| (1)Types of Policies |
Depending on various business needs, various types of insurance policies
can be arranged.
Single Policy
A policy for clients with infrequent cargo insurance needs. Based on an Insurance Application from the client, an Insurance Policy or an Insurance Certificate is issued for each transit.
Open Policy
A form of policy for clients with needs of cargo insurance on a regularly
basis. Basically, the type, description, value of goods, method of transport,
geographic scope, insurance condition, limit of liability per transit and
location are specified in the Open Policy (O/P).
All transits within the scope of the O/P wordings are automatically insured. Premiums are usually paid afterwards on monthly basis as agreed and stipulated on the O/P.
A cancellation clause is incorporated in the O/P which allows either party
to cancel the open policy or any part thereof on giving 30 days prior notice
(7 days for War and S.R.C.C. risks). |
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| (2)Insured Value and Insured Amount |
In Marine Cargo Insurance, it is essential that the value of the subject matter insured is assessed and agreed between the insured and the insurer before commencement of insurance period. This agreed value is called the Agreed Insured Value". A Marine Cargo Insurance policy is a Valued Policy" because the insurance policy stipulates the agreed insured value.
Insured Amount" is the limit of the amount of which the insurer is
liable. The insured Amount for cargo insurance is normally calculated on
the basis of 110% of the C.I.F. contract price.
The relation between the Insured Amount and the Insured Value can be described as follows.
(a)Full Insurance : Insured Amount = Insured Value
(b)Over Insurance : Insured Amount > Insured Value
(c)Under Insurance : Insured Amount < Insured Value
In the case of above (b), the excess amount is invalid. In the case of
above (c), the assured has to bear the loss or damage proportionate to
the ratio of the insured amount to the insured value. |
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| (3)Duration of Insurance |
Transit Clause
8.1 Subject to Clause 11 below, this insurance attaches from the time the subject-matter insured is first moved inthe warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit,
continues during the ordinary course of transit
and terminates either
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8.1.1 on completion of unloading from the carrying vehicle or other conveyance in or at the final warehouse or place of storage at the destination named in the contract of insurance,
8.1.2 on completion of unloading from the carrying vehicle or other conveyance
in or at any other warehouse or place of storage, whether prior to or at
the destination named in the contract of insurance, which the Assuredor
their employees elect to use either for storage other than in the ordinary
course of transit or for allocation or distribution, or
8.1.3 when the Assured or their employees elect to use any carrying vehicle
or other conveyance or any container for storage other than in the ordinary
course of transit or
8.1.4 on the expiry of 60 days after completion of discharge overside of
the subject-matter insured from the oversea vessel at the final port of
discharge,whichever shall first occur. |
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8.2 If, after discharge overside from the oversea vessel at the final port of discharge, but prior to termination of this insurance, the subject-matter insured is to be forwarded to a destination other than that to which it is insured, this insurance, whilst remaining subject to termination as provided in Clauses 8.1.1 to 8.1.4, shall not extend beyond the time the subject-matter insured is first moved for the purpose of the commencement of transit to such other destination.
8.3 This insurance shall remain in force (subject to termination as provided for in Clauses 8.1.1 to 8.1.4 above and to the provisions of Clause 9 below)during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to carriers under the contract of carriage. |
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| （4）Total Loss and Partial Loss |
A loss may be total or partial. Any loss which is not a total loss is a partial loss. A total loss may be an actual total loss or a constructive total loss.
①Actual Total Loss
A loss of the subject matter insured in its totality whether damaged or destroyed.
When a ship is deemed missing after a considerable amount of time, an actual total loss may be presumed.
②Constructive Total Loss
In cases where the expense to prevent a loss is greater than the remained value of the goods, the assured is entitled to abandon the remaining economical value of the goods to the insurer and to claim for a constructive total loss. |
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| （5）Insurance Conditions |
| The three major conditions commonly used to cover marine perils are as follows. |
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| ①INSTITUTE CARGO CLAUSES (A) |
This insurance covers all risks of loss of or damage to the subject-matter
insured except as excluded by the provisions of Clauses 4, 5, 6 and 7 below※Note①.
