1

The Japanese eat very little fat and suffer fewer The Japanese eat very little fat and suffer fewer heart attacks than the British or Americans. heart attacks than the British or Americans.On the other hand, the French eat a lot of fat On the other hand, the French eat a lot of fat and also suffer fewer heart attacks than the and also suffer fewer heart attacks than the British or Americans.British or Americans.

The Chinese drink very little red wine and The Chinese drink very little red wine and suffer fewer heart attacks than the British or suffer fewer heart attacks than the British or Americans.Americans.

The Italians drink excessive amounts of red The Italians drink excessive amounts of red wine and also suffer fewer heart attacks than wine and also suffer fewer heart attacks than the British or Americans.the British or Americans.

Conclusion: Eat & drink what you like. Conclusion: Eat & drink what you like.

“ “ It's English that kills you ”.It's English that kills you ”.

2

I N S U R A N C E

3

Insurance in broad terms may be Insurance in broad terms may be described as a method of sharing described as a method of sharing financial losses of few from a common financial losses of few from a common fund who are equally exposed to the fund who are equally exposed to the same loss.same loss.

4

Example

Say 1000 motor cars valued @ 300000/- are Say 1000 motor cars valued @ 300000/- are observed over a period of five years. On an observed over a period of five years. On an average say per year two are total loss by average say per year two are total loss by accident. Then the total annual loss would accident. Then the total annual loss would be Rs.600000. If the loss is to shared by all be Rs.600000. If the loss is to shared by all the thousand owners then they have to the thousand owners then they have to contribute Rs.600/-contribute Rs.600/-

The loss experience will be established by The loss experience will be established by taking the past experience, geographical taking the past experience, geographical area in which the vehicles are used and area in which the vehicles are used and density of traffic.density of traffic.

5

A.Rate of contribution or premium

B.The degree of hazard it is exposed to.

C.Classification of various types of properties.

PRINCIPLES OF INSURANCE

6

IMPORTANT ELEMENTS INVOLVED IN

THE CONCEPT OF INSURANCE

Subject matter of insurance.Subject matter of insurance. The PERIL (risk)The PERIL (risk) The financial loss.The financial loss.

7

Subject matter is property, human life, machinery, Subject matter is property, human life, machinery, goods etc.,goods etc.,

Peril is fire, storm, burglary, earth quake, injury,Peril is fire, storm, burglary, earth quake, injury,

explosion etc.,explosion etc.,

Financial loss is normally defined before theFinancial loss is normally defined before the

contract is signed.contract is signed.

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RISK

RISK:- can be defined as the unforeseen element RISK:- can be defined as the unforeseen element which may impede your progress in achieving the which may impede your progress in achieving the objective. objective.

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In insurance jargon they term RISK as an In insurance jargon they term RISK as an uncertainty regarding loss or what is termed as uncertainty regarding loss or what is termed as a FORTUITOUS risk. a FORTUITOUS risk.

Concept of chance and risk can be expressed Concept of chance and risk can be expressed in a single mathematical term called in a single mathematical term called “Probability”. “Probability”.

10

An example of impossibility can be quoted say An example of impossibility can be quoted say the 9/11 incident where insurance companies the 9/11 incident where insurance companies were washed out. were washed out.

Hyderabadis never in their dreams thought of Hyderabadis never in their dreams thought of taking cover for flood. When the encroached taking cover for flood. When the encroached drains could not contain rains for 2 days, the drains could not contain rains for 2 days, the resultant floods had washed away score of resultant floods had washed away score of vehicles, property etc.,vehicles, property etc.,

So, Risk is inherent in human existence. Human So, Risk is inherent in human existence. Human life and material possessions are constantly life and material possessions are constantly exposed to loss or damage due to the exposed to loss or damage due to the mechanizations of fortuitous circumstancesmechanizations of fortuitous circumstances

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A RISK OF TRADE is a loss due to a A RISK OF TRADE is a loss due to a specified event say fire, storms burglary etc., specified event say fire, storms burglary etc., These are classified and their frequency in These are classified and their frequency in already assessed.already assessed.

