Marine Insurance Clauses: Key Terms & Coverage Explained

When your cargo hits the road or the sea, you want more than just hope to protect it. That’s where cargo insurance steps in, shielding your goods from unexpected risks throughout their journey. Marine insurance clauses outline exactly what’s covered, who’s responsible, and how each risk is managed.

Whether you're shipping within India or across borders, understanding these clauses is crucial for safeguarding your business. With MSME solutions from Bajaj General Insurance, you can choose from a range of marine insurance plans tailored to your needs.

In this blog, we break down the different types of clauses in marine insurance.

What are the Clauses of a Marine Insurance Policy in India?

Here is a breakdown of some of the most crucial marine insurance clauses set by the Marine Insurance Act, 1963:

Institute Cargo Clauses (ICC)

The ICC standard clauses of cargo insurance define the scope of coverage for insurance. ICC includes 3 levels of protection, which are:

ICC (A): Provides coverage for almost all risks except war, strikes, nuclear peril, etc.

ICC (B): Provides coverage for named perils such as fire, explosion, theft,  etc.

ICC (C): Covers only a limited number of specific perils (e.g., fire, stranding, collision).

Example

Let's say you are transporting a shipment of electronics from India to the UK.  When you select ICC (A) coverage, your goods are shielded from all hazards except for those that are specifically excluded.  You can submit a claim under ICC (A) if a storm damages the container and destroys your devices.

Warehouse to Warehouse Clause

This clause protects the covered property from the origin warehouse to the destination warehouse, extending coverage beyond marine transit. In pre-shipment and post-discharge phases, this gives the goods more protection.

Example

Suppose a warehouse-to-warehouse provision is included in your shipment insurance.  This implies that your goods are safeguarded from the time they are packed at the Indian warehouse till they are transported and securely stored at the warehouse in any other nation.

Valuation Clause

This Clause determines the value of insured cargo based on the purchase price, market value, or a sum insured that you and the insurer have already agreed upon.

Because it places a cap on the amount of compensation you can get in the event of a loss, the payout will never exceed the agreed sum insured under the policy, regardless of the circumstances.

Example

Let's say you insured a shipment of electrical goods for $130,000 based on the item's purchase price, and it is damaged in transit. The insurance company will then pay you the entire $130,000 specified in the valuation clause.

Sue and Labour Clause

This clause specifies that the insured should take all reasonable steps to minimise damages and prevent further loss to the insured property. The insurer will compensate for reasonable expenses incurred in these efforts.

Example

Suppose that your ship sustains damage during a storm at sea. Then you can file a claim with your insurance company to compensate you for these costs under the suit and labour clause.

'At' and 'From' Clause

This Clause specifies the beginning and ending dates of the insurance coverage. It establishes the geographical limits of the coverage.

Example

If your policy specifies that coverage begins "at a factory in Germany" and ends "at a factory in India," then your cargo is covered from the moment it departs the German factory until it is delivered to the Indian factory.

Change of Voyage Clause

This clause allows deviations from the intended itinerary within predetermined limits without affecting the insurance coverage. This flexibility helps you in unforeseen circumstances.

Example

If your ship is diverted to a different port due to bad weather during the voyage, the change of voyage clause permits this deviation without impacting your insurance coverage.

Inchmaree Clause

Marine insurance plans, especially those that cover a vessel's machinery, sometimes contain the Inchmaree Clause, commonly referred to as the Negligence Clause.  It protects against losses and damage caused by the negligence of the captain, crew, or other individuals in charge of the vessel's operation.

Memorandum Clause

This cargo insurance clause does not cover certain inherent risks such as inherent vice, ordinary leakage, spoilage of perishable goods, etc.

Example

You are shipping oranges in a container. The memorandum clause in your policy does not cover spoilage due to inherent vice. You can not claim under the insurance coverage if the oranges rot during the journey because of their inherent nature.

Jettison Clause

Another crucial provision in maritime insurance plans, especially those that protect cargo, is the Jettison Clause. In the event of a marine emergency, it provides coverage for the loss of cargo that is intentionally thrown overboard to preserve the ship and any remaining cargo.

The owners of the remaining cargo help to pay the owner of the sacrificed cargo, and the loss of discarded cargo is regarded as a general average loss.

Why are Maine Insurance Clauses Important for Your Maritime Business?

You should understand these significant marine insurance policy clauses for several reasons:

1. Selecting Appropriate Coverage: You can choose the degree of protection that best fits your needs and risk profile by being aware of the extent of each provision.

2. Preventing Disputes: You can avoid disagreements with your insurance provider about claims by being aware of your rights and responsibilities under the policy.

3. Effective Claim Filing: Accurate and comprehensive claims result in quicker settlements if you are aware of the pertinent terms and the claims procedure.

4. Managing Risks: You can choose effective risk-reduction tactics by being aware of the risks that are covered and those that are not.

Check Bajaj General’s marine insurance plans now and protect your cargo from unforeseen risks.

Bottom Line

By understanding marine insurance clauses, you can make sure that your items are sufficiently covered and that you are ready to deal with any potential losses.  It is also important that you choose a reliable insurance provider like Bajaj General Insurance. Bajaj General provides thorough coverage and streamlined claims procedures for your cargo, allowing you to recoup from loss easily.

Frequently Asked Questions

What is the barratry clause in marine insurance?

This clause protects the shipowner in case the crew is involved in any misconduct or illegal activities.

How to ensure compliance with marine insurance clauses?

Carefully read the policy documents and adhere to the terms of the policy. Also, strictly follow the conditions to ensure compliance with marine insurance.

What is the FOB clause in marine insurance?

The freight on Board is a shipping agreement. It states that the exporter will assume all responsibility for the cargo until it is loaded at the origin. After that, the importer assumes all the responsibility.

What is the purpose of marine insurance clauses?

Marine insurance clauses help you to decide the type of coverage you need and the risks associated with shipment.

What is the Both to Blame Collision Clause?

This clause states that both parties will share the losses if caused by the negligence of both parties.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.