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※Note①
4. In no case shall this insurance cover
4.1 loss damage or expense attributable to wilful misconduct of the Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject-matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured to withstand the ordinary incidents of the insured transit where such packing or preparation is carried out by the Assured or their employees or prior to the attachment of this insurance (for the purpose ofthese Clauses “packing” shall be deemed to include stowage in a container and “employees” shall not include independent contractors)
4.4 loss damage or expense caused by inherent vice or nature of the subject-matter insured
4.5 loss damage or expense caused by delay, even though the delay be caused by a risk insured against (except expenses payable under Clause 2 above)
4.6 loss damage or expense caused by insolvency or financial default of the owners managers charterers or operators of the vessel where, at the time of loading of the subject-matter insured on board the vessel, the Assured are aware, or in the ordinary course of business should be aware, that such insolvency or financial default could prevent the normal prosecution of the voyage.
This exclusion shall not apply where the contract of insurance has been assigned to the party claiming hereunder who has bought or agreed to buy the subject-matter insured in good faith under a binding contract.
4.7 loss damage or expense directly or indirectly caused by or arising from the use of any weapon or deviceemploying atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.
5.1 In no case shall this insurance cover loss damage or expense arising from
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5.1.1 unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage of the subject-matter insured, where the Assured are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded therein.
5.1.2 unfitness of container or conveyance for the safe carriage of the
subject-matter insured, where loading therein or thereon is carried out
prior to attachment of this insurance or by the Assured or their employees
and they are privy to such unfitness at the time of loading. |
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5.2 Exclusion 5.1.1 above shall not apply where the contract of insurance has been assigned to the party claiming hereunder who has bought or agreed to buy the subject-matter insured in good faith under a binding contract.
5.3 The Insurers waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the subject-matter insured to destination.
In no case shall this insurance cover loss damage or expense caused by
6.1 war civil war revolution rebellion insurrection, or civil strife arising
therefrom, or any hostile act by or against a belligerent power
6.2 capture seizure arrest restraint or detainment (piracy excepted), and
the consequences thereof or any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war.
In no case shall this insurance cover loss damage or expense
7.1 caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions
7.3 caused by any act of terrorism being an act of any person acting on behalf of, or in connection with, anyorganisation which carries out activities
directed towards the overthrowing or influencing, by force or violence, of any government whether or not legally constituted.
7.4 caused by any person acting from a political, ideological or religious motive. |
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| ②INSTITUTE CARGO CLAUSES (B) |
| 1. This insurance covers, except as excluded by the provisions of Clauses 4, 5, 6 and 7 below※Note①., |
| 1.1 loss of or damage to the subject-matter insured reasonably attributable to |
1.1.1 fire or explosion
1.1.2 vessel or craft being stranded grounded sunk or capsized
1.1.3 overturning or derailment of land conveyance
1.1.4 collision or contact of vessel craft or conveyance with any external
object other than water
1.1.5 discharge of cargo at a port of distress
1.1.6 earthquake volcanic eruption or lightning, |
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| 1.2 loss of or damage to the subject-matter insured caused by |
1.2.1 general average sacrifice
1.2.2 jettison or washing overboard
1.2.3 entry of sea lake or river water into vessel craft hold conveyance
container or place of storage, |
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| 1.3 total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft. |
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※Note①
4.7 deliberate damage to or deliberate destruction of the subject-matter insured or any part thereof by the wrongful act of any person or persons
4.8 loss damage or expense directly or indirectly caused by or arising from the use of any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. |
5.1 In no case shall this insurance cover loss damage or expense arising from |
5.1.1 unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage of the subject-matter insured, where the Assured are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded therein.
5.1.2 unfitness of container or conveyance for the safe carriage of the
subject-matter insured, where loading therein or thereon is carried out
prior to attachment of this insurance or by the Assured or their employees
and they are privy to such unfitness at the time of loading. |
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5.2 Exclusion 5.1.1 above shall not apply where the contract of insurance has been assigned to the party claiming hereunder who has bought or agreed to buy the subject-matter insured in good faith under a binding contract.