A TRADE RISK is a risk of loss inherent in the A TRADE RISK is a risk of loss inherent in the trade itself. Broadly speaking we can say loss trade itself. Broadly speaking we can say loss of profit as a result of change due to market of profit as a result of change due to market collapse, political factors etc.,collapse, political factors etc.,

Risk of trade is insurable as it is already Risk of trade is insurable as it is already assessed, assessed,

Trade risk is yet to be classified and hence Trade risk is yet to be classified and hence majority of these are not covered.majority of these are not covered.

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MATHEMETICAL VALUE OF RISKMATHEMETICAL VALUE OF RISK

L/V x 100 where L/V x 100 where

L= total losses reportedL= total losses reported

V=refers to the total valuesV=refers to the total values

the product of the above analysis is called the product of the above analysis is called

Law of averages or the doctrine of probability.Law of averages or the doctrine of probability.

So premium rates depend upon past loss So premium rates depend upon past loss experience by systematically classifying the experience by systematically classifying the risks. Which are homogenous in characters risks. Which are homogenous in characters

Example:- Motor vehicle. Example:- Motor vehicle.

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RICE INSURANCERICE INSURANCE ATFLATFL

ITCITC

EMMSONSEMMSONS

14

SCOPE OF INSURANCE:SCOPE OF INSURANCE:

General Insurance is divided into three General Insurance is divided into three categories:categories:

FIRE, FIRE,

MARINE MARINE

& &

MISCELLANEOUS MISCELLANEOUS

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FIRE INSURANCE

FIRE INSURANCE BUSINESS: FIRE INSURANCE BUSINESS:

Loss due to FIRE, LIGHTINING, EXPLOSION, Loss due to FIRE, LIGHTINING, EXPLOSION, IMPLOSION,, RIOTS & STRIKES, IMPACT BY IMPLOSION,, RIOTS & STRIKES, IMPACT BY RAIL, AIRCRAFT DAMAGE, EARTH QUAKE, RAIL, AIRCRAFT DAMAGE, EARTH QUAKE, FLOOD, STORM, TEMPEST, TORNADO, FLOOD, STORM, TEMPEST, TORNADO, TYPHOON, CYCLONES & LAND SLIDE. TYPHOON, CYCLONES & LAND SLIDE.

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MARINE INSURANCE BUSINESS: MARINE INSURANCE BUSINESS: This is the oldest branch of Insurance comprising This is the oldest branch of Insurance comprising HULL & CARGO. HULL & CARGO.

Hull Insurance deals the Loss associated with Hull Insurance deals the Loss associated with floating crafts, Cargo insurance provides cover floating crafts, Cargo insurance provides cover in respect of loss or damage to goods during in respect of loss or damage to goods during transit by rail, road, sea or air.transit by rail, road, sea or air.

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MISCELLENOUS INSURANCE BUSINESS: MISCELLENOUS INSURANCE BUSINESS:

Mainly includes the motor business, accident, Mainly includes the motor business, accident, aviation , engineering and guarantee insurances. aviation , engineering and guarantee insurances.

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CONTRACT OF INSURANCECONTRACT OF INSURANCE

In between the insured and insurer In between the insured and insurer

INSURED:-INSURED:- Party effecting insurance,Party effecting insurance,

(Individual, Company, Firm,(Individual, Company, Firm,

Corporate body etc., with Corporate body etc., with legal status)legal status)

INSURER:-INSURER:- Party granting the protection Party granting the protection under an insurance policy.under an insurance policy.

Policy:- Policy:- Is the evidence of contractIs the evidence of contract

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Insurance contracts are governed by Indian Insurance contracts are governed by Indian contract act 1872 which states that to be contract act 1872 which states that to be legally valid following elements should be in legally valid following elements should be in order.order.

