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1. When is Cargo Insurance required?
For hundreds of years, merchants and traders have been protecting themselves against the risks of loss or damage to goods during shipment. A modern marine cargo policy typically covers imports and exports, including any temporary storage during transit, and domestic carriage.
2. Who needs to have Cargo Insurance cover?
Any business that manufactures, buys, or sells finished products, components or raw materials.
Anyone who has a financial interest in goods being transported between locations should consider Cargo insurance to protect their interests.
3. What should buyers look out for?
Problems sometimes arise where buyers or sellers do not arrange their own insurance, relying instead on:
• their suppliers or customers arranging the insurance, or
• a freight forwarder arranging insurance for them.
Those who think that carriers will pay for loss or damage may be surprised that contracts of carriage generally limit the liability of the carrier and can exclude it altogether in circumstances beyond their control.
4. What is a Stock Throughput policy?
A “stock throughput” policy extends a cargo policy so as to cover import and storage after arrival and then subsequent distribution to a domestic or international location all under one policy.
Once manufactured goods arrive, they either go direct to the end customer or into a storage warehouse before onward distribution.
For an importer, a stock throughput policy can offer:
• Insurance coverage for the import, the transit from the port to storage premises, whilst there, and the subsequent delivery transit to the final customer.
• Certainty that the cover is correct for the risks involved.
• Cost benefits, by having one policy instead of three.
• No gaps in cover, as might occur if separate policies were arranged for the three component parts.
• A reduction in administrative costs.
• Coverage at own or third party storage premises.
5. What advice should be given to Importers and Exporters?
The responsibility for arranging marine cargo insurance is largely dependent on the terms of the underlying sale/purchase contract between the seller of the goods and the buyer.
• Do not rely on the supplier to insure the goods
• Do not rely on the carrier to “cover” the goods
6. What are the benefits of a Cargo Insurance policy?
As well as the direct benefits explained on the following pages, a range of extensions allows cargo policyholders to tailor their own cargo policy to also cover:
• domestic sales and purchases
• non-sales movements between their own premises, at home or abroad
• storage after arrival, before final delivery, at home or abroad
• exhibitions or demonstrations, at home or abroad
• engineers’ tools and representatives’ samples, at home or abroad
7. What is the extent of cover provided?
All risks of physical loss of or damage to goods during transit – imports, exports and domestic carriage – including any incidental storage. Other storage can be added by extension.
Terrorism cover is only given during transit, and war risks are only covered during sea or air carriage.
8. Are all policies on an annual basis?
Annual policies are to be encouraged because it reduces the risk of the Client failing to advise of a consignment and usually work out less expensive than purchasing cover for individual trips.
Single trip covers are available in some circumstances.
9. Does an annual policy cover all contracts the Insured enters into during the period?
Subject to the policy criteria relating to subject matter insured, destinations and value limits and the start and end date of the voyage.
10. Are there any geographical restrictions?
Cover is generally available to or from ports or places worldwide.
However terms and conditions may vary for countries where there are higher than normal risks of war or terrorism, for example Iraq and Afghanistan.
Cover may not be available where trade is subject to international sanctions, for example Iran, Syria and North Korea.
Cover may not be available for the inland leg to or from the port in countries where the infrastructure is poor or where there is an unacceptable theft risk, for example to or from certain land-locked African countries.
Some countries require buyers there to insure imports in local insurance markets or with state insurance corporations.
11. What does a Cargo policy not cover?
Consequential losses are not normally covered; but can sometimes be added.
Non-fortuitous losses are not covered.
12. Letters of Credit
Because banks will only release funds to sellers on presentation of documents that match the applicable terms of sales, where sales are made against letters of credit, care should be taken to ensure that the incorporated Incoterms® Rules are appropriate for the method of carriage.
For example, CIF terms are not generally suitable for containerised shipments.
