By taking out insurance on your goods you can be safe in the knowledge that, whilst the goods are being transported with the highest degree of care possible, should something unexpected happen, you will be reimbursed for your losses according to the terms of the policy. The insurance is structured to provide cover against Â“All RisksÂ” of loss or damage to the cargo while it is in the ordinary course of transit, but is subject to a number of standard exclusions.
Insurance is a complex subject. The following frequently asked questions and answers are designed to help simplify and clarify your insurance issues.
When does cover start?
Cover starts from the time the goods leave the warehouse or place of storage, including whilst being loaded, whether the carriage is by sea or air. In cases where specific Institute Cargo and Commodity Clauses apply (for example, Frozen Food Clauses and Meat Clauses), attachment and expiry dates may differ. It is important that the relevant Institute and Commodity Clause is consulted to determine the definition in respect of the commodity you are shipping.
When does cover end?
The cover ends when the cargo is delivered to the ConsigneesÂ’ or other final warehouse or place of storage at the destination named in the Certificate OR on the expiry of 60 days after completion of discharge over side of the goods from the ocean vessel. If the cargo is being shipped by air, cover ceases on the expiry of 30 days after discharge from the aircraft at the final place of discharge. Where specific Institute Cargo and Commodity Clauses apply (for example, Frozen Food Clauses and Meat Clauses), attachment and expiry dates may differ. It is important that the relevant Institute and Commodity Clause is consulted to determine the definition in respect of the commodity you are shipping.
Is cover provided globally?
Yes. It does not matter where the cargo shipment starts and ends, cover will be available for the entire carriage as long as it is correctly declared and premium has been paid thereon. However, in certain jurisdictions where UN sanctions apply there may be restrictions.
What types of cargo can be covered?
All types of cargo can be covered.
What types of transit can be covered?
The cargo can be insured whilst it is being shipped on any type of conveyance including ships, aircraft, barges and inland transportation methods such as trucks and trains.
What is the Sum Insured?
The Sum Insured is the maximum liability that the Insurer will accept under the insurance policy. It should be declared as the total value of:
- The actual value of the item(s) being shipped;
- The shipping cost of the item(s); and
- The cost of the Insurance.
This total value is usually then increased by 10% to include the InsuredÂ’s hidden costs and a proportion of their profit. The Sum Insured is usually expressed as CIF +10% (Cost, Insurance and Freight).
If the property insured is declared for less than the total value of all of the above, then it will be deemed to be Â“under-insuredÂ”. In the event of a loss, the amount that can be recovered under the policy may be reduced by the same proportion that the under-insurance bears to the correct insured value. It is important to declare the correct Sum Insured to avoid under-insurance.
What shipping damage or loss is not covered?
You should check your policy carefully to review all exclusions. Generally we will not pay for any loss or damage caused by delay, loss of use, loss of market, or insufficient or defective packaging, but there may be specific exclusions that apply to either the commodity you are shipping or the region in which you are shipping it.
What should be disclosed at the time the cover is purchased?
The Insured needs to disclose everything that may adversely affect the risk. If you are in doubt about whether the information you have is important or not, then you should include it. The information which should be disclosed at the time the cover is purchased includes, but is not limited to:
1) the voyage;
2) the type of cargo;
3) whether that cargo is dangerous in any way;
4) how it is packed;
5) whether there is any pre-existing damage to the cargo.
What is a Certificate?
A Certificate will be issued to evidence the purchase of the insurance cover and the terms thereof. The Certificate issued is subject to all of the clauses, conditions and warranties of the main policy.
The type or age of a ship is important when fixing the rate of premium. However, the names of ships carrying goods are not usually known when fixing premium rates for a marine cargo open policy. This clause provides that the pre-agreed premium rate for the marine open policy refers to goods in transit in ships under a certain age and up to a certain Standard/Class. An additional premium may be payable for transits on other ships.
What about War and Strikes Risks?
These are covered as part of the general terms and conditions of the insurance for all shipments.