A.A. Offer and acceptanceOffer and acceptance

B.B. ConsiderationConsideration

C.C. Agreement between the partiesAgreement between the parties

D.D. Capacity of the partiesCapacity of the parties

E.E. Legality of the contractLegality of the contract

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UTMOST GOOD FAITH:UTMOST GOOD FAITH:

The greatest degree of good faith by law, is The greatest degree of good faith by law, is expected from the proposer, that is the main expected from the proposer, that is the main reason why good faith in case of Insurance reason why good faith in case of Insurance contracts becomes UTMOST good faith.contracts becomes UTMOST good faith.

It is the duty of the proposer to disclose all It is the duty of the proposer to disclose all material facts not only already known but material facts not only already known but also extends to material facts which he ought also extends to material facts which he ought to know.to know.

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Examples of material facts:Examples of material facts:

FIRE: Construction of building, type of FIRE: Construction of building, type of occupancy, nature of good stored etc. occupancy, nature of good stored etc.

MARINE: method of packing, inherent vice MARINE: method of packing, inherent vice etc.etc.

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INSURABLE INTRESTINSURABLE INTREST

In nutshell if property is the subject matter of In nutshell if property is the subject matter of insurance then the subject matter of insurance then the subject matter of insurance contract is the insured’s pecuniary insurance contract is the insured’s pecuniary interest in that property. interest in that property.

LEGAL RIGHT TO INSURE IS THE LEGAL RIGHT TO INSURE IS THE INSURABLE INTEREST. Insurable Interest is INSURABLE INTEREST. Insurable Interest is required to support the contract of Insurance required to support the contract of Insurance in order to make it legal, other wise the in order to make it legal, other wise the contract is null and void.contract is null and void.

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HOW INSURABLE INTEREST ARISES:HOW INSURABLE INTEREST ARISES:

1.1. By ownershipBy ownership

2.2. By LawBy Law

3.3. By ContractBy Contract

4.4. By Legal liabilityBy Legal liability

5.5. Interest of a Person in LifeInterest of a Person in Life

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When insurable interest must exist:When insurable interest must exist:

For Fire or Miscellaneous policy the For Fire or Miscellaneous policy the insurable interest must exist at the time of insurable interest must exist at the time of taking the policy and at the time of the loss. taking the policy and at the time of the loss.

For Marine policy an insurable interest need For Marine policy an insurable interest need not exist at the time of policy taking.not exist at the time of policy taking.

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WARRANTY:WARRANTY:

means an assurance by the assured, that he means an assurance by the assured, that he will not do some particular things or will fulfill will not do some particular things or will fulfill any conditions that are laid in advance. any conditions that are laid in advance.

WARRANTIES are further classified as WARRANTIES are further classified as express express

or implied or implied

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ASSIGNMENTASSIGNMENT

Assignment means transfer of rights and Assignment means transfer of rights and liabilities of an insured to another person liabilities of an insured to another person who had acquired insurable interest in the who had acquired insurable interest in the property insured. property insured.

Fire policies have to be assigned with the Fire policies have to be assigned with the consent of the insurers, where as Marine consent of the insurers, where as Marine cargo policies can be freely assigned cargo policies can be freely assigned without the knowledge or consent of the without the knowledge or consent of the insurer. This is because the ultimate buyer is insurer. This is because the ultimate buyer is not known at the time of taking the cover. not known at the time of taking the cover.

Marine hull policies cannot be assigned.Marine hull policies cannot be assigned.

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INDEMINITY: INDEMINITY:

Can be defined as “ compensation for loss or Can be defined as “ compensation for loss or injury sustained” or “ to make good the loss injury sustained” or “ to make good the loss or damage” .or damage” .

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Methods of indemnification:Methods of indemnification:

1.1. Cash paymentCash payment

2.2. RepairRepair

3.3. ReplacementReplacement

4.4. Reinstatement.Reinstatement.

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Mode of indemnity:Mode of indemnity:

Buildings: Buildings:

the cost of reinstating or repairing the the cost of reinstating or repairing the damaged portion, is assessed, and from that damaged portion, is assessed, and from that an appropriate allowance is made towards an appropriate allowance is made towards depreciation, depending on the age and depreciation, depending on the age and condition of the building. Allowances are condition of the building. Allowances are made for improvement due to repairs.made for improvement due to repairs.

