Marine Cargo Insurance

Marine cargo insurance covers the risks of loss, damage, expense and liability to your goods during transportation as cargo from one place to another place. For example, from a factory located inland to the seaport and then across the seas to the address of the buyer of your goods abroad.

The process of transportation includes airfreight, ocean freight and overland carriage. The marine cargo insurance is to indemnify the cargo owners and/or the financiers such as banks against financial loss arising as a result of physical loss, damage, expenses incurred or liability from the transportation process.

Loss can arise from the perils of the sea such as rough weather, sinking, the ports or as a result of overturning, collision of and/or theft from overland transports.

Who Needs Ocean Cargo Coverage?

Just about every enterprise that imports or exports raw materials or sells finished products abroad needs ocean cargo insurance. These include:

  • Manufacturers
  • Retailers
  • Wholesalers
  • Importers
  • Exporters
  • Logistics Providers
  • Commodity Traders
  • Customhouse Brokers
  • Freight forwarders
  • Steamship Lines
  • Air Carriers
  • NVOCCs


What’s Covered?

The ocean cargo policy automatically covers goods shipped by water or air, depending on the terms of sale, from the warehouse at the point of shipment to the warehouse at the point of destination, including all intermediate transit by rail or truck.

While All Risks coverage is available, the basic ocean cargo policy covers perils of the sea such as stranding, sinking, fire and collision, as well as perils on the sea including heavy weather and theft.


There are three types of cover (3) which are provided under what is termed as Institute Cargo Clauses and cover under Air Cargo Clauses. Briefly they are:-

  • Institute Cargo Clauses (A):
    This insurance is the widest cover, providing covers of all risks of loss and/or damage to the cargo insured except loss or damage or expense caused by misconduct of the Insured, any delay, ordinary leakage, wear and tear, loss of weight or volume, insufficiency or unsuitability of packing & inherent vice or nature of the subject matter insured, insolvency or financial default of the owners of the vessel, unseaworthiness of the vessel, war, strikes, riots and civil commotion. (However, with a payment of additional premium, cover for war & S.R.C.C perils and perils of Transshipment, storing cargo in warehouses and inland transport may be obtained). Clauses (A) covers also the liability arising from General Average and Salvage Charges determined according to the law and accepted practice incurred to avoid a loss caused by any cause except exclusions described above.
  • Institute Cargo Clauses (B):
    Under Institute Cargo Clauses (B), insurance covers loss of or damage to the subject matter insured reasonably attributable to fire or explosion, vessel or craft being stranded, grounded, sunk or capsized, overturning or derailment of land conveyance, collision of vessel with any external object, discharge of cargo at a point of distress, earthquake, volcanic eruption or lightning and loss or damage to the subject matter insured, caused by general average sacrifice, jettisoning or washing over board, sea, lake or river water and total loss of any package lost overboard or dropped whilst loading or unloading. This clause also does not cover damage or loss caused by excluded perils enumerated in the Institute Cargo Clauses (A).
  • Institute Cargo Clauses (C):
    Covers provided under Institute Cargo Clauses (C) are similar to those of Institute Cargo Clauses (B), except few perils. The perils which are not covered by Institute Cargo Clauses (C) are earthquake, volcanic eruption or lightning washing overboard, age by sea, lake and river water and total loss of any package lost over board or dropped whilst handling, loading or unloading.
  • AIR CARGO Clauses:
    The wording is slightly different from Institute cargo Clauses (A). Under Institute Cargo Clauses (B) and Institute Cargo Clauses (C), cover against malicious damage, theft, pilferage and non-delivery


What extension to the above cover are available?

War-strikes, riot and civil commotion, transshipment, storage for a limited period, conveyance of land transit.


What insurance document suits you most?

You can decide either to take a separate policy for every sending or, depending upon the frequency of the need for cargo insurance, we can arrange a very convenient Open Cover at agreed terms and rates which provide you with cover whenever you need such cover, and certificates will be issued to evidence the insurance.


Can the Bank Interest also be covered?

Yes. Advise us the Name of the Bank and it will be incorporated in line policy or certificate to suit your requirements. We can also incorporate any reasonable special wordings required under the Letter of Credit.

What should be Sum Insured?

Generally, the Invoice value plus the cost of freight and a reasonable profit margin and duty as appropriate.

When does the cover in Marine Cargo Policies commence and terminate?

>Cover commences front the time the goods leave the premises and terminates upon delivery of goods, to the final destination or 60 days after discharge from the vessel for Sea Cargo and 30 days after landing for Air Cargo, whichever shall occur first.

How can a person obtain Cargo insurance?

Provide us with proforma invoice and a copy of letter of credit know as form ‘M’.

Types of policies

Based on the needs of trade and industry, the following types of policies are issued:

  • Voyage policy
  • Annual policy
  • Declaration policy
  • Open Cover


Voyage Policy

The voyage policy is issued to cover up a specific transit from a particular point to another. The cover ceases upon the carrier reaching the town of destination. In all the policies, the scope of cover can be:

  • Basic cover : described in ICC-C clause.
  • Wider cover: described in ICC-B.
  • All Risks cover: described in ICC-A.
  • All risks cover does not pay all losses.
  • While the basic policy document contains general conditions, the scope of cover and exceptions and special exclusions are attached by separate clauses known as Institute Cargo Clauses (ICC).


Open cover

It is a memorandum of agreement by which the insured will set out the terms of cover and rates of premium for one-year transaction of Marine dispatches. The open cover is not a Policy and it is not negotiable. A Certificate of insurance is issued for each declaration duly stamped for appropriate value and the Certificate will be negotiable.


But for the Marine insurance policies, the trade industry and commerce would not have developed to the present levels of turnovers anywhere in the world. A manufacturer can export their produce with confidence as their dispatches have the support of Marine insurance policies, and they can also discount their bills with local Bankers without waiting for the bills being paid by the overseas importers after they receive the goods which may take months by ocean transit. Marine Insurance Policy is one of the important documents besides Invoice and Bill of Lading.


There is no tariff rate of premium and the insurers can charge any rate depending upon the nature of goods, the mode of transshipment, type of package, the voyage route and the past claims experience.

Settlement Of Claims


When loss/damage arises in respect of cargo, the consignee has to inform the Marine Department by letter and obtain a survey before the damaged cargo is removed from the Port. Thereafter, the consignee submits his claim with the damage survey report, policy or certificate of insurance, bill of lading, invoices, delivery order and other documents. For export cargo, the consignee obtains the survey report from the surveyor nominated in the policy and follows up by handing over all documents to the Claims. When packages are short landed or short delivered, the consignee should submit their claim against the parties responsible and obtain liability letters. The underwriters’ liability depends upon the stance taken by them.