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What is Single Transit Policy?

Marine insurance policies protect goods throughout their journey from their starting point to their final destination. These policies cater to various modes of transportation, encompassing road, air, rail, sea, courier, and postal services, offering protection against potential loss or damage. A single transit policy is a subset of marine insurance that provides coverage for a specific journey between two points. It is crafted to shield cargo during transportation, whether by truck, railway, ship, or airplane, from its place of origin to its intended destination. This policy ensures protection throughout the entire movement, regardless of the transportation method chosen. Its primary aim is to cover a distinct shipment or transit event, distinguishing it from policies that offer continuous coverage for numerous shipments.

The most common causes of cargo loss or damage during transit include events such as explosions, fires, hijackings, collisions, accidents, and vehicle overturns. This policy also extends its coverage against a range of risks that cargo may encounter during transportation, including strikes, theft, and riots. Moreover, a single transit marine insurance policy can encompass meticulously crafted plans that cover malicious damage, theft, damages encountered during loading and unloading processes, non-delivery of items, and mishandling of cargo specific to the transit. The coverage offered can be meticulously tailored to align with your unique requirements. It is available for an extensive array of goods or cargo, irrespective of whether they are manufactured or traded by you.

Features of Single Transit Policy in Marine Insurance:
  • Contrary to open or continuous marine insurance policies, which cover multiple shipments over a designated time frame, a single transit policy is devised specifically for a solitary journey or shipment.
  • The policy is fashioned to resonate with the exact transit event it ensures.
  • The coverage terminates once the shipment arrives at its destination.
  • It is conceptualized for businesses that sporadically dispatch shipments.
  • Single transit policies can be adjusted and tailored according to the unique needs of the insured and the characteristics of the cargo.
  • These policies are generally straightforward to secure and oversee, given that they aren't as extensive as perpetual marine insurance policies.
  • Owing to the coverage being restricted to just one shipment, the premium for a single transit policy tends to be lower in comparison to the more exhaustive and continuous marine insurance policies.

Why do you need Single Transit Policy?
A single transit policy becomes invaluable if your enterprise engages in infrequent international trading but occasionally dispatches or receives merchandise across national boundaries. It facilitates the insurance of distinct consignments without binding you to an extended, comprehensive marine insurance scheme. Moreover, for exporters or importers navigating sporadic shipments, especially those dependent on seasonal demands, this policy is an apt choice, eliminating the obligations associated with ongoing marine insurance.

In scenarios where shipments are rare or irregular, investing in continuous marine insurance might not yield cost efficiency. The single transit policy grants you the liberty to insure only those consignments that mandate coverage, mitigating extraneous expenses. This selective approach to insurance acquisition can optimize cost management and resource allocation. Furthermore, different consignments might exhibit varying degrees of associated risks.

Customization is a hallmark of the single transit policy, enabling it to adapt its coverage scope to address the unique challenges faced by your cargo during transit. For instance, when you're involved in a trade fair or an exhibition, this policy can encapsulate the transit risks germane to that particular event, bypassing the necessity for an extended insurance engagement. Singular projects, especially those necessitating the transport of specialized or oversized cargo, can also benefit from the tailored protection offered by the single transit policy.

What will Single Transit Policy cover?

A single transit policy encompasses a diverse range of coverages, such as:

Fire Accident

This coverage protects against damages resulting from fires. This includes expenses related to firefighting and damages caused by smoke and water, especially those resulting from fire extinguishing agents.

Collision, Overturning, or Derailment

This protects against physical damages or losses due to collisions, overturning, or derailments of transport vehicles. Ancillary expenses associated with salvage and recovery operations are also covered.

Sinking

This provision covers losses or damages stemming from the sinking or capsizing of a transport carrier. It also provides coverage for salvage, recovery expenses, and damages to other vessels or assets arising from the sinking incident.

Natural Calamities

This safeguards against losses caused by natural disasters, such as hurricanes, earthquakes, tsunamis, and storms.

Reconditioning Cost

In the aftermath of a covered loss or damage, this coverage compensates the carrier for expenses related to repairs or restorations to its original state. This can encompass machinery repairs, equipment replacement, the cost of replacing damaged or lost items, labor and material costs for reconditioning, and associated expenses like shipping and storage.

