CARGO INSURANCE

2020

CONTENTS

CHAPTER PARTICULARS PAGE NO.

1. INTRODUCTION 2-5

2. RESEARCH METHODOLOGY 6-12

3. TYPES OF COVERAGE 13-15

4. TYPES OF CARGO 16-57

5. LEAGAL SOURCES AND

OF CARGO INSURANCE 58-62

6. INSURANCE CLAIM AND 63-66

DOCUMENTATION

7. CLAUSESE OF CARGO INSURANCE 67-72

8. CASE STUDY 73-78

9. CONCLUSION 79

10. BIBILIOGHRAPHY 80-81

1.INTRODUCATION

What is clear to many cargo insurance (a type of property insurance), but why is it necessary? The purpose of
this article briefly and simply explains the need for this operation.

It is worth noting that the insurance of goods in the European Union is mandatory. We have it voluntarily.
Under the cargo insurance refers to the following operations: cargo insurance, insurance of dangerous goods,
international cargo insurance, and property insurance of cargo. This is almost a complete list of what can be
understood by the service of cargo insurance.

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Most often, insurance protects against unexpected circumstances. Cargo can be protected, or trust company,
which had never been failures, but an unexpected and unpleasant turn of events, is always possible. Cargo can
be damaged or even worse lost completely. Insurance guarantees at least compensation loss of cargo.

To insure your cargo not far to seek, insurance carried by most shipping companies.

The main thing to pay attention to the design contract for cargo insurance, it is not a mere formality, always
checks to see whether the documents issued for transportation.Insurance can be arranged depending on the
nature of the traffic. Company discharged or simple policy for each shipment or general policy. General policy
is valid for all types of transport declared by the insured.

In determining the amount of payment for a particular transport necessarily consider the following:

- Long-term relationship with the insurer;

- Statements of operations;

- Classification of the goods;

- Choose the insurance coverage;

- Conditions of carriage;

- Statistics of the insured losses.

Insured - a wise decision to resolve unexpected problems. And they believe, often occur in our country
transportation. Undue risk always leads to losses. Take care of your property, with the support of professionals
and proven companies.

Cargo Insurance provides coverage against all risks of physical loss or damage to freight during the shipment
from any external cause during shipping, whether by land, sea or air.

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Also, known as Freight Insurance, it covers transits carried out in the water, air, road, rail, registered post parcel,
and courier.Cargo insurance is important in international trade.

Different types of cargo insurance policies available for transporting goods by land, sea, or air.

Businesses need cargo insurance to reduce the risk of importing and exporting. Cargo insurance is covered
under risk policy or floating policies.

The cargo may be of any description, for example, wares, merchandise, property, goods and so on.
Duration of the risk of attaching from the time the goods leave the warehouse or another place of storage at the
placement of the policy for the commencement of transit.

Freight is to be payable for the carriage of cargoes or if the vessel, is chartered, the money to be paid for the
use of the vessel. The carriage is unable to earn freight if the goods or properties (cargoes) are not safely
transported.

Pre-paid freight payable in advance is at the risks of the cargo owner who includes it in the value of the goods
insured under a cargo policy.But freight payable only, on the delivery of the goods at the destination, is at the
risk of the ship-owner who has the insurable interest in it and therefore can insure it.

The disbursement warranty of the ITC (Hulls) allows the shipowner to effect in ‗Conjugation with 12 months
insurance on the ship‘s hulls and machinery etc.

Time insurance on freight and charters freight and anticipated freight. When the ship is lost, it also results in
loss of her profit earring capacity and the termination of freight contracts already entered into.A certain amount
of freight is insured by a shipowner for 12 months under the Institute Time Clauses (freight). Additional
policies are insured on a voyage basis. The freight at risk on any voyage exceeds the amount of insured for
time. The Institute Voyage Clauses (freight) is then used.Time charter hire is payable to the shipowner for the
use of his ship for the carriage of goods for a specific period.

If any events occur, such as the breakdown of machinery damage to the vessel, etc. which prevents‘ the
operation of the vessel for more than 24 consecutive hours, of the payment hire, shall cease until the ship
becomes operational.This freight is at the risk of the ship-owner.

1.2Importance of Cargo Insurance :-

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The risk then continues during the ordinary course of transit to terminate on delivery.

Cargo insurance has coverage of loss or damage caused by war, civil war, revolution, rebellion, insurrection
or civil strife or any hostile act, capture, seizure, arrest, restraint detainment, general average and salvage
charges, strikes, riots, etc.

Trade coverage covers the insurance needs of the various type of cargoes of general nature.

Several commodities and foodstuffs provide for particular hazards. Institute of London Underwriters (ILU) have
adopted uniform trade practices.

Which are followed by other insurers for insurance of cocoa, coffee, cotton, fats oil knots, hides, skins, leather,
metal, oilseeds, sugar, tea and so is assured under a standard policy.

There is separate insurance of coal, Jute, Rubber, tanker, bulk oil, frozen products. 1.3

Advantages of Cargo Insurance – Why You Need Cargo Insurance :-

Cargo Insurance or Freight Insurance benefits local and international trade.

90% of international cargo transportation is carried out by the sea. Again the overwhelming amount of sea
transportation is handled via containers utilizing state of art container vessels.If you own an import-export
business then you must know how important cargo insurance is for you to deliver the products in its proper
condition.

In export-import business every time, you need to invest a big chunk of money to ship the product but it is
quite often seen that business owner ignores the importance of cargo insurance due to which sometimes they
have to suffer from the loss.

Following aspects are covered under the benefits of this insurance:-

 Damages due to inappropriate packing.

 Infestation.

 Cargo abandonment.
 Customs rejection.

 Employee‘s dishonesty.

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 Damages due to Collision.

 Damages due to Heavy weather, Sinking, Derailment.

 Non-delivery.

 Theft.

 Fire.

2.RESEARCH METHODOLOGY

2.1 INTRODUCTION OF CARGO INSURANCE:

cargo insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by

which property is transferred, acquired, or held between the points of origin and final destination.

2.2 OBJECTIVES OF THE RESEARCH:

• Know the meaning of cago insurance.

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• Know the Companies offering cargo insurance.

• Know how to settle the claim under cargo Insurance.

• Know the inland transit / overseas transit.

• Know what is covered under Cargo insurance.

• Know what is not covered under cargo insurance.

2.3 METHODOLOGY:

2.3.1 Applied Research: Research undertaken to find a solution for a particular problem faced by a cargo

insurance companies.

2.3.2 Case Studies: Within the set-up of the research project from which this research will result, it is

also considered important to provide good case studies of typical cargo insurance cases. In addition, a clear

look at various case studies can provide important indications of the instruments used in the performance

of utmost good faith in practice.

2.4 RESEARCH DESIGN:

In view of the objects of the study listed above an exploratory research design has been adopted.

Exploratory research is one which is largely interprets and already available information and it lays particular

emphasis on analysis and interpretation of the existing and available information.

2.4.1 Exploratory Research Design:

The primary object of the exploratory research design is to provide insight into an understanding of

the problem.

So far, I have studied more than seven books, including the The Law Relating to Cargo Insurance;

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The Law of Cargo Insurance in India, Maritime Law, Cargo Insurance Its Principles and Practice (Classic

Reprint), Cargo Insurance: Law and Practice (Lloyd's Shipping Law Library) etc., and a couple of classic law

reports and journal articles.

Additionally, I have already surveyed more than ten websites. Several of these sites have a large

number of links to other sites with information about the ‗Cargo Insurance‘, so I plan to look at many of these

other sites. The majority of the sites that I evaluated had the text of complete articles, law reports and precedents

about cargo insurance. Obviously, since the study of cargo insurance is a part of the research project, the survey

of complete articles, law reports and textbooks is necessary as well.

2.5 DATA COLLECTION SOURCE:

Information is collected through both primary and secondary sources.

2.5.1 Primary Data:

It refers to first hand information which is collected to solve a specific problem. In some cases the

researchers may realize the need for collecting the first hand information. As in the case of everyday life, if we

want to have first hand information or any happening or event, we either ask someone who knows about it or

we observe it ourselves, we do the both. Thus, the primary data is collected through questionnaire. The type of

questionnaire is structured.

2.5.2 Secondary Data:

Any data, which have been gathered earlier for some other purpose, are secondary data in the hands

of researcher. Those data collected first hand, either by the researcher or by someone else, especially for the

purpose of the study is known as primary data. The data collected for this project has been taken from the both

primary and secondary source.

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 Sources of primary data are:-

• Questionnaire

 Sources of secondary data are:-

• Internet

• Magazines

• Newspapers

• Books

1. DO YOU AWARE OF CARGO INSURANCE

Column1
0%

YES
NO

100%

In the above diagram most of the people are aware with the cargo insurance

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2. IN CARGO INSURANCE IS NECESSARY TO EXPOTER AND IMPOTER.

60%

50%

40%

30%

20%

10%

0%
YES NO

In the above diagram 60% of people know about the cargo insurance need exporter and importer.

3. IS CARGO INSURANCE SAFE AND SECURED YOUR MONEY.

80%

70%

60%

50%

40%

30%

20%

10%

0%
YES NO

In the above diagram 80% of people are know that cargo insurance safeguard the money.

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4. WHICH CARGO IS MOST EXPENSIVE ?

Column1
60%

50%

40%

30%

20%

10%

0%
AIR MARINE RAIL ROAD

In the above chart there is 50% people tell that air cargo is most expensive and 25% tell that marine cargo and
15% is telling that rail cargo and rest of 10% by road.

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5. WHICH CARGO IS MOST CONVENIENT.

CARGO

10%

10%
AIR
MARINE
ROAD
20% 60% RAIL

The most of the people said that air cargo is convenient for cargo and the 20% people said that marine and rest
of them telling that road and the railways.

VI) SAMPLE SIZE:

Keeping in the view objective of the study the sample size of 30 respondents is consider good.

1) Importers – 10 Respondents

2) Exporters – 10 Respondents

3) Others - 10 Respondents

VII) SAMPLE DESIGN:

Sampling design is a plan designed to select the appropriate sample in order to collect the right data so as to

achieve the research objective. A sample is a part of the universe that can be used as respondents to a survey

or for the purpose of experimentation, in order to collect relevant information to solve a particular problem.

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VIII) HYPOTHESIS:

The formulation of hypothesis is an important step in the formulation of research problem. The hypothesis is a

tentative proposition formulation to determine its validity. The hypothesis may prove to be correct or incorrect.

In any event, it is leads to an empirical test. Whatever the outcome, the hypothesis is a question put in such a

way that an answer of some kind can be forthcoming. In the given problem hypothesis is

“There is high degree of risk in cargo transportation, therefore cargo insurance plays important role to

cover the risk.”

3. TYPES OF COVERAGE

3.1 TYPES OF COVERAGE

The following are covered for when subscribing for cargo insurance:-

3.2 ALL RISK COVERAGE:-

This will cover merchandise for most types of perils that it may encounter. This coverage is intended for
approved‖ or ―general‖ merchandise—that which is new, export packed and not unusually susceptible to
losses breakage, theft, pilferage, scratching and the like. All Risk coverage will insure against ―…physical
loss or damage from any external cause…‖ but specifically excludes the following:

• Improper packing

• Abandonment of cargo

• Rejection by Customs, FDA or other Government agency1

• Failure to pay or collect accounts

• Inherent vice (spoilage, infestation, failure of product to perform intended functions)

• Loss caused by delay2

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• Loss of use and/or market3

• Nuclear

• Losses exceeding cargo policy limit

• Losses at port city more than fifteen days after discharge4

• Losses inland more than thirty days after discharge5

• Losses in South America after sixty days6

• Oceangoing barge movements (unless specifically endorsed)

• Goods subject to an On-Deck bill of lading

• Loss caused by temperature of pressure (air freight only)

Failure to notify air carrier of preliminary loss in timely fashion:

• Damage even days
• Hidden damage fourteen days
• Non-delivery 120 days
3.3 F.P.A. (FREE OF PARTICULAR AVERAGE):-
In insurance terms, this means ―free from partial loss,‖ meaning that the insurance company is free from
partial loss. F.P.A. is frequently referred to as Total Loss only because in order to recover anything under an
F.P.A. policy, the customer usually must suffer a total loss of the goods. F.P.A. will cover perils of the sea,
such as stranding, sinking burning, or collision of the vessel. It will also cover land perils that are generally out
of man‘s control. F.P.A. coverage is usually written for used merchandise, waste such as scrap metal or waste
paper and merchandise stowed on deck or as bulk cargo.

3.4 W.A. (WITH AVERAGE):-

With Average coverage is basically F.P.A. that is extended to provide for protection from damage caused by
exceptionally heavy weather. Both F.P.A. and W.A. can usually be extended to include theft, pilferage and
non-delivery of an entire shipping package.

3.5 WAR RISK:-

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―Marine‖ insurance (this also includes air insurance) always carries a companion policy covering war risks
such as hostile actions and leftover mines. This insurance carries additional premium that is usually two to
three cents per $100 of insured value. However, war rates for countries such as Iran and Lebanon are noticeably
higher, for obvious reason.

