What are the Losses and Indemnity available under Marine Insurance Policies?
While your cargo onboard-on sea, a lot of things can go wrong. This unforeseen yet possible misfortune can happen to both the vessel and cargo. The possible misfortunes and the indemnity are as below
What are the Cargo Claims Available Under Insurance Policy?
01. Actual Loss -Cargo
Total losses incur when the subject matter is no more the same as at the time of insured. Which means subject matter (cargo) is damaged or destroyed it to a not usable stage. In such, claimer has the right to demand the total amount of insurance from the underwriter.
Example of cargo Claims-Marine Insurance: Due to a fire onboard, garments send on a container will burn. Here cargo owners will not be able to use them again where the actual loss arises.
02. Constructive Total Loss – Cargo
The constructive loss refers to the situations where the repair cost of the subject matter exceeds the insured value or the value of the subject matter. “Cost of repair” can be only the repair cost, or the “repairing cost and the cost involved to deliver the goods to the destination”. Further, when there is a constructive total loss, should immediately send a “Notice of Abandonment” to the insurer. Unless the notice of abandonment received, the underwriter is not liable to pay the claim under constructive total loss. In such a claim, if the total loss is higher than the insured value, the underwriter is only liable to pay the insured value.
03. Particular Average Loss -Cargo
When the cargo damage partially or loss partially particular average loss will apply. These damages or losses should happen by a fortuity/peril to claim the cargo loss or damage. Here claimer should have insured the cargo/vessel under the perils to enjoy the damage/loss claim.
04. General Average Sacrifice, Expenditure and Contribution -Cargo
During a peril captain of the vessel may decide to sacrifice the cargo onboard to prevent further or extraordinary damages or losses to its cargo/vessel and protect the adventure. In such, cargo owner can claim for the loss or damage incurred due to the scarification of his/her cargo same as in hull claim.
During a loss or damage due to scarification of cargo under general average, claim amount will be calculated the same as in particular average less the contribution received from other cargo owners. At first, underwriter pays the total claim to the claimer same as in particular average. Under the right of subrogation, after the general average adjustment insurer entitles to receive the contribution of other cargo owners.
Identifying the contributory value of the cargo is important to find general adjustment. As stated in York-Antwerp Rules 1974, the value mentioned in the commercial invoice should consider despite the market value. If a commercial invoice is absent due to any reason, should consider the “Shipped Value”. Shipped value include insurance cost and freight cost if they are prepaid and cargo value. This will not make the claimer happy at all as it doesn’t consider the cost of transporting goods to port or port charges. If the contributory value exceeds the insured value underwriter’s liability will reduce accordingly to avoid underwriters making a profit in a distress.
Personnel belongings of passengers who do not ship under a BL will not contribute in general average in cargo Claims-Marine Insurance.
05. Salvage Charges -Cargo
We speak on the expenses incur while salvage operation carries out. i.e. Imagine a vessel and firefighters had to bring to stop a fire onboard and rescue the cargo. The cost incurred to bring the vessel and firefighters will consider as salvage charges. The amount payable for salvage charges by the cargo policy will calculate in the same way as calculating the general average contribution.
06. Expenses Incurred to Avert or Minimize a Loss -Cargo
Any expenditure done by the insured or the agent of insured to minimise the loss/damage of the insured property should be payable by the underwriter. The claimer can only enjoy this if the damage or loss caused peril is insured under the insurance coverage. In insurance, these type of expenditures should pay despite the insured amount.