13. International Trade
Sales contracts generally incorporate the internationally-recognised terms of sale known as the Incoterms® Rules, which specify:
• various obligations of the seller and the buyer,
• how the various costs relating to the shipment are to be shared between the parties, and
• when the responsibility for the goods and thus the responsibility to insure the goods passes from the seller to the buyer
In particular, under two of the terms – CIF and CIP – insurance is arranged by the seller for the buyer’s benefit during the main carriage.
14 What are the Incoterms® Rules?
The Incoterms® Rules 2010 were available for use from 1 January 2011.
Published by the International Chamber of Commerce, the Incoterms® Rules allow buyers and sellers to transact business with the certainty that each understands its obligations in relation to:
a. the point at which the risk of loss of or damage to the goods passes from the seller to the buyer, and
b. which party bears various costs associated with the shipment.
The risk transfer point (a), also called the delivery point, is important in relation to marine cargo insurance underwriting and claims, because it is a factor in establishing insurable interest. (Another factor is title; but the Incoterms® Rules do not deal with payment or the passing of title.).
15. To reduce the misuse by sellers of the FOB, CFR and CIF delivery terms, which are generally not appropriate for containerised, multi-modal and non-maritime shipments, the delivery terms are now separated into two distinct groups:
Terms for any method of Terms applicable tocarriage, including port-to-port shipmentsmaritime shipments only
EXW Ex works FAS Free alongside
FCA Free carrier FOB Free on board
CPT Carriage paid to CFR Cost and freight
CIP Carriage and insurance CIF Cost, insurance andpaid to freight
DAT Delivered at terminal
DAP Delivered at place
DDP Delivered duty paid
Questions and Related Help Text
Proposers full legal trading name and names of any Subsidiaries to be included
A business must have a legally recognised title and identity to enter into a contract. This can include the legal registered name of the business as well as any trading names which they might use.
Proposer Contact Name
The name of the person who should be contacted to discuss matters relating to this insurance.
Proposer Contact Tel No.
The telephone number on which the person to be contacted can be reached.
Business Establishment Date
Date cannot be greater than today.
Please enter the post code, or part of the address, or the company name, and then pick the correct entry from the list provided. Once you have done so, the post code will remain in this field.
The address at which the legal entity is registered and if necessary, to which any correspondence should be sent.
Is the Trading Address different from above address?
If the business trades from a different address to the Registered Address please complete details of the trading address.
A description of the activities in which the business engages and the nature and type of goods products or services sold, received, supplied, installed or available.
Previous Insurance Information
Are you presently insured?
Is the proposed risk currently insured and if so which Insurer provides the cover and when does the cover fall due for renewal?
Has any Insurer ever declined a proposal, cancelled or refused to renew your policy, or required special terms and conditions?
This is specific material information which must be disclosed as it will affect an Underwriters assessment of the risk proposed and could void a policy.
Have you or any of your business partners or directors ever been convicted or charged (but not yet tried) with a criminal offence other than motoring? Spent convictions do not need to be disclosed under the Rehabilitation of Offenders Act 1974.
This is specific material information which must be disclosed as it will affect an Underwriter’s assessment of the risk proposed and could void a policy.
Have you been prosecuted during the last 5 years under any safety or environmental legislation?
Have there been any losses, insured or uninsured, within the last 5 years?
This is specific material information which must be disclosed as it will affect an Underwriters assessment of the risk proposed. A copy of a Confirmed Claims Experience from previous Insurers may be requested by Underwriters in addition to this information.
Date of Claim
The date must be in the last 5 years and not in the future This is specific material information which must be disclosed as it will affect an Underwriters assessment of the risk proposed.
Type of Claim
This is specific material information which must be disclosed as it will affect an Underwriter’s assessment of the risk proposed. Select the type of claim from the system table.
Amount Paid £
Insert the value of the loss which has been paid to date by insurers or incurred if the loss was not covered by an insurance policy. This amount should include taxes and handling expenses.
Amount Outstanding £
Insert the value of the loss which is estimated as still to be paid by insurers or to be incurred if the loss was not covered by an insurance policy. This amount should include taxes and handling expenses.
Add another claim
This will enable details of any additional claim to be disclosed.