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Machinery: Machinery:

HHere the method of indemnity is supposed ere the method of indemnity is supposed to be the market value for a similar machine to be the market value for a similar machine of same age and model as determined on of same age and model as determined on the date of loss. In practice this is difficult so the date of loss. In practice this is difficult so the measure of indemnity becomes the the measure of indemnity becomes the replacement value less depreciation. In case replacement value less depreciation. In case of repairs the cost of repairing is borne by of repairs the cost of repairing is borne by the insured. However replacement of parts the insured. However replacement of parts is subject to an allowance towards is subject to an allowance towards depreciation.depreciation.

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Household goods: Household goods:

Consideration similar to those applicable for Consideration similar to those applicable for machines.machines.

   Stocks: Stocks:

In case of wholesalers or retailers, the In case of wholesalers or retailers, the measure of indemnity is the price at which measure of indemnity is the price at which he will be able to replace his goods. The he will be able to replace his goods. The element of profit will not be taken care of.element of profit will not be taken care of.   

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Fire insurance

Fire insurance policies may be issued on Fire insurance policies may be issued on REINSTATEMENT value basis. Although the REINSTATEMENT value basis. Although the insured gets new property which is in similar insured gets new property which is in similar condition and of same kind, to protect the basic condition and of same kind, to protect the basic of idea of indemnity the property will not be of of idea of indemnity the property will not be of superior nature.superior nature.

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Motor: Motor:

If the vehicle is a total loss, the sum insured If the vehicle is a total loss, the sum insured or the value of the vehicle, which ever is or the value of the vehicle, which ever is less is paid. If the vehicle is damaged the less is paid. If the vehicle is damaged the cost of repairs or paid, if parts are replaced cost of repairs or paid, if parts are replaced the cost of new part will be subjected to the cost of new part will be subjected to depreciation. In all the cases age and depreciation. In all the cases age and general maintenance of the vehicle are general maintenance of the vehicle are considered.considered.

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MARINE INSURANCEMARINE INSURANCE

IIn this branch what is provided as indemnity n this branch what is provided as indemnity becomes commercial indemnity because, becomes commercial indemnity because, Almost all the policies issued are agreed Almost all the policies issued are agreed value policies. value policies.

To be precise the insured and the insurer To be precise the insured and the insurer agree that the sum insured is the value of agree that the sum insured is the value of the property insured. The agreed amount is the property insured. The agreed amount is then payable in case of total loss, with no then payable in case of total loss, with no attachments what so ever.attachments what so ever.

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MISCELLANEOUS

Miscellaneous Insurance: the insurances of Miscellaneous Insurance: the insurances of property, liability and insurance are contracts of property, liability and insurance are contracts of strict indemnity. Normally books of accounts strict indemnity. Normally books of accounts are referred when settling claims in this branch. are referred when settling claims in this branch. ( ex. fidelity guarantee insurance)( ex. fidelity guarantee insurance)

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Under insurance: Property insurances are Under insurance: Property insurances are generally subject to the condition of generally subject to the condition of average, and if there has been under average, and if there has been under insurance, only that portion of the loss is insurance, only that portion of the loss is payable.payable.

Ex.value of property Ex.value of property : Rs.20000 : Rs.20000

Sum insuredSum insured : Rs.15000: Rs.15000

Loss assessedLoss assessed : Rs.10000: Rs.10000

Amount payable will then be: Amount payable will then be:

15000 x 1000015000 x 10000 = 7500 = 7500

2000020000

The insured is then considered as his own The insured is then considered as his own insurer for the difference of the liability.insurer for the difference of the liability.

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EXCESS OR FRANCHISEEXCESS OR FRANCHISE

In some policies an EXCESS or FRACHISE is In some policies an EXCESS or FRACHISE is incorporated, which means that a certain incorporated, which means that a certain circumstances a part of the loss may have to circumstances a part of the loss may have to be borne by the insured. be borne by the insured.

