Information required for a Specific Marine Policy

The reason this above question needs to be asked is- there is no standardized proposal form for transit insurance. 

To get the correct answer, we need to answer two questions: 

A. What is the end use of this information 

B. Who is going to use this data and for what purpose 

The answer to the first question is simple - a marine specific policy needs to mention the details of the cargo (subject matter of insurance), mode of carriage the Policy document. A specific answer to this is provided in Section 25 of Marine Insurance act, 1963.

Section 25 of Marine Insurance Act:

A marine policy must specify:

  1. The name of the assured, or of some person who effects the insurance on his behalf;
  2. The subject-matter insured and the risk insured against;
  3. The voyage, or period of time, or both, as the case may be, covered by the insurance;
  4. The sum or sums insured;
  5. The name or names of the insurer or insurers.

2nd question is answered in sections 19 and 20 of the Marine Insurance act. After reminding the customers about the need for utmost good faith in insurance contract, Section 20 underlines the relevance of information regarding material facts for underwriting that business. 

Section 19 of Marine Insurance Act:

Insurance is Uberrimae Fidei.:

A contract of marine insurance is a contract based upon the utmost good faith, and if the utmost good faith be not observed by either party, the contract may be avoided by the other party.  

Section 20 of Marine Insurance Act:

Disclosure by Assured:

  1. Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance.
  2. Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.

Underwriting, as we all know, is a two step process; the first step is a decision as to accepting or not accepting a proposal and second is to apply suitable premium and terms and conditions to the risk.

To sum up, a quick list of material facts for Transit Insurance is:

1. Nature of goods, number of units and packing - eg. 28 cases of of machinery professionally packed. 

2. Sum Insured (including Trade arrangement)- CIF +10%

3. Voyage: From Consignor's warehouse to Port (at destination) 

4. Terms of cover sought: All Risks (ICC A), WAR & SRCC

5. Any variation/ additional cover: FOB (Free on board), Additional storage required.

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