The type of coverage that the insured can receive varies from the minimum requirement provided by the basic policy, commonly referred to as the S.G. policy (ship and commodity policy), to the maximum protection for All risk whatsoever. The S.G. policy covers the loss or damage to goods (wholly or partly) arising from the hazards at sea. Since the goods in transit are exposed to other hazards such as theft, pilferage, leakage, shortage, etc., the scope of the protection covered by the SG policy shall be extended by introducing a number of institute load clauses, eg. Free from special average (FPA), with average (WA) and all risks (AR). Furthermore, certain types of cargoes require special clauses, commonly referred to as trade clauses, such as Rubber Clause, Raw Sugar Clause and Timber Trade Federation Clause.
The risk clause provides coverage for all hazards, except for losses or costs due to delays, inherent cargo or nature of the cargo. The coverage for air transport is according to the Institutes air freight clauses (All Risks) (excluding shipments by mail), which differ from other clauses to meet the special need for modes of transport. Important things to note are that these clauses are designed to cover addition to the Basic Insurance Policy (S.G. Policy).
It should be noted that the Lloyds Underwriters Association, in consultation with the London Underwriters Institute and other interested parties, has replaced SGs policy due to difficulties arising from trade and trade in the interpretation of the archaic formulations in SG policy. with a single document and a corresponding set of new institutional clauses - A, B and C instead of All Risk, WA and FPA Clauses.
Clause A covers all risks of loss or damage to the insured material subject to the following exclusion:
Negligence of insurance negligence usually leakage, loss of weight or volume, wear inappropriate packaging; resident vice; delay; insolvency or financial neglect of owners, managers, charterers or ship operators nuclear weapons in war and radioactivity.
Clause B covers loss or damage to the insured material that is reasonably attributable to the following risks:
Fire; explosion; beaching; decreasing; grounding; overturning; landing clearance; collision or contact of ships with an external object other than water discharge of the load is an emergency; general average victim throw overboard; Overloading of ships, boat, hold, transport, truck or storage area Total loss of packaging lost overboard or lost during loading or unloading and earthquake, volcanic eruptions or lightning strikes.
The exceptions under the B clause are similar to those in clause A with the addition of deliberate damage to or destruction of insurance matters.
Clause C covers loss or damage to insured persons which can reasonably be attributed to the following risks:
Fire; explosion; beaching; grounding; enclosure of the ship rolls; landing clearance; collision or contact of ships with objects other than water discharge of cargo in emergency generally average victim and jettison.
The exceptions under the C clause are identical to those listed in section B. In addition, the losses resulting from the following risks are not covered:
Earthquake, Volcanic eruption or lightning strike
Damage to lake, lake or river
Total loss of packages lost or lost during loading or unloading from ships.
The loss or damage caused by war and strike, riots and civilian bargaining (SRCC) is also excluded under all three clauses mentioned above. On the other hand, traders can get cover against losses arising from war and SRCC risks against payment of additional premiums.
It is important to remember that war risks are only covered when the load is waterborne, it is not in force while the load is on land. The cover will not start until the load is loaded onboard the ship and ends as soon as it is unloaded from the ship at the last port or after the expiry of 15 days, it is calculated from midnight on the day of arrival of the ship at the Final Port, depending on which one is earlier.