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FAQs for Exporters


 Does marine insurance cover inland transit from the factory / inland warehouse to the load port?
Although the word Marine may appear to be synonymous with Ocean voyage, in actuality, the modern day Marine insurance policies covering exports are 'warehouse to warehouse' policies i.e. from the factory / inland warehouse of the Indian exporter to the inland warehouse of the overseas buyer and encompass transits by all modes of transportation.
 How important are sale terms?
The standard sale terms are FOB, C&F (CFR) and CIF (CIP). The sale terms would determine the extent of insurance requirement e.g. under an FOB /CFR sale, the Indian exporter would be responsible till the goods cross the ship's rail and Marine insurance would consequently be required up to this stage. In short the marine policy should run concurrent to the sale terms.
 What is an 'open' policy?
An 'open' marine cargo policy is a policy which remains open for 12 months from the date of its inception. The open policy is advantageous to an exporter with regular shipments. Under an 'open' policy, the exporter is not obliged to 'declare' the shipment in advance: the shipment could be declared, as per agreement, at a later date subject to maintenance of adequacy of premium.
 What are Institute Cargo Clauses?
Unlike policies issued by other branches of insurance which contain the schedule, conditions, definitions, exclusions, etc., a marine policy form is a 'blank' policy form which contains only the 'Schedule' with the preamble and the operative clause. The conditions of insurance are, therefore, not incorporated in the policy form. To complete the contract, insurance company takes recourse to the Institute Cargo Clauses which contain the conditions of insurance in detail. It is called 'Institute' because it is the property of The Institute of LondonUnderwriters worldwide, majority of the insurance markets follow the London market.
 Does an 'All Risks' policy cover everything?
Any insurance policy covers fortuities / accidents i.e. uncertainties. To this extent, an 'All Risks' policy (subject to Institute Cargo Clause-A [ICC A] dt.1/1/82) covers all fortuities. Certainties are, therefore, excluded in a marine policy by "general" exclusions and "unseaworthiness and unfitness" exclusions. There are 2 other exclusions in a standard marine policy known as "War" and "Strikes" exclusions.However, these 2 exclusions could be covered on request on payment of nominal additional premium. In an "All Risks" policy, the individual risks/perils are not enumerated-the policy would, therefore, pay for all losses unless it has been caused by an excluded named peril.
 Does marine insurance cover storage at intermediate locations &/or at the port &/or at the final destination?
The standard Marine policy covers movements during the "ordinary course of transit" and extends up to 60 days after completion of discharge overside of the insured goods from the carrying vessel at the final port of discharge. Therefore, this would include customary transshipments beyond the control of the Assured. The Marine insurance cover would, however, terminate where storages are intentional, voluntary and avoidable i.e. where there is a break in the "ordinary course of transit". In short, as against common perception, the 60 days is not an automatic storage cover. Marine Policies terminate on goods reaching final destination. If it is the intention of the Assured to store the goods during the transit/voyage, it is pertinent to bring this to the notice of the Insurance Company at the beginning and the insurer may agree to extend the cover to include such storages at a premium and conditions to be agreed.
 What is the Premium Payment Regulation or Section 64 VB?
Section 64 VB is a section of the Insurance Act, 1938. Under this section, an insured is required to pay full premium (including stamp duty and service tax, as may be applicable) in advance for the insurance company to assume the risk. In respect of a 'specific' policy, the full premium is required to be paid before the movement of the goods i.e. commencement of the risk. Therefore, if insurance is required during inland transit from the factory / warehouse but the carrying vehicle has already left the premises, the insurance company, in view of the premium payment regulation, could refuse the coverage. Similarly, if the vessel has sailed but premium was not paid in advance, it would be difficult for the exporter to obtain any insurance coverage for the shipment.

Under an open policy, the insurance company could agree to accept advance premium based on projected exports / shipments for a period say, 3 to 6 months depending on volume: it would be the responsibility of the exporter to ensure that there is adequate deposit premium before commencement of any shipment. The exporter is allowed to pay additional premium at any time during the policy period depending on export requirements. Inadequate premium at the time of commencement of shipment could prejudice a claim.
 What is a Certificate of Insurance?
A Certificate of Insurance certifies the existence of a marine insurance (open) policy. Under an open policy, it is the international practice to issue a Certificate for every shipment. A Certificate could be said akin to a Specific policy. In most cases, the open policy is adequately stamped and hence, individual Certificates need not be stamped. It is important to note that a Certificate has to be issued strictly as per terms and conditions of the corresponding open policy.
Are Tata AIG Certificates acceptable to one and all?
Yes. Tata AIG Certificates are acceptable to consignees, bankers, etc. all over world.
 Would Certificates comply with special L/C requirements?
Yes. Special L/C requirement wordings could be incorporated in a Certificate as long as such wordings do not contravene the terms and conditions of the open policy.
 To whom would an overseas importer report a claim under an export policy?
Every export policy / Certificate would clearly mention the names of the Claims Representative Survey agents and Claims Settling Agent. The first notice of loss is required to be given by the importer to the Survey agent mentioned on the policy / Certificate, who would in most cases, be located in the same city. Thereafter, the importer has to comply with the requirements of the Survey agent. After the Survey agent's work is complete and the report is issued, wherever required, the claim would be handled by the Claims Settling Agent. Reference of the loss by the importer to the exporterwould delay the entire process and could even result in aggravation of the loss: this has to be avoided. For details of our global contacts, log on to
 Could the exporter receive claim payment under an export policy covering CIF shipment?
Depending on the merits of a case an exporter could definitely have the right to claim, as an 'unpaid vendor'. There could also be cases when the importer who is the rightful claimant desires that the claim be settled with the exporter so that the latter could make early/immediate replacement. In such cases, claim payment to the exporter could be considered against an 'NOC' from the importer.
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