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SALVAGESALVAGE

Property which is saved from loss or damage Property which is saved from loss or damage and still has some commercial value is called and still has some commercial value is called salvage.salvage.

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SUBROGATIONSUBROGATION

may be defined as the transfer of rights and may be defined as the transfer of rights and remedies of the insured to the insurer who has remedies of the insured to the insurer who has indemnified the insured in respect of the loss.indemnified the insured in respect of the loss.

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CONTRIBUTION: CONTRIBUTION: An insured may have taken many policies on An insured may have taken many policies on the same subject matter. The principal of the same subject matter. The principal of contribution would lead to a situation in which contribution would lead to a situation in which the insured would be able to recover his loss the insured would be able to recover his loss from any one insurer, who then will have to from any one insurer, who then will have to effect proportionate recoveries from other effect proportionate recoveries from other insurers concerned. Normally the insurers insurers concerned. Normally the insurers seek to control additional insurances at the seek to control additional insurances at the proposal stage itself.proposal stage itself.

Remember at no cost an infringement to the Remember at no cost an infringement to the principle of indemnity is accepted.principle of indemnity is accepted.

The principal of contribution does not apply to The principal of contribution does not apply to personal accident policies.personal accident policies.

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PROXIMATE CAUSEPROXIMATE CAUSE

Means the DIRECT, DOMINANT or effective Means the DIRECT, DOMINANT or effective cause of which the loss is the natural cause of which the loss is the natural consequence. It is the cause which is most consequence. It is the cause which is most closely connected with the loss, not necessarily closely connected with the loss, not necessarily in time but in efficiency. in time but in efficiency.

Although the doctrine is clear in theory, it is Although the doctrine is clear in theory, it is difficult to determine the proximate cause, as a difficult to determine the proximate cause, as a clear demarcation should be maintained clear demarcation should be maintained between insured peril, excepted peril and un between insured peril, excepted peril and un insured peril.insured peril.

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Example: Example: An insured sustained an accident while An insured sustained an accident while hunting. Due to shock and weakness, he was hunting. Due to shock and weakness, he was unable to walk and whilst lying on wet ground, unable to walk and whilst lying on wet ground, he contracted cold which developed into he contracted cold which developed into pneumonia causing death ultimately.pneumonia causing death ultimately. The proximate cause was considered to be the The proximate cause was considered to be the accident and not the pneumonia, the disease, accident and not the pneumonia, the disease, which was only a remote cause. The claim was which was only a remote cause. The claim was payable under personal accident policy.payable under personal accident policy.

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MARINE INSURANCEMARINE INSURANCE

  A.A. cargo insurance cargo insurance   B.B. hull insurancehull insurance

Cargo insurance provides insurance cover in Cargo insurance provides insurance cover in respect of loss of or damage to goods during respect of loss of or damage to goods during transit by RAIL, ROAD, SEA, AIR OR transit by RAIL, ROAD, SEA, AIR OR REGISTERED POST.REGISTERED POST.

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TYPE OF CONTRACTTYPE OF CONTRACT RESPONSIBILITYRESPONSIBILITY

FREE ON BOARDFREE ON BOARD SELLER IS RESPONSIBLE TILL THESELLER IS RESPONSIBLE TILL THE(F.O.B)(F.O.B) GOODS ARE PLACED ONBOARD.GOODS ARE PLACED ONBOARD.

COST & FREIGHTCOST & FREIGHT THE BUYERS RESPONSIBILITY STARTSTHE BUYERS RESPONSIBILITY STARTS(C & F)(C & F) FROM THE TIME THE GOODS AREFROM THE TIME THE GOODS ARE

PLACED ONBOARDPLACED ONBOARD

COST INSURANCE COST INSURANCE THE SELLER IS RESPONSIBLE FOR THE SELLER IS RESPONSIBLE FOR & FREIGHT (C.I.F)& FREIGHT (C.I.F) ARRANGING INSURANCE WHICH ISARRANGING INSURANCE WHICH IS

INCLUDED IN THE COST OF THE GOODS.INCLUDED IN THE COST OF THE GOODS.