3.6 DUTY INSURANCE

Duty and I. R. Tax do not accrue for goods that are totally lost in transit, but partially damaged goods are
frequently dutiable at full value. Depending on the duty rate, insuring the anticipated duty amount may be
prudent. Both require companion war coverage that is usually about half the regular war coverage.

• WHAT IS GENERAL AVERAGE?

General Average means, literally, general loss. It can be involuntary, such as a collision involving another ship.
When a General Average loss occurs, each party involved participates in the loss. General Average originated
in the days of Marco Polo‘s spice trains. Marco Polo put together large groups of individuals with camels who
would foray into China and other countries, trading for spices and other goods. If, during their trip, they were
attacked and one trader lost his camel or his goods, the others in the train would chip in and replace his losses.
This noble thought survives in current transportation law so that when a vessel runs aground, incurring
substantial damage to the vessel, all of the firms having cargo on board the vessel help to pay for the repairs.
General Average liability is the first reason for purchasing cargo insurance. All types of insurance cover
General Average. There are many stories of customers that have steadfastly refused to purchase cargo
insurance, only to be involved in a General Average condition that cost up to 25% of the value of their goods.
Everyone should have cargo insurance, even if they think their cargo is not worth covering. The liability for
General Average makes it essential.

CARGO INSURANCE EXCLUSIONS:-

Most Cargo Insurance Policies do not reimburse for losses caused by improper packing or when customs
officials reject the delivered goods.

Other claims that are excluded from most Cargo Insurance Policies include:
Abandoned cargo
Other party failing to pay
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Spoilage or other damages due to the product‘s nature

Losses caused by shipping delays
Employee dishonesty
Damages at port cities more than 15 days after cargo were unloaded.

For example, improperly packed rice can expand and spoil while in-transit. This would not be covered under
standard Cargo Insurance Contracts.

4. TYPES OF CARGO INSURANCE

4.1) MARINE CARGO INSURANCE

4.2) TRUCK CARGO INSURANCE
4.3) AIR CARGO INSURANCE
4.4) RAILWAY CARGO INSURANCE

 HOW TO VALUE CARGO FOR INSURANCE?

Normally, the insured value is calculated by taking the FOB (free on board) value, adding the ocean or air
freight, and adding 10% of that total. Thus, a shipment valued at $10,000 with $2,000 ocean freight would
have an insured value of $13,200. We can frequently arrange higher buffer amounts upon request

TYPES OF CARGO INSURANCES

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4.1) MARINE CARGO INSURANCE:-

Marine Cargo Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by
which property is transferred, acquired, or held between the points of origin and final destination.

4.1.1 ORIGIN:-
Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman
maritime loan. Separate marine insurance contracts were developed in Genoa and other Italian cities in the
fourteenth century and spread to northern Europe. Premiums varied with intuitive estimates of the variable risk
from seasons and pirates.

The modern origins of marine insurance law in English law were in the law merchant, with the establishment
in England in 1601 of a specialized chamber of assurance separate from the other Courts. Lord Mansfield, Lord
Chief Justice in the mid-eighteenth century, began the merging of law merchant and common law principles.
The establishment of Lloyd's of London, competitor insurance companies, a developing infrastructure of
specialists (such as shipbrokers, admiralty lawyers, bankers, surveyors, loss adjusters, general average
adjusters), and the growth of the British Empire gave English law a prominence in this area which it largely
maintains and forms the basis of almost all modern practice. The growth of the London insurance market led
to the standardization of policies and judicial precedent further developed marine insurance law. In 1906 the
Marine Insurance Act was passed which codified the previous common law; it is both an extremely thorough
and concise piece of work. Although the title of the Act refers to marine insurance, the general principles have
been applied to all non-life insurance.

In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers)
developed between them standardized clauses for the use of marine insurance, and these have been maintained
since. These are known as the Institute Clauses because the Institute covered the cost of their publication.

Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a considerable
freedom to contract between themselves.

Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance and reinsurance. It
traditionally formed the majority of business underwritten at Lloyd's. Nowadays, Marine insurance is often
grouped with Aviation and Transit (cargo) risks, and in this form is known by the acronym 'MAT'.

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4.1.2 PRACTICE:-
The Marine Insurance Act includes, as a schedule, a standard policy (known as the "SG form"), which parties
were at liberty to use if they wished. Because each term in the policy had been tested through at least two
centuries of judicial precedent, the policy was extremely thorough. However, it was also expressed in rather
archaic terms. In 1991, the London market produced a new standard policy wording known as the MAR 91
form and using the Institute Clauses. The MAR form is simply a general statement of insurance; the Institute
Clauses are used to set out the detail of the insurance cover. In practice, the policy document usually consists
of the MAR form used as a cover, with the Clauses stapled to the inside. Typically each clause will be stamped,
with the stamp overlapping both onto the inside cover and to other clauses; this practice is used to avoid the
substitution or removal of clauses.

Because marine insurance is typically underwritten on a subscription basis, the MAR form begins: We, the
Underwriters, agree to bind ourselves each for his own part and not one for another. In legal terms, liability
under the policy is several and not joint, i.e., the underwriters are all liable together, but only for their share or
proportion of the risk. If one underwriter should default, the remainders are not liable to pick his share of the
claim.

Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is generally
known as "Hull and Machinery" (H&M). A more restricted form of cover is "Total Loss Only" (TLO),
generally used as a reinsurance, which only covers the total loss of the vessel and not any partial loss. Cover
may be on either a "voyage" or "time" basis. The "voyage" basis covers transit between the ports set out in the
policy; the "time" basis covers a period of time, typically one year, and is more common.

4.1.3 PROTECTION AND INDEMNITY:-

A marine policy typically covered only three-quarter of the insured's liabilities towards third parties. The
typical liabilities arise in respect of collision with another ship, known as "running down" (collision with a
fixed object is a "harbor"), and wreck removal (a wreck may serve to block a harbor, for example).

In the 19th century, ship owners banded together in mutual underwriting clubs known as Protection and
Indemnity Clubs (P&I), to insure the remaining one-quarter liability amongst themselves. These Clubs are still
in existence today and have become the model for other specialized and noncommercial marine and non-marine
mutual, for example in relation to oil pollution and nuclear risks.

Clubs work on the basis of agreeing to accept a ship owner as a member and levying an initial "call"
(premium). With the fund accumulated, reinsurance will be purchased; however, if the loss experience is
unfavorable one or more "supplementary calls" may be made. Clubs also typically try to build up reserves, but
this puts them at odds with their mutual status.
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Because liability regimes vary throughout the world, insurers are usually careful to limit or exclude American
Jones Act liability.

4.1.4 ACTUAL TOTAL LOSS AND CONSERVATIVE LOSS:-

These two terms are used to differentiate the degree of proof where a vessel or cargo has been lost. An actual
total loss occurs where the damages or cost of repair clearly equal or exceed the value of the property. A
constructive total loss is a situation where the cost of repairs plus the cost of salvage equal or exceed the value.

The use of these terms is contingent on there being property remaining to assess damages, which is not always
possible in losses to ships at sea or in total theft situations. In this respect, marine insurance differs from non-
marine insurance, where the insured is required to prove his loss. Traditionally, in law, marine insurance was
seen as an insurance of "the adventure", with insurers having a stake and an interest in the vessel and/or the
cargo rather than simply an interest in the financial consequences of the subject-matter's survival.

4.1.5 AVERAGE:-
The term "Average" has one meaning:
Average in Marine Insurance Terms is "an equitable apportionment among all the interested parties of such an
expense or loss."

General Average stands apart for Marine Insurance. In order for General Average to be properly declared, 1)
there must be an event which is beyond the ship owner‘s control, which imperils the entire adventure; 2) there
must be a voluntary sacrifice, 3) there must be something saved.

The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship,
be it, voluntary grounding, knowingly working the engines that will result in damages.

"General Average" requires all parties concerned in the maritime venture (Hull/Cargo/Freight/Bunkers) to
contribute to make good the voluntary sacrifice. They share the expense in proportion to the 'value at risk" in
the adventure.
"Particular Average" is the term applied to partial loss be it hull or cargo. Co-insurance – is the situation where
an insured has under-insured, i.e., insured an item for less than it is worth, average will apply to reduce the
amount payable.

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An average adjuster is a marine claims specialist responsible for adjusting and providing the general average
statement

To insure the fairness of the adjustment a General Average adjuster is appointed by the ship owner and paid by
the insurer.

4.1.6 EXCESS, DEDUCTIBLE, RETENTION, CO-INSURANCE AND FRANCHISE:-

An excess is the amount payable by the insured and is usually expressed as the first amount falling due, up to
a ceiling, in the event of a loss. An excess may or may not be applied. It may be expressed in either monetary
or percentage terms. An excess is typically used to discourage moral hazard and to remove small claims, which
are disproportionately expensive to handle. In marine the term "excess" signifies the "deductible" or
"retention".

A co-insurance, which is typically governs non-proportional treaty reinsurance, is an excess expressed as a

proportion of a claim in percentage terms and applied to the entirety of a claim.

Coinsurance is a penalty imposed on the insured by the insurance carrier for under reporting/declaring/insuring
the value of tangible property or business income. The penalty is based on a percentage stated within the policy
and the amount under reported. As an example:

A vessel actually valued at $1,000,000 has an 80% coinsurance clause but is insured for only $750,000. Since
its insured value is less than 80% of its actual value, when it suffers a loss, the insurance payout will be subject
to the underreporting penalty. The insured will receive 750000/1000000th (75%) of the claim made less the
deductible.

4.1.7 TOONERS AND CHINAMEN:-

These are both obsolete forms of early reinsurance. Both are technically unlawful, as not having insurable
interest, and so were unenforceable in law. Policies were typically marked P.P.I. (Policy is Proof of Interest).
Their use continued into the 1970s before they were banned by Lloyd's, the main market, by which time, they
had become nothing more than crude bets.

A "tonner" was simply a "policy" setting out the global gross tonnage loss for a year. If that loss was reached
or exceeded, the policy paid out. A "china-man" applied the same principle but in reverse: thus, if the limit was
not reached, the policy paid out.

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4.1.8 SPECIALIST POLICIES:-

Various specialist policies exist, including:-
New building risks: This covers the risk of damage to the hull while it is under construction.
Yacht Insurance: Insurance of pleasure craft is generally known as "yacht insurance" and includes liability
coverage. Smaller vessels such as yachts and fishing vessels are typically underwritten on a "binding authority"
or "lineslip" basis.

War risks: General Hull insurance does not cover the risks of a vessel sailing into a war zone. A typical
example is the risk to a tanker sailing in the Persian Gulf during the Gulf War. The war risks areas are
established by the London-based Joint War Committee, which has recently moved to include the Malacca
Straits as a war risks area due to piracy. If an attack is classified as a "riot" then it would be covered by warrisk
insurers.

Increased Value (IV): Increased Value cover protects the ship Owner against any difference between the
insured value of the vessel and the market value of the vessel.

Overdue insurance: This is a form of insurance now largely obsolete due to advances in communications. It
was an early form of reinsurance and was bought by an insurer when a ship was late at arriving at her
destination port and there was a risk that she might have been lost (but, equally, might simply have been
delayed). The overdue insurance of the Titanic was famously underwritten on the doorstep of Lloyd's.

Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with coverage on an A, B,
or C basis, A having the widest cover and C the most restricted. Valuable cargo is known as specie. Institute
Clauses also exist for the insurance of specific types of cargo, such as frozen food, frozen meat, and particular
commodities such as bulk oil, coal, and jute. Often these insurance conditions are developed for a specific
group as is the case with the Institute Federation of Oils, Seeds and Fats Associations (FOFSA) Trades Clauses
which have been agreed with the Federation of Oils, Seeds and Fats Associations and Institute Commodity
Trades Clauses which are used for the insurance of shipments of cocoa, coffee, cotton, fats and oils, hides and
skins, metals, oil seeds, refined sugar, and tea and have been agreed with the Federation of Commodity
Associations.

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4.1.9 WARRANTIES AND CONDITIONS:-

A peculiarity of marine insurance and insurance law generally, is the use of the terms condition and warranty.
In English law, a condition typically describes a part of the contract that is fundamental to the performance of
that contract, and, if breached, the non-breaching party is entitled not only to claim damages but to terminate
the contract on the basis that it has been repudiated by the party in breach. By contrast, a warranty is not
fundamental to the performance of the contract and breach of a warranty, while giving rise to a claim for
damages, does not entitle the non-breaching party to terminate the contract. The meaning of these terms is
reversed in insurance law. Indeed, a warranty if not strictly complied with will automatically discharge the
insurer from further liability under the contract of insurance. The assured has no defense to his breach, unless
he can prove that the insurer, by his conduct has waived his right to invoke the breach, possibility provided in
section 34(3) of the Marine Insurance Act 1906 (MIA). Furthermore in the absence of express warranties the
MIA will imply them, notably a warranty to provide a seaworthy vessel at the commencement of the voyage in
a voyage policy (section 39(1)) and a warranty of legality of the insured voyage (section 41).

