Marine Insurance:

Marine insurance covers the losses or damages caused to ships, terminals and any transport or
cargo by which goods are transferred, acquired, or held between different points of origin and
final destination. The term may also apply to inland marine but it is usually used in the
context of ocean marine insurance. Marine insurance is a haven for transporters and shipping
corporations because it helps to lower the aspect of financial loss due to cargo loss.

Marine insurance is a crucial aspect because through this policy, ship owners and other
transporters can be sure of claiming damages in case of a mishap. Sometimes, it happens that
despite following all the safety regulations, losses or damages arise. Along with natural
hazards which have the potential to disrupt the cargo and vessel, there are other incidents and
attributes which could also cause a major financial loss to the transporter. For instance,
incidents like piracy and possibilities of cross-border shootouts are more prevalent when it
entails water transportation and therefore, to avoid any such loss or damage, it is in the
interest of the transporter to buy a marine insurance.

Features of a marine insurance policy –

 Open Policy – The inland marine insurance policy covers the inland movement of a
consignment for a specified duration of time, which is generally of one year. The
policy is apt for companies which are indulging in numerous transactions around the
year as it also offers continuous cover.
 Comprehensive Protection – The policy offers protection against various types of
losses or damages like a total loss of goods, partial loss of goods, related expenses
while still in transit, etc.
 Customisation – As per your business requirement, it is feasible to customise the
policy.
 Mark up Value – The policy allows a portion of profit to be included in the sum
insured. It is known as a mark-up in the marine insurance industry.

In the eventuality when goods are destroyed, damaged or stolen, it becomes important to file
a marine insurance claim immediately with the insurer. Then the insurer will take all efforts
to find out whether the reasonable care was taken while transporting goods or not in order to
ensure no deliberate efforts were made in order to file a claim.

Here, it is important to understand that just because you have a marine insurance policy, it
doesn’t mean you can act carelessly. You are expected to take care of your goods in the same
manner you would have done in the absence of a marine insurance policy. Also, there is a
time-window of usually one year for filing a claim with a marine insurance company at the
time of any loss or damage.

Though, marine insurance offers comprehensive cover, there are some instances which are
not covered under the policy, like,

 Loss or damage due to wilful negligence

 Loss or damage due to improper packaging
 Removal of wreck
 Contamination due to radioactive rays
 Loss or damage due to riot, strike, civil commotion, etc.

Role of Clearing and Forwarding Agents:

Export-import procedures are very complex and time-consuming. Therefore, every

exporter should avail the services of Clearing and Forwarding (C&F) agent who are
expert and well versed with the customs and shipment procedures. For smooth and
timely shipment of goods, the exporter must appoint a competent C&F agent who is
able to, inter alia, provide the following services:
 
Essential Services:
(a) Transportation of goods to docks and arrangement of warehousing at port.

(b) Warehousing facilities before the goods are transported to docks.

(c) Booking of shipping space or air freighting and advice on relative cost of sending
goods by sea and air.

(d) Arrangement for loading of goods on board.

(e) Equipped with information on shipping lines and freight to different destinations,
and various charges payable by exporters.

(f) Obtaining marine insurance policies.

(g) Preparation and processing of shipping documents, Bills of Lading, Dock Receipt,
Export Declarations, Consular Invoice, Certificate of Origin, etc.

(h) Forwarding of banking collection papers.

 
Desirable Services:
(a) Storage facilities abroad, at least in major international markets, to warehouse the
goods in case importer refuses to take delivery on any account.

(b) Can trace the goods, if shipment goes astray, through his international
connections.
 (c) Arrangement for assessing the damage to shipment enrooted.

Shipping and Customs Formalities:

 According the Section 40 of the Customs Act, the person in-charge of the conveyance vessel,
vehicle, aircraft, etc., cannot permit loading of export cargo at the Customs Station unless and
until a formal permission to the export given by the authorised Customs Officer is presented.
Before granting the permission, the Customs Officer ensures that the goods being exported
are in accordance with different regulations, particularly in terms of the following:

(a) The exporter. Goods are of the same type sort and value as have been declared by the
exporter.

(b) The duty or cess liveable thereon has been properly determined and paid.

(c) Provisions of Export (Control) Order, Export (Quality Control and Inspection) Act and
Foreign Exchange (Regulation) Act are complied with.

The Procedure for shipping and customs clearance is as under:

(a) Preparation and Submission of Export Documents: For the clearance of cargo from
customs, the exporter or his agent is required to submit the following set of documents along
with five copies of shipping NI to the Customs Appraiser at the Customs House.
Letter of Credit along with export contract or export order.

Commercial Invoice (2 copies)

Packing List or Packing Note.

Certificate of Origin.

GR Form (original and duplicate)

ARE-I Form.

Original copy of Certificate of Inspection, where necessary.

Marine Insurance Policy.

 
(b) Verification of Documents: The Customs Appraiser verifies the details listed in each
document and ensures that all the formalities relating to exchange control, pre-shipment
inspection and licensing have been complied with by the exporter. If satisfied, he issues a
'Shipping Bill Number', which is very important from exporter's point of view.
 
 

(c) Valuation of the Goods: The Customs Appraiser assesses the shipping bill and values the
goods. The value of goods as determined by the Customs Appraiser is considered for all
future transactions, especially for the claim of Incentives. All documents are returned to the
exporter or his agents except:
Original copy of GR to be forwarded to the RBI.

Original copy of Shipping Bill.

One copy of Commercial Invoice.

The validity of assessed shipping bill is for one month only. If the exporter fails to deliver the
goods in that period, he will have to undergo the above procedure again.
 
(d) Obtaining 'Carting Order' from the Port Trust Authorities: The C&F agent, then,
approaches the Superintendent of the concerned Port Trust for Obtaining the 'Carting Orders
for moving the cargo inside the dock. After obtaining the Carting Order, the cargo is
physically moved into the port area and stored in the appropriate shed.
 
(e) Customs Examination and Issue of 'Let Export Order':
The Customs Examiner at the port of shipment physically examines the goods and seals the
packages in his presence. The same can be arranged for at the factory or warehouse of the
exporter by making an application to the Assistant Collector of Customs. The Customs
Examiner, if satisfied, issues a formal permission for the loading of cargo on the ship in the
form of a 'Let Export Order'. The above procedure is now processed through Electronic Data
Interchange (EDI) System.
 (f) Obtaining 'Let Ship Order' from the Customs Preventive Officer: 
'Let Export Order' must be supplemented by a 'Let Ship Order' issued by the Customs
Preventive Officer. The C&F agent submits the duplicate copy of Shipping Bill, duly
endorsed by the Customs Examiner, to the Customs Preventive Officer who endorses it with
the 'Let Ship Order'.
 (g) Obtaining Mate's Receipt and Bill of Lading: 
The goods are then loaded on board the ship for which the Mate or the Captain of the ship
issues Mate's Receipt to the Port Superintendent. The Port Superintendent, on receipt of port
dues, hands over the Mate's Receipt to the C&F Agent. The C&F Agent surrenders the Mate's
Receipt to the Shipping Company for obtaining the Bill of Lading. The Shipping Company
issues two to three negotiable and two to three non-negotiable copies of Bill of Lading.