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A further security in the form of insurance A further security in the form of insurance policy is also required by the bank to protect its policy is also required by the bank to protect its interest in case of goods suffering loss or interest in case of goods suffering loss or damage while in transit, in which case the damage while in transit, in which case the importer may not make the payment.importer may not make the payment.

The terms and conditions of the insurance are The terms and conditions of the insurance are specified in the letter of CREDIT.specified in the letter of CREDIT.

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The RISKS covered in a marine policy falls The RISKS covered in a marine policy falls under three categoriesunder three categories •MARINE PERILSMARINE PERILS

•EXTRANEOUS PERILS EXTRANEOUS PERILS

•WAR & STIRKES, RIOTS & CIVILWAR & STIRKES, RIOTS & CIVIL COMMOTION RISKS (S.R.C.C)COMMOTION RISKS (S.R.C.C)

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MARINE PERILS : are the perils associated MARINE PERILS : are the perils associated with rivers, seas.with rivers, seas.

EXTRANEOUS PERILS: means not relevant. EXTRANEOUS PERILS: means not relevant. Ex: theft, pilferage non delivery are some of the Ex: theft, pilferage non delivery are some of the extraneous perils.extraneous perils.

Loss due to WAR, STRIKES and CIVIL Loss due to WAR, STRIKES and CIVIL COMMOTIONS (SRCC) can also be covered COMMOTIONS (SRCC) can also be covered under a Marine policy.under a Marine policy.

The consequences of these perils may result in The consequences of these perils may result in total loss.total loss.

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TOTAL LOSS IS DIVIDED INTO TOTAL LOSS IS DIVIDED INTO

ACTUAL ACTUAL

OROR

CONSTRUCTIVE .CONSTRUCTIVE .

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PARTIAL LOSS

This is once again divided into This is once again divided into

PARTICULAR AVERAGE PARTICULAR AVERAGE

OROR

GENERAL AVERAGEGENERAL AVERAGE

In marine insurance the word average is In marine insurance the word average is synonymous with LOSS.synonymous with LOSS.

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PARTICULAR AVERAGE

A particular average loss is a partial loss of A particular average loss is a partial loss of subject matter insured. Deductions are as per subject matter insured. Deductions are as per excess and franchise clauses.excess and franchise clauses.

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Example: If fire is discovered onboard a Example: If fire is discovered onboard a laden vessel, the following items make up laden vessel, the following items make up the general average loss:the general average loss:

1.1. Cost of damage caused by water or any Cost of damage caused by water or any other methods used to extinguish the fireother methods used to extinguish the fire

2.2. Cost of repair if the ships structure has to be Cost of repair if the ships structure has to be altered to gain access to fire.altered to gain access to fire.

3.3. Value of any cargo damaged or jettisoned Value of any cargo damaged or jettisoned during efforts to control fireduring efforts to control fire

4.4. Cost of using the ships equipment and the Cost of using the ships equipment and the wages of the crew during the general wages of the crew during the general average incident. average incident.

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Example: A vessel runs aground in a Example: A vessel runs aground in a dangerous positiondangerous position

1.1. Cost of tugs to refloat the vessel including Cost of tugs to refloat the vessel including salvage awardsalvage award

2.2. Cost of running ships equipment while Cost of running ships equipment while refloatingrefloating

3.3. Cost of discharging cargo into lighters and Cost of discharging cargo into lighters and reloading into vessel.reloading into vessel.

4.4. cost of pollution removal if the cargo is cost of pollution removal if the cargo is jettisoned and the value of the cargo lost.jettisoned and the value of the cargo lost.

5.5. stores consumed and wages paid to crew stores consumed and wages paid to crew during the general average incident.during the general average incident.

