be in general on the following areas :

A. Proper underwriting

B. Establishment of liability

C. Expeditious settlement

D. Preservation of rights of recovery

E. Loss minimisation

For considering a claim arising under a Cargo policy, some basic documents are obviously
necessary to substantiate the loss. There is no short-cut to this requirement except with certain
specified documents, which, if not available, may be substituted by others to meet the requirements
of the Insurers.

In some cases, it may not be possible to comply with the requirements laid down due to the
peculiar character of a case or the particular circumstances of it. The resultant non-compliance
should not, therefore, render the claim non-payable and the claim settling authority may use his
discretion to dispose it on merits.

INTIMATION OF CLAIM

On receipt of intimation of loss, two things are of immediate importance :

i. To ascertain whether a valid insurance policy is in existence.

ii. Whether the statutory provisions for payment of premium have been complied with.

APPOINTMENT OF SURVEYORS

Marine Cargo claims have a peculiarity and survey by Licensed Surveyors may not be necessary
in respect of some of the following categories of losses :

i. Claims where documentary evidence of the loss is available, in the form of shortlanding
or non-delivery certificates issued by Port Trusts, Railways or other public or
Semi-Government authorities or claims in respect of which Excise authorities give a
certificate for dutiable items and sling loss claims certified by Harbour authorities.

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 New India Assurance

ii. General Average Claims. Please also refer to separate para on GA claims.

iii. Total loss

iv. Claims, the amount of which has been adjudicated upon or decreed by Courts.

v. Claims in respect of loss or damage to tea in transit from gardens in India.

vi. Claims in respect of which the amount is determined by recognized and well established
conventions or under agreements.

Independent Surveyors to be engaged in all other cases

If the estimate of loss is below Rs.20,000/- the minimum amount qualifying for survey may be
decided by the dealing office as per guidelines issued by HO. Where the requirement is waived a
completed claim form may be obtained from the claimant and the dealing office should satisfy
itself that the claim is genuine and admissible under the policy.

If the estimate of loss is considered to qualify for survey, the dealing office may appoint a surveyor
competent for conducting a survey for the type of cargo and nature of loss concerned. Self survey
facilities may be specially agreed with important and reliable clients for amount not exceeding that
where the appointment of licensed surveyor is a statutory requirement. Technical/professional
experts may also be appointed as consultants to licensed surveyors where necessary (eg.
Mechanical Engineers for machinery surveyors/Chemical Engineer for Chemical risks, Experts
from tea industry/trade for tea surveys, etc.)

In Marine insurance, unlike other classes of insurance, Survey fee is generally required to be paid
by the claimant initially. It is of course, reimbursable to the claimant along with the claim amount if
the claim is found admissible under the policy. However, this practice may be varied at Insurers
discretion on the basis of an understanding with regular clients where the survey fee is paid by the
Insurers direct, but in case the loss is found to be inadmissible, the claimant undertakes to take
the responsibility for such payment/reimbursement.

The schedule of survey fees for Marine Claims agreed by all Public Sector Insurance Companies
is available on page no. 157.

DOCUMENTATION TO SUPPORT CLAIMS

EX : Ship, Air, Port, Multimodal Transport

Documents generally required for settlement of various types of claims are as under. Keeping in
view the purpose of calling for the claim documents and depending on circumstances, submission
of certain documents may be waived recording the reasons for the same.

General

i) Original insurance policy/declaration under the open policy duly endorsed by the insured. A
letter of indemnity may be furnished if the original is lost.

ii) Original or a signed copy of sale invoice along with packing list wherever available.

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 iii) Signed copy of Bill of Lading (in case of sea voyage)/Air Consignment Note (for air cargo) /
MTD/CTD (for multimodal transport) / postal receipt for sendings by post.

iv) Triplicate or exchange control copy of Bill of Entry (to facilitate verification of the date of filing
to ascertain whether there has been any delay and also check duty payment details).

v) In case of General Average, G.A. Guarantee and Counter Guarantee or original Cash Deposit
Receipt with Letter of Transfer as the case may be. Reference be made to the separate para
on G.A.

vi) Letter of Subrogation duly stamped and executed (only where recovery from carriers/other
third parties is possible).

vii) Special Power of Attorney (wherever recovery from Railway/other carriers is involved. In other
cases as required).

viii) Lost Over Board Certificate where loss has taken place during loading / unloading.

ix) Copies of claim notice served on carriers and correspondence exchanged with them alongwith
the registered A/D cards or any other valid evidence of service of claim notice within the
statutory time limits.

x) In case of shortlanding / non-delivery of complete consignment :

Full set of original Bill of lading / Air Consignment Note/Postal Receipt etc. as applicable
endorsed in favour of insurers. The original contract of affreightment should be endorsed by
the carrier confirming shortlanding / non-delivery of the entire consignment by them or with a
separate shortlanding/non-delivery certificate. An undertaking to be obtained from the claimant
that he would take delivery of the cargo, if traced, under an insurance survey.

xi) In case of partial non-delivery/shortlanding :

Non-delivery and / or landed but missing certificate from the sea-air/CTO carrier/postal authority/
Port Trust, is applicable.

xii) In case of partial loss or damage :

a. Assessment report by sea/air/CTO carrier/postal authority

b. Survey Report of independent surveyor (if survey has not been waived)

c. Claim form/claim bill.

xiii) Banker’s Certificate confirming non-receipt of export proceeds in India in an approved manner
(in case of claims under export policies to be settled in India).

Non-delivery (shortlanding or landed but missing)

Specific documentation – The claimant should be requested to apply for either shortlanding
certificate or landed but missing certificate from the port authorities or the steamer company
within the period allowed under statute/Port Rules. When the short landing or landed but

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missing certificate is obtained, the claimant should be asked to send notice to the carrier or
the Port authorities, as the case may be for the value of the lost cargo (CIF value and / or
duty and / or profit) and obtain their acknowledgements : A claim on the carrier or the port
authorities should be accompanied by

i. Photocopy of Shortlanding or landed but missing certificate.

ii. Copy of Bill of Lading.

iii. Copy of Invoice.

Individuals or agencies specialized in the work of tracing missing cargo should be engaged to
trace the missing cargo of very high values. Where such certificates are not forthcoming in
time, notice to carriers and port authorities etc. must be served within the statutory time
limits.

Total and/or constructive total loss

(where total and/or constructive total loss of the cargo has been caused whilst in the custody of
the steamer company or port authorities) :

i. Copy of monetary claim on the carrier/port authorities (as the case may be) and
acknowledgement.

ii. Open assessment/delivery certificate.

Particular Average (partial loss i.e. theft, pilferage, shortage and other damages) (in cases
when loss or damage is reported before clearance from the dock) :

i. Steamer/port survey report.

ii. Customs examination certificate before clearance of consignment from docks.

iii. Independent survey report.

As regards claim for shortage from externally sound cases, it is essential to ask claimants to
refer the matter to their suppliers about the possibility of short packing at their end. Only on
receipt of confirmation from the suppliers about correct packing as per invoice, further
processing of claim on merits should be done. Surveyors should be asked to examine
whether there was sufficient empty space in the case to hold the missing items or whether
the missing items were replaced by some foreign materials in order to determine skilful
pilferage in transit. It may also be checked as to whether the missing items had been
extracted by Customs for examination or other purposes.

Claim under Duty and Increased Value Insurance Policy.

In the case of shortlanding, no duty is payable. Claims other than shortlanding have to be
scrutinized with due regard to the basis of duty insurance and may be authorized for payment for
the actual value of the loss including the actual customs duty paid but not exceeding the
proportionate insured value on duty.

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 As regards Increased Value Insurance, the claim would be payable for proportionate increased
value insured under the policy as per the Increased Value Insurance Clause.

A claim under ‘duty/increased value’ policy is payable only if claim on the relative cargo policy is
payable. The most important document is, therefore, the original settlement letter from the cargo
insurers. (If cargo and duty/increased value, are insured with the same insurers, then this
requirement will not obviously apply).

The other documents required are :

i. Original Insurance Policy duly endorsed

ii. Copy of Bill of Lading

iii. Copy of invoice

iv. Bill of Entry

v. Survey Report

vi. Copies of correspondence exchanged with carriers relating to the claim lodged with
them.

GENERAL AVERAGE

In the event of the steamer company declaring General Average, the consignees will be called
upon by steamer agents to make cash deposit before delivery of the consignment at destination.
The consignees should be asked not to comply with this normally, without prior concurrence of the
dealing office. The concurrence can be given after ensuring that Lloyd’s form of bond or similarly
worded form is used and the deposit to be collected by the Steamer Company would be credited
into a properly constituted Trust Account jointly with the Average Adjusters.

In lieu of cash deposit, steamer companies often accept unlimited guarantee of the Insurance
Company covering the goods. As far as possible the dealing office shall arrange for the General
Average Guarantee to be given subject to approval of CMD as per FSO – 1991.

As soon as any intimation is received regarding GA and any request from the Insured for issuance
of GA Guarantee is received, H.O – MCTD should be intimated with full details. For issuance of
GA Guarantee approval of CMD is necessary as stated in the financial order – 1991. Operating
offices should not make any commitment with regard to such guarantee. MCTD on examining the
facts would advise them in the matter.

Documents for General Average Claims

1. Original policy or certificate of Insurance duly endorsed

2. Bill of Lading (signed copy)

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 New India Assurance

3. Invoice (original or signed copy)

4. A copy of Notice declaring General Average by the Shipowner/Agent.

5. General Average Deposit Receipt on Lloyd’s Form duly endorsed.

(This document indicates the name of the steamer, details of the casualty, the B/L no., the
provisional net arrived value of the Goods, description of the goods, the name of the GA
Adjusters, the amount of the deposit by the consignees etc.)

The Steamer Company is responsible for the adjustment of the GA Loss. For this purpose,
GA Adjusters, who are experts in this field, are appointed. Those Adjusters determine, initially
on estimated basis, the contribution to be made by the several interests, viz. ship, cargo etc.
the shipowner has a lien on the cargo to enforce contribution from the cargo interests.
Therefore, cargo will not be released until a cash deposit is paid by the consignee, or G.A
guarantee is furnished.

This cash deposit is refunded to the consignees by the Insurers and the Deposit Receipt is
retained by them so that any recovery to the credit of cargo interests after the final adjustment
will be to the credit of insurers.

6. General Average Counter Guarantee

As an alternative to cash deposit shipowners are willing to accept a Guarantee from a bank
or, if the goods are insured, from the insurers. Insurers grant this Guarantee on behalf of the
insured in terms of which they agree to pay the General Average Contribution. In such cases,
a Counter Guarantee is obtained from the insured. The Counter Guarantee is required because
the General Average adjustment may be based on a contributory value of the cargo which is
higher than its insured value. It will be appreciated that insurers are liable on the basis of the
insured value and hence the insured guarantees that he will reimburse the insurers with any
excess General Average contribution.

7. Letter of Transfer

This letter is signed by the consignees whereby they

i. Surrender their rights in respect of the deposit paid to shipowners by the insurers;

ii. Agree to transfer the deposit amount to the credit of the insurers;

iii. Authorize the insurers to receive from the shipowners the difference between the amount
of general average as adjusted and the amount of the deposit;

iv. Undertake to refund to the insurers any sum deducted by the shipowners from the
deposit which may not be recoverable under the insurance policy; and

v. Undertake to repay to the insurers, if the contributory value exceeds the insured value
the proportion of general average applying to such value.

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 If it is reported that the General Average act has included sacrifice of cargo, then the
consignee should clear the damaged cargo only after the General Average Survey is conducted
by the ship’s Surveyors.

CLAIMS ON CONSIGNMENTS BY RAIL/ROAD

A. Railway Transit Claims

In the mutual interest of the insurers and the insured, the later should undertake the following
measures;

On receipt of the Railway Receipt, the consignees should arrange immediate clearance of
the goods as soon as they arrive at the destination station and, in any case, within the free
period of 7 days which is reckoned from the date of arrival of the consignment.

Even if the Railway Receipt has not reached the consignee he may, if he is aware that the
goods have arrived, arrange clearance on the basis of an Indemnity bond furnished to the
Railways. This is, of course, possible only when the ‘interest’ or the ‘property’ on the goods
has passed to the consignee under the provisions of the Sale of Goods Act.

Where an entire consignment has not arrived, say after two months from the date of booking,
the consignor and consignee should write to the Railway Administration to enable it to trace
the consignment. Registered (A/D) letters are to be addressed to the General Managers of
the Railways at the forwarding and destination stations, with copies to the respective Chief
Commercial Superintendents.

Where an entire consignments is not received within say 3 to 4 months of the date of
booking, a ‘non-delivery’ certificate should be demanded. In any case a Claim for Compensation,
under Section 106 of the Railways Act, must be filed by Registered (A/D) letters on the
General Managers of the concerned Railways within 6 months of the date of Railway Receipt.
The original Railway Receipts are not to be surrendered to the Railways unless agreed to by
the Insurers. Where apparent loss or damage is noticed on the consignment received the
consignee should demand in writing, from the Station Master an Open Delivery or Assessment
Delivery Certificate. A copy of the demand should be sent to the General Manager of the
destination Railway. The original Open Delivery/Assessments Delivery Certificate should be
retained to be eventually submitted to the insurers. A copy of the Certificate should be sent to
the Railways in support of the claim preferred against them.

If the assessment made by the Railways is not reasonable, insurers should be notified so that
they may arrange for a joint survey before the goods are cleared.

If this certificate is not granted by the Station Master, appropriate remarks should be inserted
in the Delivery Book regarding damage and a certified copy of the remarks should be
obtained from the Station Master.

A consignment may well be contained in a full wagon (Wagon Load Consignment). In such
cases, if wagon seals and labels are found tampered with, Open/Assessment Delivery should
be applied for.

This procedure also applies to delivery at the consignee’s own Railway sidings. If any tampering

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 New India Assurance

of the wagon seals/labels is detected a suspected qualified delivery should be taken by

inserting remarks in the ‘OPT-18’ receipt to the effect that wagons are received subject to
inspection and checking at the siding in the presence of railway staff. Assessed delivery
should be thereafter applied for within 24 hours of unloading.

B. Road Transit Claims

The legal rights and liabilities in respect of carriage of goods by road are governed by the
provisions of the Carriers’ Act, 1865.

In the event of loss or damage a written notice giving particulars of the loss or damage
should be given to the carrier within 6 months of the time of loss or injury first comes to the
knowledge of the claimant. This notice is to be served by Registered Post with
Acknowledgement Due. The serving of such notice is a pre-requisite for filing of a suit
against the carrier.

It may also be noted that the carriers’ liability as common carrier ends and he becomes liable
only as a bailee of the goods in the following circumstances :

i. Delivery of goods offered to and not accepted by the consignee;

or
ii. Goods booked to ‘self’ reach the destination and the free period allowed for taking
delivery expires.

C. Claims Documents (Rail / Road)

As in the case of sea/air/multimodal transport/postal claims, the insured has to furnish evidence
of (i) insurance, (ii) transit, (iii) value, and (iv) loss.

The following documents are required to be submitted to insurers in support of claim under
rail/road transit policies :

General documents :

1. Original Policy or certificate of insurance duly endorsed in blank.

2. Invoice (original or copy) / packing list/weight specifications.

3. Independent Surveyor’s Report, if any.

4. Letter of Subrogation (if recovery is possible).

Other documents depending on the nature of claim :

1. Original Railway Receipt (Non-delivery cases)

2. Copy of Railway Receipt (damage claim)

3. Original Consignment Note (Non-delivery cases – Road transit claims)

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 4. A copy of Consignment Note (Damage claim – Road transit claims)

5. ‘Non-delivery’ or ‘partial delivery’ certificate from the Railways / Road Transport Operators.

6. Open Delivery / Assessment Delivery Certificate (Rail / Road)

7. Certified copy of the Remarks in the Railway Delivery Book (Damage Claims).

8. Certified copy of the Remarks in the delivery challan (Road Transit Claims)

9. Copy of (a) Notice of claim lodged on the carriers (Rail/Road);

(b) Acknowledgement

(c) Subsequent correspondence with the carriers.

10. Special Power of Attorney (Rail Transit Claims)

11. Letter of Authority (Rail Transit Claims)

Non-co-operation of carriers

Unfortunately, at times, no co-operation is extended to the clients by the Carriers/Bailees. For

example, if in spite of a timely application for survey, the Steamer Agents do not depute their
Surveyors to assess any loss/damage in respect of packages discharged from the vessel with
outward damage to the packages. Notice may be served with them, mentioning clearly that, in
case they do not depute their surveyors immediately, the loss as assessed by the Licensed
Surveyors will be binding on them and claim will be lodged accordingly. Likewise, if Inland Road
Carriers do not allow any assessed delivery in respect of damaged package/refuse to issue any
shortage/damage certificate, a Notice may be served on them, indicating that, if in spite of the
request made to them, they do not comply with the requirement, the findings of the survey carried
out by the Licensed Surveyors will be binding on them and claim on them will be lodged accordingly.

In those cases where recovery suits are ultimately required to be filed against the Road Carriers
who are either proprietary or Partnership Firms, apart from the firm, the partners/proprietor should
also be separately impleaded in the case so that, if the time the judgement is pronounced by the
Court the firm ceases to exist, the personal property of the Partners/Proprietor may be attempted
to be attached while executing Decree.

CARGO LOSS MINIMISATION AND RECOVERY ACTION AGAINST CARRIERS / BAILEES

In Marine Cargo Insurance, like in all other classes of insurance, it is our business to ensure that
at the end of the day we are left with a reasonable underwriting surplus. To achieve this, not only
proper underwriting control is necessary but it is also of utmost importance that necessary steps
are taken to minimize the losses. A good many losses arise through careless handling by Carriers
who are primarily responsible for safe delivery of cargo entrusted to their care and custody.
Therefore, unless they are made conscious of their obligations and liabilities, they may not take
adequate steps to protect the cargo entrusted to them. Liability under the policy of insurance
succeeds and not supercedes liability of carriers.

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With a view to achieving loss minimization, the following aspects be kept in view :

1. Proper Packing :

Packing should be such as would withstand the stress and strains of normal transit. If it is
apparent that the packing employed is not suitable or insufficient, improvement should be
suggested to the shippers, having regard to the type of goods, transit and handling involved.

2. Proper Marking :

The packages should be so marked that identification is made easy. Suitable instructive
markings with indelible ink on the package tend to avoid mishandling. It is necessary that the
gross and net weights of the packages are marked, and a copy of the packing list is kept
inside the package. In respect of sensitive cargoes markings by codes are recommended to
avoid possible pilferage.

3. Selection of Carrier (Vessel / Vehicle) :

Shippers should be urged to utilize vessels whose operations are approved by GIC and also
comply with the provisions of Institute Classification Clause and shipments by vessels carrying
‘Flags of Convenience’ should be avoided.

Similarly, only reputable Transport Companies, preferably the ones which are approved by the
Banks, should be utilized for inland transit despatches to the extent possible.

4. Supervised discharge of overseas cargo :

Arrangements for supervision of discharge of valuable, delicate and sophisticated cargoes at

Indian Ports may be made, as and when required. In addition to supervision of discharge,
follow up regarding early clearance, tracing out landed but missing consignments,
recommendation to repair and recondition defective and broken cases, and assistance in
arranging survey at docks are other areas where cargo supervisors may play an active role.

