How to make standard insurance policy suitable for the different types of contracts?
The old form of policy is even used today. In order to make the standard policy suitable for the different types of contracts, suitable conditions are added to the policy.
The conditions are inserted in the policy in the form of clauses. The clauses took the standard form with special meanings. They may be pertaining to Hull, Cargo and Freight.
1. Hull Clauses:
These clauses are mainly framed with the insurances on vessels and are incorporated in hull policies. The clauses may be pertaining to losses resulting from collision, standing, general average, etc. ‘All risks policy’ may be issued or certain risks may be excluded from the policy by inserting suitable clauses.
‘Inland or Port Risk Clauses’ may be incorporated in the policy to determine the extent of loss. These clauses are known as ‘Institute Time Clauses’.
2. Cargo Clauses:
These clauses are used in the insurance of goods and are incorporated in cargo policies. The clauses describe the nature, extent; and scope of the insurance and define comprehensive conditions and restrictions.
The additional marine perils against which cover may be sought or which are excluded from the policies are inserted through special clauses. Terms and conditions of Cargo insurance are specially incorporated in the policies.
‘With Average (W.A.) or With Particular Average, (W.P.A.),’ ‘Exposed during transit’, etc., are the important clauses of cargo insurance.
The underwriting of cargo-risks depends upon the nature of goods, the susceptibility of the goods, intentions of the insurer and insured and willingness of the assured to pay extra premium. This clause is known as ‘Institute Cargo Clause’.
3. Freight Clauses:
The clauses are framed in connection with the loss of freight due to maritime perils which may be insured for a period or for a voyage.
A person who paid the freight in advance and the person who will receive the freight on completion of voyage are interested in covering the risk.
The General Average (G.A.), Particular Average (P.A.) etc. are used in the freight clauses. The clauses are known as ‘Institute Freight Clauses’.