Do’s (Things You Must Do)
1. Assess the Type of Cover Needed
Marine cargo insurance isn’t “one-size-fits-all.”
- For domestic movement, opt for Inland Transit Policies covering road/rail/air/river transport.
- For imports and exports, go for Specific Voyage Policies or Open Covers if you ship frequently.
- Select the right Institute Cargo Clauses (A, B, or C):
Clause A: All-risk cover (broadest protection).
Clause B: Named perils like fire, earthquake, and lightning.
Clause C: Basic protection against major perils like collision or capsizing.
Tip: For fragile or high-value goods, Clause A is advisable despite the higher premium.
2. Declare Accurate Cargo Details
Always provide complete and truthful details of:
- Nature of goods (chemicals, machinery, perishables, etc.).
- Packaging (cartons, containers, bulk, drums).
- Mode of transport (air, sea, rail, road).
- Transit route (direct or via high-risk areas).
Why? Mis-declaration can result in claim repudiation. For example, not disclosing that goods are temperature-sensitive may void coverage if spoilage occurs.
3. Opt for Adequate Sum Insured
The sum insured should reflect the actual total value of goods in transit, not just the invoice cost. Insurers recommend:
- Invoice value + freight charges + customs duty + 10% margin (to cover incidental costs like survey fees, re-shipment, etc.).
- Why? If you insure for less, the Average Clause applies, and you’ll receive only proportionate claim amounts.
4. Check Policy Wording Carefully
Study inclusions, exclusions, and terms. Look for:
- Included risks: Fire, theft, piracy, collision, natural calamities.
- Excluded risks: Delay, inherent defect in goods, poor packaging, ordinary leakage.
- Deductibles and excess clauses: Understand what you’ll pay before the insurer steps in.
Tip: Don’t rely on assumptions—discuss every clause with your insurer or broker.
5. Consider Add-On Covers
Depending on your cargo and trade region, you may need:
- War & Strike Risks Cover (political unrest, terrorism, war).
- Storage Cover (goods stored at ports/warehouses during transit).
- Duty Insurance (covers customs duty losses if cargo is destroyed before clearance).
- Contingency Cover (protects sellers if the buyer defaults on arranging insurance under FOB/CIF contracts).
Why? These add-ons plug gaps that standard policies often leave out.
6. Maintain Proper Documentation
Smooth claim settlement requires:
- Commercial invoice
- Packing list
- Bill of lading/airway bill/lorry receipt
- Surveyor’s report (in case of loss)
- Insurance policy copy
Why? Missing documents often cause unnecessary delays or outright rejection of claims.
7. Work with Reputed Insurers or Brokers
Engage insurers with:
- A strong marine insurance portfolio.
- Experience in handling complex cargo claims.
- International reinsurance backing.
Why? Experienced insurers can offer tailored advice and ensure quick claim resolution. Brokers can negotiate better terms and explain policy intricacies.
Don’ts (Things to Avoid)
1. Don’t Underinsure to Save Premium
Insuring for less than the actual value might save a few rupees but exposes you to huge losses later.
- Example: Cargo worth ?50 lakh insured for Rs. 30 lakh — claim will be reduced proportionately under the Average Clause.
2. Don’t Ignore Packaging Standards
- Claims are often denied if goods are damaged due to poor packaging (e.g., using ordinary cartons for delicate electronics).
Tip: Follow industry-specific packing norms and document it with photographs.
3. Don’t Delay Claim Intimation
Marine policies usually require immediate notice of loss/damage.
- Delay = Suspicion — Insurer may argue damage happened outside coverage.
- Always inform insurer and surveyor immediately on discovering a loss.
4. Don’t Overlook Route & Mode of Transit Risks
Risks differ for:
- Sea cargo = Piracy, container losses, port delays.
- Air cargo = Mishandling, high-value theft.
- Road/rail cargo = Accidents, fire, theft.
Tip: Ensure your policy specifically covers the chosen route and transit mode.
5. Don’t Assume Storage is Covered
Many policies cover goods only while in transit, not while stored at ports or warehouses.
- Add a Storage Clause if your cargo may be held temporarily in such locations.
6. Don’t Overlook International Trade Rules (INCOTERMS)
INCOTERMS (FOB, CIF, etc.) decide who bears responsibility for insuring cargo.
- FOB (Free on Board): Buyer arranges insurance.
- CIF (Cost, Insurance, Freight): Seller arranges insurance.
Tip: Always clarify responsibility in your contracts to avoid uninsured exposures.
7. Don’t Forget Renewal or Extension
- If transit takes longer than expected (e.g., vessel delays), your coverage may expire.
- Always request an extension before policy expiry.
Conclusion
Purchasing a marine cargo policy in India requires careful planning, honest disclosures, and attention to detail. The Do’s—choosing the right cover, declaring correct details, ensuring adequate sum insured, and maintaining proper documentation—will secure your cargo and your finances. The Don’ts—underinsurance, poor packaging, delayed intimation, and neglecting storage or route risks—can lead to costly disputes or denied claims.
A well-structured marine cargo policy isn’t just a regulatory formality—it is the lifeline that protects your goods
and business reputation in uncertain global trade environments.
