Assessing Marine Insurance

The Assessing of a Risk : In order to understand the considerations which will weigh with an underwriter or company in deciding to accept a risk, it is worth examining the type of information they are likely to require: –
a) Cargo and Packing : It is necessary to give a full description of the goods, together with exact details of the way in which they will be packed. Will they be containerized and if so, what type of packing will there be within the container? If not containerized will the goods be in cartons, drums, crates or bales for example?
b) Method of Shipment : Again full details of the method of shipment must be given, whether it is to be containerized and, if so, will it be door to door, part of a groupage consignment, single or multiple drop and so on. If not containerised, will it be a conventional shipment, in a chartered vessel or what special arrangements are to be made regarding such things as transhipment?
c) Voyage : Obviously, in deciding a premium, the length of the voyage and ultimate destination will be of major importance. In addition, it will relate to the War and Strikes Rate charges that might be made. Where there is a high degree of risk, for example, where warlike activities are taking place, the rate will rise. It should be remembered that the voyage might, in fact, involve an element of storage if the goods are being sent to a distribution center for onward transmission. The insurer will need to know that if the cover is to include the onward transmission or not and any storage involved, otherwise the cover will cease at the original distribution center.
d) Basis of Valuation: In export transactions, goods are frequently sold and resold and the values may alter as a result. It is an advantage, therefore, if a value is agreed in advance, not least because this will save a great deal of time and expense in the event of a claim. This would be known as a valued policy. The insurer may include expenses and profit and, if no fraud is involved, then the agreed value will be taken as the basis for a claim of total or partial loss. There may be an agreed value of the goods but the insured may decide to take the cover for a lower value. When exporting, for example, the basis of valuation may be ‘CIF invoice value plus 15%’ and if there were a claim against this policy, then the claimant would receive the CIF value plus 15%. When making a declaration under an Open Policy it follows the same valuation will be used. The assured may include a percentage to cover anticipated profit/inflation when agreeing a basis of valuation. The point being that the principle in marine insurance is to endeavor to place the insured not into the position he was in before the transit commenced but rather in the position in which he would have been had the venture been successfully completed. An unvalued policy would require proof of value in the event of a claim.