5.3 The Insurers waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the subject-matter insured to destination. |
6. In no case shall this insurance cover loss damage or expense caused
by
6.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power
6.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war. |
In no case shall this insurance cover loss damage or expense
7.1 caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions
7.3 caused by any act of terrorism being an act of any person acting on behalf of, or in connection with, anyorganisation which carries out activities
directed towards the overthrowing or influencing, by force or violence, of any government whether or not legally constituted.
7.4 caused by any person acting from a political, ideological or religious motive.
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| ③ INSTITUTE CARGO CLAUSES (C) |
| 1. This insurance covers, except as excluded by the provisions of Clauses 4, 5, 6 and 7 below※Note①, |
| 1.1 loss of or damage to the subject-matter insured reasonably attributable to |
1.1.1 fire or explosion
1.1.2 vessel or craft being stranded grounded sunk or capsized
1.1.3 overturning or derailment of land conveyance
1.1.4 collision or contact of vessel craft or conveyance with any external
object other than water
1.1.5 discharge of cargo at a port of distress, |
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| 1.2 loss of or damage to the subject-matter insured caused by |
1.2.1 general average sacrifice
1.2.2 jettison. |
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4.7 deliberate damage to or deliberate destruction of the subject-matter insured or any part thereof by the wrongful act of any person or persons
4.8 loss damage or expense directly or indirectly caused by or arising from the use of any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. |
5.1 In no case shall this insurance cover loss damage or expense arising
from |
5.1.1 unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage of the subject-matter insured, where the Assured are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded therein.
5.1.2 unfitness of container or conveyance for the safe carriage of the
subject-matter insured, where loading therein or thereon is carried out
prior to attachment of this insurance or by the Assured or their employees
and they are privy to such unfitness at the time of loading. |
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5.2 Exclusion 5.1.1 above shall not apply where the contract of insurance
has been assigned to the party claiming hereunder who has bought or agreed
to buy the subject-matter insured in good faith under a binding contract.
5.3 The Insurers waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the subject-matter insured to destination. |
6. In no case shall this insurance cover loss damage or expense caused
by
6.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power
6.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war. |
In no case shall this insurance cover loss damage or expense
7.1 caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions
7.3 caused by any act of terrorism being an act of any person acting on behalf of, or in connection with, anyorganisation which carries out activities
directed towards the overthrowing or influencing, by force or violence, of any government whether or not legally constituted.
7.4 caused by any person acting from a political, ideological or religious motive. |
※Note
The following are examples of extraneous risks that can be covered under a INSTITUTE CARGO CLAUSES (B) or (C) policy subject to additional premium and by attaching special clauses. |
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(Abbreviations) |
| Rain ＆/or Fresh Water Damage |
(R.F.W.D.) |
| Non-delivery |
(N.D.) |
| Theft, Pilferage ＆/or Non-delivery |
(T.P.N.D.) |
| Leakage &/or Shortage |
(L'kge, S'tge) |
| Breakage, Bending ＆/or Denting |
(B'kge, B.D.) |
| Hook Damage |
(HD) |
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| Nail Damage |
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| Chafing or Scratching |
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| Oil ＆/or Grease |
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| Damage caused by Contact with other Cargo |
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| Damage caused by Contact with Oil ＆/or Other Cargo |
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| Acid |
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| Rats & Vermin |
(R.V.) |
| Mould ＆ Mildew |
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| Rust Damage |
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| Sweat & Heating |
(S.H.) |
| Spontaneous Combustion |
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| Contamination |
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| Washing Overboard |
(W.O.B.) |
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| ④INSTITUTE WAR CLAUSES(CARGO) |
| This insurance covers loss of or damage to the goods, caused by hostilities, warlike operations, civil war, revolution, insurrection, or civil strife arising therefrom, capture, seizure, arrest or detainment and also mines, torpedoes, bombs or other engines of war. |
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| ⑤INSTITUTE STRIKES CLAUSES(CARGO) |
| Covers loss of or damage to the insured goods directly caused not only by strikers, locked-out workers or any person taking part in labour disturbances, riots or civil commotions, but also by any person acting maliciously. |
※Note
The rates of War & S.R.C.C. Risks shall be altered subject to the world affairs.
