Page 175 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes 9.6 Payment of Claims

You need to remember that as the risk covers are different for import/export and inland (with
in India) consignments, the procedure of claim settlement is explained separately:

9.6.1 For Import/Export Consignments

Claims under marine policies have to be supported by certain documents which vary according
to the type of loss as also the circumstances of the claim and the mode of carriage.
The documents required for any claim are as under:

Intimation to the Insurance Company: As soon as the loss is discovered then it is the duty
of the policyholder to inform the Insurance Company to enable it to assess the loss.

Policy: The original policy or certificate of insurance is to be submitted to the company.
This document establishes the claimant’s title and also serves as an evidence of the subject
matter being actually insured.
Bill of Lading: Bill of Lading is a document which serves as evidence that the goods were
actually shipped. It also gives the particulars of cargo.
Invoice: An invoice evidences the terms of sale. It also contains complete description of
the goods, prices, etc. The invoice enables the insurers to see that the insured value of the
cargo is not unreasonably in excess of its cost, and that there is no gross overvaluation. The
original invoice (or a copy thereof) is required in support of claim.
Survey Report: Survey report shows the cause and extent of loss, and is absolutely necessary
for the settlement of claim. The findings of the surveyors relate to the nature and extent of
loss or damage, particulars of the sound values and damaged values, etc. It is normally
issued with the remarks “without prejudice,” i.e. without prejudice to the question of
liability under the policy.
Debit Note: The claimant is expected to send a debit note showing the amount claimed by
him in respect of the loss or damage. This is sometimes referred to as a claim bill.

Copy of Protest: If the loss or damage to cargo has been caused by a peril of the sea, the
master of the vessel usually makes a protest on arrival at destination before a Notary
Public. Through this protest, he informs that he is not responsible for the loss or damage.
Insurers sometimes require to see the copy of the protest to satisfy themselves about the
actual cause of the loss.
Letter of Subrogation: This is a legal document (supplied by insurers) which transfers the
rights of the claimant against a third party to the insurers.
On payment of claim, the insurers may wish to pursue recovery from a carrier or other
third party who, in their opinion, is responsible for the loss. The authority to do so is
derived from this document. It is required to be duly stamped.

Some of the other documents required in support of particular average claims are Ship
survey report lost overboard certificate if cargo is lost during loading and unloading
operation, short landing certificate etc.
Bill of entry: The other important document is bill of entry issued by the customs authorities
showing therein the amount of duty paid, the date of arrival of the steamer, etc.

170 LOVELY PROFESSIONAL UNIVERSITY