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SALVAGE CHARGES: SALVAGE CHARGES:

With Marine cargo policies, the term is With Marine cargo policies, the term is often referred to as salvage loss. Ex. Say often referred to as salvage loss. Ex. Say goods insured are damaged enroute, and goods insured are damaged enroute, and the goods are such that they deteriorate the goods are such that they deteriorate incase of prolonged storage or by they time incase of prolonged storage or by they time they reach their destination. It is then they reach their destination. It is then prudent and sensible to dispose of the prudent and sensible to dispose of the same at an early date for the best price same at an early date for the best price obtainable. The difference between the obtainable. The difference between the insured value and the net proceeds of the insured value and the net proceeds of the sale becomes the salvage value. sale becomes the salvage value.

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SUE & LABOUR CHARGES: SUE & LABOUR CHARGES:

These are expenses incurred by the insured These are expenses incurred by the insured or his agents in order to avert minimize a or his agents in order to avert minimize a loss covered by the policy. Example of such loss covered by the policy. Example of such charges are the landing cost at intermediate charges are the landing cost at intermediate ports , ware housing , reconditioning and re ports , ware housing , reconditioning and re forwarding. It should be noted that the forwarding. It should be noted that the insured should always THINK AND ACT in insured should always THINK AND ACT in such manner as a UNINSURED would act.such manner as a UNINSURED would act.

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INSTITUTE CARGO CLAUSES (A), (B) & (C)INSTITUTE CARGO CLAUSES (A), (B) & (C)

Risks/Contingencies Covered by ICC(A):Risks/Contingencies Covered by ICC(A):

aa)All risks of loss or damage to the subject )All risks of loss or damage to the subject matter insured except those specifically matter insured except those specifically excluded. The term “all risks” is not to be excluded. The term “all risks” is not to be construed as embracing loss or damage, construed as embracing loss or damage, which is inevitable. The loss or damage, in which is inevitable. The loss or damage, in order to be recoverable, must have occurred order to be recoverable, must have occurred fortuitously.fortuitously.

b)General average and salvage charges b)General average and salvage charges incurred to avoid loss from any cause or incurred to avoid loss from any cause or causes except those excluded.causes except those excluded.

c)Liability under “Both to Blame Collision” c)Liability under “Both to Blame Collision” clause of the bill of lading.clause of the bill of lading.

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d) Charges reasonably and properly incurred to d) Charges reasonably and properly incurred to avert or minimize an insured loss and to avert or minimize an insured loss and to preserve and pursue recovery rights are also preserve and pursue recovery rights are also covered (as per Duty of Assured Clause).covered (as per Duty of Assured Clause).

e) In the event of termination of the transit e) In the event of termination of the transit resulting from a risk covered. EXTRA resulting from a risk covered. EXTRA CHARGES incurred in unloading, storing and CHARGES incurred in unloading, storing and forwarding the insured cargo to destination forwarding the insured cargo to destination (as per the Forwarding Charges Clause).(as per the Forwarding Charges Clause).

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Comparison between the institute cargo clauses (A), (B) & (C)Comparison between the institute cargo clauses (A), (B) & (C)

A comparative analysis of the institute Cargo Clauses (A), (B) & (C)A comparative analysis of the institute Cargo Clauses (A), (B) & (C)

Type of risksType of risksCovered (Covered () not covered () not covered ()) AA BB CC

Loss / damage reasonably attributable to:Loss / damage reasonably attributable to: 1. Fire or explosion 1. Fire or explosion 2. Vessel/Craft being stranded, grounded, sunk or2. Vessel/Craft being stranded, grounded, sunk or capsized.capsized. 3. Overturning/derailment of land conveyance. 3. Overturning/derailment of land conveyance.

