The marine transit insurance company doesn’t offer coverage when the insurer default on his duty of disclosure as disclosures need to be made whenever the policy is renewed. If found that the insurer has defaulted on the terms and conditions stipulated under this policy, the insurance company will roll back the insurance making it effective that the cargo has not been insured at all.

The disclosures are:

  1. Any known risk for a claim to increase
  2. Prior convictions or criminal offence
  3. Previous insurance claims made
  4. If other insurance company or companies have refused to provide cover under standard terms or ceased to provide coverage.

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Other reason coverages when the marine transit insurance will be stopped is as the following:

  1. Unreasonable packaging, preparation, and protection of the goods.
  2. Non-conforming containers, conveyance or lift van.
  3. Manhandling the goods while in transit
  4. Wear and tear of the goods
  5. Delay
  6. Goods being confiscated by figures of authority
  7. Hostile act by third party or insurer causing the goods to be seized, damaged or loss. (Except in piracy cases)
  8. Weapons of war affecting the goods while in land
  9. Direct or indirect loss to goods caused by:
  1. Act of foreign enemy, invasion, war, hostilities whether declared or not.
  2. An act of governmental authorities such as destruction of the goods
  • Generation of nuclear power
  1. Materials from nuclear weapons
  2. Radiations, radioactivity contamination, nuclear fuel contamination or any other nuclear waste
  3. Terrorism act regardless whether before or after the goods have been shipped before or after
  • Any action is taken to prevent, suppress or anything relating to an act of terrorism.

Case: 1

One of the leading engineering companies in Pune, T.J Engineering is reputed name in the industry. Last year, the company bagged a contract of exporting engineering parts to the company situated in Malaysia. As the consignment order had to be completed in a very short time of one week, the company employed some temporary workforce and worked in a double shift as well. 

As the company was in a hurry to complete the order, it did not pay much attention towards the packaging of the containers and opted for some low-quality containers. Due to the poor condition of the containers, some of its items got damaged. When the buyer received the consignment, it found that a major part of the consignment was wet and damaged. The buyer refused to accept the consignment and filed a case against T.J Engineering.

In this case, T.J Engineering had a marine transit insurance, and the company approached its marine insurer to compensate the buyer. However, the insurer refused to settle the case as the goods were not packed properly. The loss occurred due to improper packaging of the consignment which was done intentionally by T.J Engineering to complete the order before time.

The marine insurance company refused to settle the claim, and T.J Engineering had to bear all the expenses on own.

Case: 2

R.S Fashion House was ready to send its consignment to the company situated in the Middle East when its in-charge found some damages in boxes which were due to manhandling. As the consignment was getting late, the in-charge puts a tape around damaged boxes and sent them along with other boxes.

However, when the buyer received the consignment, he found some severely damaged boxes. There were some boxes which were wet due to improper packaging, and it caused damage to its content as well.

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The buyer refused to take the delivery of goods and filed a case against R.S Fashion House. As R.S Fashion House had a marine transit insurance, the company approached the insurer for the claim settlement.

Through the initial investigation, the insurer found out that the boxes were damaged even when the consignment was not shipped and R.S Fashion House intentionally exported damaged boxes which further spoiled its content.

R.S Fashion House could have easily avoided the losses which were due to manhandling and therefore, the insurer refused to settle the claim.