In the trade contract terms CIF and CIP, arrangement is usually made for any claims to be paid at destination to the consignee or issuing bank. However, should a loss occur prior to the passing of title to the goods to the consignee, such loss is payable at origin to the shipper or financing agent.
The assured is obligated in the policy to do everything to minimize the loss or damage, to file claims against the carrier or any other party who could be responsible for the loss or damage, and to notify the insurer or claim agent immediately of the loss or damage. The insurer or claim agent then appoints a marine surveyor (the adjuster) to inspect the subject matter insured and report on the cause of the loss or damage, the value of the cargo, and the extent of damage.
In some cases, the surveyor is named in the policy and the policy may require that request for survey to the surveyor or that claims against the carrier or any other party be made within a specified period of time after discharge of the goods from the vessel.
The surveyor issues a Certificate of Loss (Certificate of Survey), accompanied usually by the report of findings, to the consignee. The consignee may be required to pay a surveyor's fee, which may be refunded by the insurer or claim agent if the loss is recoverable under the policy.
When making an insurance claim, the claimant (the assured) usually is required to submit the following documents:
Original insurance policy or insurance certificate ---
It proves that the claimant has the insurable interest. It helps the insurer or claim agent to establish that the cargo in question is the subject matter insured and to check the amount and risks covered.
Original bill of lading or other transport document ---
It evidences the contract of carriage where the insurer or claim agent may take action against after paying the claimant. It helps the insurer or claim agent to determine that the claim is not the cause of a foul bill of lading, for example, a bill of lading with the "insufficient packing" notation where such risk is excluded in the coverage.
Commercial invoice ---
It helps the insurer or claim agent to determine the percentage of loss in a partial loss. It may prove that the cargo in question is the subject matter insured.
Packing list ---
It determines where in the consignment the loss or damage occurred. It may point to the cause of damage that might be excluded in the coverage, for example unsuitable packing.
Certificate of Loss (Certificate of Survey) ---
It shows the cause, value and extent of the loss or damage. It is issued by the marine surveyor appointed by the insurer or claim agent.
The landing account or weight notes (notes on weight) at destination ---
It helps the insurer or claim agent to identify where the loss or damage may have actually occurred. The records from the carrier or stevedoring contractor at destination may pinpoint that the loss or damage has happened on the vessel, in the container, during unloading, or while in the dock warehouse.
Any correspondence with the carrier or any other party who could be responsible for the loss or damage ---
It helps the insurer or claim agent to verify that the Not to Inure Clause is not violated.
Master's protest ---
A written declaration by the ship's master giving details of disaster, accident or injury at sea. This document is particularly important when a general average claim is involved.
Subrogation
When the assured is fully paid in an insurance claim, he/she normally signs a subrogation form giving the insurer the rights to the lost or damaged cargo. It is only then the insurer may take actions against the carrier or any other party who could be responsible for the loss or damage.
Payments in the Particular Average Claims and the General Average Claims
While the payment in a particular average claim (either partial or total loss) usually is prompt, in a general average claim it may take many months. Referring to the general average sacrifice, the appointed marine surveyor (the adjuster) carefully calculates the value of each shipment---the wholesale price of each type of goods less the applicable customs duties, taxes and other charges---in proportion to the total value of the shipments and vessel.
Cargo owners whose goods are fully insured---the amount insured equals or exceeds the value of the goods---the insurers may put up immediately a general average guarantee to cover the contribution in the general average sacrifice, so that the cargo owners may obtain the goods from the carrier instead of waiting for many months for the settlement date. In some cases, the assured is required to post a general average bond in addition to the insurer's guarantee.
The insurers are liable for the cost of the claim in a general average claim as provided in all three basic types of policies in the old and the new Institute Cargo Clauses.
In the case of uninsured goods, the cargo owners must wait until the settlement date to obtain the goods from the carrier, unless the cash is put up to cover their shares of the contribution. Still, it may be weeks before the amount of the individual contribution is available.