Explosion

If an explosion or a similar event occurs, this coverage protects your shipment and any cargo or property on board. Moreover, it accounts for salvage and recovery costs resulting from the explosion and potential liabilities for damages to other carriers and properties.

What's not covered?

The following are common exclusions found in a single transit policy in India:

Intentional or Wilful Activities by the Insured

This policy does not cover damages or losses caused by the intentional or wilful actions of the insured or their representative, such as intentionally damaging their cargo.

Normal Wear & Tear, Volume & Weight Loss, Liquid Leakage

The policy does not cover losses or damages resulting from weight loss, volume loss, liquid leakage, or ordinary wear and tear.

Inadequate Packaging

Losses due to the insured's negligence or failure to take adequate precautions during packaging or preparing items for delivery are excluded.

Inherent Nature

Damages or losses stemming from the intrinsic characteristics or defects of the insured item are not covered.

Damages Caused by Riots, Strikes, or War

Items lost or damaged during riots, civil disturbances, or wars are not covered. However, the insurance might offer coverage for some of these risks as additional options.

Default in Financial Commitments

This exclusion pertains to losses or damages caused when an entity responsible for the transport or delivery of insured goods fails to meet its financial obligations, such as loan defaults. It often applies when a party (like a goods forwarder) cannot fulfill their contractual duties due to insufficient funds.

Delay in Delivery

The policy does not cover damages or losses related to delivery delays unless the delay directly causes physical damage or loss to the insured items.

Who needs Single Transit Policy?

Single transit insurance policies cater to a broad spectrum of businesses across diverse sectors. Below are a few instances of businesses that stand to benefit from adopting such a policy:

  • Exporters or importers with intermittent shipment schedules.
  • Enterprises that participate in trade exhibitions, fairs, or events necessitate temporary transportation of commodities.
  • Organizations that periodically transport high-value cargo.
  • Freight forwarders managing selective consignments.

FAQs

What is CIF+10% under marine policy claims?
CIF in marine insurance refers to cost, insurance, and freight. The "cost" represents the purchase invoice value or selling price. "Insurance" corresponds to the premium paid. Meanwhile, "freight" encompasses freight charges and associated costs, like customs clearance fees. In a CIF arrangement, the seller shoulders the expenses and freight for delivering the goods to a destination port specified by the buyer. CIF+10% implies an added 10% to account for unexpected expenses arising from currency fluctuations or supplementary freight charges.
What is CFR in marine insurance?
CFR in marine insurance signifies cost and freight. It's a trading term where the obligation lies with the seller to ship goods via sea to a designated port.
What is the per transit limit in marine insurance?
The "per transit limit" in marine insurance indicates the uppermost coverage limit that a policy provides for a single transit or shipment of goods. In essence, it's the highest amount the insurance firm will compensate the insured for, in cases of loss, damage, or other insured risks during the transportation of goods from one place to another.
What is the main difference between CFR and CIF?
Both CFR (cost and freight) and CIF (cost, insurance, and freight) fall under a broader set of global trade norms termed as Incoterms, formulated by the International Chamber of Commerce (ICC). In both cases, the seller is tasked with transporting goods to a specified destination chosen by the buyer, absorbing the related costs. The distinction lies in the CIF arrangement, wherein the shipper (seller) also shoulders the marine insurance expense for the shipped goods. The insurance value is usually a point of mutual agreement between the buyer and the seller. Additionally, the seller is accountable for any supplementary expenses related to the transportation, which might encompass additional documentation for customs checks, inspections, or any necessary rerouting during transit.
What is DAP in the shipping of goods?
DAP, when referring to the shipping of goods, denotes "Delivered at Place." Here, the seller undertakes all costs and potential risks tied to the delivery of goods to a pre-decided destination, often the buyer's establishment.
What is the bill of lading in CIF?
In the context of a CIF (cost, insurance, and freight) agreement, the bill of lading is pivotal. This document holds immense significance in global shipping and trading operations. It acts as proof of the contractual agreement between the shipper (seller) and the transporting carrier and doubles as a receipt for the dispatched goods. Beyond that, it's a title document that symbolizes ownership of the goods, enabling the buyer to claim possession of the cargo upon its arrival at the intended port.