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What is Cargo Insurance?: Cargo insurance provides coverage against physical damage or loss of goods during shipping, whether by land, sea or air. Because of the many dangers inherent in shipping, most individuals and businesses choose to insure their goods while they are in transit. However, many different types of cargo insurance are available and it is important that you know exactly what you want before taking the insurance, or you may find yourself not covered for every eventuality.

What is Exclusion Clauses?

There are usually some "exclusion" clauses in an insurance policy under which the insurance company would not be liable for the losses resulting from the specified events.

The exclusion clauses remove the insurance coverage for the specified events that the insurance company chooses not to insure. The relevant reasons might be: such coverage is available under another class of insurance, the risks are not suitable to be taken up, or some special conditions are required, etc.

What is Subrogation in Insurance Terms?: Subrogation is the legal substitution of one person or thing in place of another. For example, subrogation takes place when an insurance company retains the right to recover the amount paid by the policy from any third party against whom the insured has a claim. By the process of subrogation, the insurance company tries to prove the liability of the third party and collect from this party the amount of damages paid to the assured. The insurance company is entitled to an assignment of any rights of recovery the insured may possess against any party for loss or damage, to the extent that payment is made by the company. This is known as subrogation.

What is a deductible?: In an insurance policy, the deductible is the amount of expenses that must be paid out of pocket before an insurer will pay any expenses.[1] In general usage, the term deductible may be used to describe one of several types of clauses (see below) that are used by insurance companies as a threshold for policy payments.

What does basis of valuation CIF + 10% or 110% valuation mean?: The standard valuation for both annual volume reporting and payment of cargo insurance claims, unless otherwise requested, is 110%. This means that the total premium owed is calculated using the policy rate times 110% of the total cost of goods, and any covered losses are paid at 110% of the cost of goods, freight and insurance premium of the shipment, less deductible.

What documentation is needed for a cargo insurance claim?: Depends on cases, but normally below documentation is required: Copy of all B/L’s, Shipper’s commercial invoice covering the entire shipment, Copy of the packing list(s), inspection report, Original Insurance Policy, Copy of the claimant’s letters to the transportation carriers placing them on notice, plus any replies received, Statement of claim, Photos, if available, etc.

What is “Without benefit of salvage”?: Without benefit of salvage is a term used in marine insurance law to signify that there is nothing capable of being abandoned to the insurer. That is, the assured has no property in the adventure which could be savaged for the benefit of insurer. This could be interpreted as the assured having no insurable interest in the adventure, therefore rendering the policy a gaming or wagering policy.

What is the form of a warranty?: An express warranty must be incorporated into the contract of insurance by means of written words only. Oral statements made during negotiations do not amount to warranties; they are representations.

what is owner’s trading freight?: Owner’s trading freight is the money earned by a shipowner for carrying his own goods.

The importance of Utmost Good Faith?: Utmost good faith is a key principle of insurance. It is concerned with the information that is disclosed by the parties who are involved in the insurance contract. If a party fails to adhere to the principle of utmost good faith, the outcome of the claim may be affected.