Policyholders usually approach insurance companies to get storage cover at different storage locations when buying transit insurance policies. Some marine transit policyholders store their goods at transit sheds, port warehouses, and railway platforms.
Marine insurance coverage
A standard marine insurance policy covers goods during the “ordinary course of transit”. Post the discharge of goods, the policy stays valid for up to 60 days. The goods are insured right after it is carried in the vessel to the final discharge port.
The case where marine insurance cover gets terminated
As a result, it would comprise 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 avoidable. In case of a break in the “ordinary course of transit”, the policy would get terminated. The marine insurance policy is also 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
If goods movement is intentionally stopped at an intermediate warehouse then it is stored at places other than the specified transit. It may so happen that 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 their final destination.
A policyholder may wish to store the goods during voyage/transit in certain situations. However, it is essential for him to notify the insurance company at the inception of the policy. The insurer can agree to extend the cover by including storage 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 is provided due to unavoidable reasons. Some situations that compel the policyholder to keep the material therein are 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 an extension of storage with suitable reasons, before the expiry of the marine insurance policy.
Marine insurance cover for export/import
Marine insurance companies would be open to issuing a marine insurance policy for import/export of the shipment up to the intermediate storage points. It can also 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 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 various clients spread across 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, the customs authority at the destination took longer than expected for calculating the duty on the goods. Hence they stored the goods. . There was a delay in the entire consignment due to this lag. 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. He visited the site and found that the losses happened due to delays at the customs authorities. This event was beyond the control of the policyholder.
After scrutinising the situation, the marine insurance company agreed to settle the claim. The claim was related to the storage of goods because the situation happened due to unavoidable reasons.