Boat insurance
The safe conduct of the goods from the time it leaves the exporter's godown and till it reaches the warehouse of the importer is what all parties in the transaction pray for. It depends upon the safety of the goods during the voyage as well as the safety of the vessel that carries the goods. The loss of or damage to goods during the voyage would affect any one or more parties involved in the transaction, viz; the importer, the exporter, the shipping company and the bank which has paid against the documents covering the goods.
Marine insurance offers the desires cover against loss of or damage to the goods during the transit. It allows a free flow of international trade by absorbing an important uncertainty connected with it. Marine insurance may cover the ship or the goods. Our interest is to study in some detail the marine cargo insurance. The consideration for which a marine insurance contract is undertaken is the premium.
II. NATURE OF MARINE CARGO INSURANCE
1. Parties: The proposer
under the policy may be the shipper or the importer. The proposer may approach the insurance
company directly or through an agent or a broker because they know well the
intricacies of marine insurance business.
The insurers in marine insurance are generally called underwriters. The person who is to receive payment in case
of loss or damage is the assured.
2. Insurable interest: A person is having an insurable interest if he is interested in the safe arrival of the cargo. Marine insurance provides that 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 affected. The chipper/exporter has the insurable interest at a later date, i.e., when the goods are boarded on the ship. Thus either the seller or the buyer may effect the insurance. If the sale contract is on Cost, insurance and freight basis, the seller has to arrange for insurance. If the contract is on cost and freight or free on board basis, it is for the buyer to arrange for insurance.
3. Utmost good faith: A contract of insurance is a contract of ?uberrimae fidei?, i.e., one of the utmost good faith. If either party to the contract has concealed any material fact, the contract can be avoided by the other party.
4. Indemnity; The contract of marine insurance is a contract of indemnity.
5. Assignment: A marine policy can be transferred by assignment unless contains terms expressly prohibiting assignment. Since marine cargo insurance does not normally prohibit assignment, it can be assigned. The assignment can be made either before or after a loss. The general practice is to get the policy assigned to bank's name by an endorsement thereon.
III. MARINE INSURANCE POLICY
1. Contents of
policy: The marine insurance act provides that a contract of marine insurance
shall not be admitted in evidence unless it is embodied in a marine policy in
accordance with the act. Marine
insurance policy may be issued in the form given in the schedule to the act,
which follows the standard format of the Lloyds of London. The policy must specify the following:
i. The name of the assured or of some person who affects the insurance on his behalf.
ii. The subject matter insured and risk insured against.
iii. The voyage or period of time or both, as the case may be covered by the insurance,
iv. The sum or sums insured, and
v. The name or names of the insurer or insurers. The marine policy may be signed by or on behalf of two or more insurers.2. Voyage and time policies: A voyage policy covers the goods from the commencement and till the completion of a particular voyage. A time policy covers the risk for a specified period mentioned in the policy. A contract for both voyage and time may be included in the same policy. A time policy can be issued for a maximum period of 12 months.
3. Valued and unvalued policies: A policy may be either valued or unvalued. In a valued policy the value of goods insured is agreed between the assured and the insurer. An unvalued policy is a policy which does not specify the value of the goods, but subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained.
4. Specific and open policies: A policy issued against specific shipment of goods is known as specific policy. This has to be on a stamped document. The policy should be issued in the standard format. Exporters having continuous shipment may opt for an open policy. Under this arrangement a policy covering the expected shipments for a period of, say, one year, is taken. As and when shipment is made, they are declared to the insurer and be a stamped document. For the declaration of shipment made under the insurance separate certificates of insurance are issued. The certificates of insurance are unstamped as the original policy is stamped. A variant of the practice is the open cover. An open cover is similar to an open policy, but is not a legal document and not executed on stamped paper. Specific policies or certificates of insurance issued under the open cover are stamped.
IV. CLAIM PROCEDURE:
In the event of loss or damage to the goods giving risks to a claim under the policy the assured should do the following:
i. Give a notice of loss to the insurance company immediately.
ii. Take all steps to minimize the loss, preserve all rights against third parties.
iii. Arrange for survey by ship surveyors if the packages show any outward sign of damage of loss
iv. Arrange for insurance survey by the insurance company in other cases
v. Prefer claims with shipping company and other parties were required.The time limit for filing suit against the shipping companies is one year from the date of discharge.The time following documents should be submitted to the insurance company while preferring a claim:i. Original insurance policy.
ii Original invoice and packing list.
iii. Copy of bill of lading.
iv. Survey report/short land/non-delivery/landed but missing certificates.
v. Copies of correspondence exchange with carriers and
vi. Claim bill
.V. INVOICES
1. Commercial invoice: A commercial invoice is a statement containing full details of goods shipped.
2. Consular invoice: It is a special type of invoice, usually in a prescribed form, describing the details of the goods shipped and sworn as being correct in all respects by the exporter before the consul of the importing country stationed in the exporting country. The consul of the importing country then certifies the invoice. A consular invoice may also contain a declaration about the place of origin of goods. It would serve the importer in getting the duties assessed and goods released by the customs without much delay. Any false declaration in the consular invoice involves heavy penalty.
3. Legalized invoice: The purpose of a legalized invoice is
similar to that of a consular invoice.
The difference is that instead of a specific format of invoice, the
ordinary commercial invoice is presented to the Embassy or consulate for
certification. Certain countries in
4. Certified invoice: A commercial invoice becomes a certified invoice when it contains certain certification by the exporter. The certification may state that (i) the goods are of particular country of origin; or (ii) the goods are in conformity with a specific contract or proforma; or (iii) any other stipulation of the importer has been fulfilled.
5. Proforma invoice; It is essential to make a distinction between a commercial invoice and a proforma invoice. A proforma invoice contains all the particulars in a commercial invoice. It is distinguished from the latter by the words proforma invoice appearing on it. A proforma invoice does not evidence a sale. The proforma invoice may be required in the following cases:
i) It may be the basis on which the contract of sale is concluded later.
ii) When goods are sent on consignment basis, a proforma invoice may be used since the goods are sent only to an agent of the seller. It serves as guide as to the price at which the agent should sell the goods.
iii) It may be used to support a tender for sale contract.
Details of the goods in the commercial invoice should agree with that in the proforma invoice.
6. Other invoices: Countries like
VI. CERTIFICATES AND OTHER DOCUMENTS
1. Certificate of origin: A certificate of origin declares the place of actual manufacture or growth of the goods. A country may place restrictions on imports from certain countries.
2. Packing list: The list would contain the details of goods containing an individual package. This helps in identifying the contents of specified packages and thus may facilitate assessment by the customs.
3 .Weight note or certificate: This gives the weight of individual items shipped. If the goods are shipped in bulk, like food grains, the list may cover the entire shipment. It is generally issued by a public agency. Since the weight certificates are issued by an independent agency, the importer is assured that goods of proper weight have been shipped.
4. Quality or inspection certificate: This may be issued by the supplier or by an independent inspection agency that the goods were examined and found to be as required under the contract of sale.
5. Analysis certificate: This may be issued in the case of chemicals, drugs, etc., showing the results of analysis made of their ingredients.
6. Health certificates; Where live animals are exported, they may certify that the animals are of good health; if food grains are exported, they are fir for human consumption; the packing materials are not a health hazard.
7. Blacklist certificate: A country at war with or having a strained political relationship with another country may require a certificate that: (i) the goods are not of the origin of the particular country, or (ii) the parties involved in the transaction are not blacklisted, or (iii) the transport vessel will not touch the other country.
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