4. Collision or contact of vessel, craft or conveyance4. Collision or contact of vessel, craft or conveyance With any external object other then water.With any external object other then water. 5.   Discharge of cargo at a port of distress5.   Discharge of cargo at a port of distress 6. Earthquake, volcanic eruption, lightning6. Earthquake, volcanic eruption, lightning 7. General average and salvage charges incurred to7. General average and salvage charges incurred to avoid loss from any cause except those excludedavoid loss from any cause except those excluded 8. General average sacrifice8. General average sacrifice

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AA BB CC 9. Jettison9. Jettison 10. Washing overboard10. Washing overboard 11. Entry of sea, lake or river water into the vessel,11. Entry of sea, lake or river water into the vessel,

craft, hold, conveyance, container, lift van orcraft, hold, conveyance, container, lift van or place of storage.place of storage. 12. Rainwater damage12. Rainwater damage 13. Total loss of any package lost overboard or13. Total loss of any package lost overboard or dropped whilst loading or unloading from dropped whilst loading or unloading from vessel or craft.vessel or craft. 14. Piracy.14. Piracy. 15. Deliberate damage or destruction by wrongful act15. Deliberate damage or destruction by wrongful act

of any person or persons, (i.e. by malicious acts)of any person or persons, (i.e. by malicious acts) (Can be covered by malicious Damage Clause for (Can be covered by malicious Damage Clause for I.C.C (B) and (C) upon payment or extra premium)I.C.C (B) and (C) upon payment or extra premium)

16. In the event of frustration of the voyage resulting16. In the event of frustration of the voyage resultingfrom a risk covered, extra charges incurred infrom a risk covered, extra charges incurred inunloading, storing and forwarding to destinationunloading, storing and forwarding to destination

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AA B B CC

17. Reasonable charges for averting or minimizing loss17. Reasonable charges for averting or minimizing loss recoverable under this insurance and also thoserecoverable under this insurance and also those incurred, to pursue recovery rights against carriers,incurred, to pursue recovery rights against carriers, bailees or third parties.bailees or third parties. 18. Other or extraneous perils all involving a fourtuity18. Other or extraneous perils all involving a fourtuity and from external causes(s), for example:and from external causes(s), for example: Damage as a result of shifting in heavy weather Damage as a result of shifting in heavy weather

Improper stowageImproper stowage Rough handling Rough handling Breakage, leakage, denting, scratching, crushing,Breakage, leakage, denting, scratching, crushing, crumpling, chipping, chafagecrumpling, chipping, chafage Heating sweatingHeating sweating Infestation, mould, mildew, rust, county damageInfestation, mould, mildew, rust, county damage Hook and sling damageHook and sling damage Contact with mud, oils and acids, damage byContact with mud, oils and acids, damage by other cargoother cargo Shortage, theft, pilferage, non-deliveryShortage, theft, pilferage, non-delivery Other loss/damage caused fortuitously and fromOther loss/damage caused fortuitously and from external cause or causes external cause or causes

60

AA BB CC 19. liability under “Both to blame collision” Clause of19. liability under “Both to blame collision” Clause of

Bill of Lading.Bill of Lading.

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COMMON EXCLUSIONS Loss, damage or expenses attributable to willful misconduct of Loss, damage or expenses attributable to willful misconduct of

the assuredthe assured Ordinary or inevitable lossesOrdinary or inevitable losses Loss, damage or expense caused by inherent vice or nature of Loss, damage or expense caused by inherent vice or nature of

the subject matter insuredthe subject matter insured Loss/damage due to insufficient, unsuitable or defective packing Loss/damage due to insufficient, unsuitable or defective packing

(including stowage)(including stowage) Loss/damage or expenses proximately caused by delay even if Loss/damage or expenses proximately caused by delay even if

the delay is caused by a peril insured againstthe delay is caused by a peril insured against Loss damage or expenses arising from insolvency of the Loss damage or expenses arising from insolvency of the

owners, managers, charterers or operators of the vessel.owners, managers, charterers or operators of the vessel. Loss damage due to un seaworthiness of the vessel or craft, Loss damage due to un seaworthiness of the vessel or craft,

container, lift van employed for carrying the insured matter.container, lift van employed for carrying the insured matter. Wars, strikes and civil commotions unless covered under Wars, strikes and civil commotions unless covered under

separate endorsements.separate endorsements.

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PROTECTION & INDEMNITY

Is a mutual association operated on behalf of its Is a mutual association operated on behalf of its members (ship owners) by a board of Directors members (ship owners) by a board of Directors appointed by and from the members of the club.appointed by and from the members of the club.

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THANK YOU