Marine Cargo Insurance
Marine Cargo Insurance – What does cargo insurance cover?
- Export and import shipments by ocean-going vessels of all types
- Coastal shipment by steamers, sailing vessels, mechanized boats and so on
- Shipments by inland vessels or country craft
- Consignment by rail, road or air and articles sent by post
Who should take a cargo insurance policy?
You all know that a person should have ownership (insurable interest) on the life/property to be insured to enter into a valid insurance.
In the case of Commercial Insurance, the insurable interest depends on the terms of the sale contract.
Let us understand how the terms in sale contract as to who should affect the insurance on the cargos.
International Cargo: Who should take a cargo insurance policy?
In international cargo insurance also, it is the terms of the Sale Contract that decide on the responsibility of insurance. There are different types of sale contracts as far as international transactions are concerned.
Given here is the table with the type of contract vis-à-vis the responsibility of insurance.
|Type of Contract||Responsibility for Insurance|
|Free on Board (FOB Contract)||Till the goods are placed on board – steamer||After the goods are placed on board – steamer|
|Free on Rail (FOR Contract)||Till the goods are placed on board – rail||After the goods are placed on board – rail|
|Cost and Freight (C&F)||Till the goods are placed on board||After the goods are placed on board|
|Cost Insurance and Freight (CIF Contract)||Arrange the insurance|
How do banks secure their loans to business?
Banks and financial institutions also form a party to the transaction apart from buyers, sellers, transporters and so on.
Banks secure their interest on the amounts of money advanced by them to the exporters in the following ways:
- The cargos on which loans are extended are themselves treated as the physical security.
- A further security by way of an insurance policy is also required by the bank to protect its interests in the event of the goods suffering loss or damage in transit.