Subject Matter Insured
Description of Goods including packaging
This must include a comprehensive description of all goods as the cover provided by the policy will only include goods shown here. If there are goods which fall outside this description any loss or damage may be excluded from the policy.
Goods or merchandise for which we do not provide cover unless declared by the Assured and agreed by Underwriters prior to shipment:
1. Precious metal, diamonds and other stones;
2. Bullion, money, credit cards, debit cards, ATM cards, cash-replacement cards, store and gift vouchers and cards, travellers’ cheques, securities, bonds, deeds, bank notes, treasury notes, stamps and similar cash substitutes;
3. Weapons and explosives of all kinds;
4. Live animals and plants;
5. Laptop computers, personal computers, computer chips, memory modules, expansion cards, software licences and the like;
6. Plasma screens;
7. Mobile telephones, pre-paid mobile phone vouchers, SIM cards, accessories and the like;
8. Assured’s own computer equipment;
9. Household goods and personal effects, privately-owned motor vehicles.
Target Premium (£)
Please provide a Target Premium based upon the information available. In order to assist Underwriters further, you may wish to supply supporting information relating to this target.
Estimated Annual Sendings (At Proposer’s Risk)
This needs to be completed if cover is required for goods sent within the UK which includes England, Scotland, Wales, Northern Ireland, the Channel Islands and the Isle of Man.
UK Sales £
Please insert the annual value of sales made by any entity included under this insurance within the UK. This value should include any taxes which you are liable to pay associated with these sales.
UK Purchases £
Please insert the annual value of purchases made by any entity included under this insurance within the UK.
FOB/CFR or similar Exports £
Please insert the value of any annual export Sales you make where you are not responsible for the goods whilst they are in transit.
If cover is required for goods which are transported outside of the UK Underwriters require information on the values of the goods and where they are sent to or received from.
Western Europe (inc. Scandinavia)
This geographic area includes Andorra, Austria, Belgium, Denmark, Finland, Faroe Islands, France, Germany, Gibraltar, Greece, Holland, Iceland, Italy, Liechtenstein, Luxembourg, Monaco, Norway, Portugal, Republic of Ireland, Spain, Sweden, Switzerland.
Exports from UK £
Please insert the annual invoice value of goods which the proposer exports from the UK to Western Europe (including Scandinavia).
Imports to UK £
Please insert the annual invoice value of goods which the proposer imports from Western Europe (including Scandinavia) to UK.
This geographic area includes Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Turkey.
Exports from UK £
Please insert the annual invoice value of goods which the proposer exports from the UK to Wider Europe.
Imports to UK £
Please insert the annual invoice value of goods which the proposer imports from Wider Europe to UK.
USA, Canada, Australia, New Zealand
This area includes all States and offshore territories.
Please insert the annual invoice value of goods which the proposer exports from the UK to USA, Canada, Australia and New Zealand.
Imports from UK £
Please insert the annual invoice value of goods which the proposer imports from USA, Canada, Australia and New Zealand to UK.
This geographic area includes Hong Kong, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam.
Please insert the annual invoice value of goods which the proposer exports from the UK to Far East.
Please insert the annual invoice value of goods which the proposer imports from Far East to UK.
This geographic area includes Bahrain, Israel, Kuwait, Qatar, Saudi Arabia, United Arab Emirates.
Please insert the annual invoice value of goods which the proposer exports from the UK to Middle East.
Please insert the annual invoice value of goods which the proposer imports from Middle East to UK.
Rest of World
Any territory which is not included in one of the above definitions.
Please insert the annual invoice value of goods which the proposer exports from the UK to any territories not listed above.
Please insert the annual invoice value of goods which the proposer imports from any territories not listed above to the UK.
Please provide the maximum invoice value of the Clients goods under each of the following categories.
Do you require cover for Domestic Sendings?
Domestic Sendings are those which have a starting location and a final destination within the UK.
Maximum any one own/hired vehicle £
Please insert the maximum invoice value of goods which would be transported at any one time either in the Proposers own commercial vehicle or in a hired commercial vehicle.