5. Prompt clearance from the docks & follow up action :

a) For prompt clearance of the cargo from the docks, documents should be filed with the
Customs under ‘prior entry’, i.e. 15 days before the arrival of the vessel. Customs
formalities and assessment of duty, should be completed before-hand so that clearance
of cargo could be effected soon after discharge from the vessel. Prompt clearance not
only minimizes the chances of theft and / or pilferage in the docks, but also avoids
payment of heavy demurrage to Port Authorities. It should be kept in mind that the cover
for 60 days from the date of landing of the cargo from the overseas vessel is not an
automatic cover. The inland transit, if involved, should be completed within this period
and once the goods reach the interior destination before the expiry 60 days, the cover
under the policy ceases automatically on arrival of the goods at the final destination. In
case of any delay in clearance of cargo, if it is found that the delay is within the control of
the consignee, the cover ceases from the time the delay is manifested. The Insured
should, therefore, approach the insurers for suitable extension on payment of additional
premium before the expiry of the cover.

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 When clearance is delayed for some reason or other, the consignment should be kept in
the lockfast/bonded warehouse. Defective packages should be reconditioned to avoid
further loss.

b) If the consignment, or a part thereof, is found missing, a ‘not found’ application should be
made forthwith to the Port Trust and shortlanding/landed but missing certificate should
be obtained from them.

6. Prompt disposal of salvage (particularly in respect of perishable commodities) is necessary

to realize maximum salvage recovery.

The salvage disposal procedure as laid down by the Company should be strictly adhered.

7. To ensure that the maximum quantum of recovery can be effected can be from the Carriers
the full value of the cargo should be declared to them. This is applicable to all types of
carriers in general and to Railways and Air Carriers in particular.

8. In view of the highly competitive marine cargo market following detariffing it is of utmost
importance to take all possible measures to protect the rights of maximum recovery from
carrier so that the cargo portfolio can continue to produce a healthy commercial surplus.
The procedures to be followed for protecting the recovery rights have been dealt along with
the time limits for filing claims and suits, whenever necessary, against the various types of
carriers in the next chapter.

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RECOVERY
Claims recovery from carriers, bailees and other third parties plays an important part in reducing the
underwriters’ and the insured’s loss experience in a marine insurance contract. Therefore, it is
imperative that the marine underwriter vigorously pursues recovery from the carriers, bailees and
other third parties who can be held responsible for the loss covered by the policy.

This can be done effectively only if the marine insurer has thorough knowledge of the various
statutes, which govern the liabilities of the carriers, bailees and other third parties. This will
help him to guide the client at the time of claim and thereafter obtain maximum recovery for the
Company.

It is however incumbent on the part of the Marine Underwriter to know his right to be entitled for
recovery from the carriers, bailees and other third parties referred to supra, who could be held
responsible for the loss covered by the policy. In this view of the matter, a perusal of the provisions
contained in Sec. 79 of the Marine Insurance Act, 1963, and understanding thereof is essential. This
is because the Insurer or the Underwriter steps into the shoes of the Assured only after the claim of
the Assured is settled. It is also equally important to note here, that the Insurer or the Underwriter
cannot recover more money than what has been paid to the Assured by way of settlement of the
claim of the latter.

When the shippers entrust their cargo to a carrier (i.e. a shipping company, an airline, railways, road
transporter, postal authorities, courier etc) the carrier assumes responsibility for the cargo while
it is in his care. He becomes liable for damage to the goods, if the shipper can prove that the
damage occurred whilst in the care, custody and control of the carrier. The carrier issues a
Document (Contract of Affrieghtment) showing that he has received the goods for transport
between two named points, (the origin place and the destination) e.g. Bill of Lading, Railway Receipt,
Lorry Receipt, Airway Bill etc.

These documents are governed by certain conventions, which define the carrier’s liability.

It is strongly recommended that the reader familiarize with the various Conventions/Acts. The objective
of this chapter is to give in brief the important provisos of the Conventions / Acts governing various
types of carriers, which every practitioner of marine insurance should be aware.

OCEAN CARRIERS

Statutes

The main conventions governing the ocean carriers are:

s Hague Rules
s Hague Visby Rules

s Hamburg Rules

The Marine Insurer in India has to be conversant with The Indian Carriage of goods by Sea
Act, 1925 (COGSA).

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 Limitation of Liability:
s Hague Rules - 100GBP per package or unit unless value declared and inserted in the Bill
of Lading.

s Hague Visby Rules - 2 SDRs per Kg or 666.67 SDRs per package or shipping unit
s Hamburg Rules –2.5 SDRs per Kg or 835 SDRs per package or shipping unit
Note:

s Though India is a signatory to Hague Rules, by an amendment to COGSA effective 16.10.92

(Carriage of Goods by Sea Act), 1925, the Limits are as per Hague Visby Rules.

s The Act is applicable only to Goods shipped from any Indian Port, irrespective of the
destination.
s The Paramount Clause in the Bill of Lading will reflect the Limitation of Liability.

Notification of Damage:
s Hague Rules – Notice of loss or damage should be given in writing to the carrier or his agent:
1. On the day of delivery

Or
2. Within 3 days where damage is latent
s Hague Visby Rules – Same as above

s Hamburg Rules - Notice of loss or damage must be given in writing to the carrier:
1. By working day following delivery to the consignee
Or

2. Within 15 days of delivery where damage is latent

3. Notice of Delay must be given within 60 days of Delivery
In all the above Conventions Ship Survey /Joint Survey with Insurer’s Surveyor is essential.

Limitation for filing suit:

s Hague Rules
Suit must be brought within One year of Date of Delivery or Delivery should have taken place.

s Hague Visby Rules

Same as above.

s Hamburg Rules
Suit must be brought within Two years of Date of Delivery or Delivery should have taken place.
Place for filing Suit:

s Hague Rules
Rules are Silent

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s Hague Visby Rules

Same as above.

s Hamburg Rules

Principal place of Business of carriers/ Port of Origin/ Port of Destination/ Place where contract was
drawn up/ Place of arrest of vessel.

Documentation:

s Hague Rules
Ship Survey Report /Joint Survey Report/Damage or Shortage Certificate
Copy of Notice of monetary loss
Acknowledgement of the same by the carrier
Copy of Bill of Lading (clear copy of both sides)

s Hague Visby Rules

Same as above.

s Hamburg Rules
Same as above.

MULTI MODEL TRANSPORT / COMBINED TRANSPORT

Statute

Multi Model Transportation of Goods Act 1993 (enacted in India on 2.4.93).

Limitation of Liability:

2.5 SDRs per kg or 835 SDRs per package or shipping unit.

Notification of Damage:

Notice to be given at the time goods are delivered to the consignee. However, where such loss or
damage is not apparent, notice to be given within six days from date of delivery.

Limitation for Filing Suit:

Within 9 months of

r The date of delivery of good or

r The date when good should have been delivered or

r The date on and from which the consignee has the right to treat the goods as lost.

Place for Filing Suit:

Principal place of Business of carriers/port of Origin/Port of Destination/Place where contract was

drawn up.

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 Documentation:

Ship Survey Report/Joint Survey Report/Damage or Shortage Certificate

Copy of Notice of monetary loss
Acknowledgement of the same by the carrier
Copy of MTD / CTD (Clear copy of both sides)

RAILWAYS

Statutes

The Railways Act 1989, which came into effect from 01/07/1990.
The Railways Claims Tribunal Act ,1987

Limitation of Liability:

The Railways Liability is restricted to Rs.50/- per kg unless value of goods has been specifically
declared and ‘percentage charge’ is paid.

Notification of Damage:

Notice of loss or damage must be served to the Railway Administration within 6 months from the
date of Booking i.e. the date of the Railway Receipt.

Notice must be addressed to the Chief Commercial Superintendent (Claims) or the General Manager
of the Railway Administration under which the booking and delivery stations fall. For e.g. if goods are
despatched from Chennai to Mumbai then Notice is to be given to the Chief Commercial
Superintendent (Claims) of Southern Railway ( governing Chennai) and Chief Commercial
Superintendent (Claims) of Western Railway (governing Mumbai).

Place for filing Suit:

The Suit can be filed at the place of Booking or at the place of Destination OR or at the place where
cause of action has arisen, if known.

Limitation for filing suit:

A Suit must be filed within 3 years from the date of booking after giving notice of two months as per
Section 80 of Civil Procedure Code.

ALL Suits against Railways must be filed in the Railway Claims Tribunal. Decision of the Tribunal can
be Appealed in the respective High Court within 90 days of the order.

Documentation:

Joint Survey Report/Damage or Shortage Certificate

Copy of Railway Register indicating shortages/damages in the absence of above document
Copy of Notice of monetary loss
Acknowledgement of the same by the Railway
Copy of Railway Receipt (clear copy of both sides)

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ROAD CARRIERS
Statutes

The Carrier’s Act 1865.

Limitation of Liability:

The common carrier’s Liability is restricted to value declared. Offices should insist that correct value
of goods is declared along with proper description of goods.

The common carrier may limit his liability by a special contract and in such cases there will be no
recovery and claim will have to be processed as Non Standard.

Notification of Damage:

Statutory notice of loss or damage must be given within six months from the date of knowledge of
loss( but it is advisable to give this notice within six months from date of Lorry Receipt/ Goods
Consignment Note)

Limitation for filing suit:

Suit must be filed within three years from date of damage or three years from the date when goods
ought to have reached destination.

While filing suit party who has sent notice within SIX months must be made plaintiff to the suit, as the
law requires that Plaintiff should give notice before filing suit. Insured should be made a proforma
plaintiff to avoid technical objections.

Place for filing Suit:

The place mentioned in the Lorry Receipt as place of jurisdiction.

The Jurisdiction of Courts cannot be decided by the parties to a litigation by any contract. The
ordinary law of the land will decide the same. However, if two or more Courts have concurrent
jurisdiction, then the parties to the litigation may decide by contract as to which of these Courts
having concurrent jurisdiction should adjudicate the dispute between them. In case of common
carriers, the Civil Courts at the places where the contract of carriage was entered into and/or where
the goods were delivered to the common carrier and/or destination of the goods to be delivered or
where the cause of action relating to the loss or damage occurred or arose will have jurisdiction to
adjudicate the dispute between the Consignor/Consignee as the case may be and the common
carrier.

Documentation:

Joint Survey Report/Damage or Shortage Certificate

Copy of Panchnama indicating shortages/damages in the absence of above document
Copy of Notice of monetary loss
Acknowledgement of the same by the carrier
Copy of Lorry Receipt (clear copy of both sides)

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 AIR CARRIER

Statutes

s The Warsaw Convention, 1929 (International Carriage)

s The Carriage by Air Act, 1934.

s The Carriage by Air Act, 1972.

Limitation of Liability:

250 French Francs per Kg. The French Francs refer to a currency unit of sixty-five and half milligrams
of gold of millisimal fineness nine hundred; the sum can be converted to national currency in round
figures.

The liability for domestic carriage is Rs. 160/-per Kg.

In case the consignor at the time of handing over the consignment has made a special declaration of
the value and has paid a valuation charge to the carrier, the carrier is liable to pay a sum not exceeding
the declared amount. Any provision to relieve the carrier of liability or to fix a lower limit than that
which is laid down in the convention is null and void.

Notification of Damage:

International carriage

Must send notification of loss/damage Fourteen days from receipt of cargo or in case of non delivery
twenty one days from the date of cargo being handed over to the carrier.

Domestic Carriage

Must send notification of loss/damage Seven days from receipt of cargo or in case of non-delivery
fourteen days from the date of cargo being handed over to the carrier.

Limitation for filing suit:

Two years from date of booking in case of loss or damage or from date of arrival of aircraft in case of
non-delivery for both International and Domestic airlines.

Place for filing Suit:

Suit can be filed in the territory of one of the High Contracting Parties, either before the Court having
jurisdiction where the carrier is ordinarily resident , or has his principal place of business , or has an
establishment by which the contract has been made or before the Court having jurisdiction at the
place of destination.

Documentation:

Joint Survey Report/Damage or Shortage Certificate/ noting on the Airway Bill (AWB)
Copy of Notice of monetary loss
Acknowledgement of the same by the carrier
Copy of the Airway Bill (AWB) (clear copy of both sides)

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 New India Assurance

POSTAL AUTHORITIES

Statutes

Indian Post Office Act ,1898

Limitation of Liability:

Rs. 25/- per package but not exceeding the value of article lost or amount of damages caused
unless the parcel is insured with the Post Office.

Notification of Damage:

Notice of claim must b given within six months from date of Booking.

Limitation for filing suit:

Suit should be filed within three years from knowledge of loss.

Place for filing Suit:

The place mantioned in the Postal Receipt as place of jurisdiction.

Documentation:

Joint Survey Report/Damage or Shortage Certificate/ noting on the Postal Receipt

Copy of Notice of monetary loss
Acknowledgement of the same by the carrier
Copy of the Postal Receipt (clear copy of both sides)

PORT AUTHORITIES

Statute

Major Port Trusts Act 1963 and Rules, Regulations and Bye Laws.

Limitation of Liability:

Market value of the consignment

Notification of Damage:

The Notice of loss / damage to The Board of trustees of the Port Trust within a period of seven clear
working days from the date of taking charge of such goods.

Limitation for filing suit:

A suit must be filed against the Port Trust within 7 months (including of 1 month’s nolice period)
from the date of accrual of cause of action. Notice must be addresed to “the Trustess of the
Port of -----”.

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 Place for filing Suit:

The place where the Port is situated, where the relevant damage took place.
Documentation:
Joint Survey Report/Landing Remarks/Landed but Missing Certificate issued by Port
Copy of Notice of monetary loss
Acknowledgement of the same by the Port Authority

COURIER
The recovery in case of courier will depend on the type of carriage of consignment detailed in the
chapter on ‘transit by couriers.’
As far as Courier Services are concerned, they are a more extension of Postal Services given
recognition by the State. No special legislation or rules have been framed. The Courier Services
have also not been constituted under any statute. The same have been a matter of practice in
commercial trade with its origin in the angadias or angadi as known in the erstwhile Bombay State
(now comprising of Maharashtra and Gujarat). The rules governing Postal Services have been
extended to Courier Services under a government regulation giving them recognition.
UNACCOMPANIED BAGGAGE
The same regulations as stated for the specific carrier will apply. For example if the booking is
through Railways the regulations stated for Railways will apply, if by air the rules stated for air carrier
will apply and so on.

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CUSTOMS CLEARANCE PROCEDURE & REFUND OF DUTY

Goods may be imported or exported by sea, air, rail, road, post, also as baggage, stores and
transhipment cargo.

Clearance of any imported goods means their physical removal from customs area either for
Home Consumption or Warehousing.

The imported goods are cleared for warehousing when they are not required immediately for use
or consumption after landing. Such goods are permitted to be deposited in a warehouse, with
payment of 50% duty, as deposit for subsequent clearance on payment of balance 50% duty. In
such cases the goods may be deposited in customs bonded warehouse, public bonded warehouse
or bonded warehouse within the importers premises at final destination.

When the Bonded goods are cleared on payment of duty, they are said to be ex-bonded.

Whether the clearance is for Home Consumption or Warehousing the importer of cargo must file
an Import Bill of Entry in customs. The importer himself may file the Bill of Entry in his own name
or utilize the services of any Licenced Custom House Agent (C.H.A.), who is also known as
clearing agent.

The Import Bill of Entry is found in order if it becomes acceptable to customs for assessment,
which is in three parts.

A) Scrutiny with documents presented such as the Invoice, Packing List, Bill of Lading, Insurance
Policy, Import Licence, etc. with the Bill of Entry.

B) Appraisement of value of goods.

C) Determination of classification and indication of the effective date of duty.

For completing the assessment the customs may need to examine the goods, test them and/or
examine the contract of sale/purchase etc. it should be noted that under Section 17 of Customs
Act, there is an obligation on the customs to complete their formalities without undue delay.

Assessment of goods as declared on the Bill of Entry on the basis of documents produced,
subject to examination of the goods subsequent to payment of duty is known as the 2nd check
appraisement.

When the goods are assessed after examining and testing them and the duty is paid thereafter it
is known as 1st check appraisement.

The 1st check appraisement procedure is followed by customs is respect of goods which cannot
be correctly identified by physical inspection and are not of type which are imported regularly.

The 2nd check procedure is followed by customs for goods which are well known and can be
classified and assessed readily.

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 Appraisement means to fix the price or arrive at the price of the goods for levy of duty. The
assessed price or value has to be at the place of delivery, hence it will include the cost, insurance,
freight and landing charges.

Under Section 15 of the Customs Act, the relevant rate for charging custom duty is as under :

1) In the case of goods entered for Home Consumption, the rate of duty applicable on date of
presentation of the Bill of Entry to Customs.

2) In the case of goods cleared from a Bonded Warehouse, the rate applicable on the date of
physical removal of the goods.

3) In any other case, the rate applicable on the date of payment of duty.

The assessed Bill of Entry is then audited by customs and if found in order, forwarded to the
Assistant Collector, for his signature. Some other internal procedures are also completed after
which the Bill of Entry is ready for payment of duty.

Goods released for delivery by customs after completion of customs clearance formalities are said
to be out of customs charge. Custom clearance procedure may be delayed on account of the
objections raised by them for various reasons such as:

a) Difference in the shipping marks and numbers or number of packages or their serial numbers.

b) Difference in description of goods.

c) Port of destination not same as shown in the documents.

d) Classification differs.

e) Under/over invoicing.

f) Import Licence not valid.

g) Difference in weight.

h) Catalogue not produced.

Customs may issue a Detention Certificate stating the period and the cause for which the goods
were detained by them, before release (out of charge) but such certificate is issued only when the
goods are sent by them for analytical test or they are detained for no fault of the importer or in the
event the documents are lost by customs due to which the goods cannot be released.

Delay in clearance may also occur due to the following reasons :

a) Non-payment of cost of goods by the importer to the bank for the latter to release the original
documents.

b) Importers or their agents’ laxity in completing the procedures.

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c) Goods not traceable.

d) Congestion at the port.

e) Survey procedures.

f) Funds not readily available for payment of duty.

Clearance and storage of imported goods into a (Bonded) Warehouse without payment of duty is
allowed for one month. For this purpose, the importer or his clearing agent has to submit a Bill of
Entry for Warehousing to Customs. Procedures for noting, assessment and completion of the Bill
of Entry are the same as in the case of Home Consumption Bill of Entry. The goods to be
deposited in the (Bonded) Warehouse are escorted by the port official if the warehouse is within
the port premises or by a customs preventive officer if they are to be stored in a private or public
(Bonded) Warehouse.

Normally warehousing is allowed for dutiable goods. However, imported goods which are 100%
export oriented are considered to be bonded goods till cleared. Goods for transshipment can also
be warehoused under a Transhipment Permit.

When the importer desires to clear the warehoused goods he is required to file in Customs an ex-
bond Bill of Entry which will be processed in the same manner. After duty and warehousing
charges are paid, the importer will be allowed to clear the goods.

The procedure for clearance of AIRFREIGHT import cargo is more or less identical. Main difference
between the sea and airfreight imports clearance is in assessable value; for the latter there is no
addition of landing charges.

On arrival of an air-craft at the airport the air-carrier hands over the import cargo to Customs and
the International Airport Authority of India (IAAI). The IAAI have appointed ground handling agencies
such as ‘Air-India’ at some airports for this purpose.

