Policyholders usually approach insurance companies to get storage cover at different storage locations, when buying marine transit policy. Usually, such storage is done at transit sheds, port warehouses, railway platforms, etc.
A standard marine insurance policy covers goods during the “ordinary course of transit”, and the policy is extended up to 60 days after the completion of the discharge over the side of the goods which are insured from the carrying vessel at the final discharge port.
As a result, it would comprise of the customary trans-shipments which are beyond the control of the policyholder. However, the marine insurance policy would get terminated if storage was intentional, voluntary and was avoidable. This means that the policy would be terminated if there is a break in the “ordinary course of transit”. The marine insurance policy will also be terminated if the policyholder uses the storage place either:
- For storing goods other than in the specified course of transit, or
- For distribution of goods
Storing goods other than the specified transit would happen, where for example, the movement of goods is intentionally stopped by the policyholder at an intermediate warehouse because the original warehouse is full or used for distribution or allocation to break the consignment into small units for further transit. This means, contrary to the common perception, that the 60 days period is not the automatic storage cover. The policy would terminate as soon as goods would reach the final destination.
In a situation, where the policyholder wishes to store the goods during voyage/transit, it is essential to bring this fact to the notice of the insurance company at the inception of the policy. The insurer can agree to extend the cover by including storages at extra premium rates and conditions as agreed.
Further, the cover during storage at a bonded warehouse, or clearing and forwarding agent’s storage location would be offered if there are unavoidable reasons which compel the policyholder to keep the material therein, like a port strike, transporters’ strike, delay due to the assessment of duty on the goods by the customs authorities, etc. In case of unavoidable circumstances, it would be necessary for the client to approach the insurance company for extension of storage with suitable reasons, before the expiry of the marine insurance policy.
Marine insurance companies would be open to issuing a marine insurance policy for import/export of the shipment up to the intermediate storage points and even to extend the cover to include transit risk for the onward journey once the storage period is over.
In case you want to get more information on the marine insurance coverage, you are strongly advised to read the policy document. You can also contact your insurer to seek clarification.
Case of marine insurance storage cover
K.S Engineering is a renowned name in the engineering industry. The company has a long list of clients which are spread in different parts of the world. Considering the type of risk which can arise during business operations, the company has also purchased a marine insurance policy to get financial coverage for losses.
Last year, it won a huge contract for exporting engineering items worth Rs 50 lakh to a buyer situated in Dubai. The consignment left for Dubai and reached the destination port on time. However, at the destination, the customs authority took longer than expected for calculating the duty on the goods, and hence the goods had to be stored. Due to this lag, the entire consignment got delayed. Though the buyer accepted the consignment after a delay, they asked for compensation.
As K.S Engineering had a marine insurance policy, it approached the insurer for the claim settlement, submitted the required documents and got their compensation. The insurer appointed a surveyor who visited the site and found that the losses happened due to delay at custom authority and this event was beyond the control of the policyholder.
After scrutinising the situation, the marine insurance company agreed to settle the claim which was related to storage of goods because the situation happened due to unavoidable reasons.