Marine Insurance

Marine insurance covers any loss of damage to the ship, cargo, terminal and any transport of cargo by which property is transferred, acquired or held between the point of origin and final destination. Marine insurance plays a vital role in the field of overseas commerce and internal trade of a country.

Broad categories of Marine insurance:

Marine insurance is broadly divided into 2 categories:

  • Marine cargo - Any loss or damage to cargo while in transit by rail, road, air, sea or by post.
  • Marine hull - Any loss or damage to the ship, tankers, bulk carriers, smaller Vessles, fishing boats, sailing vessels, etc. Will be covered under the policy.

Loss/ damage under the Marine policy to the property insured includes:-

  • Fire or explosion, stranding sinking ship, etc
  • Overturning derailment (of land conveyance)
  • Collision
  • Discharge of cargo at port of distress
  • Jettison
  • General average sacrifice salvage charges
  • Earthquake lightning
  • Washing overboard
  • Total loss of package, lost overboard, dropped in loading/ unloading.
  • War and srcc Is specifically covered
  • Shipments by inland vessels or country craft
  • Coastal shipments by steamers, sailing vessels, mechanized boats, etc.

Types of sales contract under a marine insurance:

The principal types of sales contract as concerned under the marine insurance are as follows:

Type of contract

Responsibility of insurance

Free on board

(f.O.B contract)

The seller is responsible till the goods Re placed on board the steamer. The buyer is responsible thereafter. He can get the insurance done wherever he likes.

Free on rail

(f.O.R contract)

The provisions are the same as in the above contract. This is mainly relevant to the internal transactions.

Cost & freight

(c&f contract)

Here also, the buyer's responsibility normally attaches once the goods are placed on board

Cost, insurance & freight (c.I.F contract)

In this case, the seller is responsible for arranging the insurance.


Risk coverage under the marine insurance policy:

The risk coverage under the marine insurance is under various institution cargo clauses are:

Institution cargo clause (I.C.C.) a: this clause Provide cover for all risk of loss or damage to the Subject matter insured. An all risk cover means it includes losses which are caused due to accidental circumstances only. The risk covered under clause 'a' are not specified.

Institution cargo clause (I.C.C.) b: risk covered under clause b are

  1. Fire or explosion
  2. Vessel or craft being stranded, grounded, sunk or capsized
  3. Collision or contract of vessel, craft or conveyance with any external object other than water
  4. Discharge of cargo at a port of distress
  5. General average sacrifice
  6. Jettison
  7. Earthquake, volcanic eruption or lightning
  8. Entry of sea, lake or river water into vessel craft, hold, conveyance, container, Liftvan or place of storage
  9. Total loss of any package lost overboard or dropped whilst loading on to, or unloading from vessel or craft.

Below given risk can be covered under I.C.C. 'b' on payment of additional premium:

  1. Theft, pilferage and/ or non-delivery
  2. Fresh water and rainwater damage
  • Hook and/ or oil damage
  1. Heating and sweating
  2. Damage by mud, acid and other extraneous substances
  3. Breakage
  • Leakage
  • Country damage
  1. Bursting/ tearing of bags

Institution cargo clause (I.C.C.) c: clauses attached to the policy form, which covers the following risk

  • Fire or explosion
  • Vessel or craft being stranded, grounded, sunk or capsized
  • Collision or contract of vessel, craft or conveyance with any external object other than water
  • Discharge of cargo at a port of distress
  • General average sacrifice
  • Jettison


Exclusions under the marine policy:

All three set of clauses Contact exclusions. Let us list down few important exclusions which are not covered under the marine insurance policy

  • Loss caused by willful misconduct of the insured
  • Ordinary leakage, ordinary wear and tear, etc.

These are normal 'trade' losses

  • Loss caused by Unherent vice or nature of the subject matter. For example, perishable commodities like fruits, vegetables, etc. May deteriorate without any accidental cause.

This is known as 'inherent vice'

  • Loss caused by delay, even though the delay be caused by an insured risk.
  • Deliberate damage by the wrongful act of any person. This is called as malicious damage and can be covered, at extra premium under (b) and (c) clauses. Under 'a' clauses, the risk is automatically covered.
  • Loss arising from insolvency or financial default of owners, operators, etc of the vessel. This is not an accidental loss. The insured has to be cautious in selecting the vessel for shipment.
  • Loss or damage due to inadequate packing.
  • War, and kindred perils. (can be covered by paying additional premium)
  • Strikes, riots, lock-out, civil commotions and terrorism. (can be covered by paying additional premium)

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