Import and Export of POSTAL GOODS is governed by the International Postal Convention
for its transport. On arrival of the postal bags containing the goods by sea or air, the bags are
transferred to the sorting office, where a list of the goods will be prepared and presented
by the Foreign Post Office to Customs. The list is known as the ‘way-bill’. Based on the way-bill,
Customs issue a call-cum-show cause notice to the importers requiring them to produce documents
to prove value, determine classification and permission for clearance. Upon receiving the documents
from the importer, Customs will examine the parcel, check correctness of declaration, value,
permissibility and classification. Once the goods are assessed, they will be forwarded to the
nearest post office of the addressee (importers) for delivery against payment of duty and postal
charges.

Some goods such as gems and jewellery and special cases may be delivered to the importers at
the Foreign Post Office counter, after payment of duty etc.

REFUND OF DUTY

We have seen that Customs Duty is insured as per the Duty Clause in which it is mentioned that

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 in ascertaining the amount of the claim recoverable credit shall be given for any rebates or
refunds of duty which may become allowable.

The claimant is, therefore under obligation to make every effort to recover the Duty and any lapse
on his part in doing so would prejudice the claim.

The claimant is required to attempt recovery of Duty from (a) Carriers and (b) Customs.

RECOVERY OF DUTY FROM CARRIERS

Short Landing

If a consignment or package is short landed and the importer does not pay duty for the short
landed cargo, the Customs recover not exceeding twice the amount of duty from the carriers as
penalty duty under Section 116 of the Customs Act 1962 which reads as under :-

“If any goods loaded in a conveyance for importation into India, or any goods transhipped under
the provisions of this Act or coastal goods carried in a conveyance are not unloaded at their place
of destination in India, or if the quantity unloaded is short of the quantity to be unloaded at the
destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of
the Assistant Collector of Customs, the person-in-charge of the conveyance shall be liable :-

a) in the case of goods loaded in a conveyance for importation into India or goods transhipped
under the provisions of the Act, to a penalty not exceeding twice the amount of duty that
would have been chargeable on the goods not unloaded or the deficient goods, as the case
may be, had such goods been imported;

b) in the case of coastal goods, to a penalty not exceeding twice the amount of export duty that
would have been chargeable on the goods not unloaded or the deficient goods, as the case
may be, had such goods been exported.”

The carriers liability for duty is not dependent on the terms and conditions of the Bill of Lading and
does not take into account their maximum liability which may be £ 100/- or so. The carrier may be
liable to the importer/consignee for £ 100/- per package but if the Duty is more than £ 100/- the
carrier pays to the Customs as penalty duty the exact amount of penalty duty leviable irrespective
of the amount he has already paid on the consignment by way of claim on cargo. Where the
consignee has already paid the Duty, he may recover the same from the carriers apart from the
claim on cargo. Hence a consignee can recover say, £ 100/- on each short-landed unit, plus the
actual Duty paid.

The possibility stated above has been availed of by consignees very rarely. The alternatives and
other remedies which do not fall under the above provisions and help the consignee seek redress
from Customs are as under :

RECOVERY FROM CUSTOMS

Application for refund of duty in India has to be made to the Assistant Collector of Customs within

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six months of the date of payment of such duty under Section 27(1) of the Customs Act 1962,
which reads as under :

27(1) Any person claiming refund of any duty paid by him in pursuance of an order or
assessment made by an officer of Customs may make an application for refund
of such duty to the Assistant Collector of Customs before the expiry of six
months from the date of payment of duty.”

A specimen of the Application Form is attached. (See Page No. 113). It is

necessary to enclose with the application all such documents which are
necessary to establish a claim for refund of duty. Any lapse in this behalf would
prejudice settlement under the terms of the policy.

If aggrieved by order of the Assistant Collector of Customs, an appeal can be

made to the Collector of Customs (Appeal) within three months of the date of
receipt of communication by the claimant of such decision. An appeal against
the decision of the Collector of Customs can be filed within three months to the
Appelate Tribunal.

Under provisions of Sections 13 and 23 of the Indian Customs Act, a consignee

is entitled to remission of duty on goods lost before the consignment is “out of
customs charge” and under Sec. 22 for abatement of duty where the consignment
has deteriorated in value. Section 13, 23 (1) and 22 are reproduced below.

Section ‘13’ : If any imported goods are pilfered after the unloading thereof and before the
proper officer has made an order for clearance for home consumption or deposit
in a warehouse, the importer shall not be liable to pay the duty leviable on such
goods except where such goods are restored to the importer after pilferage.

Section ‘23.1’ : Where it is shown to the satisfaction of the Assistant Collector of Customs that
any imported goods have been lost or destroyed, at any time before clearance
for home consumption, the Assistant Collector of Customs shall remit the duty
on such goods.

Section ’22.1’ : Where it is shown to the satisfaction of the Assistant Collector of Customs :

a) that any imported goods had been damaged or had deteriorated at any
time before or during the unloading of the goods in India; or

b) that any imported goods other than warehoused goods, had been damaged
at any time after the unloading thereof in India but before their examination
under Section 17, on account of any accident not due to willful act,
negligence or default of the importer, his employee or agent; or

c) that any warehoused goods had been damaged at any time before clearance
for home consumption on account of any accident not due to any willful
act, negligence or default of the owner, his employee or agent, such goods
shall be chargeable to duty in accordance with the provisions of Sub-
Section (2).

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 2) The duty to be charged on the goods referred to in sub-section (1) shall bear
the same proportion to the duty chargeable on the goods before the damage or
deterioration which the value of the damaged or deteriorated goods bears to
the value of the goods before the damage or deterioration.

3) For the purpose of the section, the value of damaged or deteriorated goods
may be ascertained by either of the following methods at the option of the
Owner :

a) the value of such goods may be ascertained by the proper officer, or

b) such goods may be sold by the proper officer by Public Auction or by

tender, or with the consent of the owner in any other manner, and the
gross sale proceeds shall be deemed to be the value of such goods.”

OBSERVATIONS

Under Section 12 of the Customs Act, 1962 Duty is payable on cargo imported from foreign
countries or exported to foreign countries, unless exempted. The import takes place only when the
goods are unloaded from the Ship/Conveyance and delivered at Port for HOME CONSUMPTION
or WAREHOUSING, but mere bringing of the goods into the Indian Port is not import of the goods.

DUTY ON PILFERRED GOODS

Under Section 13 of the Act an importer is not liable to pay Duty on shortages due to pilferages
after unloading but before order for clearance for Home Consumption or deposit in Warehouse is
made by a proper Officer and if paid, is entitled to refund. To entitle to have refund under this
section the importer must obtain Customs Shortage Certificate or endorsement on the reverse of
the Bill of Entry evidencing the shortage before the goods are out of customs charge.

ABATEMENT OF DUTY

Section 22 of the Act deals with damage or deteriorated cargo and Duty payable thereon. If the
imported cargo is damaged or deteriorated due to any accident not due to willful act, negligence
or default to cargo owners, his employees or agents :

i. Before or during the unloading (except warehoused goods) and in any event before goods
are examined by Customs for assessment under Section 17;

OR

ii. In case of Warehoused goods, before clearance for Home Consumption, in such an event the
value of such goods damaged/deteriorated, would be fixed by the Customs Officer and duty
would be charged on such damaged/deteriorated value at the same rate of duty applicable as
would have been on sound goods and this is called abatement of Duty due to reduction in
value on account of damage/deterioration.

REMISSION OF DUTY

Section 23 deals with remission of Duty on imported goods lost, destroyed or abandoned due to

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extensive damage at any time before CLEARANCE for home consumption. Under the Section the
Assistant Collector of Customs, if satisfied that the loss or the deterioration has taken place before
clearance then remission in duty would be allowed. In view of this Section, it is possible for the
importer to claim refund of duty not only on short-landed cargo but also on landed but missing or
destroyed cargo.

Section 13 & 23 are different from each other in the sense that while under Section 13 duty is not
payable on the shortage due to pilferage before an ORDER FOR CLEARANCE OR DEPOSIT is
made, Section 23 deals with remission of Duty on Loss or Destruction of entire cargo or whole of
packages at any time even after the order for Clearance or Deposit in Warehouse is made but
before ACTUAL CLEARANCE from Docks/Airport.

While above Sections deal with pilferages, damage and loss of the goods before order for clearance
is made or before clearance in fact is made, Section 74 of the Customs act deals with damages
after actual clearance and the procedure to be followed for obtaining refund of duty by way of
Draw-back on such damages after clearance. In accordance with Section 74 where costly machinery
is imported and damaged in inland transit after Clearance from Docks, and such machinery can
be repaired by foreign suppliers abroad, then in such cases the importer can within two years of
import, if the damaged goods are identifiable, export the same and thereby avail maximum of 98%
of the Duty as Draw-back.

From the above Section it is clear that while abatement of Duty can be availed of under Section 22
on the damaged/deteriorated material immediately before Clearance, refund of Customs Duty can
be availed of on pilfered goods under Section 13 and on lost/destroyed goods under Section 23,
by making refund application on prescribed form as provided by Section 27 (1).

(1) Obtaining Customs examination report before order for home consumption or deposit in
Warehouse (Bonded Warehouse) is issued due to which he is unable to obtain the Customs
shortage/damage certificate or Customs endorsement on Bill of Entry to that effect.

(2) Apply for refund of duty on prescribed form within the prescribed time limit. To finalise claim
under the Duty Policy and pursue refund of duty from Customs, we must collect the following
from the claimant :

a) A copy of refund of duty application made to customs on the prescribed form.

b) Evidence to show that the refund application was delivered to the Customs within the
Time Limit.

c) Original copy of the Customs Examination (shortage/damage) certificate or photocopy of

the Custom attested Bill of Entry bearing Custom’s endorsement certifying shortage/
damage of goods.

d) Appropriate Power of Attorney from the Importer authorizing the Underwriters to deal
with the Customs, appear before the Customs in refund application, appeal and before
the Customs Tribunal.

If claim under the Duty Policy is settled it is advisable to obtain an undertaking from the insured
that they will refund the duty recovered by them directly from the Customs without any deduction.

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 REFUND APPLICATION

The Assistant Collector of Customs

Appraising Refunds/Postal Appg. Dept.,

We wish to lodge this claim for refund of Customs duty which has been colleted in excess from us
as per details given below :

1. Bill of Entry No./Post Parcel No.

2. Bill of Entry Cash No./Deposit No. with date/date of purchase Invoice

3. Description of goods covered by Bill of Entry/Post Parcel/Purchase Invoice

4. Name & Address of

a. Importer

b. Clearing Agent

c. Applicant

5. Indicate whether the claim is covered under Section 27 (1) (a) or 27 (1) (b)

6. In case of payment of duty under protest details of registration of protest

7. Amount of CENVAT credit availed from the Additional duty Customs paid now covered by the
refund claim

8. Ground of claim

9. Enclosures (No. of sheets should be specified against each claim)

10. Any further details that are deemed necessary and relevant to the claim

11. Indicate whether personal hearing is required or not.

DECLARATION

I____________________________________the applicant representing the

importer__________________________________, do hereby declare that what is stated above
is true to the best of my information and belief. I also declare (a) that the excess duty paid and
claimed now for refund has been passed/has not passed on to any other person by the importer;
(b) that the claim pertains to imports made by an individual for his personal use; (c) that the import
duty borne by the buyer of the imported goods at the time of buying from the importer has been
passed/has not passed on to any other persons.

(Strike out whichever is not applicable)

Signature of the Applicant

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 New India Assurance

Appendix - A
THE MARINE INSURANCE ACT, 1963
[Act No. 11 of 1963 dated 18th. April, 1963]

1. Short title and commencement 29. Valued policy

2. Definitions 30. Unvalued policy
3. Marine insurance defined 31. Floating policy by ship or ships
4. Mixed sea and land risks 32. Construction of terms in policy
5. Lawful marine adventure 33. Premium to be arranged
6. Avoidance of wagering contracts 34. Double insurance
7. Insurable interest defined 35. Nature of warranty
8. When interest must attach 36. When breach of warranty excused
9. Defeasible or contingent interest 37. Express warranties
10. Partial interest 38. Warranty of neutrality
11. Reinsurance 39. No. implied warranty of nationality
12. Bottomry 40. Warranty of good safety
13. Master's and seamen's wages 41. Warranty of seaworthiness of ship
14. Advance freight 42. No implied warranty that goods are
15. Charges of insurance seaworthy

16. Quantum of interest 43. Warranty of legality

17. Assignment of interest 44. Implied condition as to commencement of

risk
18. Measure of insurable value
45. Alteration of port of departure
19. Insurance is uberrimae fidei
46. Sailing for different destination
20. Disclosure by assured
47. Change of voyage
21. Disclosure by agent effecting insurance
48. Deviation
22. Representations pending negotiation of
contract 49. Several ports of discharge

23. When contract is deemed to be concluded 50. Delay in voyage

24. Contract must be embodied in policy 51. Excuse for deviation or delay
25. What policy must specify 52. When and how policy is assignable
26. Signature of insurer 53. Assured who has no interest can not assign
27. Voyage and time policies 54. When premium payable
28. Designation and subject matter 55. Included and excluded losses

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 56. Partial and total loss 75. General provisions as to measure of
indemnity
57. Actual total loss
76. Particular average warranties
58. Missing ship
77. Successive losses
59. Effect of transhipment, etc.
78. Suing and labouring clause
60. Constructive total loss defined
79. Rights of subrogation
61. Effect of constructive total loss
80. Right of Contribution
62. Notice of abandonment
81. Effect of under-insurance
63. Effect of abandonment
82. Enforcement of return
64. Particular average loss
83. Return by agreement
65. Salvage charges
84. Return for failure of consideration
66. General average loss 85. Ratification by assured
67. Extent of liability of insurer for loss 86. Implied obligation varied by agreement or
68. Total loss usage

69. Partial loss of ship 87. Reasonable time, etc., a question of fact
88. Covering note as evidence
70. Partial loss of freight
89. Power to apply Act with modifications, etc.,
71. Partial loss of goods, merchandise, etc.
in certain cases
72. Apportionment of valuation
90. Certain provisions to override Transfer of
73. General average contributions and salvage Property Act, 1882
charges 91. Savings
74. Liabilities to third parties 92. 2[***]

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SCHEDULE : FORM OF POLICY

An Act to codify the law relating to marine insurance.

BE it enacted by Parliament in the Fourteenth Year of the Republic of India as follows: -

1. Short title and commencement

(1) This Act may be called the Marine Insurance Act, 1963.

(2) It shall come into force on such date1 as the Central Government may, by notification in
the Official Gazette, appoint.

2. Definitions

In this Act, unless the context otherwise requires,-

(a) "contract of marine insurance" means a contract of marine insurance as defined by

section3;

(b) "freight" includes the profit derivable by a ship-owner from the employment of his ship to
carry his own goods or other movables, as well as freight payable by a third party, but
does not include passage money;

(c) "insurable property" means any ship, goods or other movables which are exposed to
maritime perils;

(d) "marine adventure" includes any adventure where-

(i) any insurable property is exposed to maritime perils;

(ii) the earnings or acquisition of any freight, passage money, commission, profit or
other pecuniary benefit, or the security for any advances, loans, or disbursements is
endangered by the exposure of insurable property to maritime perils;

(iii) any liability to a third party may be incurred by the owner of, or other person
interested in or responsible for, insurable property by reason of maritime perils;

(e) "maritime perils" means the perils consequent on, or incidental to, the navigation of the
sea, that is to say, perils, of the seas, fire, war perils pirates, rovers, thieves, captures,
seizures, restraints and detainments of princes and peoples, jettisons, barratry and any
other perils which are either of the like kind or may be designed by the policy;

(f) "movables" means any movable tangible property, other than the ship, and includes
money, valuable securities and other documents;

(g) "policy" means a marine policy;

(h) "ship" includes every description of vessel used in navigation;

(i) "suit" includes counter-claim and set-off.

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 MARINE INSURANCE

3. Marine insurance defined

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.

4. Mixed sea and land risks

(1) A contract of marine insurance may, by its express terms, or by usage of trade, be
extended so as to protect the assured against losses on inland waters or on any land
risk which may be incidental to any sea voyage.

(2) Where a ship in course of building, or the launch of a ship, or any adventure analogous
to a marine adventure, is covered by a policy in the form of a marine policy, the provisions
of this Act, in so far as applicable, shall apply thereto, but, except as by this section
provided, nothing in this Act shall alter or affect any rule of law applicable to any contract
of insurance other than a contract of marine insurance as by this Act defined.

Explanation.-'An adventure analogous to a marine adventure' includes an adventure

where any ship, goods or other movables are exposed to perils incidental to local or
inland transit.

5. Lawful marine adventure

Subject to the provisions of this Act, every lawful marine adventure may be the subject of a
contract of marine insurance.

6. Avoidance of wagering contracts

(1) Every contract of marine insurance by way of wagering is void.

(2) A contract of marine insurance is deemed to be a wagering contract-

(a) where the assured has not an insurable interest as defined by this Act, and the
contract is entered into with no expectation of acquiring such an interest; or

(b) where the policy is made "interest or no interest", or "without further proof of interest
than the policy itself", or "without benefit of salvage to the insurer" , or subject to any
other like term:

Provided that, where there is no possibility of salvage, a policy may be effected

without benefit of salvage to the insurer".

7. Insurable interest defined

(1) Subject to the provisions of this Act, every person has an insurable interest who is
interested in a marine adventure.

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(2) In particular a person is interested in a marine adventure where he stands in any legal or
equitable relation to the adventure or to any insurable property at risk therein, in
consequence of which he may benefit by the safety or due arrival of insurable property,
or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or
may incur liability in respect thereof.

8. When interest must attach

(1) The assured must be interested in the subject-matter insured at the time of the loss,
though he need not be interested when the insurance is effected:

Provided that, where the subject- matter is insured "lost or not lost", the assured may
recover although he may not have acquired his interest until after the loss, unless at the
time of effecting the contract of insurance the assured was aware of the loss, and the
insurer was not.

(2) Where the assured has no interest at the time of the loss, he cannot acquire interest by
any act or election after he is aware of the loss.

9. Defeasible or contingent interest

(1) A defeasible interest is insurable, as also is a contingent interest.

(2) In particular, where the buyer of goods has insured them, he has an insurable interest,
notwithstanding that he might, at his election, have rejected the goods, or have treated
them as at the seller's risk, by reason of the latter's delay in making delivery or otherwise.

10. Partial interest

A partial interest of any nature is insurable.

11. Reinsurance

(1) The insurer under a contract of marine insurance has an insurable interest in his risk,
and may reinsure in respect of it.

(2) Unless the policy otherwise provides, the original assured has no right or interest in
respect of such reinsurance.

12. Bottomry

The lender of money on bottomry or respondentia has an insurable interest in respect of the
loan.

13. Master's and seamen's wages

The master or any member of the crew of a ship has an insurable interest in respect of his
wages

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 14. Advance freight

In the case of advance freight, the person advancing the freight has an insurable interest, in
so far as such freight is not repayable in case of loss.

15. Charges of insurance

The assured has an insurable interest in the charges of any insurance which he may effect.

16. Quantum of interest

(1) Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest
in the full value thereof, and the mortgagee has an insurable interest in respect of any
sum due or to become due under the mortgage.

(2) A mortgagee, consignee, or other person having an interest in the subject-matter insured
may insure on behalf and for the benefit of other persons interested as well as for his
own benefit.

(3) The owner of insurable property has an insurable interest in respect of the full value
thereof, notwithstanding that some third person may have agreed, or be liable to indemnify
him in case of loss.