4.1.10 SALVAGE AND PRIZES:-

The term "salvage" refers to the practice of rendering aid to a vessel in distress. Apart from the consideration
that the sea is traditionally "a place of safety", with sailors honor-bound to render assistance as required, it is
obviously in underwriters' interests to encourage assistance to vessels in danger of being wrecked. A policy
will usually include a "sue and labour" clause which will cover the reasonable costs incurred by a shipowner
in his avoiding a greater loss.

At sea, a ship in distress will typically agree to "Lloyd's Open Form" with any potential salvor. The Lloyd's
Open Form is the standard contract, although other forms exist. The Lloyd's Open Form is headed "No cure
— no pay"; the intention being that if the attempted salvage is unsuccessful, no award will be made. However,
this principle has been weakened in recent years, and awards are now permitted in cases where, although the
ship might have sunk, pollution has been avoided or mitigated. In other circumstances the "salvor" may invoke
the SCOPIC terms (most recent and commonly used rendition is SCOPIC 2000) in contrast to the LOF (Lloyd's
Open Form) these terms mean that the salvor will be paid even if the salvage attempt is unsuccessful. The
amount the salvor receives is limited to cover the costs of the salvage attempt and 15% above it. One of the
main negative factors in invoking SCOPIC (on the salvors behalf) is if the salvage attempt is successful the
amount at which the salvor can claim under article 13 of LOF is discounted. The Lloyd's Open Form, once
agreed, allows salvage attempts to begin immediately. The extent of any award is determined later; although

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the standard wording refers to the Chairman of Lloyd's arbitrating any award, in practice the role of arbitrator
is passed to specialist admiralty QCs.
A ship captured in war is referred to as a prize, and the captors entitled to prize money. Again, this risk is
covered by standard policies.

4.1.11 MARINE INSURANCE ACT, 1906:-

The most important sections of this Act include:
4: a policy without insurable interest is void.
17: imposes a duty on the insured of utmost good faith.
18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance and rating of
the risk. Failure to do so is known as non-disclosure or concealment (there are minor differences in the two
terms) and renders the insurance voidable by the insurer.

33(3): If [a warranty] be not [exactly] complied with, then, subject to any express provision in the policy, the
insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any
liability incurred by him before that date.

34(2): where a warranty has been broken, it is no defense to the insured that the breach has been remedied, and
the warranty complied with, prior to the loss.

34(3): a breach of warranty may be waived (ignored) by the insurer.

39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the purpose of it
(voyage policy only).

39(5): no warranty that a vessel shall be seaworthy during the policy period (time policy). However if the
assured knowingly allows an unseaworthy vessel to set sail the insurer is not liable for losses caused by
unseasworthiness.

50: a policy may be assigned. Typically, a ship owner might assign the benefit of a policy to the shipmortgagor.

60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive
total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual
total loss describes the physical destruction of a vessel or cargo.)

79: deals with subrogation, i.e., the rights of the insurer to stand in the shoes of an indemnified insured and
recover salvage for his own benefit.

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Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording.

4.1.12 TYPES OF MARINE INSURANCE POLICIES:-

The major types of marine insurance policies are
1. Time policy:-
Hull insurance is often sold in time policies, which cover risks during a stated period of time. An insured vessel
is not bound to a particular route and all voyages within the stated policy period are covered. If a voyage is not
complete at the policy's expiration date, many time policies contain a "continuation clause" extending coverage
until the boat reaches its destination.

2. Voyage policy:-
Voyage policies protect a certain ship traveling a certain route regardless of length of time. In these cases the
insurance would not be effective until the voyage begins and would terminate when the voyage ends.

3. Mixed policy:-
This policy is the combination of time and voyage policy. It, therefore, covers the risks for both particular
voyage and for a stated period of time.

4. Floating policy:-
Floating policy is taken for a relatively large sum by the regular suppliers of goods. It covers several shipments
which are declared afterwards along with other particulars. This policy is most situated to exporter in order to
avoid trouble of taking out a separate policy for every shipment.

5. Valued policy:-
Under its terms the agreed value of the subject matter of insurance is mentioned in the policy itself. In case of
cargo this value means the cost of goods plus freight and shipping charges plus 10% to 15% margin for
anticipated profit. The said value may be more than the actual value of goods.

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6. Unvalued policy (Open Policy):-

Where the value of the subject matter of insurance is not declared but left to be ascertained and proved later it
is called unvalued policy.

7. Builder's risk policy:-

This policy is issued for more than one year. This covers the risk of damage to vessels from the time its
construction commences until its trail is completed.

8. Blanket policy:-
Under the condition of the blanket policy the maximum limit of the required amount of protection is estimated
which is purchased in lump sum. The amount of premium is usually paid in advance. This policy describes the
nature of goods insured, specific route, ports and places of the voyages and covers all the risk accordingly.

9. Port risk policy:-

This policy covers all the risk of a vessel while it is standing at a port for particular period of time.

10. Wager policy:-

Where the assured has no insurable interest in the subject matter of insurance that is known as wager policy.
As this policy has no legal effect so it cannot be taken to a court of law. If underwrite refuses to accept the
claim the policy holder cannot take any legal action against him. It is, therefore, also called as gambling policy.

11. Special hazards policy:-

This policy covers special risks incident to piracy and war. It provides protection to insured under agreement
against seizure, capture, detention and other war risks.

12. Composite policy:-

This type of policy is purchased from more than one under writers. If there is no any motive of fraud then
insured will be indemnified by each under writer separately in case of loss.

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13. Block policy:-

This policy is particularly purchased to gold diggers. It covers all the risks of damage to gold from the time of
its recovery to its distinction. These types of policy have been introduced in Africa and are very popular in the
mine fields of gold.

14. Hull insurance:-

Hull insurance covers physical damage to an insured vessel as well as salvage costs and limited property
damage liability. It is similar to collision coverage for an automobile. Builder's risk policies protect these same
vessels during construction until they are ready for operation.

4.1.13 EXCLUSIONS OF MARINE CARGO INSURANCE:-

Loss or damage due to Delay
Loss or damage due to Insufficiency of packing
Loss or damage due to insolvency, financial default of ship owners, etc.

4.1.14 COMPANIES IN INDIA OFFERING MARINE CARGO INSURANCE:-

GSI LOGISTICS PVT. LTD, NEW DELHI
MARS SHIPPING AGENCY, MUMBAI
URANUS CLEARING AND FORWARDING SERVICES, CHENNAI
TRV FREIGHT SOLUTION PVT. LTD, NEW DELHI
FLOMIC FREIGHT SERVICES PVT. LTD

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 A MARINE CARGO INSURANCE APPLICATION FORM

4.2) AIR CARGO INSURANCE:-

A type of insurance policy that protects a buyer or seller of goods being transported through the air. Air cargo
insurance is designed to protect the insured against items damaged, destroyed or lost. Cargo insurance is
offered through insurance companies, some freight forwarders and trade service intermediaries. The amount
of coverage and deductible required with this insurance varies, with each insurance provider.

4.2.1 PAST AND PRESENT OF AIR CARGO INSURANCE:-

The man has long dreamed of learning to fly. This dream was realized humanity in the last century with the
establishment of the Wright Brothers first powered airplane. But it soon turned out that the possibility of air
transport are not limited to transport people from one airport to another. Therefore, from the second decade of
XX century began to develop actively cargo flights. And by the end of 1920, all formed at that time began to
offer airline cargo delivery by air.

The air transports of the time are not known for carrying capacity. However, over time all aircraft reached great
heights. If initially it was possible to carry on a plane not more than a thousand pounds of cargo, by the end of
the third decade of the XX century, appeared in the air transport, air cargo has made possible to a million
pounds of weight. And one of the first companies to include in the active development of air cargo was Boeing.
This company belongs to the glory of creating the first mail plane in the U.S., known as the Model 40.

Before the Second World War, a commercial airline could not fully express themselves in the development of
transportation because of the limitations. But in 1941, some of them managed to get permission for this activity.
As a result, by American Airlines in 1942 have been mastered transcontinental cargo flights. And one of the
first aircraft used by the company was a Douglas DC-3. This model is due to its flight and lifting qualities
aroused great interest of the U.S. Army. By the end of the war were fired more than ten thousand of these
aircraft. It is on the Douglas DC-3 that makes the first trucking company Lufthansa from Europe to America
in 1957.

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Regular intercontinental air freight began with the appearance of Douglas DC-6. The model is designed for the
transportation of cargo, entered service in 1949. It's a plane with excellent for the time characteristics, having
increased capacity to withstand heavy payload, with a spacious interior - extremely popular air transport equally
well used for the transport of persons, and for the delivery of goods.

The next stage in the development of trucking is the creation of a giant cargo and passenger Boeing 747. For
the release of such powerful in size aircraft had to build a new plant in the United States, where they began to
be produced from the 70's. The demand for huge Boeing began to decline only with the beginning of the new
millennium. During this time, a lot of modifications as Boeing 747 passenger and cargo destinations. At the
moment, for passenger airlines, this model is no longer sold, but airfreight famous «Jumbo Jet» still performs
with surprising regularity.

Current level of development of transportation by air creates more competition among the many companies
offering trucking. And choosing among them is suitable for specific purposes can be difficult without the help
of professionals. The company "Borger" is ready to take on the full range of services to ensure the safe delivery
of any goods by air, on certification of goods and customs clearance to the construction of the optimal route,
the choice of airline and freight forwarding to the destination.

4.2.2 COVERAGE:-
Warehouse-to-warehouse coverage for physical loss or damage to goods caused by an external event. Coverage
for litigation and labor expenses incurred to prevent or mitigate a loss.

Coverage for landing, warehousing and forwarding charges incurred as the result of an insured peril. It can be
extended to include inland transit and warehouse risks as well as coverage for war, strikes, riots and civil
commotion, terrorism, theft, hijacking, shortage and non-delivery.

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4.2.3 BRIEF OVERVIEW:-

Air cargo services are characterized by tighter control over its cargo due to short transportation time. Short
transportation time and tight control reduce the cargo exposure to theft, pilferage and damage. Freight,
packaging and labor costs can be saved dramatically with air freight services due to faster delivery and better
security.

4.2.4 ADVANTAGES OF AIR CARGO INSURANCE:-

The first and the undeniable advantage air cargo are certainly operative. Because at the moment there is no
faster shipping method than by air transport. And speed is a major factor in many situations, so often the high
cost of the rapid movement of goods does not bother the owners of cargo.Quick transportation of perishable
goods - the main condition for the preservation of their quality. This category includes not only products that
are easily stored, and for a long time, say, in a deep freeze.

Speed of delivery is of particular importance in air cargo related to health care. These drugs with a limited shelf
life, and organs for transplantation, and donor blood.This also is attributed transported plants and animals, as
well as the press, that sounds pretty unexpected, but logical.

Another advantage of air cargo is the ability to deliver to hard for all other transport areas. This is especially
true for regions, the way in which to train and freight wagons block the mountains or rivers. Even in cases
where the message cut off from the mainland area may land or water, often bring back the goods "on the
chaise," using the roads and railways, and trucks and ferries or barges, repeatedly overloading the product.
This method of delivery as a result is not only time consuming but also very expensive, so air travel in this
situation is more suitable.

And, of course, to the advantages of air cargo should include the safety of this mode of transportation.
Sending goods by air do not worry about their safety, regardless of the distance, which he has to overcome.
When air travel is lost nothing, does not deteriorate, and always delivered on time. And to provide even more
reliable delivery of cargo by air, which not only help you make the best route to choose a suitable carrier and
competently prepare all necessary documents, but will provide professional support to the shipping destination.

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4.2.5 DISADVANTAGES OF AIR CARGO INSURANCE:-

High cost of freight air. When the delivery is not as per the mentioned time, it becomes in appropriate along
with the value and importance of goods.

In cases where it is not too high, air transport is simply not profitable. Therefore, for leisurely delivery cheap
goods is another preferred type of transport, for example, by water, in the case of delivery of cargo from one
continent to another, or trains, when the destination is on the same continent. In the latter case is not as popular,
and delivery trucks.

Another negative point may be difficulties with delivery of small loads by air. When it comes to small-sized
goods, air cargo relevant is only when supplying them in large quantities. Otherwise, the cost of shipping will
be higher than the cost of transported goods. But this deficiency can usually be overcome by choosing to air
transportation of cargo delivery as urgent transport of small parties small items required infrequently.

4.2.6 FEATURES AND CUSTOMS OF AIR CARGO INSURANCE:-

International transport of goods is most often carried out by air, because it is the most rapid and secures way
to deliver the goods. So you can carry not only lightweight and small things, but also very significant in weight
and size. Air Cargo can quickly move oversized cargo in small batches over long distances. Provided competent
package and secure international air transportation cost with almost no loss of quality, regardless of the
characteristics of the goods.

