All marine insurance coverage is historically based on the clauses drawn up and issued by the Institute of London Underwriters (herein after called institute). The policy Form and the institute Cargo Clauses have been revised and were introduced in the UK w.e.f January 1982 and in India from April 1983. These changes are designed to serve the interests of the importers and exporters as also brokers and underwriters by clearly defining the risks and exclusions involved. Marine policies could be taken either with institute Cargo Clauses (A) or Institute Cargo Clauses (B) or institute Cargo Clauses (C). The coverage provided by various types of policies is given below.
Institute Cargo Clauses (A)
This insurance covers all risks of loss or damage to the subject matter insured except risks excluded under (i) general exclusion clause (4); (ii) unseaworthiness and unfitness exclusion clause (5); (iii) war exclusion clause (6); and (iv) strikes clauses (7) Of course, war and strike risks can be covered by special endorsements.
This insurance covers general average and salvage adjusted changes charges adjusted or determined according to the contract of affreightment and/or the governing law and practice incurred to avoid or in connection wit the avoidance of loss from any cause except those excluded in Clauses 4,5,6 and 7 elsewhere in this insurance.
This insurance is extended to indemnify the Assured against such proportion or liability under the contract of Both to Blame collision. Clause as in respect of a loss recoverable hereunder. In the event of any claim by ship owners under the said Clause, the Assured agrees to notify the underwriters who shall have the right at their own cost and expense to defend the Assured against such claim. Piracy is treated as marine risk and covered under this clause.
Institute Cargo Clauses (B):
This insurance covers except as provided in clauses 4,5,6, and 7 (referred to above) –
1. Loss of or damage to the cargo reasonably attributable to:
(i) Fire or explosion
(ii) Vessel or craft being stranded, grounded sunk or capsized
(iii) Overturning or derailment of land conveyance
(iv)Collision or contact of vessel, craft or conveyance with any external object other than water.
(v) Discharge of cargos at a port of distress.
2. Loss of or damage to the cargo caused by:
(i) General average sacrifice;
(ii) Jettison or washing overhead and
(iii) entry mode from sea lake or river water into vessel craft, hold conveyance, container lift van or place of storage
3. Total loss of any package lost overboard or dropped whilst loading on to or unloading from vessel or craft. In addition, it covers
(i) General Average and salvage Charges and
(ii) Liability of the assured under the Contract of affreightment ‘Both to Blame Collision’ Clauses.
This insurance also covers the forwarding charges (Clause 12) and issue and labor charge (Clauses 16.2).
In addition to the exclusions referred to above this insurance also excludes from its coverage deliberate damage to or deliberate destruction of the subject matter insured or nay part thereof by wrongful act of any person or persons. (Clause 4.7)
This risk can be covered by attaching the “malicious damage Clause” devised for the purpose.
Thus coverage under institute Cargo Clauses (B) is less than that under Clauses (A). Other risks can be covered by special endorsements on payment of additional premium.
Institute Cargo Clauses (C):
This insurance covers except as provided under Clauses 4,5,6 and 7:
(i) 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 or contact of vessel, craft or conveyance with any external object other than water
* Discharge of cargo at a port of distress
(ii) Loss of or damage to the cargo insured caused by:
* General average sacrifice
In additions it covers:
(i) General average and salvage charges and
(ii) Liability of the assured under the contract of affreightment “Both to Blame Collision” clauses
The value also covers the forwarding charges (Clause 12) and sue and labor charges (Clauses 16.2)
Thus coverage of insurance under institute Cargo Clauses is that narrowest.
In all Institute cargo Clauses war and strike risks are excluded If coverage against these risks is required it has to be specifically asked for. Insurance can then be effected under institute War clauses (Cargo) and Institute Strikes Clauses (Cargo).