Maximum any one location in ordinary course of transit £
Please insert the maximum invoice value of goods which would be at single location at any one time whilst those goods are in the ordinary course of transit from a location in the UK to a destination in the UK.
Maximum any one hauliers vehicles £
Please insert the maximum invoice value of goods which would be transported at any one time in a single haulage contractor’s vehicle.
Do you require cover for International Sendings?
International Sendings are those which have a starting location in the UK and a destination outside of the UK and/or vice versa
Maximum any one conveyance £
Please insert the maximum invoice value of goods which would be transported at any one time by a single conveyance.
Please insert the maximum invoice value of goods which would be at a single location whilst those goods are in the ordinary course of transit to a destination outside of the UK and/or vice versa.
Non Sale Movements
Do you require cover for Non Sale Movements?
Non Sale Movements are those goods which are transported not directly as a result of a sale or purchase process with an unrelated business entity.
Please insert the total value of goods which are transported between associated companies or between different locations of the same company.
Please insert the total value of goods any one exhibition or demonstration which would be transported to commercial exhibitions and number of exhibitions per year in the UK and overseas.
Please insert the total value of engineers’ tools per vehicle which are conveyed at any one time in company or private vehicles and which are not the subject of a sale or purchase. Also state the number of engineers vehicles.
Please insert the total value of Representatives Samples per vehicle which are conveyed at any one time in company or private vehicles and which are not the subject of a sale or purchase. Also state the number of representatives vehicles.
Storage Risk- Outside the Normal Course of Transit
Do you require Storage Risks Outside the Normal Course of Transit?
The maximum value of goods stored at any one location at any one time. If there is storage outside the normal course of transit it is possible that multiple consignments may be accumulated at the storage address. Underwriters require to know the maximum value of goods stored at this location at any one time, in order to evaluate the maximum loss potential.
Location 1: Address search
The postal address for the location which is used for storage outside the normal course of transit.
Location Limit £
The maximum value of goods which may be stored at this location at any one time.
Construction of location
What are the buildings used for storage made of? Please advise the materials used in the construction of the walls, floor and the roof. If there are internal partitions what are they made of and are any Fire Shutters or other means by which a fire would be restricted from spreading within the building (s) deployed?
Security at location
Please give full details of the Security measures which are in operation at this location where the goods are stored.
Add another location
If there are additional storage locations please continue to provide full details.
The questions on this Proposal Form and any other details we specifically request, relate to facts which we consider material to underwriting this insurance. However, because no list of questions can be exhaustive, please consider whether there is any other material information which is known to you which could influence our assessment and acceptance of the risk.
FAILURE TO DISCLOSE MATERIAL FACTS WHETHER OR NOT THE SUBJECT OF SPECIFIC QUESTIONS MAY INVALIDATE YOUR INSURANCE
We recommend that you keep a record, including copies of this proposal, any letters and all information supplied to us for the purpose of entering into this insurance.
The Proposer has a duty to disclose all material information which may influence an Underwriter’s assessment or acceptance of the risk. If the Proposer is in any doubt about whether information should be disclosed then it should be disclosed. If Material Information is not fully disclosed then claims may not be paid or the insurance policy could be cancelled and considered invalid. It is in the Proposers best interests that all material information is disclosed and that they are given a full explanation of the implications of non-disclosure or misrepresentation.
Use this space to provide full details if there is any other material information which you should disclose:
Please provide any additional material information and ensure that the Proposer is aware that all material information has been disclosed.
When this Submit button is engaged the following will happen:
1. The enquiry will be forwarded to the Underwriter with a copy to NIS and also to Arthur J. Gallagher.
2. You will receive an email acknowledging that the enquiry has been successfully sent.
3. You will receive a response to the enquiry within 3 working days.
4. If terms are offered and acceptable please process the instruction using the SONIC system.
5. If the terms are accepted please complete the NIS Cross Selling Form and return it electronically to NIS.
6. If there are further queries or issues to discuss please use the ‘Ask the Expert’ facility to communicate them.