CARGO INSURANCE AND OPEN COVER
CARGO INSURANCE:-
It covers physical damage to or loss of goods whilst in transit by land, sea and air. There is no standard cargo policy and most policies are tailored for the individual risk. However, most policies incorporate the Institute cargo clauses A,B,or C. Risks covered under these clauses are :-
1) ICC C-- Gives cover only against major casualties like fire or explosion, vessel or craft stranded, grounded or sunk, capsized, overturning or derailment of land conveyances, collision or contact, discharge at a port of distress, jettison, general average sacrifices.
2) ICC B -- Extends the 'C' cover to include earthquakes, volcanic eruption, lightening, washing overboard, entry of sea, lake or river into the vessel, total loss of package in unloading or loading. There is deliberate damage exclusion, requiring the addition of the malicious damage clause. Theft is not covered.
3) ICC A -- Give cover 'against all risks of loss of or damage to the subject matter insured' making the policy almost fully comprehensive.
Some conditions are common to all institute cargo clauses. But for risks against war and strike, which are excluded from above mentioned cargo cover, cargo owners have separate insurance cover which is called cargo insurance war clause and institute strike clause.
Except for risk of piracy and malicious damage covered under policy A, excluded risks are common to all 3 policies and these are:-
1) willful misconduct of the insured
2) Ordinary leakage, wear and tear, normal losses in weight or volume of cargo, insufficient or unsuitability of packing or preparation of cargo.
3) Inherent vice or nature of cargo
4) Delay
5) Insolvency or financial default of owners, managers, charterers or operators of vessel
6) Unseaworthiness of vessel
7) Use of any weapon of war employing atomic or nuclear fission
Long term cargo insurance contract covering all goods shipment is normally covered by 'OPEN COVER'. In this, assured forwards insurance against all shipment during the duration of open cover. Open cover is itself an original slip, placed in the same way as an individual goods insurance policy. The period of the open cover is usually fixed at 12 months, with a 30 days notice period of cancellation by either side, reduced to 7 days when there are war risks. The assured is honor bound to declare and insure all his shipments during the term of the open cover and the insurer is honor bound to insure all the assured's shipments.
It covers physical damage to or loss of goods whilst in transit by land, sea and air. There is no standard cargo policy and most policies are tailored for the individual risk. However, most policies incorporate the Institute cargo clauses A,B,or C. Risks covered under these clauses are :-
1) ICC C-- Gives cover only against major casualties like fire or explosion, vessel or craft stranded, grounded or sunk, capsized, overturning or derailment of land conveyances, collision or contact, discharge at a port of distress, jettison, general average sacrifices.
2) ICC B -- Extends the 'C' cover to include earthquakes, volcanic eruption, lightening, washing overboard, entry of sea, lake or river into the vessel, total loss of package in unloading or loading. There is deliberate damage exclusion, requiring the addition of the malicious damage clause. Theft is not covered.
3) ICC A -- Give cover 'against all risks of loss of or damage to the subject matter insured' making the policy almost fully comprehensive.
Some conditions are common to all institute cargo clauses. But for risks against war and strike, which are excluded from above mentioned cargo cover, cargo owners have separate insurance cover which is called cargo insurance war clause and institute strike clause.
Except for risk of piracy and malicious damage covered under policy A, excluded risks are common to all 3 policies and these are:-
1) willful misconduct of the insured
2) Ordinary leakage, wear and tear, normal losses in weight or volume of cargo, insufficient or unsuitability of packing or preparation of cargo.
3) Inherent vice or nature of cargo
4) Delay
5) Insolvency or financial default of owners, managers, charterers or operators of vessel
6) Unseaworthiness of vessel
7) Use of any weapon of war employing atomic or nuclear fission
Long term cargo insurance contract covering all goods shipment is normally covered by 'OPEN COVER'. In this, assured forwards insurance against all shipment during the duration of open cover. Open cover is itself an original slip, placed in the same way as an individual goods insurance policy. The period of the open cover is usually fixed at 12 months, with a 30 days notice period of cancellation by either side, reduced to 7 days when there are war risks. The assured is honor bound to declare and insure all his shipments during the term of the open cover and the insurer is honor bound to insure all the assured's shipments.
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