En­sur­ing in­sur­ance for cargo @ sea

S Vish­wanathan, Head- Com­mer­cial Lines Un­der­writ­ing, SBI Gen­eral In­sur­ance, shares the cru­cial points while opt­ing for a marine cargo in­sur­ance. In trial sit­u­a­tions, the pol­icy acts like a cush­ion for cargo own­ers to com­bat un­seen loss.

Cargo Talk - - Expert Speak -

Why should one go for cargo in­sur­ance?

There are four to five rea­sons for buy­ing cargo in­sur­ance. First and fore­most, it arises from the sales con­tract that ne­ces­si­tates pur­chas­ing marine in­sur­ance to pro­tect the buyer or at times a lenders in­ter­est, es­pe­cially when goods are sold un­der CIF/CIP. Sec­ond, it pro­tects the seller from mon­e­tary loss in case a dam­age oc­curs to the cargo shipped when the buyer has not paid for the goods. Sim­i­larly, it pro­tects a buyer who has fully paid or made part pay­ment for the goods pur­chased when the cargo meets with ac­ci­den­tal dam­age. Third, the lim­ited re­course avail­able from the car­ri­ers of goods as they are not re­spon­si­ble for many of the com­mon causes of loss that can dam­age goods in tran­sit. Fur­ther the car­rier’s li­a­bil­ity is lim­ited ei­ther by law or by con­tract through the bill of lad­ing. Hence, the amount re­cov­er­able is minis­cule and only marine cargo in­sur­ance pro­vides a proper so­lu­tion. Next, in­stead of depend­ing on a buyer’s in­sur­ance cover or a sell­ers’ in­sur­ance cover, if the in­ter­ested party pur­chases cargo in­sur­ance on their own, it would help re­al­i­sa­tion of an in­sur­able claim from a known in­sur­ance car­rier ef­fec­tively. Fi­nally, there are sit­u­a­tions where the cargo owner is re­quired to con­trib­ute for any ex­penses or losses aris­ing out of sav­ing a com­mon ad­ven­ture. In such sit­u­a­tions, the in­sur­ance pol­icy comes in handy to pro­tect the cargo own­ers from such fi­nan­cial pay­ments.

High­light the to-do’s while opt­ing for an in­sur­ance for cargo mov­ing by sea? The marine cargo pric­ing is in­flu­enced by the fol­low­ing fac­tors:

Age of the ves­sel and flag Pack­ing and method of tran­sit, i.e., full con­tainer /bulk break Length of voy­age and time of year Any con­tin­gen­cies from buyer/ seller an­gle


Ap­pro­pri­ate pack­ag­ing based on prod­uct spe­cific re­quire­ments Prefer­ably to be con­tainer­ised and fillers should be mois­ture re­sis­tant Bal­ance the weight of the cargo in a con­tainer with proper wedges/brac­ings Us­age of straps, seals, shrink wrap­ping so that cargo is pro­tected

Please throw light on the grow­ing im­pact of tech­nol­ogy on the marine in­sur­ance sec­tor.

Ini­tially it was ves­sel build­ing (con­tainer ships, Pana­max, VLCCs, UVLCCs) and nat­u­rally in­sur­ers had to face larger vol­umes of cargo trans­ported lead­ing to larger size claims. Then came the IT wave where the amount of in­for­ma­tion han­dled in ports be­came faster. E-com­merce giants like (Ama­zon /Wal­mart/Alibaba) are now mov­ing in to cargo trans­porta­tion by leas­ing air­crafts etc. Prob­a­bly the way in­sur­ance is pur­chased can be al­tered by these play­ers.

In­sur­ance of cargo pro­tects the seller from mon­e­tary loss in case a dam­age oc­curs to the shipped cargo

S Vish­wanathan Head- Com­mer­cial Lines Un­der­writ­ing SBI Gen­eral In­sur­ance

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