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.
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
Precautions:
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