17. Assignment of interest

Where the assured assigns or otherwise parts with his interest in the subject-matter insured,
he does not thereby transfer to the assignee his rights under the contract of insurance, unless
there be an express or implied agreement with the assignee to that effect.

But the provisions of this section do not affect transmission of interest by operation of law.

INSURABLE VALUE

18. Measure of insurable value

Subject to any express provision or valuation in the policy, the insurable value of the subject-
matter insured must be ascertained as follows:-

(1) In insurance on ship, the insurable value is the value, at the commencement of the risk,
of the ship, including her outfit, provisions, and stores for the officers and crew, money
advanced for seamen's wages, and other disbursements (if any) incurred to make the
ship fit for the voyage or adventure contemplated by the policy, plus the charges of
insurance upon the whole:

The insurable value, in the case of a steamship, includes also the machinery, boilers,
and coals and engine stores if owned by the assured; in the case of a ship driven by
power other than steam includes also the machinery and fuels and engine stores, if
owned by the assured; and in the case of a ship engaged in a special trade, includes
also the ordinary fittings requisite for that trade:

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(2) In insurance on freight, whether paid in advance or otherwise, the insurable value
is the gross amount of the freight at the risk of the assured, plus the charges of
insurance:

(3) In insurance on goods or merchandise, the insurable value is the prime cost of the
property insured, plus the expenses of and incidental to shipping and the charges of
insurance upon the whole:

(4) In insurance on any other subject- matter, the insurable value is the amount at the risk of
the assured when the policy attaches, plus the charges of insurance.

DISCLOSURE AND REPRESENTATIONS

19. Insurance is uberrimae fidei

A contract of marine insurance is a contract based upon the utmost good faith, and if the
utmost good faith be not observed by either party, the contract may be avoided by the other
party.

20. Disclosure by assured

(1) Subject to the provisions of this section, the assured must disclose to the insurer, before
the contract is concluded, every material circumstance which, is known to the assured,
and the assured is deemed to know every circumstance which, in the ordinary course of
business, ought to be known to him. If the assured fails to make such disclosure, the
insurer may avoid the contract.

(2) Every circumstance is material which would influence the judgment of a prudent insurer
in fixing the premium, or determining whether he will take the risk.

(3) In the absence of inquiry the following circumstances need not be disclosed, namely:-

(a) any circumstance which diminishes the risk;

(b) any circumstance which is known or presumed to be known to the insurer.

The insurer is presumed to know matters of common notoriety or knowledge,
and matters which an insurer in the ordinary course of his business as such, ought
to know;

(c) any circumstance as to which information is waived by the insurer;

(d) any circumstance which it is superfluous to disclose by reason of any express or

implied warranty.

(4) Whether any particular circumstance, which is not disclosed, be material or not is, in
each case, question of fact.

(5) The term "circumstance" includes any communication made to, or information received
by, the assured.

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 21. Disclosure by agent effecting insurance

Subject to the provisions of the preceding section as to circumstances which need not be
disclosed, where an insurance is effected for the assured by an agent, the agent must
disclose to the insurer-

(a) every material circumstance which is known to himself, and an agent to insure is deemed
to know every circumstance which in the ordinary course of business ought to be known
by, or to have been communicated to, him; and

(b) every material circumstance which the assured is bound to disclose, unless it comes to
his knowledge too late to communicate it to the agent.

22. Representations pending negotiation of contract

(1) Every material representation made by the assured or his agent to the insurer during the
negotiations for the contract, and before the contract is concluded, must be true If it be
untrue the insurer may avoid the contract.

(2) A representation is material which would influence the judgment of a prudent insurer in
fixing the premium, or determining whether he will take the risk.

(3) A representation may be either as to a matter of fact, or as to a matter of expectation or

belief.

(4) A representation as to a matter of fact is true, if it be substantially correct, that is to say, if

the difference between what is represented and what is actually correct would not be
considered material by a prudent insurer.

(5) A representation as to a matter of expectation or belief is true if it be made in good faith.

(6) A representation may be withdrawn or corrected before the contract is concluded.

(7) Whether a particular representation be material or not, is, in each case, a question
of fact.

23. When contract is deemed to be concluded

A contract of marine insurance is deemed to be concluded when the proposal of the assured
is accepted by the insurer, whether the policy be then issued or not; and for the purpose of
showing when the proposal was accepted, reference may be made to the slip, covering note
or other customary memorandum of the contract, although it be unstamped.

THE POLICY

24. Contract must be embodied in policy

A contract of marine insurance shall not be admitted in evidence unless it is embodied in a

marine policy in accordance with this Act. The policy may be executed and issued either at
the time when the contract is concluded, or afterwards.

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25. What policy must specify

A marine policy must specify-

(1) the name of the assured, or of some person who effects the insurance on his behalf;

(2) the subject-matter insured and the risk insured against;

(3) the voyage, or period of time, or both, as the case may be, covered by the insurance;

(4) the sum or sums insured;

(5) the name or names of the insurer or insurers.

26. Signature of insurer

(1) A marine policy must be signed by or on behalf of the insurer.

(2) Where a policy is subscribed by or on behalf of two or more insurers, each subscription,
unless the contrary be expressed, constitutes a distinct contract with the assured.

27. Voyage and time policies

(1) Where the contract is to insure the subject-matter at and from, or from one place to
another or others, the policy is called a "voyage policy", and where the contract is to
insure the subject -matter for a definite period of time, the policy is called a "time policy"
A contract for both voyage and time may be included in the same policy.

(2) A time policy which is made for any time exceeding twelve months is invalid.

28. Designation and subject matter

(1) The subject-matter insured must be designated in a marine policy with reasonable
certainty.

(2) The nature and extent of the interest of the assured in the subject-matter insured need
not be specified in the policy.

(3) Where the policy designates the subject-matter insured in general terms, it shall be
construed to apply to the interest intended by the assured to be covered.

(4) In the application of this section regard shall be had to any usage regulating the designation
of the subject-matter insured.

29. Valued policy

(1) A policy may be either valued or unvalued.

(2) A valued policy is a policy which specifies the agreed value of the subject-matter insured.

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 (3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the
policy is, as between the insurer and assured, conclusive of the insurable value of the
subject intended to be insured, whether the loss be total or partial.

(4) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for
the purpose of determining whether there has been a constructive total loss.

30. Unvalued policy

An unvalued policy is a policy which does not specify the value of the subject-matter insured,
but subject to the limit of the sum insured, leaves the insurable value to be subsequently
ascertained, in the manner hereinbefore explained.

31. Floating policy by ship or ships

(1) A floating policy is a policy which describes the insurance in general terms, and leaves
the name or names of the ship or ships and other particulars to be defined by subsequent
declaration.

(2) The subsequent declaration or declarations may be made by endorsement on the policy,
or in other customary manner.

(3) Unless the policy otherwise provides, the declarations must be made in the order of
dispatch or shipment. They must, in the case of goods, comprise all consignments within
the terms of the policy and the value of the goods or other property must be honestly
stated, but an omission or erroneous declaration may be rectified even after loss or
arrival, provided the omission or declaration was made in good faith.

(4) Unless the policy otherwise provides, where a declaration of value is not made until after
notice of loss or arrival, the policy must be treated as an unvalued policy as regards the
subject-matter of that declaration.

32. Construction of terms in policy

(1) A policy may be in the form in the Schedule.

(2) Subject to the provisions of this Act, and unless the context of the policy otherwise
requires, the terms and expressions mentioned in the Schedule shall be construed as
having the scope and meaning assigned to them in the Schedule.

33. Premium to be arranged

(1) Where an insurance is effected at a premium to be arranged, and no arrangement is

made, a reasonable premium is payable.

(2) Where an insurance is effected on the terms that an additional premium is to be arranged
in a given event, and that event happens out no arrangement is made, then a reasonable
additional premium is payable.

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DOUBLE INSURANCE

34. Double insurance

(1) Where two or more policies are effected by or on behalf of the assured on the same
adventure and interest or any part thereof, and the sums insured exceed the indemnity
allowed by this Act, the assured is said to be over-insured by double insurance.

(2) Where the assured is over-insured by double insurance-

(a) the assured, unless the policy otherwise provides, may claim payment from the
insurers in such order as he may think fit, provided that he is not entitled to receive
any sum in excess of the indemnity allowed by this Act;

(b) where the policy under which the assured claims is a valued policy, the assured
must give credit as against the valuation, for any sum received by him under any
other policy, without regard to the actual value of the subject-matter insured;

(c) where the policy under which the assured claims is an unvalued policy he must give
credit, as against the full insurable value, for any sum received by him under any
other policy;

(d) where the assured received any sum in excess of the indemnity allowed by this Act,
he is deemed to hold such sum in trust for the insurers, according to their right of
contribution among themselves.

WARRANTIES, ETC

35. Nature of warranty

(1) A warranty, in the following sections relating to warranties, means a promissory warranty,
that is to say a warranty by which the assured undertakes that some particular thing
shall or shall not be done, or that some condition shall be fulfilled, or whereby he affirms
or negatives the existence of a particular state of facts.

(2) A warranty may be express or implied.

(3) A warranty, as above defined, is a condition which must be exactly complied with,
whether it be material to the risk or not. If it be not so complied with, then, subject to any
express provision in the policy, the insurer is discharged from liability as form the date of
the breach of warranty, but without prejudice to any liability incurred by him before that
data.

36. When breach of warranty excused

(1) Non- compliance with a warranty is excused when by reason of a change of circumstances,
the warranty ceases to be applicable to the circumstances of the contract, or when
compliance with the warranty is rendered unlawful by any subsequent law.

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 (2) Where a warranty is broken, the assured cannot avail himself of the defence that the
breach has been remedied, and the warranty complied with, before loss.

(3) A breach of warranty may be waived by the insurer.

37. Express warranties

(1) An express warranty may be in any form of words from which the intention to warrant is
to be inferred.

(2) An express warranty must be included in, or written upon the policy, or must be contained
in some document incorporated by reference into the policy.

(3) An express warranty does not exclude implied warranty, unless it be inconsistent therewith.

38. Warranty of neutrality

(1) Where insurable property, whether ship or goods, is expressly warranted neutral, there is
an implied condition that the property shall have a neutral character at the commencement
of the risk, and that , so far as the assured can control the matter, its neutral character
shall be preserved during the risk.

(2) Where a ship is expressly warranted "neutral", there is also an implied condition that, so
far as the assured can control the matter she shall be properly documented, that is to
say, that she shall carry the necessary papers to establish her neutrality, and that she
shall not falsify or suppress her papers, or use simulated papers If any loss occurs
through breach of this condition, the insurer may avoid the contract.

39. No. implied warranty of nationality

There is no implied warranty as to the nationality of a ship or that her nationality shall not be
changed during the risk.

40. Warranty of good safety

Where the subject-matter insured is warranted "well" or "in good safety" on a particular day, it
is sufficient if it be safe at any time during that day.

41. Warranty of seaworthiness of ship

(1) In a voyage policy there is an implied warranty that at the commencement of the voyage
the ship shall be seaworthy for the purpose of the particular adventure insured.

(2) Where the policy attaches while the ship is in port, there is also an implied warranty that
she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary
perils of the port.

(3) Where the policy relates to a voyage which is performed in different stages, during which
the ship requires different kinds of or further preparation or equipment, there is an

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implied warranty that at the commencement of each stage the ship is seaworthy in
respect of such preparation or equipment for the purposes of that stage.

(4) A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter
the ordinary perils of the seas of the adventure insured.

(5) In a time policy there is no implied warranty that the ship shall be seaworthy at any
stage of the adventure, but where, with the privity of the assured, the ship is sent to
sea in an unseaworthy state, the insurer in not liable for any loss attributable
to unseaworthiness.

42. No implied warranty that goods are seaworthy

(1) In a policy on goods or other movables there is no implied warranty that the goods or
movables are seaworthy.

(2) In a voyage policy on goods or other movables there is an implied warranty that at the
commencement of the voyage the ship is not only seaworthy as a ship, but also that she
is reasonably fit to carry the goods or other movables to the destination contemplated by
the policy.

43. Warranty of legality

There is an implied warranty that the adventure insured is a lawful one, and that, so far as the
assured can control the matter, the adventure shall be carried out in a lawful manner.

THE VOYAGE

44. Implied condition as to commencement of risk

(1) Where the subject-matter is insured by a voyage policy "at and from" or "from" a particular
place, it is not necessary that the ship should be at that place when the contract is
concluded, but there is an implied condition that the adventure shall be commenced
within a reasonable time, and that if the adventure be not so commenced the insurer
may avoid the contract.

(2) The implied condition may be negatived by showing that the delay was caused by
circumstances known to the insurer before the contract was concluded, or by showing
that he waived the condition.

45. Alteration of port of departure

Where the place of departure is specified by the policy, and the ship instead of sailing from
that place sails from any other place, the risk does not attach.

46. Sailing for different destination

Where the destination is specified in the policy, and the ship, instead of sailing for that
destination, sails for any other destination, the risk does not attach.

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 47. Change of voyage

(1) Where, after the commencement of the risk, the destination of the ship is voluntarily
changed from the destination contemplated by the policy, there is said to be a change of
voyage.

(2) Unless the policy otherwise provides, where there is a change of voyage, the insurer is
discharged from liability as from the time of change, that is to say, as from the time when
the determination to change it is manifested; and it is immaterial that the ship may not in
fact have left the course of voyage contemplated by the policy when the loss occurs.

48. Deviation

(1) Where a ship, without lawful excuse, deviates from the voyage contemplated by the
policy, the insured is discharged from liability as from the time of deviation, and it is
immaterial that the ship may have regained her route before any loss occurs.

(2) There is a deviation from the voyage contemplated by the policy-

(a) where the course of the voyage is specifically designated by the policy, and that
course is departed from; or

(b) where the course of the voyage is not specifically designed by the policy, but the
usual and customary course is departed from.

(3) The intention to deviate is immaterial; there must be a deviation in fact to discharge the
insurer from his liability under the contract.

49. Several ports of discharge

(1) Where several ports of discharge are specified by the policy, the ship may proceed to all
or any of them, but, in the absence of any usage or sufficient cause to the contrary, she
must proceed to them, or such of them as she goes to, in the order designated by the
policy. If she does not there is a deviation.

(2) Where the policy is to "ports of discharge" within a given area, which are not named, the
ship must, in the absence of any usage or sufficient cause to the contrary, proceed to
them, or such of them as she goes to, in their geographical order. If she does not there is
a deviation.

50. Delay in voyage

In the case of a voyage policy, the adventure insured must be prosecuted throughout its
course with reasonable despatch, and; if without lawful excuse it is not so prosecuted, the
insurer is discharged from liability as from the time when the delay became unreasonable.

51. Excuse for deviation or delay

(1) Deviation or delay in prosecuting the voyage contemplated by the policy is excused-

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(a) where authorised by any special term in the policy; or

(b) where caused by circumstances beyond the control of the master and his employer ; or

(c) where reasonably necessary in order to comply with an express or implied warranty; or

(d) where reasonably necessary for the safety of the ship or subject-matter insured; or

(e) for the purpose of saving human life or aiding a ship in distress where human life
may be in danger; or

(f) where reasonably necessary for the purpose of obtaining medical or surgical aid for
any person on board the ship; or

(g) where caused by the barratrous conduct of the master or crew, if barratry be one of
the perils insured against.

(2) When the cause excusing the deviation or delay ceases to operate, the ship must
resume her course, and prosecute her voyage, with reasonable despatch.

ASSIGNMENT OF POLICY

52. When and how policy is assignable

(1) A marine policy may be transferred by assignment unless it contains terms expressly
prohibiting assignment. It may be assigned either before or after loss.

(2) Where a marine policy has been assigned so as to pass the beneficial interest in such
policy, the assignee of the policy is entitled to sue thereon in his own name; and the
defendant is entitled to make any defence arising out of the contract which he would
have been entitled to make if the suit had been brought in the name of the person by or
on behalf of whom the policy was effected.

(3) A marine policy may be assigned by endorsement thereon or in other customary manner.

53. Assured who has no interest can not assign

Where the assured has parted with or lost his interest in the subject-matter insured, and has
not, before or at the time of so doing expressly or impliedly agreed to assign the policy, any
subsequent assignment of the policy is inoperative:

Provided that nothing in this section affects the assignment of a policy after loss.

THE PREMIUM

54. When premium payable

Unless otherwise agreed, the duty of the assured or his agent to pay the premium, and the
duty of the insurer to issue the policy to the assured or his agent, are concurrent conditions,
and the insurer is not bound to issue the policy until payment or tender of the premium.

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 LOSS AND ABANDONMENT

55. Included and excluded losses

(1) Subject to the provisions of this Act, and unless the policy otherwise provides, the
insurer is liable for any loss proximately caused by a peril insured against, but, subject
as aforesaid, he is not liable for any loss which is not proximately caused by a peril
insured against.

(2) In particular-

(a) the insurer is not liable for any loss attributable to the wilful misconduct of the
assured, but, unless the policy otherwise provides, he is liable for any loss proximately
caused by a peril insured against, even though the loss would not have happened
but for the misconduct or negligence of the master or crew;

(b) unless the policy otherwise provides, the insurer on ship or goods is not liable for
any loss proximately caused by although the delay be caused by a peril insured
against;

(c) unless the policy otherwise provides, the insurer is not liable for ordinary wear and
tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter
insured, or for any loss proximately caused by rats or vermin, or for any injury to
machinery not proximately caused by maritime perils.

56. Partial and total loss

(1) A loss may be either total or partial. Any loss other than a total loss, as hereinafter
defined, is a partial loss.

(2) A total loss may be either an actual total loss, or a constructive total loss.

(3) Unless a different intention appears form the terms of the policy, an insurance against
total loss includes a constructive, as well as an actual, total loss.

(4) Where the assured brings a suit for a total loss and the evidence proves only a partial
loss, he may, unless the policy otherwise provides, recover for a partial loss.

(5) Where goods reach their destination in specie, but by reason of obliteration of
marks, or otherwise, they are incapable of identification, the loss, if any, is partial and
not total.

57. Actual total loss

(1) Where the subject-matter insured is destroyed, or so damaged as to cease to be a thing

of the kind insured, or where the assured is irretrievably deprived thereof, there is an
actual total loss.

(2) In the case of an actual total loss no notice of abandonment need be given.

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58. Missing ship

Where the ship concerned in the adventure is missing, and after the lapse of a reasonable
time no news of her has been received, an actual total loss may be presumed.

59. Effect of transhipment, etc.

Where, by a peril insured against, the voyage is interrupted at intermediate port or place,
under such circumstances as, apart from any special stipulation in the contract of affreightment,
to justify the master in landing and reshipping the goods or other movables, or in transshipping
them, and sending them on to their destination, the liability of the insurer continues,
notwithstanding the landing or transhipment.

60. Constructive total loss defined

(1) Subject to any express provision in the policy, there is a constructive total loss where the
subject-matter insured is reasonably abandoned on account of its actual total loss
appearing to be unavoidable, or because it could not be preserved from actual total loss
without an expenditure which would exceed its value when the expenditure had been
incurred.

(2) In particular, there is a constructive total loss-

(i) where the assured is deprived of the possession of his ship or goods by a peril
insured against, and

(a) it is unlikely that he can recover the ship or goods, as the case may be, or

(b) the cost of recovering the ship or goods, as the case may be, would exceed
their value when recovered; or

(ii) in the case of damage to a ship, where she is so damaged by a peril insured
against that the cost of repairing the damage would exceed the value of the ship
when repaired.