In case of non-flying conditions or other unforeseen circumstances, there is air cargo insurance, which reduces
the risks associated with this mode of transportation to a minimum. But the peculiarity of international air
travel is that a great deal is also customs. Customs procedures remain virtually unchanged from the time of its
formation. Moreover, they are similar enough for freight and passenger traffic.

The main function of the customs authorities in both cases is the control of goods transported on international
flights. That's what the customs officers at airports check. In international air travel for passengers checking
the luggage at a special place on the airport. In the departure lounge customs, inspection is carried out before
the registration desk. After customs clearance passengers are recorded in counters, they have to present a
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passport and issue the luggage of transportation. Next, there is a special check conducted for the presence of
prohibited items for carriage.

To prevent unauthorized cargo, Customs cooperate with services by air monitoring. Indeed, apart from the
official flight, there are also private flights. And international air travel has a feature that consists of the fact
that the foreign aircraft in the territory of any State may be inspected only in case of emergency. Therefore, the
interaction of the air and ground services helps to take control of the airfield, checking all aircraft for possible
hiding place of facts.

There are certain rules governing international air freight. These rules are determined by the allowable size and
weight, packaging, labeling and matching contents of consignment. Flight transported goods must comply with
safety standards and do not pose a threat to other crew's baggage and cargo ship. There are clear instructions
for the transport of perishable goods. Unfortunately, the rules are not always respected, and a violation of the
tracking is also included in the task control services.

4.2.7 VARIOUS GOODS CARRIED IN AIR CARGO:-

Special Handling:-
Fragile item transport applies for those articles that because of their characteristics, form, or packaging may
break or be damaged upon being transported by COPA AIRLINES COLOMBIA. This type of cargo must be
properly packed with materials that protect, particularly with a cushioning material that keeps goods protected.

Some of these articles include: computers, dishes/plates, cellular telephones, LCD and plasma TVs, ceramics,
and crystal. All of these items must be in perfect condition and provided packaging that protects them during
transport.

Perishable Goods:-
Goods that when not kept under certain conditions are affected in a way that compromises their essential
qualities.

Perishable goods include products such as: fruits, flowers, vegetables, meats, eggs, medicines and transplants,
organs, fish, etc. This type of cargo is usually evaluated to make sure that there is no leakage and that internal
packing is sufficient for absorption if any spillage does occur during transport.

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Personal Belongings:-
Personal belongings must include a packing list in order to be received as cargo. If they are not accompanied
by a packing list, they must be stamped with a shipping label that relieves Copa Airlines Colombia of any
responsibility in losses during shipment. This includes luggage (excess luggage), and household items (moves).
Passengers generally find out about this cargo service when they have excess baggage and prefer the service
for its value.

Human Remains:-
Human remains include:
1. Cadavers: the human body.
2. Incinerated remains: ashes of a human body.

Cadavers:
Must be embalmed and packed in this order: a zinc or iron metal box (hermetic), absorbent material, a wooden
box (casket), cardboard, and finally a wooden crate with handles.

Incinerated Remains:-
Must be contained in a funerary urn, stored in external packaging, and contained with sufficient and proper
cushioning material.

Note:-
Human remains from individuals that have passed away as a result of an infectious disease must be cremated in
order to be transported in any way.

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Valuable Goods:-
Valuable goods are any that include gold, platinum, bank notes, securities, stock shares, cash, etc. For the
transport of said goods, commercial agreements and procedures must be agreed upon before transport.

Live Animals:-
Live animals may be accepted as air cargo provided they comply with the following requisites:
They are domesticated or otherwise non-harmful animals.
They are kept in cages or packaging that is suitable and safe.

Documentation:-
Dogs must be accompanied by vaccination documents.

Dangerous Goods
Are articles or substances that may pose risks to human health, safety, security, property, or the environment.

Types of Dangerous Goods:-

• Explosives such as firecrackers, fireworks, ammunition, bullets, sparklers, etc.
• Gases such as extinguishers, camping fuel, aerosols, sprays, inhalers, lighters, oxygen bottles,
compressed gases, etc.

• Flammable liquids such as adhesives, glues, acetone, paints, resins, oil products, varnishes, perfume
products, etc.

• Flammable solids such as candles, metallic dusts (zinc, magnesium), lithium, sodium, activated carbon,
etc.

• Oxidants and organic peroxides such as fertilizers, ammonium nitrate, chlorine, oxygen generators, etc.

• Infectious and toxic substances such as pesticides, herbicides, disinfectants, contaminated blood,
infected samples, etc.

• Radioactive materials such as smoke detectors, plutonium, uranium, and any other materials that give
off ionizing radiation.

Corrosive substances such as acids, bases, mercury, ammonia, household cleaners, batteries, etc.

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Miscellaneous dangerous goods such as magnetized materials, chemistry sets, dry ice, motorcycles, vehicles,
rescue materials, etc.

4.2.8 VARIOUS COMPANIES PROVIDING AIR CARGO SERVICES:-

Road Runner Logistic Services Pvt. Ltd, New Delhi
Linear Freight Logistics India Private Limited, Mumbai
BWI Logistics Private Limited (Import Agent), New Delhi
Vrl Cargo Packers and Movers, Ahmedabad
Phoenix International, Rajkot

4.2.9 WORLD'S LARGEST AIR CARGO CARRIERS:-

1. TOTAL SCHEDULED AIR CARGO TONNES-KMS FLOWN
2. FedEx Express - 14.579 million
3. Korean Air - 8.264 million
4. Lufthansa Cargo - 8.040 million
5. United Parcel Service - 7.353 million
6. Singapore Airlines Cargo - 7.143 million
7. Cathay Pacific - 5.876 million
8. China Airlines - 5.642 million
9. Eva Airways - 5.477 million
10. Air France - 5.388 million
11. Japan Airlines - 4.924 million

TOTAL INTERNATIONAL SCHEDULED CARGO TONNES-KMS FLOWN

1. Korean Air - 8.164 million
2. Lufthansa Cargo - 8.028 million
3. Singapore Airlines Cargo - 7.143 million
4. Cathay Pacific - 5.876 million
5. China Airlines - 5.642 million
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6. FedEx Express - 5.595 million

7. Eva Airways - 5.477 million
8. Air France - 5.384 million
9. British Airways - 4.771 million
10. Cargolux - 4.670 million

TOTAL DOMESTIC SCHEDULED CARGO TONNES-KMS FLOWN

FedEx Express - 8.984 million
United Parcel Service - 4.260 million
Northwest Airlines - 0.949 million
China Southern Airlines - 0.860 million
American Airlines - 0.576 million
Delta Air Lines - 0.557 million Air
China - 0.531 million

United Airlines - 0.525 million

Cargojet Airways - 0.517 million
China Eastern Airlines - 0.458 million

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 AN AIR CARGO INSURANCE APPLICATION FORM

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4.3) RAILWAY CARGO POLICY:-

Rail freight transport is the use of railroads to transport cargo as opposed to human passengers. A freight train
or goods train is a group of freight cars or goods wagons hauled by one or more locomotives on a railway,
transporting cargo all or part of the way between the shipper and intended destination as part of the logistics
chain. Trains may haul bulk material, intermodal containers, general freight or specialized freight in purpose-
designed cars. Rail freight practices and economics vary by country and region.

When considered in terms of ton-miles or tonne-kilometers hauled per unit of energy consumed, rail transport
can be more efficient than other means of transportation. Maximum economies are typically realized with bulk
commodities (e.g., coal), especially when hauled over long distances. However, rail freight is often subject to
transshipment costs, which may exceed that of operating the train itself, a factor that practices such as
containerization aim to minimize. Bulk shipments are less affected by transshipment costs, with distances as
short as 30 kilometers (18.6 mi) sufficient to make rail transport economically viable. However, shipment by
rail is not as flexible as by highway, which has resulted in much freight being hauled by truck, even over long
distances.

Traditionally, large shippers build factories and warehouses near rail lines and have a section of track on their
property called a siding where goods are loaded on to or unloaded from rail cars. Other shippers have their
goods hauled (drayed) by wagon or truck to or from a goods station (freight station in US). Smaller locomotives
transfer the rail cars from the sidings and goods stations to a classification yard, where each car is coupled to
one of several long distance trains being assembled there, depending on that car's destination. When long
enough, or based on a schedule, each long distance train is then dispatched to another classification yard. At
the next classification yard, cars are resorted. Those that are destined for stations served by that yard are
assigned to local trains for delivery. Others are reassembled into trains heading to classification yards closer to
their final destination. A single car might be reclassified or switched in several yards before reaching its final
destination, a process that made rail freight slow and increased costs. Many freight rail operators are trying to
reduce these costs by reducing or eliminating switching in classification yards through techniques such as unit
trains and containerization. In many countries, railroads are built to haul one commodity, such as coal or ore,
from an inland point to a port.

A major disadvantage of rail freight is its lack of flexibility. In part for this reason, rail has lost much of the
freight business to road transport. Many governments are now trying to encourage more freight onto trains,
because of the environmental benefits that it would bring; rail transport is very energy efficient.
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In Europe (particularly Britain) many manufacturing towns developed before the railway. Many factories did
not have direct rail access. This meant that freight had to be shipped through a goods station, sent by train and
unloaded at another goods station for onward delivery to another factory. When lorries (trucks) replaced horses
it was often economic and faster to make one movement by road. In the United States, particularly in the West
and Mid-West towns developed with railway and factories often had direct rail connection. Despite the closure
of many minor lines carload shipping from one company to another by rail remains common. Many rail systems
have turned to computerized scheduling for trains which has helped add more train traffic to the rails. Many
businesses ship their products by rail if they are shipping long distance because it can be cheaper to ship in
large quantities by rail than by truck; however barge shipping remains a viable competitor where water
transport is available. Economies of scale are achieved because less labor and energy is required to haul the
same amount of cargo.

In some countries rolling highway trains are used; trucks can drive straight onto the train and drive off again
when the end destination is reached. A system like this is used on the Channel Tunnel between the United
Kingdom and France. In other countries, the tractor unit of each truck is not carried on the train, only the trailer.
Piggy back trains are common in the United States, where they are also known as trailer on flat car or TOFC
trains, but they have lost market share to containers (COFC), with longer, 53-foot containers frequently used
for domestic shipments. There are also roadrailer vehicles, which have two sets of wheels, for use in a train, or
as the trailer of a road vehicle.

There are also many other types of wagon, such as "low loader" wagons for transporting road vehicles; there
are refrigerator vans for transporting food, simple types of open-topped wagons for transporting minerals and
bulk material such as coal, and tankers for transporting liquids and gases. Most coal and aggregates are moved
in hopper wagons that can be filled and discharged rapidly, to enable efficient handling of the materials.

Freight trains are sometimes illegally boarded by individuals who do not wish, or do not have the money, to
travel by ordinary means, a practice referred to as "hopping." Most hoppers sneak into train yards and stow
away in boxcars. Bolder hoppers will catch a train "on the fly," that is, as it is moving, leading to occasional
fatalities, some of which go unrecorded. The act of leaving a town or area by hopping a freight train is
sometimes referred to as "catching-out", as in catching a train out of town.

4.3.1 REGIONAL DIFFERENCES:-

Railroads are subject to the network effect. The more points they connect to, the greater the value of the system
as a whole. Early railroads were built to bring resources, such as coal, ores and agricultural products from
inland locations to ports for export. In many parts of the world, particularly the southern hemisphere, that is
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still the main use of freight railroads. Greater connectivity opens the rail network to other freight uses including
non-export traffic. Rail network connectivity is limited by a number of factors, including geographical barriers,
such as oceans and mountains, technical incompatibilities, particularly different track gauges and railway
couplers, and political conflicts. The largest rail networks are located in North America and Eurasia. Long
distance freight trains are generally longer than passenger trains, with greater length improving efficiency.
Maximum length varies widely by system. See longest trains for train lengths in different countries.

4.3.1.1 North America:-

Canada, Mexico and the United States are connected by an extensive, unified standard gauge rail network. The
one notable exception is the isolated Alaska Railroad, which is connected to the main network by rail barge.

Rail freight is well standardized in North America, with Janney couplers and compatible air brakes. The main
variations are in loading gauge and maximum car weight. Most trackage is owned by private companies that
also operate freight trains on those tracks. Since the Staggers Rail Act of 1980, the freight rail industry in the
U.S. has been largely deregulated. Freight cars are routinely interchanged between carriers, as needed, and are
identified by company reporting marks and serial numbers. Most have computer readable automatic equipment
identification transponders. With isolated exceptions, freight trains in North America are hauled by diesel
locomotives, even on the electrified Northeast Corridor.

Ongoing freight-oriented development includes upgrading more lines to carry heavier and taller loads,
particularly for double-stack service, and building more efficient intermodal terminals and transload facilities
for bulk cargo. Many railroads interchange in Chicago, and a number of improvements are underway or
proposed to eliminate bottlenecks there.[4] The U.S. Rail Safety Improvement Act of 2008 mandates eventual
conversion to Positive Train Control signaling.