The rates of War & S.R.C.C. Risks at the date of sailing from the loading
port of the vessel shall be applied |
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| (6)Marine Insurance Act, 1906 （M.I.A.） |
Because of the long history of maritime affairs and the vast number of precedents in the English courts, it is not unusual for marine insurers to choose English law as the governing law for their insurance policies.
This is not an exception for Japanese Insurance Company. where our insurance policies stipulate that the liability and settlement of claims are subject to English law and usage. Thus it becomes important for us to know about the Marine Insurance Act of 1906 （M.I.A.） as the relative English law of our insurance contracts.
The following sections are some of the fundamental rules listed on the M.I.A.
Section 17
A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contact may be avoided by the other party.
Section 18
Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such disclosure, the insurer may avoid the contract.
Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.
Section 41
There is an implied warranty that adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner. |
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| (1)Prompt Claim Notice to Agents |
In event of loss of or damage to the cargo, prompt notice should be given to Insurance company’s agent or Insurance comapny where you get cover. A surveyor may be appointed in order to examine the goods and issue survey reports. The claims settling agents are listed on the top left side of the insurance policy.
Delay in claim notice usually makes it difficult to find the cause of the damage or the time it took place. Depending on the circumstances, late notice sometimes create difficulty to indemnify the assured for the loss. |
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| (2)Notice of Claim to Third Parties |
When the goods are discharged from the ocean vessel or delivered from the
customs or warehouses in a damaged condition, it is necessary to clarify
the responsibilities of the parties concerned. For such clarification,
it is common to take remarks on the delivery documents such as Outturn
Report, Discharge Record, Boat Note, Tally Sheet, Delivery Report and Customs
Certificate. (Variety of names peculiar to the place of issuance and practice
of the people concerned.) These documents represent important evidence,
not only to ascertain whether the damage is payable under the insurance
policy, but also to exercise the right of recoveries against the responsible
parties.
If the loss of or damage to the goods are discovered certain time after
acceptance (e.g. upon unpacking) where the goods were apparently sound
upon arrival, the insured must give immediate notice to the ocean carriers
or other third parties concerned and ask for confirmation of the damage
by their representatives or their surveyors. Afterwards, the assured should
claim damages in writing to the ocean carriers or other third parties.
The assured can obtain appropriate and helpful advice from Insurance company’s agent or Insurance comapny about these procedures. |
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| (3)Documentation of Claims |
| Necessary claim documents varies depending on the nature of the casualty, the extent of the damage and the insurance conditions. We will enumerate the necessary claims documents for both partial loss and total loss to give image of the documentation. |
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| ①Necessary claims documents for Partial Loss |
(a)Claim Note
(b)Policy (Original)
(c)Commercial Invoice (Signed Copy)
(d)Packing List
(e)Bill of Lading or Air Waybill
(f)Survey Report
(g)Claim Notice to Carriers and their reply
(h)Discharging Report |
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| ②Necessary documents for total loss |
In addition to the above documents a, b, c, d, e and g, the following documents will be necessary.
Where the goods sustain total damage on board during the ocean transportation
(sinking with no possibility of salvage, or burnt etc.) , Notice of Claim,
Certificate of Total Loss by the shipping company, survey report on the
part of the shipping company and a full set of Bill of Lading should be
submitted to the insurer.
The reason why a full set of Bill of Lading is required is that when an insurer pays a total loss, they become entitled to take over the full interest of the assured. This includes subrogation of all the rights and remedies of the assured in respect of the subject-matter to claim against the carriers or other responsible parties. Also, dishonest third parties who wrongly obtain one of the Bills of Lading may file an undue claim against the carriers and so forth. By presentation of the full set of Bill of Lading to the insurer, such situations will be avoided. |
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