In estimating the cost of repairs, no deduction is to be made in respect of general

average contributions to those repairs payable by other interests, but account is to
be taken of the expense of future salvage operations and of any future general
average contributions to which the ship would be liable if repaired; or

(iii) in the case of damage to goods, where the cost of repairing the damage and
forwarding the goods to their destination would exceed their value on arrival.

61. Effect of constructive total loss

Where there is a constructive total loss the assured may either treat the loss as a partial loss,
or abandon the subject-matter insured to the insurer and treat the loss as if it were an actual
total loss.

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 62. Notice of abandonment

(1) Subject to the provisions of this section, where the assured elects to abandon the
subject-matter insured to the insurer, he must give notice of abandonment. If he fails to
do so the loss can only be treated as a partial loss.

(2) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing
and partly by word of mouth, and may be given in any terms which indicate the intention
of the assured to abandon his insured interest in the subject-matter insured unconditionally
to the insurer.

(3) Notice of abandonment must be given with reasonable diligence after the receipt of
reliable information of the loss, but where the information is of a doubtful character the
assured is entitled to a reasonable time to make enquiry.

(4) Where notice of abandonment is properly given, the rights of the assured are not
prejudiced by the fact that the insurer refuses to accept the abandonment.

(5) The acceptance of an abandonment may be either express or implied from

the conduct of the insurer. The mere silence of the insurer after notice is not an
acceptance.

(6) Where notice of abandonment is accepted the abandonment is irrevocable. The

acceptance of the notice conclusively admits liability for the loss and the sufficiency of
the notice.

(7) Notice of abandonment is unnecessary where at the time when the assured receives
information of the loss, there would be no possibility of benefit to the insurer if notice
were given to him.

(8) Notice of abandonment may be waived by the insurer.

(9) Where an insurer has reinsured his risk, no notice or abandonment need be given by
him.

63. Effect of abandonment

(1) Where there is a valid abandonment the insurer is entitled to take over the interest of the
assured in whatever may remain of the subject-matter insured, and all proprietary rights
incidental thereto.

(2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in
course of being earned, and which is earned by her subsequent to the casualty
causing the loss, less the expenses of earning it incurred after the casualty;
and, where the ship is carrying the owner's goods, the insurer is entitled to a
reasonable remuneration for the carriage of them subsequent to the casualty causing
the loss.

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PARTIAL LOSSES (INCLUDING SALVAGE AND

GENERAL AVERAGE AND PARTICULAR CHARGES)

64. Particular average loss

(1) A particular average loss is a partial loss of the subject-matter insured, caused by a peril
insured against, and which is not a general average loss.

(2) Expenses incurred by or on behalf of the assured for the safety or preservation of the
subject-matter insured, other than general average and salvage charges, are called
particular charges. Particular charges are not included in particular average.

65. Salvage charges

(1) Subject to any express provision in the policy, salvage charges incurred in preventing a
loss by perils insured against may be recovered as a loss by those perils.

(2) "Salvage charges" means the charges recoverable under maritime law by a salvor
independently of contract. They do not include the expenses of services in the nature of
salvage rendered by the assured or his agents, or any person employed for hire by them,
for the purpose of averting a peril insured against. Such expenses, where properly
incurred, may be recovered as particular charges or as a general average loss, according
to the circumstances under which they were incurred.

66. General average loss

(1) A general average loss is a loss caused by or directly consequential on a general

average act. It includes a general average expenditure as well as a general average
sacrifice.

(2) There is a general average act where any extraordinary sacrifice or expenditure is
voluntarily and reasonably made or incurred in time of peril for the purpose of preserving
the property imperilled in the common adventure.

(3) Where there is a general average loss, the party on whom it falls is entitled, subject to
the conditions imposed by maritime law, to a rateable contribution from the other parties
interested, and such contribution is called a general average contribution.

(4) Subject to any express provision in the policy, where the assured has incurred a general
average of expenditure, he may recover from the insurer in respect of the proportion of
the loss which falls upon him; and in the case of a general average sacrifice, he may
recover from the insurer in respect of the whole loss without having enforced his right of
contribution from the other parties liable to contribute.

(5) Subject to any express provision in the policy, where the assured has paid, or is liable to
pay, a general average contribution in respect of the interest insured, he may recover
therefor from the insurer.

(6) In the absence of express stipulation, the insurer is not liable for any general average

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 loss or contribution where the loss was not incurred for the purpose of avoiding, or in
connection with the avoidance of a peril insured against.

(7) Where ship, freight, and cargo, or any two of those interests, are owned by the same
assured, the liability of the insurer in respect of general average losses or contributions
to be determined as if those interests were owned by different persons.

MEASURE OF INDEMNITY

67. Extent of liability of insurer for loss

(1) The sum which the assured can recover in respect of a loss on a policy by which he is
insured, in the case of an unvalued policy to the full extent of the insurable value, or, in
the case of a valued policy to the full extent of the value fixed by the policy, is called the
measure of indemnity.

(2) Where there is a loss recoverable under the policy, the insurer, or each insurer if there
be more than one, is liable for such proportion of the measure of indemnity as the
amount of his subscription bears to the value fixed by the policy in the case of a valued
policy, or to the insurable value in the case of an unvalued policy .

68. Total loss

Subject to the provisions of this Act, and to any express provision in the policy, where there is
a total loss of the subject-matter insured-

(1) if the policy be a valued policy, the measure of indemnity is the sum fixed by the policy;

(2) If the policy be an unvalued policy, the measures of indemnity is the insurable value of
the subject-matter insured.

69. Partial loss of ship

Where a ship is damaged, but is not totally lost, the measure of indemnity subject to any
express provision in the policy, is as follows-

(1) where the ship has been repaired, the assured is entitled to the reasonable cost of the
repairs, less the customary deductions, but not exceeding the sum insured in respect of
any one casualty;

(2) where the ship has been only partially repaired, the assured is entitled to the reasonable
cost of such repairs, computed as above, and also to be indemnified for the reasonable
depreciation, if any, arising from the unrepaired damage, provided that the aggregate
amount shall not exceed the cost of repairing the whole damage, computed as above;

(3) where the ship has not been repaired, and has not been sold in her damaged state
during the risk, the assured is entitled to be indemnified for the the reasonable depreciation
arising from the unrepaired damage, but not exceeding the reasonable cost of repairing
such damage, computed as above;

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(4) where the ship has not been repaired, and has been sold in her damaged state during
the risk, the assured is entitled to be indemnified for the reasonable cost of repairing the
damage, computed as above, but not exceeding the depreciation in value as ascertained
by the sale.

70. Partial loss of freight

Subject to any express provision in the policy, where there is a partial loss of freight, the
measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued
policy or of the insurable value in the case of an unvalued policy, as the proportion of freight
lost by the assured bears to the whole freight at the risk of the assured under the policy.

71. Partial loss of goods, merchandise, etc.

Where there is a partial loss of goods, merchandise, or other movables, the measure of
indemnity, subject of any express provision in the policy, is as follows:-

(1) where part of the goods, merchandise or other movables insured by a valued policy is
totally lost, the measure of indemnity is such proportion of the sum fixed by the policy as
the insurable value of the part lost bears to the insurable value of the whole ascertained
as in the case of an unvalued policy;

(2) where part of the goods, merchandise or other movables insured by an unvalued policy
is totally lost, the measure of indemnity is the insurable value of the part lost, ascertained
as in case of total loss;

(3) where the whole or any part of the goods or merchandise insured has been delivered
damaged at its destination, the measure of indemnity is such proportion of the sum fixed
by the policy in the case of a valued policy, or of the insurable value in the case of an
unvalued policy, as the difference between the gross sound and damaged values at the
place of arrival bears to the gross sound value;

(4) "Gross value" means the wholesale price, or, if there be no such price, the estimated
value, with, in either case, freight, landing charges, and duty paid beforehand; provided
that, in the case of goods or merchandise customarily sold in bond, the bonded price is
deemed to be the gross value. "Gross proceeds" means the actual price obtained at a
sale where all charges on sale are paid by the sellers.

72. Apportionment of valuation

(1) Where different species of property are insured under a single valuation, the valuation
must be apportioned over the different species in proportion to their respective insurable
values, as in the case of an unvalued policy. The insured value of any part of a species
is such proportion of the total insured value of the same as the insurable value of
the part bears to the insurable value of the whole, ascertained in both cases as provided
by this Act.

(2) Where a valuation has to be apportioned, and particulars of the prime cost of each
separate species, quality, or description of goods cannot be ascertained, the division of

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 the valuation may be made over the net arrived sound values of the different species,
qualities, or descriptions of goods.

73. General average contributions and salvage charges

(1) Subject to any express provision in the policy, where the assured has paid, or is liable
for, any general average contribution, the measure of indemnity is the full amount of
such contribution if the subject-matter liable to contribution is insured for its full contributory
value; but, if such subject-matter be not insured for its full contributory value, or if only
part of it be insured, the indemnity payable by the insurer must be reduced in proportion
to the under-insurance, and where there has been a particular average loss which
constitutes a deduction from the contributory value, and for which the insurer is liable,
that amount must be deducted from the insured value in order to ascertain what the
insurer is liable to contribute.

(2) Where the insurer is liable for salvage charges the extent of his liabilities must be
determined on the like principle.

74. Liabilities to third parties

Where the assured has effected an insurance in express terms against any liability to a third
party, the measure of indemnity, subject to any express provision in the policy, is the amount
paid or payable by him to such third party in respect of such liability.

75. General provisions as to measure of indemnity

(1) Where there has been a loss in respect of any subject-matter not expressly provided for
in the foregoing provisions of this Act, the measure of indemnity shall be ascertained as
nearly as may be, in accordance with those provisions, in so far as applicable to the
particular case.

(2) Nothing in the provisions of this Act relating to the measure of indemnity shall affect the
rules relating to double insurance, or prohibit the insurer from disproving interest wholly
or in part, or from showing that at the time of the loss the whole or any part of the
subject-matter insured was not at risk under the policy.

76. Particular average warranties

(1) Where the subject-matter insured is warranted free from particular average, the
assured cannot recover for a loss of part, other than a loss incurred by a general
average sacrifice, unless the contract contained in the policy be apportionable; but,
if the contract be apportionable, the assured may recover for a total loss of any
apportionable part.

(2) Where the subject-matter insured is warranted free from particular average, either wholly
or under a certain percentage, the insurer is nevertheless liable for salvage charges, and
for particular charges and other expenses properly incurred pursuant to the provisions of
the suing and labouring clause in order to avert a loss insured against.

(3) Unless the policy otherwise provides, where the subject-matter insured is warranted free

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from particular average under a specified percentage, a general average loss cannot be
added to a particular average loss to make up the specified percentage.

(4) For the purpose of ascertaining whether the specified percentage has been reached,
regard shall be had only to the actual loss suffered by the subject-matter insured.
Particular charges and the expenses of and incidental to ascertaining and proving the
loss must be excluded.

77. Successive losses

(1) Unless the policy otherwise provides, and subject to the provisions of this Act, the
insurer is liable for successive losses, even though the total amount of such losses may
exceed the sum insured.

(2) Where under the same policy, a partial loss, which has not been repaired or otherwise
made good, is followed by a total loss, the assured can only recover in respect of the
total loss :

Provided that nothing in this section shall affect the liability of the insurer under the suing
and labouring clause.

78. Suing and labouring clause

(1) Where the policy contains a suing and labouring clause, the engagement thereby entered
into is deemed to be supplementary to the contract of insurance, and the assured may
recover from the insurer any expenses properly incurred pursuant to the clause,
notwithstanding that the insurer may have paid for a total loss, or that the subject-matter
may have been warranted free from particular average, either wholly or under a certain
percentage.

(2) General average losses and contributions and salvage charges, as defined by this Act,
are not recoverable under the suing and labouring clause.

(3) Expenses incurred for the purpose of averting or diminishing any loss not covered by the
policy are not recoverable under the suing and labouring clause.

(4) It is the duty of the assured and his agents, in all cases, to take such measures as may
be reasonable for the purpose of averting or minimising a loss.

RIGHTS OF INSURER ON PAYMENTS

79. Rights of subrogation

(1) Where the insurer pays for a total loss, either of the whole, or in the case of goods of any
apportionable part, of the subject-matter insured, he thereupon becomes entitled to take
over the interest of the assured in whatever may remain of the subject-matter so paid for,
and he is thereby subrogated to all the rights and remedies of the assured in and in
respect of that subject-matter as from the time of the casualty causing the loss.

(2) Subject to the foregoing provisions, where the insurer pays for a partial loss, he acquires

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 no title to the subject-matter insured, or such part of it as may remain, but he is
thereupon subrogated to all rights and remedies of the assured in and in respect of the
subject-matter insured as from the time of the casualty causing the loss, in so far as the
assured has been indemnified, according to this Act, by such payment for the loss.

80. Right of Contribution

(1) Where the assured is over-insured by double insurance each insurer is bound, as between
himself and the other insurers, to contribute rateably to the loss in proportion to the
amount for which he is liable under his contract.

(2) If any insurer pays more than his proportion of the loss, he is entitled to maintain a suit
for contribution against the other insurers, and is entitled to the like remedies as a surety
who has paid more than his proportion of the debt.

81. Effect of under-insurance

Where the assured is insured for an amount less than the insurable value, or, in the case of a
valued policy, for an amount less than the policy valuation, he is deemed to be his own
insurer in respect of the uninsured balance.

RETURN OF PREMIUM

82. Enforcement of return

Where the premium, or a proportionate part thereof, is, by this Act, declared to be returnable-

(a) if already paid, it may be recovered by the assured from the insurer, and,

(b) if unpaid, it may be retained by the assured or his agent.

83. Return by agreement

Where the policy contains a stipulation for the return of the premium, or a proportionate part
thereof, on the happening of a certain event, and that event happens, the premium, or, as the
case may be, the proportionate part thereof, is thereupon returnable to the assured.

84. Return for failure of consideration

(1) Where the consideration for the payment of the premium totally fails, and there has been
no fraud or illegality on the part of the assured or his agents, the premium is thereupon
returnable to the assured.

(2) Where the consideration for the payment of the premium is apportionable and there is a
total failure of any apportionable part of the consideration, a proportionate part of the
premium is, under the like conditions, thereupon returnable to the assured.

(3) In particular-

(a) where the policy is void, or is avoided by the insurer as from the commencement of

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the risk, the premium is returnable, provided there has been no fraud or illegality on
the part of the assured; but if the risk is not apportionable, and has once attached,
the premium is not returnable;

(b) where the subject-matter insured, or part thereof, has never been imperiled the
premium, or, as the case may be, a proportionate part thereof, is returnable :

Provided that where the subject-matter has been insured "lost or not lost", and has
arrived in safety at the time when the contract is concluded, the premium is not
returnable unless, at such time, the insurer knew of the safe arrival;

(c) where the assured has no insurable interest throughout the currency of the risk the
premium is returnable, provided that this rule does not apply to a policy effected by
way of wagering;

(d) where the assured has a defeasible interest which is terminated during the currency
of the risk, the premium is not returnable;

(e) where the assured has over-insured under an unvalued policy, a proportionate part
of the premium is returnable;

(f) subject to the foregoing provisions, where the assured has over-insured by double
insurance, a proportionate part of the several premiums is returnable:

Provided that, if the policies are effected at different times, and any earlier policy
has at any time borne the entire risk, or if a claim has been paid on the policy in
respect of the full sum insured thereby, no premium is returnable in respect of that
policy, and when the double insurance is effected knowingly by the assured no
premium is returnable.

SUPPLEMENTAL

85. Ratification by assured

Where a contract of marine insurance is in good faith effected by one person on behalf of
another, the person on whose behalf it is effected may ratify the contract even after he is
aware of a loss.

86. Implied obligation varied by agreement or usage

(1) Where any right, duty, or liability would arise under a contract of marine insurance by
implication of law, it may be negatived or varied by express agreement, or by usage, if
the usage be such as to bind both parties to the contract.

(2) The provisions of this section extend to any right, duty, or liability declared by this Act
which may be lawfully modified by agreement.

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 87. Reasonable time, etc., a question of fact

Where by this Act any reference is made to reasonable time, reasonable premium, or
reasonable diligence, the question what is reasonable is a question of fact.

88. Covering note as evidence

Where there is a duly stamped policy, reference may be made, as heretofore, to the slip or
covering note, in any legal proceeding.

89. Power to apply Act with modifications, etc., in certain cases

The Central Government may, by notification in the Official Gazette, direct that the provisions
of this Act shall, in their application to contracts of marine insurance relating to any class of
ships exclusively used in inland navigation, be subject to such conditions, exceptions and
modifications as it may specify in the notification.

90. Certain provisions to override Transfer of Property Act, 1882

Nothing in clause (e) of section 6 of the Transfer of Property Act, 1882, shall affect the
provisions of sections 17, 52, 53 and 79.

91. Savings

The rules of law, including the law merchant, which applied to contracts of marine insurance
immediately before the commencement of this Act, save in so far as they are inconsistent
with the express provisions of this Act, shall continue to apply to contracts of marine insurance.

92. 2[***]

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SCHEDULE : FORM OF POLICY

(See section 24)

BE IT KNOWN THAT _________________ as well in _________________________ own name

as for and in the name and names of all and every other person or persons to whom the same
doth, may, or shall appertain, in part or in all doth make assurance and cause _____________
and them, and every of them, to be insured lost or not lost, at and from upon any kind of goods
and merchandises, and also upon the body, tackle, apparel, ordnance, munition, artillery, boat and
other furniture, of and in the good ship or vessel called the ________________________________
whereof is master for this present voyage _____________________ or whosoever else shall go
for master in the said ship or by whatsoever other name or names the said ship, or the master
thereof, is or shall be named or called; beginning the adventure upon the said goods and
merchandises from the loading thereof aboard the said ship, ___________ upon the said ship,
etc. __________________ and so shall continue and endure, during her abode there, upon the
said ship, etc. _____________ And further, until the said ship, with all her ordnance, tackle,
apparel, etc., and goods and merchandises whatsoever shall be arrived at ____________________
upon the said ship, etc., until she hath moored at anchor twenty-four hours in good safety; and
upon the goods and merchandises, until the same be there discharged and safely landed. And it
shall be lawful for the said ship, etc., in this voyage to proceed and sail to and touch and stay at
any ports or places whatsoever without prejudice to this insurance. The said ship, etc., goods and
merchandises, etc., for so much as concerned the assured by agreement between the assured
and assurers in this policy, are and shall be _______________________________ valued at.

Touching the adventures and perils which we the assurers are contented to bear and do take
upon us in this voyage; they are of the seas, men of war, fire, enemies, pirates, rovers, thieves,
jettisons, letters of mart and countermart, surprisals, takings at sea, arrests, restraints, and
detainments of all kings, princes, and people, of what nation, condition, or quality soever, barratry
of the master and mariners, and of all other perils, losses, and misfortunes that have or shall
come to the hurt, detriment, or damage of the said goods and merchandises, and ship, etc., or
any part thereof.

And in case of any loss or misfortune it shall be lawful to the assured, their factors, servants and
assigns, to sue, labour, and travel for, in and about the defence, safeguards and recovery of the
said goods and merchandises and ship, etc., or any part thereof, without prejudice to this insurance;
to the charges whereof we, the assurers, will contribute each one according to the rate and
quantity of his sum herein assured.