The Guatemala railroad is currently inactive, preventing rail shipment south of Mexico. Panama has freight
rail service, recently converted to standard gauge, that parallels the Panama Canal. There has never been a rail
line to South America, but a connection, FERISTSA, from Mexico to Panama, has been proposed in the past.

4.3.1.2 EURASIA:-
Coal awaiting shipment to an electric generating plant in Germany
Train station in Tatarstan, Russia with container and tank cars There
are four major rail networks on the Eurasian land mass.
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Most counties in the European Union participate in a standard gauge network. The United Kingdom is linked
to this network via the Channel Tunnel. The Marmaray project will connect Europe with eastern Turkey, Iran
the Middle East via a rail tunnel under the Bosphorus when it opens in late 2013. Spain and Portugal are mostly
broad gauge, though Spain has built some standard gauge lines that connect with the European high speed
passenger network. A variety of electrification and signaling systems are in use, though this is less of an issue
for freight, however overhead electrification prevents double stack service on most lines. Archaic buffer and
chain couplers are generally used for freight, though there are plans to develop an automatic coupler compatible
with the Russian SA3. See Railway coupling conversion.

The countries of the former Soviet Union, along with Finland and Mongolia, participate in a Russian
gaugecompatible network, using SA3 couplers. Major lines are electrified. Russia's Trans-Siberian Railroad
connects Europe with Asia, but does not have the clearances needed to carry double-stack containers. China
has an extensive standard gauge network. Its freight trains use Janney couplers. China has ambitious plans to
extend its high speed rail network to neighboring countries and far westward, with an eventual goal of two day
service to Europe.

India and Pakistan operate extensive broad gauge networks. India also has substantial meter gauge trackage,
but it has a Project Unigauge to convert much to broad gauge. Indo-Pakistani wars and conflicts currently
restrict rail traffic between the two countries to two passenger lines. There are also links to Bangladesh and
Nepal. India operates some double stack service without the use of the special well cars needed elsewhere. The
four major Eurasian networks link to neighboring countries and to each other at several breaks of gauge points.
Containerization has facilitated greater movement between networks, including a Eurasian Land Bridge.

4.3.1.3 SOUTH AMERICA:-

Brazil has a large rail network, mostly meter gauge, with some broad gauge. It runs some of the heaviest iron
ore trains in the world on its meter gauge network.

Chile and Argentina have Indian gauge networks in the south and meter gauge networks in the north. The meter
cauge networks are connected at one point, but the only rail link between the broad gauge lines is currently not
in service. Most other countries have isolated rail systems, if any.

4.3.1.4 AFRICA:-
The railways of Africa were mostly started by colonial powers to bring inland resources to port. There was
little regard for eventual interconnection. As a result there are a variety of gauge and coupler standards in use.
A Cape gauge network with Janney couplers serves southern Africa. East Africa uses meter gauge.
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North Africa uses standard gauge, but potential connection the European standard gauge network is blocked by
the Arab-Israeli conflict.

4.3.1.5 AUSTRALIA:-
Rail developed independently in different parts of Australia and, as a result, three major rail gauges are in use.
A standard gauge Trans-Australian Railway spans the continent.

4.3.3 STATISTICS:-
Rail freight by network, billion tonne-km

In 2011, North American railroads operated 1,471,736 freight cars and 31,875 locomotives, with 215,985
employees; They originated 39.53 million carloads (averaging 63 tons each) and generated $81.7 billion in
freight revenue. The largest (Class 1) U.S. railroads carried 10.17 million intermodal containers and 1.72
million trailers. Intermodal traffic was 6.2% of tonnage originated and 12.6% of revenue. The largest
commodities were coal, chemicals, farm products, nonmetallic minerals and intermodal. Coal alone was

43.3% of tonnage and 24.7% of revenue. The average haul was 917 miles. Within the U.S. railroads carry
39.9% of freight by ton-mile, followed by trucks (33.4%), oil pipelines (14.3%), barges (12%) and air (0.3%).

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Railways carried 17.1% of EU freight in terms of tonne-km, compared to road transport (76.4%) and inland
waterways (6.5%).

4.3.4 BULK CARGO:-

Bulk cargo is commodity cargo that is transported unpackaged in large quantities. It refers to material in either
liquid or granular, particulate form, as a mass of relatively small solids, such as petroleum, grain, coal, or
gravel. This cargo is usually dropped or poured, with a spout or shovel bucket, into a bulk carrier ship's hold,
railroad car, or tanker truck/trailer/semi-trailer body. Smaller quantities (still considered "bulk") can be boxed
(or drummed) and palletized. Bulk cargo is classified as liquid or dry.

Bulk cargo constitutes the majority of tonnage carried by most freight railroads. Bulk cargo is commodity
cargo that is transported unpackaged in large quantities. These cargos are usually dropped or poured, with a
spout or shovel bucket, as a liquid or solid, into a railroad car. Liquids, such as petroleum and chemicals, and
compressed gases are carried by rail in tank cars

Hopper cars are freight cars used to transport dry bulk commodities such as coal, ore, grain, track ballast, and
the like. This type of car is distinguished from a gondola car (US) or open wagon (UIC) in that it has opening
doors on the underside or on the sides to discharge its cargo. The development of the hopper car went along
with the development of automated handling of such commodities, with automated loading and unloading
facilities. There are two main types of hopper car: open and covered; Covered hopper cars are used for cargo
that must be protected from the elements (chiefly rain) such as grain, sugar, and fertilizer.

Open cars are used for commodities such as coal, which can get wet and dry out with less harmful effect.
Hopper cars have been used by railways worldwide whenever automated cargo handling has been desired.
Rotary car dumpers simply invert the car to unload it, and have become the preferred unloading technology,
especially in North America; they permit the use of simpler, tougher, and more compact (because sloping ends
are not required) gondola cars instead of hoppers.

4.3.4.1 EXAMPLES OF DRY BULK CARGO:-

1. Bauxite
2. Bulk minerals (sand & gravel, copper, limestone, salt, etc.)
3. Cement
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4. Chemicals (fertilizer, plastic granules & pellets, resin powder, synthetic fiber, etc.)
5. Coal
6. Dry edibles (for animals or humans: alfalfa pellets, citrus pellets, livestock feed, flour, peanuts, raw or
refined sugar, seeds, starches, etc.)

7. Grain (wheat, maize, rice, barley, oats, rye, sorghum, soybeans, etc.)
8. Iron (ferrous & non-ferrous ores, ferroalloys, pig iron, scrap metal, pelletized taconite), etc.)
9. Wood chips.

4.3.4.2 EXAMPLES OF LIQUID BULK CARGO:-

Non edible and dangerous liquids:-
• Dangerous chemicals
• Gasoline
• Liquefied natural gas (LNG)
• Petroleum

Liquid edibles and non dangerous liquids:-

• Cooking Oil
• Fruit juices
• Milk
• Vegetable oil
• Zinc Ash

4.3.5 HEAVY DUTY ORE TRAFFIC:-

The heaviest trains in the world carry bulk traffic such as iron ore and coal. Loads can be 130 tonnes per wagon
and tens of thousands of tonnes per train. Daqin Railway transports more than 1 million tonnes of coal to the
east sea shore of China every day and in 2009 is the busiest freight line in the world Such economies of scale
drive down operating costs. Some freight trains can be over 7 km long.

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4.3.6 CONTAINERIZATION:-
Containerization is a system of intermodal freight transport using standard shipping containers (also known as
'ISO containers' or 'isotainers') that can be loaded with cargo, sealed and placed onto container ships, railroad
cars, and trucks. Containerization has revolutionized cargo shipping. As of 2009 approximately 90% of non-
bulk cargo worldwide is moved by containers stacked on transport ships; 26% of all container transshipment
is carried out in China. As of 2005, some 18 million total containers make over 200 million trips per year.

Use of the same basic sizes of containers across the globe has lessened the problems caused by incompatible
rail gauge sizes in different countries by making transshipment between different gauge trains easier. While
typically containers travel for many hundreds or even thousands kilometers on the railway, Swiss experience
shows that with properly coordinated logistics, it is possible to operate a viable intermodal (truck + rail) cargo
transportation system even within a country as small as Switzerland.

4.3.7 DOUBLE STACK CONTAINERIZATION:-

Most flatcars (US) or flat wagons (UIC) cannot carry more than one standard 40-foot (12.2 m) container on
top of another because of limited vertical clearance, even though they usually can carry the weight of two.
Carrying half the possible weight is inefficient. But if the rail line has been built with sufficient vertical
clearance, a double-stack car can accept a container and still leave enough clearance for another container on
top. This usually precludes operation of double-stacked wagons on lines with overhead electric wiring. China
runs double stack trains with overhead wiring, but does not allow two maximum height containers to be
stacked.

In the United States, Southern Pacific Railroad (SP) with Malcom McLean came up with the idea of the first
double-stack intermodal car in 1977. SP then designed the first car with ACF Industries that same year. At first
it was slow to become an industry standard, then in 1984 American President Lines started working with the
SP and that same year, the first all "double stack" train left Los Angeles, California for South Kearny, New
Jersey, under the name of "Stacktrain" rail service. Along the way the train transferred from the SP to Conrail.
It saved shippers money and now accounts for almost 70 percent of intermodal freight transport shipments in
the United States, in part due to the generous vertical clearances used by U.S. railroads. These lines are diesel
operated with no overhead wiring.

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Double stacking is also used in Australia between Adelaide, Parkes, Perth and Darwin. These are diesel only
lines with no overhead wiring. Double stacking is used in India for selected freight-only lines.

4.3.8 SPECIAL CARGO:-

Several types of cargo are not suited for containerization or bulk; these are transported in special cars custom
designed for the cargo.

Automobiles are stacked in open or closed autoracks, the vehicles being driven on or off the carriers.
Steel plates are transported in modified gondolas called coil cars.
Goods that require certain temperatures during transportation can be transported in refrigerator cars (or reefers
- US) or refrigerated vans, but refrigerated containers are becoming more dominant.

Center beam flat cars are used to carry lumber and other building supplies.
Extra heavy and oversized loads are carried in Schnabel cars.

4.3.9 VARIOUS COMPANIES IN INDIA OFFERING RAILWAY CARGO SERVICES:-

• SAL Logistics Pvt. Ltd, New Delhi

• AXIS Freight Solutions Pvt. Ltd, New Delhi
• OMX, Delhi
• A.R. Shipping and Logistics, Hyderabad
• Royal Logistics, Chennai
• Rays Logistics, Pune

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 A RAILWAY CARGO INSURANCE APPLICATION FORM

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4.4) MOTOR TRUCK CARGO INSURANCE:-

Protection required under the Motor Carrier Act of 1935. The policy covers the motor truck carrier if it is
legally liable for the damage, destruction, or other loss of the customer‘s property being shipped. This includes
lost packages, broken contents, and stolen articles.

This insurance policy, without question, requires careful thought and evaluation prior to purchasing. In
addition, the customer needs to be constantly evaluating the nature of his/her freight to make sure the coverage
meets the demands.

The Motor Truck Cargo policy can be, and usually is, tailored to meet customer's operations and exposure.
Significant exclusions create many situations where there might be no coverage. A good insurance broker will
ask the customer pertinent questions that properly address this concern. The Motor Tuck Cargo policy can also
contain provisions to insure the cargo when it is in the customer's terminal or warehouse. This exposure results
when the freight cannot be delivered the same day or is consolidated with other shipments. The coverage exists
so long as there is no separate charge made for storage or warehousing.

Similar to Motor Truck Cargo is the insurance policy which protects the customer for the freight his/her charge
storage charges for. The customer needs to utilize a warehouse receipt, similar to a bill of lading, for the storage
which specifies the terms of his/her storage contract.

In truck cargo insurance, Whether the damage is caused by a collision, a fire, a load being accidentally dumped
onto a roadway, or even being run over while waiting to be loaded, the related costs can be incredibly
expensive. It‘s not just the cost of fixing or replacing the vehicle, the carrier may face. It may well be the
additional costs of replacing the goods in transit, compensating the customer and supplier or paying for the
clear up and associated costs of pollution and debris removal. Never mind any legal expenses. These costs can
be crippling to any business.

Any goods which are being shipped are subject to a Bill of Lading. The bill is designed to protect the carrier,
rather than the owner of the cargo and it stipulates very clearly the maximum amounts for which the carrier is
responsible. These limits are very low if the goods are shipped by truck - typically the default on a standard
bill of lading limits liability for the carrier to $2/lb. So if a Rolex watch (worth about $20,000) is lost in transit,
the carrier would only have to pay around $5 as compensation – a long way from its true value, because it is
so lightweight. However, as part of their risk management strategies, more and more companies want truckers
to insure their goods while they are in transit as it allows them to transfer the risk to the cargo carrier. Therefore
the focus then falls on the transport company to have the right insurance in place.

