Insurance for marine trade is like the calm after a storm, where the goods and ships can be insured to compensate any losses incurred during the movement and transportation of the cargo.
The procedure of insuring under the marine cargo insurance may seem tedious but it is simple documentation once a deeper understanding of the procedure is established.
1) Submission of the form
The name of the insured is to be mentioned on the form. A detailed description of the cargo is essential as the risk of damage differs from product to product. Perishables and non-perishables, liquid, crockery and electronic goods will be hampered by different factors. The method of packing, the material used to pack the goods, mode of transportation for inland as well as ocean transit must be mentioned in detail. The risk coverage requirement must be clear and simple to avoid confusion and misinterpretation in the future.
2) Quotation by the underwriter
Based on the clarity of information provided by the businessman who wants to be insured, a quotation by the insurance company is drafted. A premium rate is quoted on the basis of the nature of the cargo, the method of packing, the ship or vessel and the type of insurance policy requested.
3) Payment of the premium
Once the quotation is acceptable to both parties, that is the insured and the underwriter, the premium amount is paid by the insured. As each policy is tailored to suit the insured providing maximum coverage, the payment will be influenced by details mentioned in the form.
4) Issue of documents
When a regular policy is not yet issued due to lack of clarity in information about the cargo or shipment, a cover note acts as a temporary document to ensure that the insured may be able to carry on his trade.
Evidence of a contract in marine insurance is a marine policy which contains details regarding the insured, the risk coverage and the goods.
In some cases, a lump sum amount is paid as premium for multiple voyages that take place on a specific geographical path. This is called a floating policy or an open policy. The value of each consignment is deducted from the lump sum amount. It can be paid for up to a year.
An open cover is a document similar to an open policy but this document has no legal validation like the open policy. It can be canceled by either party. This is an unstamped document.
The open policy and open cover facilitate features like limit per bottom, limit per conveyance, basis of valuation, location clause, rates, terms, declaration, and cancellation clause.
Documentation for Marine cargo insurance is vital for the long run of large-scale international businesses.