And it is especially declared and agreed that no acts of the insurer or insured in recovering,
saving, or preserving the property insured shall be considered as a waiver, or acceptance of
abandonment. And so we, the assurers, are contented, and do hereby promise and bind ourselves,
each one for his own part, our heirs, executors, and goods to the assured, their executors,
administrators, and assigns, for the true performance of the premises, confessing ourselves paid
the consideration due unto us for this assurance by the assured, at and after the rate of
___________________________

In witness whereof we, the assurers, have subscribed our names and sums assured in ________

MEMORANDUM N.B.- Corn, fish, salt, fruit, flour, and seed are warranted free from average,
unless general or the ship be stranded,-sugar, tobacco, hemp, flax, hides and skins are warranted

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 free from average, under five per cent, and all other goods, also the ship and freight, are warranted
free from average, under three per cent unless general, or the ship be stranded.

RULES FOR CONSTRUCTION OF POLICY

The following are the rules referred to by this Act for the construction of a policy in the above or
other like form, where the context does not otherwise require:-

1. Lost or not lost

Where the subject-matter is insured "lost or not lost" and the loss has occurred before the
contract is concluded, the risk attaches unless, at such time the assured was aware of the
loss, and the insurer was not.

2. From

Where the subject-matter is insured "from" a particular place, the risk does not attach until
the ship starts on the voyage insured.

3. At and from

(a) Where a ship is insured "at and from" a particular place, and she is at that place in good
safety when the contract is concluded, the risk attaches immediately.

(b) If she be not at that place when the contract is concluded, the risk attaches as soon as
she arrives there in good safety, and, unless the policy otherwise provides, it is immaterial
that she is covered by another policy for a specified time after arrival.

(c) Where chartered freight is insured "at and from" a particular place, and the ship is at that
place in good safety when the contract is concluded, the risk attaches immediately. If she
be not there when the contract is concluded, the risk attaches as soon as she arrives
there in good safety.

(d) Where freight, other than chartered freight, is payable without special conditions and is
insured "at and from" a particular place, the risk attaches pro rata as the goods or
merchandise are shipped; provided that if there be cargo in readiness which belongs to
the ship-owner, or which some other person has contracted with him to ship, the risk
attaches as soon as the ship is ready to receive such cargo.

4. From the loading thereof

Where goods or other movables are insured "from the loading thereof", the risk does not
attach until such goods or movables are actually on board, and the insurer is not liable for
them while in transit from the shore to the ship.

5. Safely landed

Where the risk on goods or other movables continues until they are "safely landed", they must
be landed in the customary manner and within a reasonable time after arrival at the port of
discharge, and if they are not so landed the risk ceases.

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6. Touch and stay

In the absence of any further license or usage, the liberty to touch and stay "at any port or
place whatsoever" does not authorise the ship to depart from the course of her voyage from
the port of departure to the port of destination.

7. Perils of the Seas

The term "perils of the seas" refers only to fortuitous accidents or casualties of the seas. It
does not include the ordinary action of the winds and waves.

8. Pirates

The term "pirates" includes passengers who mutiny and rioters who attack the ship from the
shore.

9. Thieves

The term "thieves" does not cover clandestine theft or a theft committed by any one of the
ship's company, whether crew or passengers.

10. Restraint of Princes

The term "arrests, etc., of kings, princes, and people" refers to political or executive acts, and
does not include a loss caused by riot or by ordinary judicial process.

11. Barratry

The term "barratry" includes every wrongful act willfully committed by the master or crew to
the prejudice of the owner, or, as the case may be, the charterer.

12. All other perils

The term "all other perils" includes only perils similar in kind to the perils specifically mentioned
in the policy.

13. Average unless General

The term "average unless general" means a partial loss of the subject-matter insured other
than a general average loss, and does not include "particular charges".

14. Stranded

Where the ship has stranded, the insurer is liable for the excepted losses although the loss is
not attributable to the stranding, provided that when the stranding takes place the risk has
attached and, if the policy be on goods, that the damaged goods are on board.

15. Ship

The term "ship" includes the hull, material and outfit, stores and provisions for the officers

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 and crew, and, in the case of vessels engaged in a special trade, the ordinary fittings
requisite for the trade, and also, in the case of a steamship, the machinery, boilers, and coals
and engine stores, if owned by the assured and also in the case of a ship driven by power
other than steam, the machinery and fuels and engine stores, if owned by the assured.

16. Freight

The term "freight" includes the profit derivable by a ship-owners from the employment of his
ship to carry his own goods or movables as well as freight payable by a third party, but does
not include passage money.

17. Goods

The term "goods" means goods in the nature of merchandise, and does not include personal
effects or provisions and stores for use on board.

In the absence of any usage to the contrary, deck cargo and living animals must be insured
specifically, and not under the general denomination of goods.

Foot Notes

1. Appointed date is 1st. August, 1963 vide Notification No. S.O. 1925 dated 8th. July, 1963.

2. Section 92 omitted by the Repealing and Amending Act, 1974 (Act No. 56 of 1974), dated
20th. December, 1974.

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Appendix - B

THE INSURANCE ACT, 1938 AND

THE INSURANCE RULES, 1939
The Insurance Act, 1938

Sec. 64-VB of the Insurance Act, 1938, reads as under:

(1) No insurer shall assume any risk in India in respect of any insurance business on which
premium is not ordinarily payable outside India unless and until the premium payable is not is
received by him or is guaranteed to be paid by such person in such manner and within such
time as may be prescribed or unless and until deposit of such amount as may be prescribed,
is made in advance in the prescribed manner.

(2) For the purpose of this section, in the case of risks for which premium can be ascertained in
advance, the risk may be assumed not earlier than the date on which the premium has been
paid in cash or by cheque to the insurer.

Explanation – Where the premium is tendered by postal money order or cheque sent by post,
the risk may be assumed on the date on which the money order is booked or the cheque is
posted, as the case may be.

(3) Any refund of premium which may become due to an insured on account of the cancellation
of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer
directly to the insured by a crossed order cheque or by postal money order and a proper
receipt shall be obtained by the insurer from the insured, and such refund shall in no case be
credited to the account of the agent.

(4) Where an insurance agent collects a premium on a policy of insurance on behalf of an

insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in
full without deduction of his commission within twenty-four hours of the collection excluding
bank and postal holidays.

(5) The Central Government may, by rules, relax the requirements of sub-section (1) in respect of
particular categories of insurance policies.

The Insurance Rules, 1939.

58. Advance payment of premiums :- For the purposes of sub-section (1) of section 63-VB of
the Act, a risk in respect of a policy may be assumed before the premium payable in respect
thereof is received –

i) if the entire amount of the premium is guaranteed to be paid by a Banking Company

before the end of the calendar month next succeeding to the month in which the risk is
assumed, if the premium due is not paid by the insured before that date;

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 ii) if an advance deposit is made with the insurer to the credit of insured sufficient to cover
the payment of the entire amount of the premium together with the premium, if any, due
from the insured in respect of any other risk already assumed against such deposit, such
deposit being agreed to be adjusted towards the premium before the end of the month
next succeeding to the month in which the risk is assumed, if the premium due is not
paid by the insured before that date.

59. Relaxation – (i) In respect of the categories on insurance policies mentioned hereunder the
requirements of sub-section (1) of section 64-VB shall stand relaxed to the extent and in the
manner mentioned against each category of policy, subject to the conditions mentioned
therein-

a) to (j) not reproducted as they are not relevant.

k) Marine Covers other than Hulls –

(i) In the case of inland shipment and transit risks, risk may be assumed under open
policies of seasonal crops such as tea, on the payment of a provisional premium
based on a fair estimate.

ii) In the case of exports overseas, risk may be assumed subject to the condition
that the premium shall be paid within fifteen days from the date of sailing of the
overseas vessel.

iii) In the case of imports, risk may be assumed subject to the condition that the
premium shall be paid within fifteen days of the receipt of declaration in India from
the insured or insured’s representative overseas. Provided that the relaxations
under sub-clauses (ii) and (iii) shall apply to marine cover notes only and not
to marine policies.

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Appendix - C

On Non-Judicial Stamp Paper of an amount applicable to your State.

POWER OF ATTORNEY
(Incorporating letter of subrogation)

TO ALL TO WHOM THESE PRESENTS SHALL COME, I/WE the Authorised Signatory/Managing
Director of ____________________ Ltd., a company duly registered under the Companies Act,
1956, having its registered office at __________________ the Managing Partner of having its
registered office at ____________________________________________ /the Proprietor of
_______________ carrying on business _______________ in from _________________ / of
Mumbai, Indian Inhabitant/s son/daughter/wife of________________ residing at
____________________ (if more than one person describe separately as (1) ________________
(2) ____________) SEND GREETINGS:-

WHEREAS in consideration of having received a sum of Rs. _____________ (in words)

___________________________________ in full and final settlement of my/our claim No.
__________ incurred under Policy (describe the policy) No. _________ regarding the loss/damage
________ (details of the loss/damage suffered), I/We, (the consignor/s or consignee/s as the case
may be) have subrogated, all my/or rights and interests in (specify the insurable interest in respect
whereof loss is suffered and claim settled/or the subject matter of Insurance Policy supra) to The
New India Assurance Co. Ltd. having its registered office at __________________ (hereinafter for
short, “the Insurer”) AND HAVE FURTHER AUTHORISED the Insurer to take all actions against
any one in its own name to recoup or minimize the damages suffered by it by settlement of my/our
aforesaid claim No. ____________ incurred under Policy No. _______________ supra AND HAVE
ACCORDINGLY TRANSLATED the said subrogation of my rights and interests in (again specify
details of the insurable interest in respect whereof loss has been suffered and claim settled or the
subject matter of the Insurance) into this SPECIAL POWER OF ATTORNEY in favour of the
Insurer.

NOW KNOW YE AND THESE PRESENTS WITNESS that I/We

_______________________________ do (if more than one person add: “and each of us doth”)
hereby nominate, constitute and appoint the Insurer namely, The New India Assurance Company
Limited or any of its authorized representative duly authorized by it in the behalf to be my/our true
and lawful Attorney/s to do and execute and perform all or any of the following acts, deeds and
things, viz:

1. To ask, demand, sue for, recover and receive in my/our own name and/or on our behalf or in
the insurer’s own name from the carrier/ the shipper ship owner/ charterers/ airlines company/
etc. for recovery of compensation for the loss caused to the insurable interest subject matter
of insurance policy supra (to the extent of my/our indemnification by the Insurer) by way of
any action in law through a Court or Tribunal of competent jurisdiction or otherwise.

2. To sign, file and verify plaints, written statements, applications by way of execution or otherwise
and petitions as the case may be in the Court or Tribunal of competent jurisdiction for
recovery of compensation for the loss caused to the insurable interest/ subject matter of
insurance policy supra (to the extent of my/our indemnification from the aforesaid carrier/ the
shipper/ ship owner/ charterers/ airlines company/ etc. (as the case may be).

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 3. To appoint Advocate/s or Counsel/s to act, appear and plead the matter before any Court or
Tribunal of competent jurisdiction in the course of conducting the case or legal action.

4. To withdraw and receive documents and any money from the Court or Tribunal or from the
opposite party, either in execution of the decree or award or otherwise, and on receipt or
payment thereof sign and deliver proper receipts or discharges for the same.

5. To file and/or execute any compromise with the opposite party in this behalf subject however
that the amount settled for or compromised in this manner shall not exceed the amount paid
to me/us in respect whereof, I/We have subrogated all our rights and interests in respect of
for the loss caused to the insurable interest/ subject matter of insurance policy supra.

6. To do all incidental acts, deed and things in furtherance of the above object or which are
necessary for the efficient prosecution of the legal action and/or realisation of the compensation
for the loss caused to the insurable interest/ subject matter of insurance policy supra.

7. And all and whatever my said Attorney or the Advocate/s or Counsel/s appointed by it shall
lawfully do, I hereby agree to ratify and confirm.

PROVIDED ALWAYS that the powers hereby conferred shall be exercisable by my said attorney in
the said case now pending in the Original Court/Tribunal or any Revisional or Appellate Court/
Tribunal also and the same powers shall also be exercisable in all matters and cases arising out of
or pertaining to the matters under litigation in the Original Court.

PROVIDED FURTHER that I/We agree to assist and confer with the Attorney in the prosecution of
the aforesaid legal proceedings and execute the pleadings for the said purpose AND if required,
join the insurer in the prosecution of the aforesaid legal proceedings OR if called for, institute any
action or legal proceeding as directed by the insurer subject to the payment of costs, charges or
expenses incurred therefor by the insurer.

IN WITNESS WHEREOF, I/WE, the said _____________________________ have hereto set and
subscribed my/our respective signature/s to this document the day of ________ in the year.

Signed, Executed and Delivered )

by the withinnamed/Donor/s, )

_________________________ )

presence of the Notary Public whose signature )

and seal appear on this document. )

BEFORE ME

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 New India Assurance

Dated the ____________ day of __________

From

______________ …….Donor

To

The New India Assurance Co. Ltd…. Donee

SPECIAL POWER OF ATTORNEY

INCORPORATING LETTER OF
SUBROGATION

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 Appendix - D
LETTER OF SUBROGATION
From: _____________________

_____________________

_____________________

Date :
To:

The Manager,
The New India Assurance Co. Ltd.,
87, M.G.Road, Fort,
Mumbai – 400 001.

Sir/Madam,

I/WE, the Authorised Signatory/Managing Director of ___________________ Ltd., a company

duly registered under the Companies Act, 1956, having its registered office at
____________________/ the Managing Partner of ___________________________ having its
registered office at ___________________________ / the Proprietor of________________ carrying
on business in __________________ from _________________/ of Mumbai, Indian Inhabitant/s
son/daughter/wife of _________________ residing at _____________________ (if more than
one person describe separately as (1) _________ (2) _________) in consideration of having
received a sum of Rs. __________ (in words) ___________ in full and final settlement of my claim
No. ____________ incurred under Policy (describe the policy) No. _________ regarding the loss/
damage _________ (details of the loss/damage suffered), I/We, (the consignor/s or consignee/s
as the case may be) have subrogated, all my/or rights and interests in (specify the insurable
interest in respect whereof loss is suffered and claim is settled/ or the subject matter of Insurance
Policy supra) to The New India Assurance Co. Ltd. having its registered office at
___________________

Accordingly, in accordance with the aforesaid subrogation, I/we further authorize your company to
take all action against any one in this regard in your name in accordance with the principles of
indemnity.

Signature of the Claimant

On Non-Judicial Stamp Paper of an amount applicable to your State.

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 New India Assurance

Appendix - E
MARINE (CARGO) SURVEY FEES SCHEDULE
i. Damages/losses to all types of cargos

Maximum
Category ‘A’ Surveyors : Rs.3,500/- for on the job work
exceeding 5 hours per day Rs. 35,000/-

Category ‘B’ Surveyors : Rs. 2,500/- for on the job work

exceeding 5 hours per day Rs. 25,000/-

Category ‘C’ Surveyors : Rs. 1,500/- for on the job work

exceeding 5 hours per day Rs. 15,000/-

ii. On the job work not exceeding 5 hours for any loss

Maxmium

Category ‘A’ Surveyors : Rs.1,750/-

Category ‘B’ Surveyors : Rs.1,250/-

Category ‘C’ Surveyors : Rs. 750/-

iii. Claim for non-delivery of package/packages and storages

Maxmium

Category ‘A’ Surveyors : Rs.1,750/-

Category ‘B’ Surveyors : Rs.1,250/-

Category ‘C’ Surveyors : Rs. 750/-

iv. Claim involving machinery and equipments requiring detail inspection in line with
Engineering surveys to ascertain the loss, the Fire/Engineering Schedule of fees will be
applicable.

v. When surveys requiring special expertise are to be carried out, due weightage should be
given to the special nature of the jobs involved and fees higher than the fees as mentioned
above may be allowed as per the following level :

AGM’s/RM’s : Upto 150% of survey fees including the claim falling within the Financial
Authority of DOs

GM : Upto 200% of survey fees

CMD : Above 200% of survey fees

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 vi. Predespatch/acceptance survey and for supervised discharge/loading

i) where detailed inspection are not carried out - 40% of applicable survey as in 1) above.

ii) where detailed inspections of cargo is carried out - as in 1) above (maximum).

P.S.

i) In case of regular/ standing clients, the above fees will be borne by the Insurer.

ii) In case of specific/isolated cases, the fees will be borne by the proposer/insured.

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 New India Assurance

Appendix - F
GIM
MEMORANDUM OF EXCHANGE CONTROL REGULATIONS
RELATING TO GENERAL INSURANCE IN INDIA
Introduction

General insurance business in India is undertaken by insurance companies which are registered
with Insurance Regulatory and Development Authority (IRDA).

Scope of Memorandum

2. (i) Exchange Control regulations governing general insurance business written in India are
set out in this Memorandum.

(ii) Directions contained in this Memorandum have been issued under Section 10(4) and
Section 11(1) of Foreign Exchange Management Act 1999 (42 of 1999).

Definitions

3. For the purpose of this Memorandum, the terms “Person resident in India” and
“Foreign Currency” will have the same meaning as defined under Foreign Exchange
Management Act, 1999.

Bank Encashment Certificates

4. Where Insurers have been permitted to issue policies expressed in foreign currency against
premium payable in foreign currency, they should insist on submission of suitable document
to satisfy themselves that the premium has been received by foreign exchange remittance
through banking channels or in rupees derived by sale of foreign exchange to an authorised
dealer in foreign exchange or an authorised money-changer.

Direct Insurance outside India by Residents

5. Persons, firms, companies etc. resident in India are not permitted to take insurance cover of
any kind with insurance companies in foreign countries without the prior permission of Reserve
Bank. Besides, permission of Government of India under General Insurance Business
(Nationalisation) Act, 1972, is also required to be taken in such cases.

Transaction in Nepal and Bhutan

6. Indians, Nepalese and Bhutanese resident in Nepal and Bhutan as well as offices and
branches of Indian, Nepalese and Bhutanese firms, companies or other organisations in
these two countries are treated as resident in India for purposes of transactions in Indian
rupees. Payment of claims to such persons against marine or non-marine policies may be
freely made in rupees. Payments in foreign currency towards claims under marine or non-
marine policies will require prior approval of Reserve Bank, except where premiums thereon
were also collected in foreign currency.

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 7. The Memorandum is divided into four parts as under

PART A - MARINE INSURANCE

PART B - NON-MARINE INSURANCE
PART C - REINSURANCE
PART D - FOREIGN CURRENCY ACCOUNTS AND INVESTMENTS ABROAD

PART A - MARINE INSURANCE

Currency in which Marine Policies may be issued

A.1 (i) Marine insurance policies on coastal shipments may be issued only in Indian rupees.

(ii) Marine insurance policies on shipments between India and other countries as also
between two points outside India may be issued in rupees or in any foreign currency.

Premiums on Marine Policies covering Exports

A.2 Payment of premium on a marine insurance policy on exports from India may be accepted in
rupees provided exporter furnishes to the insurer a certificate to the effect either (a) that
insurance charges on the shipment in question have to be borne by him in terms of contract
with overseas buyer and that he is not making the payment on behalf of any non-resident or
(b) that he is defraying insurance charges on the shipment in question on account of overseas
buyer of the goods and he undertakes to add the amount on the invoice and recover the
payment so made from the buyer in an approved manner.

NOTES : A. Overseas buyers may sometimes approach Insurers directly or through

their overseas offices/agents for extension of cover for additional risks or
for extended transit risks necessitated by circumstances not envisaged
when the marine insurance was originally covered in India with the Insurers.
Such extensions may be made by Insurers provided the additional premiums
are collected from overseas buyers in foreign currency.