Not all Motor Truck Cargo policies are the same. There are companies that typically use broad all-risk legal
liability coverage which has been specifically designed to cover the risks faced by a trucking company hauling
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goods. Here are a couple of examples of what that means in practice: companies won‘t recommend policies that
exclude liability for a load if the power unit is detached from the trailer and the trailer is left unattended or
where loads are not insured overnight unless inside a secure yard. In a nutshell, Insurance managers will only
propose coverage for clients that will actually cover all the reasonable legal liabilities that a trucking company
would expect to have covered, not just some of their operations. The companies approach is firmly rooted in
the real world – meaning the customer is covered for the risks he is actually likely to face in the regular course
of his business.

By choosing a cost-effective policy from Insurance Companies cargo carriers will be able to rest safe in the
knowledge that their goods will be covered in case something happens to it while it‘s in their care. Insurance
Companies can create stand-alone Motor Truck Cargo Insurance policies for cargo carriers business or include
it in a wider cargo and vehicle insurance portfolio. They can provide coverage for almost any type of cargo –
from logging and drilling equipment, livestock, mobile homes to other vehicles being transported and certain
types of dangerous goods. As people would expect, there are certain exclusions in a Motor Truck Cargo policy,
which companies would explain to people in detail to help them get the very best coverage.

4.4.1 WHO NEEDS TRUCK CARGO INSURANCE?

A growing number of risk managers require truckers to insure their cargo. You can meet that requirement with
Motor Truck Cargo Insurance. It pays when you are responsible for damage to or loss of the cargo due to fire,
collision or even hitting or running over the cargo that you transport on behalf of a client.

4.4.2 VARIOUS COVERAGES UNDER TRUCK CARGO INSURANCE:-

4.4.2.1 Primary Liability:-

Primary Liability Insurance coverage protects carriers from damage or injuries to other people as a result of a
truck accident. This coverage is mandated by state and federal agencies and proof of coverage is required to
be sent to them. Companies provide coverage limits ranging from $35,000 to $1,000,000. Pricing is dependent
on region, driving records, and history of the trucking operation.

4.4.2.2 Physical Damage:-

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Physical Damage Insurance is coverage for carrier‘s truck and trailer. This coverage is for repair or replacement
for damage resulting from things such as collision, fire, theft, hail, windstorm, earthquake, flood, mischief, or
vandalism to your owned vehicles. Truck Insurance pricing is based on the value of the equipment and usually
pays a percentage of that value. This coverage may be required by the lien holder of the vehicle.

4.4.2.3 Motor Truck Cargo:-

Motor Truck Cargo insurance is needed to protect the carrier in case of lost freight or damaged goods. There
is a maximum load limit per vehicle with this policy. Truck insurance coverage limits can range from $10,000
to $100,000 with excess policies available upon request. Pricing for this insurance is mainly dependant on the
type of cargo being hauled.

4.4.2.4 Trailer Interchange:-

Trailer Interchange Insurance is coverage for the legal liability of truckers for loss or damage to non-owned
trailers and equipment which are in the insured's possession under a written trailer interchange agreement.

4.4.2.5 Non-Trucking Liability:-

Non-Trucking Liability provides limited liability insurance for owner-operators who are permanently leased
to an ICC regulated carrier. It provides limited liability protection when the owner-operator is not on dispatch,
nor pulling a loaded trailer. For example, this truck insurance coverage would apply when the owner-operator
gets their truck washed or brings their trucks into a shop for repairs. Once the owneroperator is under dispatch,
they are covered under the Primary Liability insurance policy of the company that they are leased to.

4.4.2.6 ICC Authority:-

Interstate Operating Authority is permission granted by the federal government to transport regulated freight
across state lines. Interstate Operating Authority is now granted by the Office of Motor Carrier Safety
Administration under the auspices of the Federal Highway Authority. Unlike many of the other regulations
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governing interstate operations, there is no minimum weight threshold that requires compliance. Any vehicle
operating for hire in interstate transportation of regulated freight or passengers must have operating authority.
Our in-house ICC practitioner can handle all of your necessary filings.

4.4.3 PURPOSE OF TRUCK CARGO INSURANCE COVERAGE:-

The purpose of motor truck cargo insurance coverage is to protect truck drivers from liability for transported
cargo that belongs to others. Coverage is available to common carriers who are available for hire by the general
public, and contract carriers, who haul cargo under terms of a contract that is engaged with a specific entity.

4.4.4 DOCUMENTATION:-
In order to file a claim, the trucker must have a copy of the bill of lading, which is a document that lists all of
the items that make up the cargo as well as its destination and dollar value. With a contract carrier, this
information should be listed in the actual terms of the contract.

4.4.5 COVERAGE PERIOD:-

Coverage begins when the trucker takes possession of the cargo, and ends when delivery is completed. In some
cases, the bill of lading specifies a brief period for which the carrier is still liable for the cargo after delivery to
allow time for the delivery to be picked up, if necessary. This normally does not exceed 72 hours.

4.4.6 DIFFERENCES:-
Coverage can vary depending on the insurance company. Policies may carry high deductibles or copayments
which could mean that the carrier could pay a significant portion of a claim out of pocket. Premiums can also
vary depending on the commodity that is being hauled. Coverage can be scheduled-which provides specific
coverage for each truck--or composite, which encompass an entire fleet.

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4.4.7 LIMITS AND DEDUCTIBLES:-

When people purchase Cargo insurance, they have to select a limit for their coverage. This limit determines the
maximum amount insured's insurance company will pay for damaged or destroyed cargo. People also need to
choose a deductible. A deductible is the amount they agree to pay out of pocket when they have a claim.
Choosing a higher deductible is an easy way to lower the price of their insurance, but they have to be sure to
choose a deductible that they can afford to pay out of pocket at any time.

4.4.8 RESTRICTIONS, EXCLUSIONS OR EXCEPTIONS TO TRUCK CARGO

INSURANCE:-
Motor Truck Cargo Insurance can only be obtained for for-hire trucking policies of the below body types:-
• Tractor
• Trailer (most)
• Dump Truck
• Cargo Vans
• Car Haulers
• Flatbeds
• Cement Mixers
• Box Trucks
• Pick-Ups (Dually)
• Motor Truck Cargo Insurance is not available for limos, buses, ice cream trucks, garbage trucks, hearses,
or passenger vans.

In addition to restrictions on the body type, there are also cargo exclusions. Cargo type exclusions include:-
• Shipping containers
• Live animals
• Property not included on a Bill of Lading
• Art

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• Jewelry
• Money
• Paper
• Pharmaceuticals
• Tobacco, alcohol, or contraband
• Property owned by the insured
• Radioactive or Explosive material
• Greater than 72 hour storage
• Property in custody of another carrier

Other restrictions and exclusions may apply. Motor Truck Cargo Insurance may not be available in every state.

4.4.9 TOP REASONS FOR PURCHASING TRUCK CARGO INSURANCE:-

4.4.9.1 Protect your financial interest:-
The insurance will automatically cover 100% of the insured invoice value, plus an additional 10%. The policy
protects cargo against "all risk" of physical loss or damage from any external cause no matter what the
percentage of loss, and with no deductible.

4.4.9.2 Enjoy peace of mind:-

Coverage begins as soon as the goods leave the shipper and/or supplier, continuing throughout transit to the
final destination. Insurance remains in force for 30 days after cargo discharge or delivery, whichever occurs
first. Concealed damage must be reported within three days of delivery, excluding Saturdays, Sundays, and
holidays.

4.4.9.3 Take advantage of competitive rates:-

Companies work hard to secure the best cargo insurance rates for their customers. Using the centralized
purchasing department, companies have negotiated competitive rates with a major international insurance
company.

4.4.9.4 Fast claims resolution:-

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In the unfortunate event the insured do have a claim, the companies experienced staff works hand in hand with
The Navigators Group to process the insured's claim quickly and without hassle. Claims are usually settled in
30 days or less.

4.4.10 VARIOUS COMPANIES PROVIDING TRUCK CARGO INSURANCE:-

• Hi Grow Associates, Raj Nagar
• Sainath Insurance Advisor, Rammurthy Nagar
• Pramod Kumar Insurance Advisor, Laxmi Nagar
• Excellent Investment Advisors, Rajouri Garden
• Cashless Insurance Point, Shastri Nagar

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 A TRUCK CARGO INSURANCE APPLICATION FORM

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CONCLUSION:-
Since there are the 4 major types of cargo insurance, people should choose the one which they find more
convenient and also as per the priority of the goods to be transferred or received within a particular time frame.
Also, choosing cargo insurance provides safety and guarantee to the product that has been shipped, in order to
recover for any losses that occur during the shipment stage. And hence, subscribing for cargo insurance is very
convenient as it saves time and energy and is also providing guarantee for the shipment of the goods.

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5. LEGAL SOURCES & RULES OF CARGO INSURANCE

5.1. GENERAL STIPULATIONS.

5.1.1. INVESTFLOT INSURANCE COMPANY in accordance with these Rules accepts for insurance cargoes
to be transported by surface, water and air transport.

5.1.2. The assured of cargoes may be the owner (consignor and/or consignee) for its own advantage and for the
advantage of the third parties.

5.1.3. The insurance contract may be concluded as for separate installment so for a regular transportation.

5. 2. EXTEND OF LIABILITY

5.2.1. Under insurance contract concluded in accordance with these Rules are indemnified:

a) losses and expenses due to total loss of the cargo (or part of it) and/or due to removal of damages to the
cargo (or part of it) arising from fortuitous accidents and perils of the carriage as well as due to other sudden
and unforeseen reasons except those specified in point

b) cargo's share in losses, expenses and contributions allowed in General Average during the merchant
seafaring;

c) necessary and properly incurred expenses for the salvage of the cargo as well as for preventing and
minimizing the loss and ascertaining its extent.

5.2.2. Losses and expenses arising in consequence of the following are not to be indemnified:

a) warlike operations and their consequences, piracy, commotion and labour conflicts, acts of sabotage or
terrorism;

b) participation of cargo in smuggling or other illegal activities or due to the attempt of such participation;

c) actions of governmental authorities against the insured cargo excluding measures to prevent or diminish the
risk of pollution;

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d) direct or backhanded affection of atomic explosion and radio-contamination connected with any application
of atomic energy;
e) willful action or rude imprudence of assured or beneficiary or their representatives and infraction by them
the rules of transportation and storage of cargo;

f) effect of usual weather conditions or specific and/or natural internals of cargo;

g) package or marking of cargoes with infraction of standards or dispatch of cargoes in damaged condition;
h) shortage/damage of internal quantity/quality if integrate of external package;

i) fire or explosion of the spontaneously combusting and explosive matters;

j) damage of cargo by worms, rodents, insects;

k) any collateral losses.

5.2.3. Not to be indemnified 10% of losses and expenses arising from one insurance accident. Nevertheless,
INVESTFLOT's liability in respect of all losses and expenses is limited by 100% of the insured sum.

5.3. CONCLUSION OF THE INSURANCE CONTRACT.

5.3.1. The insurance contract is concluded for one cargo conveyance. INVESTFLOT's liability starts from
the moment the cargo is taken from the place of storage including the loading in the point of departure and
covers storage/reloading of cargo in the points of transshipments.

5.3.2. The insurance contract expires at the moment of the cargo's delivery to the point of destination
(including discharging) but not more than 30 days from the start out of the insurance. Renewal over 30 days
can be provided for additional payment.

5.3.3. Under a special contract (General Policy) can be insured all or distinct kinds of cargoes which the
assured receive or transmit during a certain period. The assured is obliged to inform INVESTFLOT in respect
of each transmission of cargo falling under the General Policy even after the delivery of cargo to the point of
destination in undamaged condition. If the assured deliberately informed INVESTFLOT untimely, unduly or
didn't inform at all, than INVESTFLOT has a rights to cancel the General Policy and to receive all the sums
of the insurance premium which INVESTFLOT could receive in the case of a conscientious fulfillment of the
General Policy by the assured.
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5.3.4. The insurance contract is concluded on the basis of the assured's declaration in writing and
containing the following:

a) exact description, type of package, number of pieces and weight of the cargo;
b) numbers and dates of the transportation documents;

c) kind of vehicle;

d) points of departure, transshipment and destination of the cargo; e) insurance sum;

f) conditions of insurance;

g) particular circumstances not stipulated by these Rules.

5.3.5. If necessary the insurance contract is concluded with inspection of cargo and scheduling of its assessment
on the base of consignments, invoices and other documents confirming the presence and the value of the cargo.

5.3.6. The example of the above declaration is returned to the assured with calculation of the insurance premium
to be paid.

5.3.7. The assured is obliged to communicate any further particulars known to him regarding circumstances of
essential importance for judging the extent of the risk.

5.3.8. The assured is obliged to pay the calculated insurance payment at once, then the insurance contract will
entitle in force, unless otherwise stipulated in the insurance contract

5.4. INSURANCE SUM AND RATE.

5.4.1. The cargo is considered to be insured in the sum announced by the assured but not higher the value
specified in the customer's invoice (including transportation expenses) or other documents specified in point
of these Rules.

