1. CHAPTER VIII MARINE CARGO INSURANCE
Risks Covered
Voyage and Time Policies
Causes of Loss Covered
Coverage by Additional Endorsements
Conveyances Covered
Types of Marine Cargo Insurance Coverage
War Risk Only Policy
Rejection Clause, Warranties, Express or Implied
Amount of Insurance, Insurance Documents, Claims
Letter of Credit and Marine Insurance Policy

2. Types of Marine Insurance
Property Insurance
Hull Insurance: Loss or damage to the vessel itself
Cargo Insurance: Loss or damage to the cargo
Freight Insurance: Loss of freight income
Indemnity Insurance: Liability of ship owners
Collision liability insurance: Liability of insured vessel for damage resulting from collision
Protection and indemnity insurance: Liability for bodily injury including death or property damage and unexpected vessel related expenditures

3. Risks Covered by Marine Cargo Insurance
Loss of or damage to the cargo occurred during the insured voyage
Loss: Disappearance of the cargo
Damage: Arrived not intact. Not the same condition as shipped by the seller
Total loss:
Actual total loss
Constructive total loss
Partial loss : Average

4. Partial Loss Particular average:
Total loss of part of the shipment: one container out of 5
Partial loss to the whole shipment
General Average
Extraordinary sacrifice for the common safety: Jettison of cargo, Damage from fire fighting, Voluntary stranding, Repairing the vessel
To be borne proportionately by all interests: owners of vessel and cargoes

5. Voyage Policy and Time Policy
Duration of a particular voyage in the policy
Time Policy: Duration of a particular period of time, usually one year
Open cargo policy or Open policy
A beginning date but no expiry date
Cancelable by either party with 30 days written notice
All lawful merchandise
All shipments from or to all countries except those excluded in the policy such as embargoed countries

6. Causes of Loss Covered
Heavy weather, lightning, barratry of the masters and mariners & assailing thieves
Fire or explosion
Vessel being stranded, sunk or burnt
Collision or contact of vessel with any external objects including ice except water
Jettison
Bursting of boilers, latent defect in the machinery or hull
Faults or errors in the navigation or management of the vessel
Discharge of cargo at a port of refuge or distress

7. Causes of Loss Covered Fumigation of the vessel or dock
While ashore, sprinkler leakage, earthquake, cyclone, hurricane, collapse of docks and flood
Accidents during loading or unloading from the vessel

8. Coverage with Additional Endorsements to Open Cargo Policy
FOB & FAS shipments coverage: Transit between premises and vessel
Export contingency (Unpaid vendors) coverage: FOB or CFR without L/C & buyer fails to buy insurance & refuses to pay for damaged goods
Difference in Conditions(D.I.C.) Coverage: Difference between two coverages by the seller and the buyer

9. Coverage with Additional Endorsements to Open Cargo Policy
Warehouse to Warehouse Clause: The seller's warehouse to the buyer's warehouse, but if not delivered after discharge, ceases after 15 days if the final warehouse is within port or 30 days outside the port limit
Marine Extension Clause: From the seller's warehouse to the buyer's warehouse without a specific time limit
South American Clause: Warehouse to warehouse but ceases 60 days after discharge

10. Conveyances or Carriers
Metal self-propelled vessel & connecting conveyances
Aircraft & connecting conveyances
Metal barge
Mail or express

11. Institute Cargo Clauses
Sets of terms for marine cargo insurance policies internationally recognized and voluntarily adopted in 140 countries
Latest 2009 version by Lloyd’s Market Assn. and International Underwriting Assn. of London

12. Marine Cargo Insurance Coverage
Three Levels of Coverage
Institute Cargo Clauses (A):
Similar to former AR (All Risks) coverage
Institute Cargo Clauses (B):
Similar to former WA (With Average) coverage
Institute Cargo Clauses (C):
Similar to former FPA (Free of Particular Average)

13. Institute Cargo Clauses (A)
Covers all risks of loss of or damage to insured cargo except as excluded by
General Exclusion Clause
Unseaworthiness & Unfitness Exclusion Clause
War Exclusion Clause
Strikes Exclusion Clause
Broadest coverage: Loss or damage from any external cause
Similar to former AR (All Risks) coverage

14. Institute Cargo Clauses (A)
General Exclusion Clause
Willful misconduct of the assured
Ordinary leakage, loss, wear & tear
Insufficiency or unsuitability of packing or preparation of insured cargo
Inherent vice or nature
Delay
Insolvency or financial default of owners or operators of vessel
Weapon or device employing atomic or nuclear fission and/or fusion or radioactive force

15. Institute Cargo Clauses (A)
Unseaworthiness & Unfitness Exclusion Clause
Unseaworthiness or unfitness of vessel or craft: If the assured are privy to unseaworthiness or unfitness at the time the insured cargo is loaded
Unfitness of container or conveyance: If the assured are privy to unfitness at the time of loading

16. Institute Cargo Clauses (A)
War Exclusion Clause
War, civil war, revolution, rebellion, insurrection, or civil strife
Capture, seizure, arrest, restraint or detainment but piracy is excepted, that is, covered
Derelict mines, torpedoes, bombs or any derelict weapons of war