B. Certain countries operate restrictions requiring importers in their countries

to obtain marine insurance cover from local insurers, settlement under
which may not be possible in the event of cargo getting lost before reaching
port of destination due to Exchange Control regulations governing
remittances against imports into those countries. Insurers may issue in
such cases, contingency marine insurance policies to exporters to protect
their interest till goods are paid for. The policies should be issued with a
condition that they will not be assignable to overseas buyer or any other
non-resident party. Claims on such policies should be paid only to exporters
in India.

Premiums on Marine Policies covering Imports

A.3 (i) Payment of premium on a marine insurance policy on imports into India may be accepted
in rupees provided importer furnishes to the insurer a certificate to the effect that (a) the

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 New India Assurance

insurance charges are required to be borne by him in terms of the contract with the
overseas seller and (b) where the import is made against an Import Licence, he undertake
to ensure that the amount of insurance premium is endorsed on the import licence in
due course.

(ii) In case of imports by the public sector (viz. Central Government, any State
Government,Statutory or public bodies and Government undertakings), payment of
insurance premium in rupees may be freely accepted.

(iii) In all other cases, where payment of premium in respect of imports is offered in rupees,
prior approval of Reserve Bank will be required. Applications for the purpose should be
made by letter (in duplicate) furnishing full particulars.

Premiums on Marine Policies covering Shipments between Countries outside India

A.4 (i) Premiums on marine insurance policies covering shipment between countries
outside India must ordinarily be received in foreign currency, but payment in rupees
may be accepted provided a certificate from an authorised dealer in foreign exchange
is produced to show that the rupees are derived by a remittance from abroad in an
approved manner.

NOTE : Overseas offices of the Insurers may grant marine insurance cover for
trade between China and third countries and receive premium/settle claims
through foreign currency accounts maintained by their overseas offices
without prior approval of Reserve Bank.

(ii) Sometimes, firms and companies in India finance merchanting trade i.e. goods
shipped from one foreign country to another and financed by an intermediary in India.
In some of these cases goods may be purchased on f.o.b./c.& f. terms and/or sold on
c.i.f. terms, the marine insurance cover being arranged by the intermediary in
India. Insurance companies registered with IRDA may issue policies covering
transit risks between the loading and the destination ports in rupees or in any foreign
currency in such cases, against payment of premium in rupees by the intermediary,
after satisfying themselves that the contract provides for marine insurance being taken
by the intermediary.

Claims against Marine Policies

A.5 Claims against marine insurance policies, when payable to persons, firms or companies in
India should be paid only in rupees, irrespective of the currency in which relative policies had
been issued. Where claimant is not a resident of India, Insurance may settle the claim out of
foreign currency balances held by them, provided they are satisfied that ownership of the
goods lost, damaged etc., vest in such claimant and that the latter is not making the claim
merely as agent of the real owner of the goods in India.

Remittance of Claims on Exports

A.6 (i) In the case of marine claims against exports, remittances of claim will be permitted
by authorised dealers in foreign exchange on application on form A2 provided the
Insurer has satisfied himself that the ownership of the goods on which claim has

161
 arisen vests in the non-resident claimant. Applications should be supported by
following documents:
(a) Statement of claim duly certified by an official authorised by the insurance company
registered with IRDA for this purpose.
(b) Insurance policy.
(c) Survey report or other customary proof of loss.
(d) Bill of lading/Airway bill.
(e) Certified copy of invoice.
(f) Any other documents ordinarily required to support the claim.

Where original documents are not available for any reason, photo copies may be produced to
authorised dealer together with reasons for non-availability of the original documents. This
provision does not apply to remittances for replenishment of foreign currency balances which
will require specific approval of Reserve Bank.

Note: Insurers may settle claims in rupees in favour of Indian exporters even in cases
where title to the goods has passed to foreign buyer, if a request to that effect has
been made by the non-resident claimant. A certificate indicating full particulars of
the transaction including number of relative GR/PP form and amount paid in
settlement of claim should be issued to the exporter to enable the latter to obtain
necessary approval from Reserve Bank for making replacement shipments.

(ii) Claims against marine insurance policies covering exports may also be settled through
the overseas claims settling agents, if so desired by insurers. Authorised dealers have
been permitted to open revolving letters of credit in favour of established claims-settling
agents abroad and reimburse claims under the credit on verification of the necessary
documentary evidence viz. statement of claim, survey report or other documentary
evidence of loss/damage, original policy or certificate of insurance etc.

Payment in Foreign Currency of certain Import Claims

A.7 Although it is a basic rule that marine claims on imports should be settled locally in rupees in
favour of importer in cases where ownership of the goods lost, damaged, etc. vests in the
importer, Insurers may settle claims from their foreign currency balances in favour of overseas
suppliers in the following categories of imports, in order to facilitate early replacement of the
lost, damaged, etc. goods, on request being received in this regard from importers:

(a) Imports by Government Departments and public sector undertakings

(b) Imports by private sector undertaking against foreign credits provided the terms of the
foreign credit require that insurance cover should be taken in foreign currency for
replacement of lost/damaged goods.

(c) In all other cases, where the ownership of the goods lost/damaged, etc. vests with the
overseas supplier and no payment has been made towards any part of the cost of the
goods.

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These provisions are applicable not only to marine policies, but also to marine-cum-erection
policies, whether issued separately or combined.

Claims on Policies Covering Merchanting Trade

A.8 Claims arising from marine insurance policies covering merchanting trade financed through
India may be settled by Insurers from their foreign currency balances only if -

(a) the ownership of the goods vests with the overseas party and

(b) where the claim is proposed to be settled in favour of the overseas supplier, payment for
the goods has not been made to the supplier and where claim is proposed to be settled
in favour of the overseas buyer, payment for the goods has been received by the Indian
intermediary from the buyer.

PART B - NON-MARINE INSURANCE

Assets in India

B.1 Insurance cover on risks inside India (including All Risk Insurance) on assets in India owned
by residents of India may be issued only in rupees. This is also applicable to assets of Indian
branches/offices of foreign companies, banks,etc.

Assets outside India

B.2 Non-marine risks in respect of assets outside India owned by residents of India may be
covered in rupees or in foreign currency provided that in respect of immovable property held
outside India by Indian nationals, permission of Reserve Bank for holding the property had
been obtained, (where necessary). Settlement of claims under such policies should be made
only in rupees locally. Foreign currency policies providing for payment of claims in foreign
currency in the foreign country may, however, be issued only if the premiums are paid in
foreign currency out of eligible foreign currency assets held by Indian nationals/persons of
Indian origin who have returned to India from abroad after a minimum continuous stay board
for at least one year or out of funds held in their RFC accounts with authorised dealers in
India. Issue of foreign currency policies in other cases will require prior approval of Reserve
Bank.

Policies in foreign currency approved by Reserve Bank -

Settlement of claims

B.3 (i) Request for issue of policies in foreign currency which are not covered by the above
guidelines are examined on merits by RBI. For such request where RBI grants specific
approval for issue of policy in foreign currency, acceptance of premium in foreign currency
and settlement of claim in foreign currency, insurers may approach A.D. for remittance of
claims under policies subject to the following conditions :-

(a) the policy has been issued in foreign currency with specific approval of RBI;

(b) the claim has been admitted by the competent authority of the insurance company.

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 (c) the claim has been settled as per the surveyors report and other substantiating
documents;

(d) claims on account of reinsurance are being lodged with the reinsurers and will be
received as per reinsurance agreement;

(e) the remittance is being made to the non-resident beneficiary under the policy. For
resident beneficiaries the claim may be settled in Rupee equivalent of foreign currency
due. Under no circumstances payment in foreign currency be made to a resident
beneficiary.

B.3 (ii) Insurers may submit, to the Regional Office of RBI under whose jurisdiction it operates,
a report on quarterly basis of the claims settled in foreign currency along with supporting
documents of each claim settled by them. These reports may be submitted within 15
days from the end of each quarter of the calender year.

Baggage and Valuables in transit

B.4 (i) Insurance cover on baggage or valuables in transit between India and other countries or
between two countries outside India may be issued in rupees or in foreign currency.

(ii) Premiums on such policies may be collected in rupees only if the owner of the baggage
or other valuables is either an Indian national or is normally resident in India. In other
cases, premiums should be received in foreign currency or in rupees derived by surrender
of foreign currency to an authorises dealer in foreign exchange or authorised money-
changer; such payments should be supported by a certificate from the authorised dealer/
money-changer in the prescribed form.

(iii) Claims on such policies may be paid only in rupees in India except where the policy
holder is a person normally resident outside India and premiums against the policy had
been collected either in foreign currency or in rupees derived by surrender of foreign
currency. Remittances of claims in foreign currencies in other cases will require prior
approval of Reserve Bank.

(iv) Remittances towards claims on personal baggage reshipped from India by foreign nationals
on completion of their assignments in India may be allowed by insurers, if they are
eligible for or have been accorded remittance facilities at the time of retirement from
India.

War etc. Risks Insurance on Marine hulls

B.5 Insurance on Indian marine hulls covering All Risks against war and other allied risks arising
out of civil commotion, political or labour disturbances etc. are required to be obtained from
the Insurers in India only.

B.6 Personal accident policies may be issued only in rupees and claims thereon settled only in
rupees, in case of Indian nationals and persons of Indian origin normally resident in India. In

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 New India Assurance

other cases, personal accident policies may be issued in foreign currency, provided premiums
thereon are paid either in foreign currency or in rupees derived by surrender of foreign
currency to an authorised dealer or authorised money-changer. Claims in these cases may
be settled in currency of the policy or in rupees as desired by the policy holder.

NOTE : Indian companies executing construction and turnkey contracts in foreign countries
may at times desire to obtain personal accident cover from Indian Insurers for the
workmen and technical staff actually engaged in the overseas contracts providing
for settlement of claims in foreign currency. Insurers may permit such insurance
being taken provided premiums will be paid by remittances in foreign currency from
out of the foreign currency earnings generated by the contracts. Claims in such
case may be settled in foreign currency or if so desired, in rupees locally.

Overseas Medical Insurance Scheme for Indians Travelling Abroad

B.7 Policies may be issued in India under the Overseas Medical Insurance Schemes as approved
by Reserve Bank to Indian residents travelling abroad for any approved visits viz. business,
study tour, specialised training, conferences, employment, or higher studies. Premiums on
such policies, other than for visits for employment, may be collected in rupees and for
employment in foreign currency. Insurers may also open a revolving letter of credit with an
Indian bank in London for settlement of its share in the claims that may eventually arise under
the policies.

Miscellaneous

B.8 (i) Insurers may issue product liability policies for exports and errors and omissions Policy
in respect of computer software exports in foreign currency against receipt of premium in
rupees and settle claims if any in foreign currency in respect of such policies.

(ii) Claims arising outside India against policies issued under Workmen’s Compensation Act
and Merchant Shipping Act may be paid in appropriate foreign currency. Remittances will
be allowed for meeting specific claims on application by the Insurers furnishing full
details of the claims.

PART C - REINSURANCE

C.1 As per the extant Govt. of India’s instructions, reinsurance arrangements of the insurance
companies registered with IRDA are to be decided by the companies themselves on an
annual basis, which is to be approved by the respective insurance company’s Boards in
consultation with IRDA. Authorised dealer, designated by these insurance companies may
allow remittances falling due under such approved reinsurance arrangements, by the insurers
in accordance with the terms and conditions laid down by their Boards.

C.2 Remittance of Reinsurance Premia by Local Brokers

Whereever local brokers arrange the reinsurance on behalf of insurers, local brokers may
remit the premia through the branch of the authorised dealer designated by the insurance
company in terms of para C.1 above subject to the production of undernoted documents:

(i) Relative debit notes from overseas insurance company.

165
 (ii) Detailed statement of premia settled by the individual insurance company, along with a
certificate to the effect that the amount of reinsurance business is within the overall limit
approved by the insurance company’s Board and that the risks covered under the
reinsurance arrangements are within the scope of the Reinsurance Programme, approved
by the insurance company’s Board in consultation with IRDA.

(iii) A certificate from the Chartered Accountant of the local broker, prepared on the basis of
certificate and statements obtained from the insurance companies, to the effect that the
proposed remittance of reinsurance premia sought, is in agreement with the various
statements/certificates obtained from the insurance company/companies.

PART D - FOREIGN CURRENCY ACCOUNTS AND INVESTMENTS ABROAD

Foreign Currency Accounts Abroad

D.1 Insurers may open, hold and maintain with a bank outside India foreign currency accounts for
facilitating transactions and expenses relating/incidental to general insurance business
undertaken in foreign countries in accordance with regulations laid down in this Memorandum.
Insurers should endeavour to keep in their foreign currency accounts only the minimum
balances required for normal business and transfer to India regularly all surplus funds held at
foreign centres.

Investments abroad

D.2 Renewal of existing investments, reinvestment of redemption proceeds of existing investments

and fresh investment out of funds abroad, in government/semi-Government securities and
bank deposits may be made by Insurers freely without prior approval of Reserve Bank,
provided they are for meeting statutory requirements in the foreign country concerned.
All other investments will require prior approval of Reserve Bank of India.

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 New India Assurance

Appendix - G

STAMP DUTY IN MARINE CARGO INSURANCE

(1) For sea voyages and transit by country craft 5 paise for every Rs.1500/- or part thereof
subject to the following

i) When the rate charged is 1/8% (0.125%) or less, the stamp duty is only 5 paise regardless
of the sum Insured. Total premium charged under the policy, Inclusive of premium for
War and Strikes risks, is taken into account when determining whether the rate is 1/8%
or less.

ii) When Inland Transit (Rail or Road) is covered in conjunction with a sea voyage, the
Policy must be stamped according to the scale for sea voyage.

(2) For other than sea voyage (i.e. transit by rail, road or air) :-

The old rates will continue which is reproduced below for your ready reference.

a) 50 paise when sum insured is Rs.5,000/- or less.

b) Re.1/- when sum Insured is over Rs.5,000/-

(3) For postal sending :-

a) Scale as per (1) above, if involving sea voyage.

b) Scale as per (2) above , for transits by rail, road or air.

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 COMMON MARINE CARGO TERMS
Abaft At or towards the stern or after end of a ship. Also referred to as aft.

A.B.S. American Bureau of Shipping American ship classification society.

For the functions of a ship classification society, see Classification
society.

Accomplish a bill To surrender a bill of lading to the carrying ship at the discharge port
of lading (to) in exchange for the goods. If more than one original bill of lading has
been issued, only one need be surrendered to the ship, the others
becoming non-negotiable.

Accomplished bill Original bill of lading which has been surrendered to the carrying
of lading ship at the discharge port in exchange for the goods.

Act of God Occurrence over which there is no human control, such as

an unusually severe storm or lightning strike, resulting in a loss.
Generally, contracts of carriage contain a clause excluding the
carrier from liability for any such loss. It would not be an act
of God, however, if the loss could reasonably have been foreseen or
avoided.

Adjustment Calculation of a loss by an average adjuster. In the case of general

average, the adjustment sets out all the contributions of the parties
who had an interest in the marine adventure.

Average Term used in marine insurance to mean a loss which may be general
(see General average) or partial (see Particular average).

Average adjuster Expert whose services are used by insurance underwriters to calculate
complex marine insurance claim or who, in the case of general
average, is appointed by the shipowner to determine the contributions
due from all the parties to the voyage.

Average bond Statement signed by cargo interests undertaking to pay their

contribution to general average and/or salvage as well as any
special charges determined by the average adjuster. Cargo interests
also undertake in this document to provide documentation showing
the value of the goods to enable the adjuster to calculate the
contribution. This bond is required in consideration of the release of
the goods.

Average guarantee Statement signed by insurance underwriters guaranteeing to the

shipowner that they will pay the contribution due from cargo interests
to general average and/or salvage as well as any special charges
determined by the average adjuster. Without this guarantee, cargo
interests are required to pay the shipowner an appropriate sum of
money in consideration of the release of the goods.

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Barratry Negligence or fraud on the part of the master or crew of a ship

resulting in a loss to the owners of the ship or her cargo.

Break bulk (to) To commence to discharge a bulk cargo. It is sometimes a condition

of carriage that freight, or some percentage of it, becomes payable
on breaking bulk.

Breakbulk Relating to cargo lifted on and off ships one piece or bundle at a time
by means of cranes or derricks, as opposed to cargo shipped on
trailers or in shipping containers. Such goods may be described as
breakbulk cargo; the ships which carry them are sometimes referred
to as breakbulk ships which, if operated on a regular basis between
advertised ports, provide a breakbulk service. The term breakbulk is
often used to denote the opposite of containerised. Also referred to
as conventional.

Bulk cargo Homogeneous unpacked dry cargo such as grain, iron ore or coal.
Any commodity shipped in this way is said to be in bulk.

B.V. Bureau Veritas French ship classification society.

Cabotage (1) Coasting trade, that is, the movement of cargoes by ship between
ports of the same coast or between ports of the same country.

Cabotage (2) Reservation of the coasting trade of a country to ships operating

under the flag of that country.

Captain Title given to the master of a merchant ship.

Cargo sweat Condensation which occurs when a ship sails from a cool to a
relatively warm climate. The temperature of the cargo rises at a
slower rate than that of the ship’s environment and when the surface
of the cargo is colder than the dew point of the surrounding air,
moisture condenses directly on to the cargo. Opinions differ as to
whether cargo should be ventilated when meeting these climatic
conditions, so as to avoid damage caused by cargo sweat

Cargo tracer Message sent by a ship’s agent at one of the discharge ports on a
ship’s itinerary to the agents at all of the other discharge ports
to determine whether cargo, which was shown on the ship’s
manifest as being for discharge at that port but was not discharged
there, had been landed in error at one of the other ports. A
similar message may be sent to the agent at the loading port to
ascertain whether the cargo was not, in fact, loaded. Also known
simply as a tracer.

Cargoworthiness Fitness of a ship to carry a particular cargo.

Cargoworthy Said of a ship, being fit to carry a particular cargo.

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 C.K.D. Completely Knocked down q.v.

Claim adjuster Employee of an insurance company whose job is to determine

whether, or to what extent, claims presented by policyholders are
covered by the policies. The claims adjuster also has the task of
recovering amounts paid out from carriers and other parties
responsible.

Class Category in a classification register denoting the type of ship and the
classification society with which she is classed. Probably the best
known class is 100A1 used by Lloyd’s Register of Shipping and
other classification societies. The assigning of a class depends on
the ship being constructed and maintained in accordance with the
classification society’s rules.

Classification Certificate issued by a classification society which states the class

certificate attributed to a ship.

Classification Society Organisation whose main function is to carry out surveys of ships
whilst being built and at regular intervals after construction, its purpose
being to set and maintain standerds of construction and upkeep for
ships and their equipment. Each classification society has a set of
rules governing the requirements for surveys and, for a ship to
maintain her class, she must comply with these rules. In most
countries, it is not obligatory for a shipowner to have his ship classed
but there would be considerable difficulties in trading if the ship were
not, since it is often a condition of the ship’s insurance and a
requirment of most charterers and shippers. Classification societies
also inspect and approve the construction of shipping containers.
These organisations exist in most of the principal maritime countries.

Classification survey Survey carried out by a surveyor of a classification society, either a

periodical survey or one required, for example, after a collision, to
ensure that the ship meets the minimum standerds for continued
trading set by the classification society.