5.4.2. Rates of the insurance payments are established by INVESTFLOT in per cents of the insurance sum
in relation of the value and kind of the cargo, kind of vehicle and range of transportation and other essential
data for judging the extent of the risk. The sum of insurance payments is determined by multiplication of the
insurance sum and the established rates.
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5.4.3. The assured is obliged immediately he becomes aware thereof inform INVESTFLOT of any
essential modifications in the risk, for instance: delay of the cargo's shipment, modification of the route, places
of loading, transshipment, discharging, method of shipment etc.. Modifications increasing the extent of the risk
give INVESTFLOT the right to demand the additional insurance payment. If the assured refuses to pay the
additional insurance payments the insurance contract ceases from the moment of the increasing in the risk
appeared. If the assured didn't inform about the increasing in the risk INVESTFLOT has the right to cancel the
insurance contract and to demand the indemnity of the incurred losses.

5.5. Mutual relations between the parties if accident occurred.

5.5.1. If accident occurred the assured or its representatives are obliged to inform INVESTFLOT immediately,
and:

a) to apply all possible measures for salvage of the cargo and also to prevent its further damage;

b) within 24 hours to declare INVESTFLOT in writing about the circumstances of the accident and the expected
losses;

c) to present INVESTFLOT with the damaged cargo or its strays;

d) to ensure INVESTFLOT with the right of regress

5.5.2. INVESTFLOT is obliged to:

a) direct its representative or independent expert within 2 days after receiving the information in respect of the
accident for determination the extent of damage and adjustment of the cargo damage (loss) act;

b) decide on the payment of the insurance indemnity within 10 days after receiving the documents sustaining
the insurance accident.

5.5.3. INVESTFLOT has the right to refuse the payment of the insurance indemnity if the assured:

a) advised wrong information about the circumstances of essential importance for judging the extent of the risk;

b) didn't inform about the essential changers in the risk;

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c) didn't apply measures for salvage of the cargo and prevention its further damage;

d) didn't inform INVESTFLOT immediately about the accident;

e) didn't provide INVESTFLOT with documents sustaining the insurance accident;

f) concealed the person guilty in infliction of damages; g) damaged the cargo deliberately.
5.5.4. If the assured received indemnity of losses from the third party INVESTFLOT pays only the difference
between the sum that is to be paid-up upon the insurance conditions and the indemnity received from the third
party. 5.5. All expenses connected with the insurance accident are primarily paid-up by the assured and only
then are indemnified by INVESTFLOT.

5.5.6. While merchant seafaring the average adjusters should determine the General Average and make
computation on its assignment according to the declarations of the parties concerned. All documents must be
opened for revue and the average adjuster has to hand out the deposed copies of these documents to the parties
concerned on their demand and for their own account. For composition of the average statement the tax is
levied and included into the average statement and then proportioned between all parties concerned in
accordance with their shares in the General Average.

5.5.7. The assured can declare to INVESTFLOT the refusal of his rights on the insured cargo (abandonment)
and to be indemnified in full insurance sum, if:

a) missing (complete lost) of the transportation vehicle;

b) economical inexpedience in removal of damages or delivery of the insured cargo to place of destination;
c) grip of cargo (insured from this risk) which lasts more then 2 months. The abandonment must be declared
within 3 months from the moment of the insurance accident occurred. At the expiration of this period the
assured can demand the indemnity of losses on the common base. The abandonment can't be declared by the
assured provisionally and can't be taken back.

5.6. SUBROGATION

5.6.1. INVESTFLOT that paid-up the insurance indemnity receives within the ambit of this sum the right
of pretence to the guilty party; the insured is obliged at the receiving of the insurance indemnification circulate
all his documents necessary for realization of the subrogation.

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5.6.2. If on the fault of insured the subrogation can't be realized then insurer in the congruous size
disengage from the obligation to pay insurance indemnification, in case it has been paid-up already the insured
is obliged to return to insurer the insurance indemnification.

5. 6.3. Any disputes in connection with the insurance contract concluded in accordance with these Rules are
subject to the decision of Russian Law.

6. INSURANCE CLAIM AND DOCUMENTS REQUIRED

Cargo Claims Procedures may assist in overcoming difficulties that may be encountered in issuing claims for
loss or damage. In dealing with cargo claims it is important to remember that international rules (liability
regimes) apply to the carriage of goods by sea such as the Hague-Visby Rules.

Claims procedure

1. Immediate notification

2. Appoint a surveyor and arrange for joint/bilateral inspections of the damaged cargo

3. Mitigation: minimize and prevent further losses

4. Collect documents

5. Submit a substantiated and quantified claim

6. Protect against time bar

7. Lessons Learnt analysis

Claims procedure

1. Immediate notification:

• Notify your cargo insurer *)

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• Nofify and hold Cargow responsible for the loss and invite for inspection/survey

• If the damage was not apparent at the time of delivery of the cargo, notice should in any event be given within
3 days of delivery.

(It should be noted that your claims are being reviewed under limited liability per Bill of Lading terms and
conditions and International Conventions. This means that when your cargo is not insured by you, your claim
will solely be dealt with on the basis of Cargow‘s liability as carrier.)

2. Survey:

• Appoint a surveyor to act on your behalf

• It is important that your surveyor liaises intensively with our surveyor in order to prevent discussions
afterwards when the claim is finally presented

• Surveys should be carried out jointly with our surveyor; if possible the survey should take place while the
cargo is still untouched.

3. Mitigation:

• You have a legal obligation to minimize your loss and this obligation lies entirley on your side

• Your surveyor will be able to assist you herewith and should communicate this with our surveyor •

The costs hereof are, insofar that they are reasonable, part of your total claim towards Cargow

4. Collect documents:

• Proof of title to claim (e.g. bills of lading etc.) Evidence of ownership of the cargo to prove that the party
presenting the claim is indeed the rightfull claimant and the one that suffered the damages.

• Proof of claim (e.g. survey reports, commercial invoices, documentation showing quantity a/o value,
photographs, invoices of additional mitigation costs etc.) Any evidence or documentation, that provides
evidence of the claim and that reasonably supports the extent and the amount of the claimed loss.

5. Substantiated and quantified claim:

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A formal claim must be submitted before any settlement can be considered and should include: - Claim
statement and calculation of the specific value of the cargo damage or loss - Details of causation and this all
supported by the collected documents as described.

6. Time limit:

• In most cases your claim will be subject to an one-year time ba r (Hague Visby Rules) • If the claim is not
resolved within 1 year after the date of unloading you are to: - start legal proceedings or - request Cargow in
writing to extend the time limit. Cargow will normally, in consultation with their insurers, grant an extension

7. Leasons Learnt:

Any incident that leads to damage must be treated as an indication that something is wrong with the system.
Cargow will use the lessons learnt to reduce the probability of a similar incident happening again.
 Documentation required:

a. Suppliers invoice(s) to support the values and also indicate terms of sale.

b. Packing list or weight notes (where applicable).

c. Delivery receipts, landing accounts, and/or similar documents as evidence of the condition and place of loss.

d. All original transit documentation – for example, bill of lading, airway-bill, as evidence of the contract of
carriage. e. Correspondence with carriers, suppliers, or other third parties holding them responsible for any
loss or damage so that any subsequent recoveries can be sought from responsible parties.

f. Original policy or certificate of marine insurance, as applicable.

g. Survey report, if applicable.

h. Any other documentation not detailed above relevant to the shipment and the loss

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7. CLAUSESE OF CARGO INSURANCE

7.1 Structure of insurance terms

The policy consists of Institute Cargo Clauses (IC), General Terms of Contract of Cargo Insurance (CC), and
Additional Cover of Institute Cargo Clauses (AC 720-728). The insurance can by separate agreement be made
to include the War and Strikes Clauses (WS) and other common institute clauses (AC 729-760). Cargo
Insurance, International Clauses (KU 07) consists of the following terms and conditions:

●● IC Institute Cargo Clauses

●● WS War and Strikes Clauses

●● CC General Terms of Contract of Cargo Insurance

●● AC Additional clauses to cargo insurance and other common institute clauses

7.2 Application of insurance terms and conditions

These cargo insurance terms and conditions shall apply, unless otherwise agreed, to companies‘ and
entrepreneurs‘ deliveries from Finland to abroad, and within and between foreign countries. These terms and
conditions can be deviated from if separately agreed upon and marked down in the insurance policy or
agreement.

7.3 IC 1 PURPOSE OF INSURANCE

Pohjola Insurance Ltd (hereinafter Insurance Company) will indemnify under these conditions (KU07) against
any direct material damage to the insured goods caused by a sudden, unforeseen event, and any other expenses
specified in the terms and conditions.

7.4 IC 2 OBJECT OF INSURANCE

7.2.1 This policy covers transports and merchandise or other specified piece of property or benefit referred to
in the insurance contract or policy.

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7.2.2 The policy is valid only for transports using vehicles or equipment approved by the authorities for traffic
use or goods delivery (see clauses 6.2.4 and 707).

7.2.3 Unless otherwise agreed, the policy is not valid for towing or barge transportation.

7.2.4 Unless otherwise agreed, the policy is not valid for

●● cash, other means of payment and securities

●● precious metals, pearls, precious stones, jewellery and other valuables manufactured from the above raw
materials

●● valued musical instruments

●● works of art and valuable collections

●● live animals.

7.5 IC 3 INSURANCE COVERAGE

Depending on the extent of the policy, the terms applied for this cargo insurance can be either

●● Basic Conditions, Institute Cargo Clauses (C) or

●● Full Conditions, Institute Cargo Clauses (A) The insurance coverage is specified in the policy. Unless otherwise agreed,
the insurance is valid under

BASIC CONDITIONS (INSTITUTE CARGO CLAUSES (C),

(see item 700)) when the object of the insurance is:

●● forwarding, provided the preceding transport was not insured by Pohjola Insurance ●●

bulk cargo

●● goods carried in an open vehicle

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●● deck cargo. Deck cargo is not considered to include goods carried in a box container, box trailer or box van. A
conveyance or container equipped with a removable tarpaulin cover is not considered a box container, box trailer or box
van. If separately agreed, the policy may also include a War and Strikes Insurance to which a separate set of terms and
conditions is applied (WS).

7.6 IC 4 SPECIAL CORPORATE INSURANCE ADDITIONAL INSURANCE

No compensation is made under the insurance if compensation liability is based on forwarding, warehousing or transport
operations or the Road Transport Agreement Act, similar foreign acts, the CMR Convention or another

Finnish or foreign act, regulation or agreement related to a mode of transport, or the forwarder‘s liability in accordance
with the General Conditions of the Nordic Association of Freight Forwarders.
7.7 IC 5 POLICY FEE

If the insurance company issues a separate Marine Insurance Policy or Certificate at the policyholder‘s request, it will
debit EUR 70 for each document.

 IC INSTITUTE CARGO CLAUSES

 IC 700 Institute Cargo Clauses
 (C) 01/01/2009 CL 384 1/1/09

INSTITUTE CARGO CLAUSES (C)

7.8 RISKS COVERED

Risks

 This insurance covers, except as excluded by the provisions of Clauses 4, 5, 6 and 7 below,
 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,
 oss of or damage to the subject-matter insured caused by

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 general average sacrifice

 jettison. General Average
 This insurance covers general average and salvage charges, adjusted or determined according to the
contract of carriage and/or the governing law and practice, incurred to avoid or in connection with the
avoidance of loss from any cause except those excluded in Clauses 4, 5, 6 and 7 below. ‖Both to Blame
Collision Clause‖

 This insurance indemnifies the Assured, in respect of any risk insured herein, against liability incurred
under any Both to Blame Collision Clause in the contract of carriage. In the event of any claim by
carriers under the said Clause, the Assured agree to notify the Insurers who shall have the right, at their
own cost and expense, to defend the Assured against such claim.

 EXCLUSIONS
 In no case shall this insurance cover
 loss damage or expense attributable to wilful misconduct of the Assured
 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject-matter
insured

 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 of these Clauses ‖packing‖ shall be deemed to include stowage in a container and
‖employees‖ shall not include independent contractors)

 loss damage or expense caused by inherent vice or nature of the subject-matter insured
 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)
 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

 deliberate damage to or deliberate destruction of the subject-matter insured or any part thereof by the
wrongful act of any person or persons

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 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.

 In no case shall this insurance cover loss damage or expense arising from
 unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage of the subjectmatter
insured, where the Assured are privy to such unseaworthiness or unfitness, at the time the subject-matter
insured is loaded therein

 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.

 Exclusion
 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.

 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

 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by
or against a belligerent power

 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt thereat 
derelict mines torpedoes bombs or other derelict weapons of war.

 In no case shall this insurance cover loss damage or expense

 caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil
commotions

 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions

 caused by any act of terrorism being an act of any person acting on behalf of, or in connection with, any
organisation which carries out activities directed towards the overthrowing or influencing, by force or
violence, of any government whether or not legally constituted

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 caused by any person acting from a political, ideological or religious motive.

