Unit - 9

Obtaining a cover, filing a claim and settlement of claim

The procedure involved in taking out a cargo Insurance policy is quite simple and straight
forward. The intervention of an insurance broker is not always required, though his service
may be utilized by those who do not have knowledge about marine insurance practice.

Generally, the following steps are to be adopted while taking out a marine insurance policy:

● Selection of the Company

● Selection of Agent or Broker
● Marine Declaration Form
● Assessment of the Risk
● Payment of premium
● Issue of Cover Note
● Issue of Policy
Lets see the steps briefly.

1. Selection of the Marine Insurance Company

In India, the four subsidiaries of General Insurance corporation of India such as National
Insurance Co., New India Assurance Co., Oriental Insurance Co. and United India Insurance
Co. and some private general insurers are authorized to undertake marine insurance
business. The person, who is willing to take a marine insurance policy will have to choose
any one of the above mentioned companies.

2. Selection of Agent or Broker

After having chosen a suitable company for taking marine policy, the proposer will have to
decide whether to take the policy directly from the concerned company or through an agent
or broker. As the proposer is not aware of all the rules and regulations relating to marine
insurance, he is forced to contact a nearby agent of the marine insurance company.

The agent, who possesses a specialized knowledge about the affairs and goings in the
world, will provide necessary information to the proposer to take out a marine insurance
policy without any difficulty. He will assist the proposer not only in the matter of taking policy
but also offer sound advice on other matters. He charges a nominal amount for his services.

3. Marine Declaration Form

Generally, a proposal form is submitted with the marine insurance company to initiate the
process of insurance. But in marine insurance, instead of proposal form, a Marine
Declaration Form or Requisition Form is to be submitted with the insurer.

This form requires the proposer to give all the details about the risk such as name of the
insured, the number of cases, the item, the port of destination, the value of the goods (which
is IPO more than the actual value), the name of the carrying vessel, the place where the
claim, if any, is payable in case of damage, marks on the goods to be shipped etc.
This information may either be sent over the phone or maybe sent in writing, which is
handed over to the marine insurance company either directly or through the agent.

The agent will see that the declaration requisition form is in order and will pass on to the
insurer. It is to be noted that the amount for which the marine insurance is effected is the
cost of the goods together with shipping expenses plus 10% or 15% added thereto for
anticipated profits.

4. Assessment of the Risk

Having received the Marine Declaration Form, the officials of the insurance company will
evaluate the risk to be insured. The risk insured must be found to exist in the condition as is
mentioned in the declaration form. The officials then, after ascertaining the amount of risk
involved, will determine the rate of premium to be paid by the insured along with the stamp
fee. These calculations are made on the back side of the declaration form filled up by the
insured.

5. Payment of premium
Once the declaration form is accepted, the proposer is asked to pay the required premium
fixed to the insurer. The premium maybe paid either in the form of cash or cheque or any
other agreed mode of payment.

6. Issue of Cover Note

As soon as the proposer has paid the required premium, the insurer will issue a Cover Note,
subject to the conditions of the company’s printed policy and the relevant institute clauses, if
any, to the extent of the amount mentioned.

The cover note contains information about the name of the marine insurance company, the
name of the insured, amount insured, name of the vessel, port of destination, port of
departure, rate of premium etc. This cover note covers the property pending preparation of
the final policy. However, the cover note will become void if policy is not received prior to or
within 24 hours of the issue of transport carrier’s receipts.

7. Issue of Marine Insurance Policy

Finally, the insurer will prepare a final marine insurance policy on a proper form with full
details and stamps and will hand over the same to the insured.

Claim Process for Cargo Insurance

In the case of an unwanted event causing damage to the goods, follow the steps mentioned
below in order to file a claim and obtain the claim amount:

1.Inform the insurance company about the event as soon as you can
2.In case of theft or loss of cargo, make sure to file an FIR and obtain copy of the same
3.A surveyor will be appointed to visit you and the location of loss/damage
4.Submit the documents to the surveyor along with the claim form
5.Once the documents reach the claim department of the insurance company, the
department initiates the verification process
6.On successful verification, you will receive the claim amount within a span of 30 days.
Documents Required for Claim Process
Submit all or some of the following documents to the insurance provider at the time of filing a
claim:

● Claim Form (duly filled & signed)

● Original Policy Document
● Details of the goods damaged/lost
● FIR report (in case of theft)
● Consignment details
● Any other details asked by the provider