Clause paramount Clause in a bill of lading or charter-party which stipulates that the
contract of carriage is governed by the Hague Rules or Hague-Visby
Rules or the enactment of these rules of the country having jurisdiction
over the contract.

Clean receipt Receipt given by anyone receiving cargo into his care or possession
bearing no clausing or notation indicating loss or damage, thus
indicating that the goods were received in apparent good order and
condition.

C.M.R. International convention on the carriage of goods by road. It sets out

the conditions of carriage for the international movement of goods by
road and the liabilities of the carriers.

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Combined transport Document evidencing a contract between a shipper and a shipping

bill of lading or line for the carriage of goods on a voyage involving at least two legs.
combined transport Normally, the issuer of this document is responsible for the goods
document [CTD] from the time they are received into his care until the time they are
delivered at destination.

Common carrier Person or company advertising a service involving the carriage of

goods to and from ports on a particular route. A common carrier is
required by law to accept all cargoes offered, expect dangerous
ones, and to make a resonable charge for their carriage.

Condensation Turning of water vapour into liquid which occurs when a ship
sails from a cool to a relatively warm climate (see cargo sweat) or
vice versa (see ship’s sweat). Often, the expert use of ventilation is
required to prevent condensation which can cause serious damage
to cargoes.

Conference Two or more shipping lines operating a service in common between

designated geographical areas.The lines agree a set of freight
rates and any special rates for shippers and each line charges the
same as the others. the ships used are of types suitable for
the trade. Unlike tramp shipping where freight rates are a function
of daily supply and demand, conference rates are relatively
stable: base rates are altered by means of a general rate increase
which in many cases is once a year. Lines in a conference are
governed by the rules of membership which may include rights to
load or discharge at certain ports and pooling of cargo. Also referred
to as a freight conference or a shipping conference or a liner
conference.

Consign (to) To place goods in the care of a carrier for delivery to a person known
as the consignee.

Consignee Person to whom goods are to be delivered by the carrier at the place
of destination.

Consignment note Document, prepared by the shipper, which contains detail of the
consignment to be carried to the port of loading. It is signed by the
inland carrier as proof of receipt into his care.

Consignor Person who places goods in the care of a carrier for delivery to a
person known as the consignee.

Consolidation The grouping together of several compatible consignments into a full

container load. Also referred to as groupage.

Constructive total loss Loss or damage to goods or to a ship which is such that the cost of
repair or recovery would exceed their value when repaired or
recovered. Abbreviated to c.t.l.

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 Container Box, designed to enable goods to be sent from door to door without
the contents being handled. There are several standerd sizes used
worldwide such that the same container may be transferred from one
mode of transport to other modes in the course of a single voyage.
Indeed, specially designed road and rail vehicles and special ships
are frequently used to carry containers. The most common sizes of
containers are the 20 footer, which measures about 20 feet (6.1
metres) long by 8 feet (2.4 metres) wide by 8 feet 6 inches (2.6
metres) high and the 40 footer, measuring about 40 feet (12.2 metres)
long and having the same width and height as the 20 footer. Typically
made of steel, there are containers of several types whose use
depends principally on the nature of the cargo, for example dry bulk,
liquid or perishable cargoes.

Contamination Tainting of cargo by virtue of its being stowed in close proximity to a

(of cargo) product with a strong odour or in a compartment which previously
contained such a product and which has not been cleaned. Some
commodities are susceptible to being damaged in this way; one
example is tea.

Contributory value Value of property at the end of a voyage in which there has been a
general average loss. This forms the basis of the contribution by
each of the parties to the voyage to make good the loss.

Dangerous goods Cargo which is potentially hazardous such as inflammable or toxic

goods. Such cargo must be notified by the shipper to the shipping
company as being dangerous and is usually carried on deck.

Deadweight or Difference between a ship’s loaded and light displacements, consisting

deadweight all told of the total weight of cargo, fuel, fresh water, stores and crew which
a ship can carry when immersed to a particular load line, normally
her summer loadline. the deadweight is expressed in tons or tonnes.
Abbreviated to d.w.t. or d.w.a.t. Also reffered to as total deadweight.

Deadweight cargo Cargo one tonne of which measures one cubic metre or less. Freight
on deadweight cargo is generally payable on the weight, that is, per
tonne or per ton. Also reffered to as weight cargo.

Deadweight cargo Weight of cargo which a ship is able to carry when immersed to the
capacity or deadweight appropriate load line, expressed in tonnes or tons. Abbreviated to
carrying capacity d.w.c.c.

Deck cargo Cargo carried on, and secured to, the open deck of a ship. Cargoes
traditionally carried on deck include dangerous goods, timber and
goods which are too large for the hatchways. Considerations needed
when contemplating carrying cargo on deck are; the strength of the
deck, the strength of the hatch covers if cargo is stowed on top of
them, the safety of the crew and their ability to go from one part of
the ship to another, the need to ensure that cargo is not stacked so
high as to impede navigation. Deck cargoes are carried at the risk of
the charterer, shipper or bill of lading holder, as the case may be.

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Declare general To declare to all parties involved in a voyage that an intentional act
average (to) or sacrifice has been carried out in order to protect the voyage from
a real peril. This declaration is made by the shipowner who appoints
a general average adjuster to determine each party’s contribution to
the loss.

Destuff (to) To unload a shipping container.

Det Norske Veritas Norwegian ship classification society. Abbreviated to D.N.V. for the
functions of a ship classification society, see Classification society.

Deviation Departure by a ship from the agreed route or normal trade route.

Dunnage Materials of various types, often timber or matting, placed among the
cargo for separation, and hence protection from damage, for ventilation
and, in the case of certain cargoes, to provide a space in which the
forks of a fork-lift truck may be inserted.

E.t.a. Estimated time of arrival.

E.t.c. Estimated time of completion.

E.t.d. Estimated time of departure.

E.t.r. Estimated time of readiness.

E.t.s. Estimated time of sailing.

Ex From. This term is used with a location, for example, ex works, ex quay or
ex ship, to identify the point where responsibility passes from one
party to another.

Exceptions clause Clause in a charter-party or bill of lading which exonerates the carrying
ship from responsibility for damage to cargo from certain named
causes such as an act of God or negligence of the master.

Excess landing Cargo landed in excess of the quantity on the ship’s manifest.

Extension to suit time An extension by the carrier of the period within which cargo interests
must bring a lawsuit for any claim which they may have under the
contract of carriage. This extension may be granted at the request of
cargo interests when the claim has not been fully quantified and
provides the parties with further time to settle the claim out of court.

First class ship Ship to which the highest class has been given by a classification
society in accordance with its rules concerning construction and
maintenance.

Flag Nationality of a ship, that is, the country in which the ship is registered.

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 Flag of convenience Registration of a ship in a country whose tax on the profits of trading
ships is low or whose requirments concerning manning or
maintenance are not stringent. Sometimes referred to as a flag of
necessity.

Flotsam Floating wreckage from a shipwreck.

Force majeur Circumstance which is beyond the control of one of the parties to a
contract and which may, according to the terms and conditions, relieve
that party of liability for failing to execute the contract.

Forty foot Unit of measurement equivalent to one of 40 foot container, normally

equivalent unit abbreviated to f.e.u. Thus two 20 foot containers comprise an f.e.u.
This measurement is used to quantify, for example, the container
capicity of a ship, the number of container carried on a particular
voyage or over a period of time, or it may be the unit on which
freight is based.

Forwarding agent Person or company who arranges the carriage of goods and the
or forwarder associated formalities on behalf of a shipper. The duties of a forwarding
agent include booking space on a ship, providing all the necessary
documentation and arranging Customs clearance. Also referred to as
a freight forworder.

Full container load Quantity of cargo which fills a shipping container to capicity, either by
weight or cubic measurement. Abbreviated to f.c.l.

General average Intentional act or sacrifice which is carried out during a voyage to
preserve the venture from a real peril.The party who has suffered a
loss as a result is reimbursed by all the other parties to the marine
adventure, each paying a proportion of the amount of the loss
according to the value of their interest. Abbreviated to g.a.

General average act Intentional act, authorised by the master of ship, which is intended to
preserve the voyage from a real peril and which results in a general
average loss. Such an act might be the putting out of a fire in a hold
which causes cargo to be damaged by water.

General average Clause in a bill of lading or charter-party which stipulates in what

clause country or place and by what rules, often the York-Antwerp Rules,
general average is to be adjusted.

General average Monetary contribution to a party suffering a general average loss

contribution from each of the parties to the voyage. The amount of each party’s
contribution is based on the proportion which that party’s property
bears to the total value of all the property in the voyage.

General average Intentional act, authorised by the master of a ship, which is intended
sacrifice to preserve the voyage from a real peril and which results in a
general average loss. Such an act might be the jettison of cargo to
lighten a ship which is aground and in danger of breaking up if not
refloated.

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General cargo Cargo consisting of goods unpacked or packed, for example in a

cartons, crates, bags or bales, often palletised, but specifically not
cargo shiped in bulk, on trailers or in shipping containers. A general
cargo ship is one designed to carry such cargo, often having several
decks because of the number of ports served and the range of
products carried.

Germanischer Lloyd German ship classification society. For the functions of a ship
classification society, see Classification society.

Gross tonnage A figure representing the total of all the enclosed spaces within a
ship arrived at by means of a formula which has as its basis the
volume measured in cubic metres. Abbreviated to g.t. The gross
tonnage has replaced the gross registered tonnage.

House bill of lading Bill of lading issued by a forwarding agent to a shipper covering a
consignment which the forwarding agent has grouped with
consignments from other shipper to the same destination. The
forwarding agent receives one groupage bill of lading from the carrier
which covers all the consignments.

Hygroscopic cargo Cargo which is capable of absorbing moisture, for example from the
atmosphere, and can accordingly suffer a change of weight during
an ocean passage.

I.A.C.S. International Association of Classification Societies.

I.C.D. Inland container depot.

I.M.O. International Maritime Organization.

Incoterms Rules governing the interpretation of terms used in international trade,

published by the International Chamber of Commerce. Against each
of the terms of sale, such as f.o.b., c.i.f. and delivered, are defined
the duties of buyer and seller. These rules are incorporated into a
contract of sale by agreement of the two parties.

International Association of major classification societies whose principal aim is

Association of the improvement of standerds of safety at sea. Abbreviated to I.A.C.S.
Classification
Societies

Jetsam Cargo jettisoned from a ship, that is, thrown overboard in order to
lighten the ship, and washed ashore.

Jettison The throwing overboard of cargo to lighten a ship so as to save the

ship, her crew and remaining cargo from a peril. This action is often
allowed as a general average sacrifice.

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 Knot Measure of speed of a ship, equal to one nautical mile (6,080 feet or
1,852 metres) per hour.

Less than container Consignment of cargo which is insuffcient to fill a shipping container.
load It is grouped with other consignments for the same destination in a
container at a container freight station. Abbreviated to l.c.l.

Limitation of liability Maximum sum of money payable by a carrier to a shipper or bill of

lading holder for any damage or loss to the cargo for which the
carrier is liable under the contract of carriage. The basis of the
limitation may be per piece or package or per tonne or per container
according to the particular contract. The amount of the limitation is
determined by agreement of the two parties or by law.

Liner or liner ship Cargo-carring ship which is operated between scheduled, advertised
ports of loading and discharge on a regular basis.

Liner bill of lading Bill of lading containing the terms and conditions of carriage of a
shipping line.

Lloyd’s Register British ship classification society. For the function of a ship
of Shipping classification society, see Classification society.

Manifest Document Containing a full list of a ship’s cargo, extracted from the bills of
lading. A copy known as the outward manifest, is lodged with the
Customs authorities at the port of loading. A further copy, known as
the inward manifest, is similarly lodged at the discharge port, with
one copy going to the ship’s agent so that the unloading of the ship
may be planned in advance.

Marks and numbers Marking distinctively displayed on goods being shipped, or on

their packaging, for case of identification. These include the port
or place of destination and a package number, if there is more
than one.

Mate’s receipt Receipt, made out by the first officer, stating the quantity and
condition of goods loaded on board the ship. This document is given
to the shipper and later exchanged for the bill of lading.

Net tonnage A figure representing the total of all the enclosed spaces within a
ship available for cargo arrived at by means of a formula which has
as its basis the volume measured in cubic metres. Abbreviated to n.t.
The net tonnage has replaced the net register tonnage.

Net weight Weight of the goods only, not including their packaging.

Nippon Kaiji Kyokai Japanese ship classification society. Abbreviated to n.k.k.

For the definition of a ship classification society, see Classification
society.

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Non-vessel owning Person or company, often a forwarding agent, who does not own or
common carrier or operate the carrying ship but who contracts with a shipping line for
non-vssel operating the carriage of the goods of third parties to whom he normally issues
common carrier a house bill of lading. Abbreviated to n.v.o.c. or n.v.o.

Outturn (to) Said of cargo, to be discharged from a ship. This term is normally
qualified by the condition or quantity of the cargo, that is, whether it
is damaged or whether the quantity is greater or less than the quantity
on the ship’s manifest.

Packing list Document detailing the contents of a case or crate, or itemising a

consignment.

Pallet Flat tray, generally made of wood but occasionally of steel or other
materials, on which goods, particularly those in boxes, cartons or
bags, can be stacked. Its purpose is to facilitate the movement of
such goods, mainly by the use of fork-lift trucks.

Particular average Marine insurance term denoting a partial loss.

Port or port side Left side of a ship when viewed facing forwards.

Port of refuge Port not on a ship’s itinerary, which she calls at because of some
unforeseen hazard at sea and where she may undergo repairs, refuel
or resecure cargo to enable her to continue the voyage.

Port of registry Place where a ship is registered with the authorities, thus establishing
her nationality. The name of the port is marked on the stern of the ship.

Protest Declaration Made before a notary public by the master of a ship on arrival in
port, that the ship has encountered circumstances beyond his control,
such as heavy weather, which may have caused damage to the ship
or her cargo. This declaration may be necessary, for example, to
avoid liability for damage to cargo.

Registration Recording of the ownership of a ship with the authorities of a country.

Details of the owner or owners are submitted, as are plans and
details of the ship, including the measurements and tonnages. The
name of the ship and her port of registry must be painted on the
ship. Registration of a ship provided her with a nationality and makes
her subject to the laws of the country in which she is registered.

R.I. Registro Italiano Italian ship classification society. For the functions of ship classification
Navale society, see Classification society.

Said to contain Term in a bill of lading signifying that the master and carrier are
unaware of the nature or quantity of the contents of a carton, crate or
bundle and are relying on the description furnished by the shipper.
Abbreviated to s.t.c.

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 Salvage or salvage Remuneration paid to a person who saves a ship, her equipment or
charges cargo from loss or damage at sea. The amount is assessed by a
court of law according to the value of the salved property, the degree
of danger to which it was exposed, the risks borne by the salvor and
the degree of skill exercised in saving the property. All the parties
contribute in proportion to the value of their salved property.

Salvage (service) Action taken to save a ship, her equipment or cargo from loss or
damage at sea.

Salvage Property saved from loss or damage at sea.

Salvage agreement Written agreement signed by the master or owner of a salving ship
and the master or owner of a ship in need of salvage assistance,
containing their names, the amount of salvage payable and a provision
that the sevice is provided on a no cure no pay basis, that is, that
salvage is not payable unless the property is salved in accordance
with the agreement.

Salvor Person performing a salvage operation.

Seaworthiness Fitness of a ship for a particular voyage with a particular cargo. The
main requirments for seaworthiness are that a ship has sufficient
crew, stores and fuel, that machinery and equipment are in good
repair and that the ship is fit to receive and carry the cargo.

Seaworthy Said of a ship, to be fit for a particular voyage with a particular cargo.
See also Seaworthiness above.

Secure (to) To prevent a cargo from shifting in transit, usually by lashing it to the
ship or to the container or vehicle by means of wires, chains ropes or
straps.

Shrink-wrapping Method of packing goods involving wrapping them in a material which

is then heated so that it shrinks and holds the goods securely.

Shut out (to) To fail to take cargo on a ship. Situations where cargo is left behind
at the loading port occur mainly when a shipping line has insufficient
space on board its ship for the volume of booking taken, or when
cargo arrives after the ship has completed loading. Also referred to
as to short ship.

Sling Piece of rope whose ends are joined together so that it forms a loop.
It is slung around cargoes in bags or bales, for example, so that
these can be lifted. Also known as a rope sling. Normally, slings are
removed from the cargo after the lift has been completed but in
some cases they are left in position after loading and during transit
so as to simplify and speed up discharging.

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Starboard or The right side of a ship when viewed facing forwards.

starboard side

Statement of facts Statement, prepared by the ship’s agent at the loading and discharging
ports, which shows the dates and times of arrival of the ship and the
commencement and completion of loading and discharging. It details
the quantity of cargo loaded or discharged each day, the hours worked
and the hours stopped with the reasons for the stoppages, such as
bad weather, a strike or breakdown of equipment. Sometimes referred
to as a port log.

Stevedore Person running a business whose functions are to load, stow and
unload ships. Often used synonymously with docker.

Stowage The placing of goods in a ship in such a way as to ensure, firstly, the
safety and stability of the ship not only on a sea or ocean passage
but also in between ports when parts of the cargo have been loaded
or discharged, as the case may be; secondly, the safety of the
individual consignments which should not be damaged or
contaminated by being in proximity to goods with which they are not
compatible; thirdly, the ability to unload goods at their ports of
discharge without having to move goods destined for other ports.

Taint Trace of a substance found in a cargo which contaminates that cargo

and is likely to make it unfit for its original purpose. Some cargoes,
like citrus fruit, have a tendency to taint others while some, like tea,
are more susceptible than others to being tained themselves.

Tare or tare weight Weight of wrapping or packing. This is added to the net weight of a
cargo to determine its gross weight. In the case of shipping containers,
the tare represents the weight of the container without its contents.

T.b.a. To be advised.

Time bar Expiry of the period within which a lawsuit must be brought or
arbitration commenced against a carrier for any claim under a contract
og carriage. Normally, a claim which is the subject of a time bar will
not succeed. This period is agreed in the contract of carriage and
can be extended by agreement of the two parties.

Transhipment Transfer of goods from one ship to another. This transfer may be
direct or it may be necessary to discharge the goods on to the quey
prior to loading them on to the second ship, or on to vehicles should
the second ship be loading at a different berth. Alternative spellings
are transshipment and trans-shipment.

Transit time Time taken for goods to be carried from one place to another.

Turn round time Time between a ship arriving in port and sailing.

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 Twenty foot Unit of measurement equivalent to one 20 foot shipping container,
equivalent unit normally abbreviated to t.e.u. Thus a 40 foot container is equal to two
t.e.u.s. This measurement is used to quantify, for example, the
container capacity of a ship, the number of containers on a particular
voyage or over a period of time, or it may be the unit on which freight
is payable.

Ullage Height of the space in a cargo tank above the surface of the liquid
cargo. This distance is used to calculate the volume of liquid in the
tank.

Under deck shipment Carriage of goods within the hold of a ship, as distinct from their
carriage on deck. Under deck shipment affords greater protection
against the elements and is often a requirment of purchasers of
goods, particularly when payment is by letter of credit.

Unseaworthiness Unfitness of a ship for a particular voyage with a particular cargo.

This could be, for example, as a result of insufficiency of crew, stores
or fuel, machinery or equipment not being in good repair or unfitness
to receive or carry the cargo.

Wharf Structure built alongside the water where ships berth for loading or
discharging goods.

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