 DURATION
Transit Clause
 Subject to Clause 11 below, this insurance attaches from the time the subject-matter insured is first
moved in the 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

 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,

 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 insurance, which the
Assured or their employees elect to use either for storage other than in the ordinary course of transit or
for allocation or distribution, or

 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

 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.

 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.

 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.

 Termination of Contract of Carriage

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 If owing to circumstances beyond the control of the Assured either the contract of carriage is
terminated at a port or place other than the destination named therein or the transit is otherwise
terminated before unloading of the subject-matter insured as provided for in Clause 8 above, then this
insurance shall also terminate unless prompt notice is given to the Insurers and continuation of cover
is requested when this insurance shall remain in force, subject to an additional premium if required by
the Insurers, either

 until the subject-matter insured is sold and delivered at such port or place, or, unless otherwise
specially agreed, until the expiry of 60 days after arrival of the subject-matter insured at such port or
place, whichever shall first occur, or

 if the subject-matter insured is forwarded within the said period of 60 days (or any agreed extension
thereof) to the destination named in the contract of insurance or to any other destination, until
terminated in accordance with the provisions of Clause 8 above.

8. CASE STUDY

Policy no. 21/2009/320 dated: 2.12.2003 specific marine policy

Consignor: M/S Manav International, New Delhi

Consignment: Readymade Garments in container meant for export in 304 cartons

Packing: Container

Voyage: From Delhi to Panama

Mode: By Road/Sea

Sum Insured: Rs.67,93,000 on C&I + 10% (Rs.60,47,817 + 10%)

Coverage: ICC ‗A‘ with War & SRCC

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Bill of Lading: Delhi/0393 dated 8.12.2003

Invoice nos.: 03 & 04/2003 dated 4.11.2003

Status of container: Empty, noticed at consignee‘s warehouse.

Claim lodged: Invoice value US $ 134250 + 13425 + SF US$ 381 + Freight US$

1985 = Total US$ 150041

Course of Action suggested: Verifications with various agencies involved in transit of goods from -

consignor, carriers, shipping line, Custom Authority, local suppliers, fabricators, and consignee Document

Verification:-

Export Sales for yr. ending 31.3.2003: Rs. 4,24,41,593; GP =Rs. 45,22,854, (10.6%) and
NP= Rs.16,09,936 (3.79%)

Export Sales for yr. ending 31.3.2004: Rs.1,40,22,966 including the consignment; GP=
Rs.42,88,263 (30.58%) and NP= Rs. 19,79,320 (14.11%) Local

sales if any: Nil

Valuation of Cargo: The policy is issued as per cover note = Invoice Value + 10% (USD 134250 + 13425 =
USD 147675). Taking the conversion rate at Rs. 46 the Sum Insured was worked out
at Rs. 67,93,000.

Documents for export: Credit sales without letter of credit. Original B/L, Invoice, Packing list, original shipping
bills along with exchange control copy and export promotion copy were submitted to
the Bank for the purpose of clearance of GR/SDF form.

Transshipments: The container carrying the garments was loaded at port of Nhava Sheva, India and was
transshipped at port of Singapore and again transshipped at port of Hongkong and finally
the container was discharged from the vessel APL Tourmaline at the port of Manzanillo
International Terminal (MIT) Republic of Panama on 21.01.04
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Previous similar claims: one similar claim by the same client in yr.2003

Claim Settling agent: M/S W.K Webster(Overseas) Ltd. Appointed to investigate into nature of claim and
movement of cargo

Indian Investigator: M/S J C & Co. Pvt. Ltd., New Delhi to investigate into as the consignor and consignee
were closely related, to investigate into right from sampling, approval by importer,
purchases of fabric, fabrication, finishing, packing and voyage details upto receipt of
container at Consignee‘s warehouse

Brief facts of the case: 1. 1. The representative of the exporter visited the importer with samples and got the
necessary order for export, but no record/evidence of such person having visited the
importer to seek the order was produced

1.2. No samples approval by the importer or their photos were retained by the exporter nor any documentary
evidence to have the sample-garments fabricated/manufactured was produced.

2. The purchase order dt.20.9.2003 from the importer had following deficiencies:

(i) No specifications, whatsoever, of the garments ordered have been given; and from
the invoice and packing list, the goods have not been exported as per the order

(ii) As per the terms or the order the consignor is responsible till the goods are received
by the consignee in sound condition, therefore the consignee is not responsible for
payment in this case. However the balance sheet of the consignor showed and
outstanding amount due from the consignee only Rs. 49 lacs approx. against a
consignment of Rs.60 lacs approx.

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3.1. Purchases of fabric for manufacture of garment were arranged by one Mr. Mohan Lal under the name
Ganesh Trading Co, Katra Neel Chandni Chowk, Delhi-06 and other firms with different
addresses of which no trace was found out and firms seemed to be non-existent/bogus.

3.2 Surprisingly, even the purchases of the fabric started and delivered to the fabricators before the order of
importer.

4.1 The issuance of fabric to fabricators started before the date of purchase order of the importer dated 20.9.03,
without knowing the kind of garments to be fabricated

4.2 A good number of garments were received after the date of invoice dt.14.11.2003 but incorporated in the
invoice and packing list dt.14.11.03

4.2 In certain cases there was no sign/trace of fabricator who raised their bills against fabrication of the reported
garments

5. Corrugated cartons 655 were purchased before the import order for no reason
explained

6. Details for garments not suitable for export sent for refinishing and repacking could not be substantiated by
documentary evidence

Claim by Consignee: 1.1 On arrival of the container, the Importer Baby International found the custom seal
number changed. Letter from the port to the transporter observed the numbers of both
the seals of container were not visible. On contacting the shipping lines M/s Mitsui
OSK Lines Ltd and insurance Surveyor Mc Larens Toplis, Panama the
container was opened in the warehouse of consignee in the presence of representative of
OSK Lines and the container was found totally empty.

1.2 The consignee handed over the orginal B/L dated 8/12/03 issued by M/s ARK
Royale Agencies Pvt. Ltd. to their agent M/s Servicio International De Carga to obtain
the copy of master B/L dt 23.12.03 of M/s Mitsui OSK Lines Ltd. dully endorsed in
favour of M/s Baby International. At this point of time the consignee did not bring it to
the notice of the Servicio International about the changes in the seal number except a

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monetary claim letter dt. 23.3.04 was later lodged on them for loss of entire
consignment.

1.3 The delivery of the container were taken on 27.01.2004 through a driver of a trailer of M/S Intertrans by
handing over the endorsed master bill of lading dt. 23.12.03 without any remarks of erasing of seal
numbers. Normally delivery in case of illegible seal number should not have been taken without written
communication to M/s Servicio International and M/s Mitsui OSK Lines Ltd. An open assessment delivery
should be taken to find out the condition of the cargo inside the container. If any such open delivery
assessment is refused then only the delivery should be taken under protest. More so when a similar empty
container was received by Consignee‘s group M/s M & M Fashions barely a few days ago, the consignee
cannot afford to adopt such casual approach towards tampering with the seal numbers of container and
engaging the same carrier M/s Intertrans to take delivery of container independently.

1.4 Further the wt 7600 kg of goods and tare wt 1600 kg of the container should have came to notice of the
driver of Intertrans easily to judge the emptiness of the container when the seal numbers were illegible.
Consignee instructed the driver to take delivery of the container with a certificate from MIT mentioning
about the invisibility of seal numbers. Invisibility of seal numbers did not ascertain if the seals were
original or same. The conduct of the consignee shows that they were not worried about the cargo but to
create evidence about the abnormality of seal numbers only at the time of taking delivery. The consignee
should have insisted for open assessment delivery. The insured should have acted as if uninsured.

Right of Recovery: The claimant has to establish that the goods have been lost/damaged whilst in the
custody of any of the parties‘ enroute, to protect the recovery rights. The consignee
having noted invisibility of seal numbers should have gone for open assessment delivery
to note the condition of the cargo. Nothing as such has been established or even
attempted to be established. No monetary claim was lodged on M/s Mitsui OSK Lines
Ltd N Delhi, India.

Insurable Interest: 1.1 The purpose of insurance is to indemnify the insured for the financial losses suffered
by him due to the operation of insured perils. The insured can suffer loss only when he
has financial interest in the subject matter of insurance. This financial interest is called
insurable interest as defined in the Insurance Act. Also refer ICC clause 11.1.

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1.2 As per the sale contract between the consignor and the consignee- the consignor will be responsible till
the consignee received the consignment in sound condition at their warehouse. The consignment will be
shipped at the risk and responsibility of the Consignor insured.

1.3 If insured has no interest at the time of the loss, he cannot acquire it later after he is aware of the loss. Till
the time of loss the consignee had not made payment to the consignor. However, later the consignor has
confirmed that they have received the money of sale after some time of the loss. The policy was assigned
in favour of the consignee.

Admissibility of Claim:1.1 The invoices and packing lists were not found authentic. Lack of Utmost Good
faith was observed by the surveyor.

1.2 The insured did not act as if uninsured. The insured did not protect the recovery rights.

1.3 As per the BL of dt 23.12.03 of M/s Mitsui OSK Lines Ltd. Mentions place of delivery as Colon Door,
which seems to be a case of door delivery. But the consignee preferred to take delivery at MIT port and
made their own transportation arrangements from Port to their warehouse without any consignment note
issued by the transporter, Intertrans. It shows that the contract of carriage entered into with the shipping
lines was terminated by the Consignee and the consignee carried the container from MIT port their
warehouse at their own risk and responsibility.
1.4 The contract of carriage was terminated at MIT port and the Consignee was duty bound to take open
assessment delivery or delivery under protest after survey by insurance surveyor since there was apparent
doubt about loss/damage to the cargo.

1.5 The claim of the consignee is not admissible for want of Insurable interest.

Question: What kind of policy was issued in this case? What was the valuation of
the policy? Whether freight was covered?

Question: The rate of profit increased despite reduction in sale? Is the sale to single importer- buyer
! Does it Show some close link between seller and buyer ?

Question: What is insurable interest? Whether the insurable interest in this case is transferred with
the assignment of the policy in favour of consignee?
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Question: What is recovery right? Why recovery rights are not protected in this case?

Question: Should the claims have been lodged by the Consignor on the insurer instead of Consignee.
What went wrong, where the open assessment survey should have been conducted to
remove the doubts in this case?

9. CONCLUSION
The study area is with high potentiality for the marketing of inland transit insurance marine policies. The four
public sector general insurance companies in the study area with their thick infrastructure facilities and network
of branches enjoyed a monopoly status in spite of the competition among themselves on the basis of their
service quality. As per the opinion of the policyholders, those companies served them well with their
development officers and other marketing forces both in pre and after sales services. Similarly the opinion
survey with the policyholders also brings to the fore that all the four public sector general insurance companies
served them well in regard to dissemination of product knowledge, issue of policies, after sales service before
and after claim even though a slight discontent is reported by minority.

At the same time we cannot underestimate the role of private general insurance companies in the study area.
Though, thin infrastructure and grazing only the creamy layers of the market for inland transit policies are their
major weaknesses in materializing the market for transit policies, enthusiastic attitude of their dynamic
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marketing force, their adoption of hi- tech online mechanism towards claim settlement, competing with
innovative products in marine transit insurance with low rate of premium etc, may make it as a challenge to
the four public sector insurers in the study area.

Not having network of branches is a big hurdle for the private insurers in rendering pre and after sales service
in marketing transit policies. Yet there is a good scope for tapping potential market to the four public sector
general insurance companies, since the potential policyholders for marine policies are in amazing quantum in
the study area. At the same time they have to cope up with the competitive environment from private players.
The concluding exposure on the study is that though the cultivator (public sector insurers) can venture in a
fertile and arable land (vast potential market) to achieve bumper crop; it is not a cake-walk. They have to share
the same land with another mighty competitive cultivator (private players) in future in the right perspective.

10.BIBILIOGRAPHY

BOOKS REFFERED:

Study Material of cargo insurance

Insurance act book & types of insurance

WEBSITES REFFERED:

www.wikipedia.com www.google.co.in

www.cholainsurance.

www.royalsundaram.com

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www.sivakasi.com

www.virudhunagar.nic.in

• Birds, J. Birds' Modern Insurance Law. Sweet & Maxwell, 2004. (ISBN 0-421-87800-2)
• Donaldson, Ellis, Wilson (Editor), Cooke (Editor), Lowndes and Rudolf: Law of General Average and the
York-Antwerp Rules. Sweet & Maxwell, 1990. (ISBN 0-420-46930-3)

References:-

1. J. Franklin, The Science of Conjecture: Evidence and Probability Before Pascal (Baltimore: Johns
Hopkins University Press, 2001), 273-278.

2. Palmer, Sarah (October 2007). "Lloyd, Edward (c.1648–1713)". Oxford Dictionary of National
Biography. Oxford University Press. Retrieved 16 February 2011.

3. Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. ("The Good Luck")
[1991] 2 WLR 1279 and at 1294-5

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