17. Institute Cargo Clauses (A)
Strikes Exclusion Clause
Caused by strikers, locked-out workmen, participants in labor disturbances, riots or civil commotions
Resulting from strikes, lock-outs, labor disturbances, riots or civil commotion
Caused by any act of terrorism
Caused by any person acting from political, ideological or religious motive

18. Institute Cargo Clauses (B)
Loss or damage reasonably attributable to
Fire or explosion
Vessel or craft being stranded, grounded, sunk or capsized
Overturning or derailment of land conveyance
Collision or contact with any external object except water
Discharge of cargo at port of distress
Earthquake, volcanic eruption or lightning

19. Institute Cargo Clauses (B)
Loss or damage caused by
General average sacrifice
Jettison or washing overboard
Entry of sea, lake or river water into vessel, craft, hold, conveyance, container or place of storage
Total loss of any package overboard or dropped during loading or unloading

20. Institute Cargo Clauses (B)
General Exclusion Clause
General Exclusion Clause Items 1 to 7 of Institute Cargo Clause (A)
8. Deliberate damage or deliberate destruction of insured cargo by wrongful act of any person (s)
War Exclusion Clause
All exclusions of War Exclusion Clause of Institute Cargo Clauses (A) including Piracy
Piracy is covered Institute Cargo Clauses (A) but not under (B)
Strikes Exclusion Clause
The same as those of Institute Cargo Clauses (A)

21. Institute Cargo Clauses (C)
Loss or damage reasonable attributable to
Fire or explosion
Vessel or craft being stranded, grounded, sunk or capsized
Overturning or derailment of land conveyance
Collision or contact with any external object except water
Discharge of cargo at port of distress
Earthquake, volcanic eruption or lightning not covered under Clauses (C)

22. Institute Cargo Clauses (C)
Loss or damage caused by
General average sacrifice
Jettison or washing overboard
Entry of sea, lake or river water into vessel, craft, hold, conveyance, container or place of storage is not covered under Clauses (C)

23. Institute Cargo Clauses (C)
General Exclusion Clause
Unseaworthiness and Unfitness Exclusion Clause
War Exclusion Clause
Strikes Exclusion Clause
The same as those of Institute Cargo Clauses (B)

24. Institute War Clauses (Cargo)
Loss or damage caused by
War, civil war, revolution, rebellion, insurrection, or civil strife
Capture, seizure, arrest, restraint or detainment
Derelict mines, torpedoes, bombs or any derelict weapons of war
General Exclusion Clause
Unseaworthiness and Unfitness Exclusion Clause
The same as those of Institute Cargo Clauses (B)

25. Institute Strikes Clauses (Cargo)
Loss or damage caused by
Strikers, locked-out workmen, or persons taking part in labor disturbances, riots or civil commotions
Any terrorist or any person acting from a political motive
General Exclusion Clause: Additional exclusions
Loss, damage or expense from the absence, shortage or withholding of labor
Loss, damage or expense caused by war, civil war, revolution, insurrection or civil strife

26. Marine Cargo Insurance
Recommendation
Purchase Institute Cargo Clauses (A)
Purchase Institute War Clauses (Cargo)
Purchase Institute Strikes Clauses (Cargo)

27. Rejection Clause
Covers the rejection of the goods by the Government of importing country
Fresh fruits, vegitables
Foods
Any good which must pass inspections by federal or state government

28. Express Warranties
Exceptive warranties indicating causes expressly excluded from the coverage
FC & S (Free of Capture & Seizure) Warranty
To cover, stamp word “DELETED” over the exclusion clause and attach Institute War Clauses (Cargo)
FSR & CC (Free of Strike, Riot and Civil Commotion) Warranty
To cover, stamp word “DELETED” over the exclusion clause and attach Institute Strikes Clauses (Cargo)

29. Warranties, Express or Implied
Implied Warranties
Warranties which are understood to apply even though not actually printed in the policy
Seaworthiness: Not older than 20 years, over 1,000 net registered tons and classified A-1 Seaworthiness is admitted because cargo owners have no control
No deviation: Covered with Marine Extension Clause
Legality: Voyage and cargo must be legal.

30. Amount of Insurance
Minimum amount of insurance coverage: 110% of CIF or CIP value
Insures against loss of expected profit
120% or 130% if both exporter and importer agree

31. Insurance Documents Insurance date not later than shipment date
Same currency as that of the L/C
Insurance policy
Issued by insurer (insurance company)
Insurance certificate
Issued by assured (exporter) under its open cargo policy with insurer

32. Claims for Loss or Damage
Initiated by the importer or consignee
Ocean B/L, Airway Bill, Post Office Receipt
Original Marine Insurance Policy
A copy of the claim filed against the carrier
A copy of the shipper's invoice
A copy of delivery receipt showing exceptions
Confirmation of non-delivery from the carrier if not delivered
Customs entry report
Survey report

33. Marine Insurance Policy & Letter of Credit
Banks will not accept an insurance policy or certificate:
Coverage date later than the shipment date
Currency different from L/C
Coverage less than 110% of CIF or CIP
Different coverage from L/C

34. Comparison of Marine Cargo Insurance Coverage
Institute Cargo Clauses (A)
Institute Cargo Clauses (B)
Institute Cargo Clauses (C)