Clauses to Consider While Buying Marine Insurance
The marine incidents are unforeseeable. It may occur at any moment. Therefore, the exporter and business must subscribe to marine insurance policies in order to evade the losses.
However, the exporter must note that every contract includes several clauses which are subject to abide by the parties. A marine policy is also a contract between the insurer and the insured. Hence, the clause contained in the agreement shall be enforceable.
Let us discuss the clauses to consider while buying marine insurance.
Perils Coverage
The perils or risks in the marine policy include the following.
Maritime Risks
The maritime perils include two events created by god and humans. The God events include earthquakes, storms, lightning, volcanic eruption, collisions, etc. While man-made events include, fire, piracy, vandalism, smoke, etc.
Extraneous Perils
These risks commonly occur due to faults in loading, unloading or carrying of the goods.
War
The insurance policy covers a war clause under the risk section. The war includes revolution, civil war, etc. Nonetheless, the seizure of goods by customs officers shall not be covered under such a clause.
Strike
It includes damages or loss caused to the ship due to strikes, riots, or labour disturbances on the ship. Further, it also includes terrorist activities.
Institute Cargo Clause
The institute cargo is an important clause to consider while buying a marine insurance policy.
These clauses are:
Institute Cargo Clause A
It is also an 'all risks' clause since it covers maximum risks. The insured may obtain the widest coverage upon including clause A. As a result, it is the most expensive clause in marine policy.
Institute Cargo Clause B
The insured is required to pay a moderate sum in order to add clause B to the insurance contract. The coverage under clause A is restrictive to some risks. As a result, the insured obtains claims for partial cargo.
Institute Cargo Clause C
It is the most restrictive clause among clauses A, B, and C. It covers limited risks. The main risks covered by this clause are:
- Collision
- General Average
- Fire or explosion
- Average sacrifice
At and From Clause
The ‘at and from clause’ is essential clause to consider while buying a marine insurance policy. It generally covers hull and freight insurance. The risk is covered when it starts. For example, if the clause mentions 'at and from Chennai', the policy shall cover the risk from the time the ship is present at the Chennai port and departure from the port.
Warehouse to Warehouse Clause
It ensures the safe arrival of products from one warehouse to another warehouse. In other words, this clause covers the risks at land along with the risks involved at sea. For example, in order to export the goods, the insured called it from the warehouse to bring it to the port. Further, while unloading the goods, the shipper sends them to keep in the warehouse.
Jettison
This clause is applied in an emergency. Under this clause, the insured throw some goods present in the ship in order to lighten the weight and avoid the risk of sinking. The master of the ship is required to determine the item to be unloaded from the ship. However, this clause is only applicable if the insured succeeds in his activities.
Conclusion
There are several other clauses to consider while buying marine insurance policies. These clauses include the memorandum clause, valuation clause and others. An exporter must consider such clauses before subscribing to a marine insurance policy.
