One of my friend (Buyer) has established the L/c. He insured the goods but the vessel carring the stuff sink on the way to destination.
My friend is in great tension. He wants to know about require documents + procedure + how he can satisfy to Insurance Company.
Kindly help my friend.
Best Regards
ID int786

Replying to [int786]:I think you should ask the insurance company for help directly.

Replying to [int786]:
What a terrible! I don't know how to say since we haven't got this kind of trouble before.

Replying to [int786]:

Its quiet simple, specially if he has done the payment through the L/C.

1. He needs the Invoice where the full amount is stated, on Exwarehouse basis.

2. The transportation cost from the Forwarder, shipping bill or invoice.

3. If possible the SGS or third party inspection confirming the loading on the vessel, and ofcourse the Bill of lading is needed.

4. The bank papers, which state that he has already paid for the goods.

5. Along with all those papers he needs to have a written statement from the shipping company that the ship has sunk and that the goods along with it and the retrival is not possible, and if it is that the goods are damaged and unusuable.

6. In addition to all that he needs to fill in a Claim form of the Insurance and thats all.


Most likely he will be paid back the good value, but not the shipping cost, and please note that he will only be paid the ammount stated on the invoice not more or less.

The insurance takes up to 6 months to issue the money back.

Hope that helps you, for further information you can also contact the insurance, they must help you out.

Replying to [int786]:

Mr. Firoze Singh has already replied to your query in detail, thanks to him.

First of all are the goods ensured under Marine Policy?

If yes then the supplier should approach to the insurance company with custom attested commercial invoice, packing list, Bill of Lading, Certificate of Origin, Third Party Inspection Certificate (if any), Original letter from the shipping company issued to the supplier or his Freight Forwarder stating that the vessel (number and name) containing the cargo of the freight forwarder / exporter having container number and seal number has sinked and the goods are not re-coverable.

If the ship has sinked and the same is noted by news agencies like Reuters / BBC or any other media, The original copy of the newspaper covering the article should also be provided alongwith the above documents.

The supplier has to fill the claim form.

Please be advised that insurance company will make the payment towards the cost of goods only. The ocean freight will not be paid.

The amount will be around or less than 90% of the goods (invoice value)

Sometimes shipping company pays only cost of the goods which does not include the sellers margin.

The entire procedure can take upto 6 months

Best of Luck.

Warm Regards,
Sameer

This situation highlights the fact that you should always take out Insurance in your own name and only through your local insurance broker (never let the seller take out the policy in his name where you have already paid for the goods or where you must pay if they are lost).

Broadly, unless the Insurance Policy is in your name you have no right to deal with the insurance company. Even if the policy is in your name but is arranged in another country, you face long delays in processing claims.

When I insure goods, I do it strictly only through my own local insurance broker where I know the Claim will be quickly processed and the broker will handle all the paperwork.

In other words, letting the seller arrange the insurance is often much like having no insurance at all.

Replying to [Aussie]:Your comment is exaggeration.For CIF term,usually the Bank will ask the seller to hand up the insurance policy in which beneficiary is seller and endorsee is buyer under L/C. When the insured good is lost, if the insurance company has no branch or agent in buyer's country, the buyer can authorize to sellerr to deal with the insurance company. In this instance ,I am sure the seller would do his best to help its customer.

So I think if the buyer decide to insure the goods itself or by seller should base on two factors.1st which insurance company can provide a attractive insurance rate, seller's or buyer's? 2nd if it is worth for buyer to arrange the insurance itself , the seller can arrange it with shippping ,inspection at some time, when the damage occured , just push the seller to handle it .

Replying to yaang:


Aussie does have a point there, that the possiblity is quiet high that if the supplier is a crook and the policy is on his name he can cut out the buyer, and in the worst case also take the money upfront already.


But its a double edged sword, if the buyer hasn´t paid yet, then it would be unfair to the seller.

In most cases though it doesn´t happen, since both want to do business, and try to work long term.

You know Firo, if you bought some stuff from me, paid my invoice, paid me to insure it and I did so in my own name and the ship sank ... guess what?

That's right ... the insurance policy is invalid ... neither of us can get the insurance money.

That's because I did not have what is called an "insurable interest" in the goods.

Because you paid for the goods against my invoice, you are the new owner. Consequently, only you the owner, has the insurable interest in the goods ...only you may insure the goods.

However, if I did take out the insurance policy in your name, only you can make the claim when the goods are lost ... not so easy as you are on the other side of the earth from where I took out the policy for you. 

Point being, always take out insurance from your local broker who will process the paperwork if the goods are lost.

CIF is different.

If a vessel sinks, then general average is declared and the carrier will be in touch with a dollar figure for the loss as this is a very old law (goes back to Mesopotamia) in that all parties benefiting from the vessel are also accountable for loss and/or damages of the vessel on a pro-rata basis. If your friend insured his goods on an All Risks cargo policy, then he is covered for general average and the insurer will cover this loss. As far as the actual cargo goes, he can then submit a claim for all costs including freight and the full value of the cargo. For article on guide to insurance and video, please feel free to email me.