Marine cargo & contractors all risk

Two covers for things that move and things being built

Property insurance protects assets standing still in a building you control. Two situations fall outside that: goods travelling between places, and a construction site where the asset does not yet exist in finished form.

Marine cargo insurance covers goods in transit. The name misleads persistently — it applies to movement by sea, air, rail and road, so a truck from Peenya to Pune is a marine risk in insurance language, and most Indian marine policies never touch water.

Contractors all risk covers a construction project for the duration of the contract: the works themselves, the materials and plant on site, and liability to third parties arising from the site. Erection all risk does the same job where the project is principally about installing plant and machinery rather than building.

Marine cargo: what to get right

Choose the clauses deliberately. Cover follows the Institute Cargo Clauses. Clause A is the widest, close to all-risk. Clause C is the narrowest, listing specific named perils only. The gap between them is substantial and the premium difference is often small, so the narrower option should be a decision rather than a default.

Do not rely on the transporter. A carrier’s liability is limited both by contract and by statute, and the limit is usually a small fraction of consignment value. Recovering also means proving fault and then pursuing them, which takes time your working capital does not have. Marine cover pays you and lets the insurer chase recovery.

Match cover to the Incoterm. The trade term determines at what point risk passes between seller and buyer, and therefore who needs the insurance for which leg. Assuming the counterparty has covered it, when the Incoterm says otherwise, leaves a gap nobody discovers until a claim.

Understand where cover starts and ends. Most wordings operate warehouse to warehouse, but the precise attachment and termination points matter — particularly where goods sit at a port or in an intermediate godown for an extended period.

Preserve your claim. On loss or damage, obtain a survey, lodge a claim on the carrier within the time their contract allows, and keep the transport document, invoice and packing list together. Failing to lodge against the carrier can prejudice the insurer’s recovery and your claim with it.

Contractors all risk: where projects are underinsured

CAR has two sections. The material damage section covers physical loss or damage to the permanent and temporary works, materials, and construction plant on site. The third party liability section covers injury or property damage caused to outsiders by the site.

Both are routinely demanded by project owners and by lenders before disbursement, and both are usually taken in the joint names of the contractor, the principal employer and sometimes the financier. The common failures are consistent:

• Insuring at contract value with no escalation. Costs rise during a long project, and a policy fixed at the original contract sum leaves the difference with you.
• No debris removal provision. After a serious loss, clearing the site is a substantial cost in its own right and is usually a separately stated limit.
• Surrounding property left out. Damage to the principal’s existing structures adjacent to the works is frequently excluded unless specifically added.
• Testing and commissioning overlooked. On erection projects this is the highest-risk phase, and the cover period for it needs to be explicitly agreed.
• Third party limits set too low to respond to a serious injury or a neighbouring property loss.
• Free issue materials omitted from the sum insured, even though the contractor is responsible for them on site.
• Maintenance period assumed. Limited and extended maintenance cover are different things, and which one you have decides whether damage caused during defect rectification is covered.

Design defect is treated in a graded way in most wordings, and the extent to which defective design, material or workmanship is covered — and whether cover extends only to resulting damage or to the defective part itself — is one of the more consequential things to check before signing.

How Rytvae helps

We work with businesses around Bengaluru to set sums insured against real exposure rather than contract value alone, and place cover through our IRDAI-regulated partners. See the full corporate and group insurance guide for how these sit alongside property and liability cover, and cyber and D&O liability for the covers that respond to management and data exposures.

Frequently asked questions