An insurance blog-posting from the past……

Understand the possibilities of complexities arising in making a marine cargo insurance claims!

If your business involves the import and export of goods, the subject of marine cargo claims and how you can avoid pitfalls while making such claims should interest you.

Let start by assuming you are the consignee or the importer. Having paid for your goods and finalised the necessary documentation with the bank , you arrived at the port only to find your cargo damaged. More than often, if you had hired a freight forwarder to handle the cargo  on your behalf, you can depend on them for the procedures involved in dealing with the problem.

But there are many instances these forwarders failed to deliver…., and even if an agent was previously engaged, the agent may not be too familiar with the  detailed procedures then things would likely fall back on your lap… meaning you would need to know at least those basics claims handling procedures and processes. If you failed in this aspect, you may well prejudice your insurance claim position.

Before proceeding further, it is good to know the type of marine insurance contract you are in possession for your imports. The varying practices of trade and patterns of business sometimes dictate the exact shape of this arrangement.

The usual types of marine cargo contracts are:

FOB (Free On Board) – Buyer or you effect the insurance C & F (Cost and Freight) – Buyer or you effect the insurance CIF (Cost Insurance and Freight) – Seller effect the insurance – the seller should have enclosed the insurance policy for you

There is also a need to have a basic understanding of the type and nature of the marine insurance coverage…. You can say there are 3 basic types of marine cargo policy wordings – Institute Cargo Clauses or ICC in three types of coverage format – “A”, “B” and “C”. The coverage is as illustrated below:

The standard claims documentation you need to submit to the insurance company.

From the above listing of standard documentation, you would have noticed that most of the documents are within your familiar territory, you should not have much of a problem having the requirements resolved, save maybe the last two items.

In respect of the item, “All other information and documentary evidence……..” this would depends on how complicated the case has developed, thus we shall not discuss this aspect here.

In respect of the item, “Correspondence holding the respective parties responsible….” this relate to your obligation to hold those involved with the transportation / storage of the cargo responsible for the damages. The documents are usually standard – just request the format from the insurer’s claims handling executive. Reason for doing this is to enable the insurer to subrogate against the parties allegedly having caused the loss to the cargo.

For those cases where your shipment is on CIF to your place of destination, always check the policy document that is in your possession, check if there is any prescribed claims handling agent stated in the policy schedule. Usually for imports (from foreign country), your policy should contained the relevant settling or claims handling agent – you just need to call them up and seek abit of their advice…… but do not take everything they said, they are not obligated to provide you with a clear advice. The other setback in such import where the seller is buying the insurance, the insurer is usually foreign, ie. not Malaysian registered, thus the reliance on the claim handling agent is unavoidable.

Of course, you may not be able to rely totally on your insurance company, especially if you do not buy from them directly or the insurance was secured by your freight forwarder……or seller. In any event your losses fell outside the ambit of your policy coverage, example, your forwarder may had bought a ICC “C” type cover and therefore the policy does not respond; it is best you seek further help…. FILE A COMPLAINT WITH THE CENTRAL BANK! Otherwise it is all about “caveat emptor” or “let’s the buyer beware”