Marine Cargo Insurance
commercial shipping industry transports some 90% of
the world's cargo. The industry is complex and has
many unique risks. It is no surprise that the
history of insurance starts with the development of
marine policies, that Lloyds of London was the first
marine insurance market and that the Marine
Insurance Act 1906 still sets out the basis of
modern insurance policies.
through a complex transport chain with complex risks
attached: from accidental damage to theft, from act
of God to political and social risks. Often a loss
is not caused by the person transporting the goods.
Carriers generally, therefore, limit or avoid any
liability for losses. This can have a substantial
impact on a company's bottom line should a whole
shipment be lost.
Cargo Insurance – the basics
insurance covers the loss, damage or theft of
commodities during transit. Policies are available
for specific shipments or on an open basis – whereby
all shipments that meet the agreed criteria are
covered during the term of the policy. Cargo sent by
sea is usually insured under one of the following
Cargo Clauses “C”
this Clause is limited to major perils only such as
fire or capsizing. The main types of expenses are
covered such as salvage and costs for minimising
Cargo Clauses “B”
widens the cover available to include additional
perils such as lightning and washing overboard.
Cargo Clauses “A”
provides “all risks” cover and covers loss or damage
not otherwise excluded. Standard exclusions include
war risks, unsuitable packaging and inherent defects
in the goods.
are excluded from any policy as a matter of course.
Policyholders can opt, however, to “buy back” cover
at an additional premium. The standard Institute War
Clauses and Institute Strike Clauses are then added
to the policy. Policies can also be extended to
cover road and air risks.
Feature of Marine Insurance
insurance has some features that are not found in
other types of insurance. The policy is freely
assignable and changes ownership alongside other
transfers of the goods – it is sufficient that
someone has an insurable interest at the time of a
loss. Marine policies can also be extended to cover
General Average. General Average applies where a
ship's master voluntarily jettisons a cargo to save
the voyage. All parties involved in the venture make
a contribution to the resulting costs.