Understanding the Inland Transit Clause in Marine Insurance

The transit clause in marine insurance is an essential component that covers goods during ocean shipping and travels inland. 

This clause ensures coverage for goods during freight forwarding, including the journey from the point of origin to their final inland destination, making it a must-have for businesses involved in import and export.

What is the Inland Transit Clause?

The inland transit clause is a critical component of marine cargo insurance, offering coverage for goods as they move overland between various transport modes. 

This clause is typically part of broader marine insurance policies. It ensures that cargo is protected during its journey on trucks, trains, or inland waterways, bridging the gap between Ocean Shipping and final delivery.

Businesses rely on this clause in freight forwarding or supply chain management to mitigate risks like theft, damage, or delays during inland transport.

This protection is essential for seamless coverage across both inland marine and ocean marine insurance processes, ensuring uninterrupted risk management from start to finish.

Needless to say, understanding this clause can make a significant difference in how you manage your logistics.

Purpose and Importance of the Inland Transit Clause

The inland transit clause is essential in ensuring cargo protection during overland transport. While marine cargo insurance typically covers goods on water, this clause extends that protection to cover risks during the inland portion, such as damage, theft, or accidents. 

It provides vital protection for businesses involved in import and export once goods leave the port and move toward their final destination.

1. Risk Protection: 

Inland transportation involves risks, including theft, weather damage, or accidents during transit by road or rail. 

This clause ensures that these overland risks are accounted for, providing comprehensive coverage for goods from point A to point B. Without the inland transit clause, a company could face substantial financial losses if its goods are damaged during overland transport.

2. Insurable Interest: 

The inland transit clause establishes an insurable interest for the cargo owner and the transportation company. This means that if goods are lost or damaged during transport, the policyholder can file a claim. 

Businesses must document their insurable interest in the goods, as this will determine their eligibility for compensation under their marine insurance policy.

3. Peace of Mind for Cargo Owners: 

In today’s complex supply chains, cargo is rarely shipped by one mode of transportation. Goods are frequently transferred from ships to trucks or trains. Protecting cargo throughout its journey, not just at sea, is crucial for companies. 

The inland transit clause provides peace of mind, ensuring seamless protection for goods across multiple transportation modes.

Let Pazago handle your multi-modal transport needs with ease and reliability.

4. Ideal for Small to Medium-Sized Businesses: 

The inland transit clause is especially beneficial for small to medium-sized businesses that don’t have extensive international trade networks. These companies may lack the resources to absorb major losses if goods are damaged during overland transport. 

The inland transit clause offers affordable protection for businesses that rely on inland transport for domestic distribution or smaller-scale international trade.

Explore Pazago's specially designed solutions for small to medium businesses to minimize risks efficiently.

5. Clarifying Sum Insured for Claims: 

Understanding the sum insured is crucial for any business with an inland transit clause in its policy. The sum insured is the maximum value the insurance company will pay in the event of a claim. 

It’s essential to accurately assess the value of the goods being transported and ensure that the sum insured reflects that value. Under-insuring can lead to significant financial shortfalls in the event of a claim, while over-insuring can unnecessarily increase premiums.

Pazago's marine insurance ensures your cargo is fully protected across all stages.

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Coverage Provided by the Inland Transit Clause

The transit clause in marine insurance offers critical protection during the inland transportation of goods, whether by roadways or rail. This ensures seamless coverage from departure to final delivery, extending the safety net beyond ocean shipping.

Pazago’s marine insurance offering adds an extra layer of security for your inland and ocean freight.

Key Elements of Coverage:

1. Protection During Overland Transit: The clause ensures that goods are protected while transported overland by rail or road.
2. Activation Point: Coverage begins when the goods leave the warehouse or storage facility.
3. Termination Events: Coverage ends upon successful delivery or one week after the goods arrive at the railway station or the vehicle arrives at the destination, whichever comes first.

Let’s delve into the possible extensions available for this coverage.

Possible Extensions to Coverage Under the Inland Transit Clause

In certain cases, businesses may require more flexibility in their inland transit clause in marine insurance. While standard coverage typically includes one week after arrival at the railway station or destination, insurers often provide options to extend this timeframe.

1. Standard One-Week Extension

Most shipping insurance policies include a standard extension one week after the cargo reaches the intended railway station or destination. 

This ensures that the goods remain covered while they await final delivery, providing peace of mind for businesses handling supply chain management logistics.

2. Potential for an Additional 8-week Extension

Under specific conditions, businesses may request an additional extension of up to eight weeks. This option is usually invoked when unforeseen delays occur during transit or at the destination, such as customs inspections, strikes, or shipment inspection issues. 

Such extensions are crucial for companies dealing with sensitive goods or businesses where marine cargo insurance requires more comprehensive protection due to unpredictable transit times.

This flexibility offers enhanced security, especially for industries dealing with high-value or time-sensitive deliveries. It ensures that the cargo remains protected during prolonged transit or storage.

Next, let’s explore the different options for inland transit coverage.

Inland Transit Coverage: ITC A and ITC B

Marine inland transit coverage can be categorized into two major heads, each designed to address different risk tolerance levels and operational needs. 

1. Inland Transit Clause A (ITC A) – All Risk Policy

The ITC A clause, or the All Risk Policy, provides comprehensive protection by covering many risks during inland transit. The key benefit of this clause is that it protects against nearly all possible risks except those specifically excluded in the insurance policy. 

This means businesses are shielded from potential losses such as accidents, theft, and damages.

However, it’s important to note that:

• Coverage is available only for the specified time frame outlined in the insurance policy, typically from the departure of the goods to their successful delivery.
• Some conditions may limit the scope of coverage, and policyholders should thoroughly read and understand the terms. Businesses seeking extended coverage can request specific additions from their insurer.

This policy is ideal for businesses seeking broad protection, especially those transporting valuable goods across railways or roadways, as it ensures maximum risk mitigation during transit.

2. Inland Transit Clause B (ITC B) – Basic Risk Cover

The ITC B clause, or Basic Risk Cover, offers a more limited form of protection. Unlike the all-encompassing ITC A, this policy only covers financial losses resulting from specific, basic risks such as:

• Fire
• Lightning
• Earthquake
• Collisions during transit

While this policy provides a lower level of coverage, it is still suitable for businesses that only require protection against these fundamental risks. It may be cost-effective for companies without involving high-value goods or complex transit chains.

Key Differences:

• ITC A (All Risk): Covers many risks, including accidents, theft, natural disasters, and more, providing extensive protection.
• ITC B (Basic Risk): Offers more limited coverage, focusing on essential risks like fire, lightning, and collision damage.

By choosing between ITC A and ITC B, businesses can tailor their marine cargo insurance based on their needs, ensuring the right balance of protection and cost efficiency. Both policies safeguard businesses' insurable interest in their cargo, providing peace of mind during the inland transit process.

But what happens when certain scenarios aren't covered?

Exclusions Under the Inland Transit Clause in Marine Insurance

While the transit clause in marine insurance provides crucial protection for goods during overland transportation, businesses should be aware of several common exclusions that highlight circumstances where the insurance policy does not cover damage or losses.

1. Ordinary Leakage or Natural Losses in Weight/Volume

One of the most common exclusions is the natural shrinkage in weight or volume during transportation. This refers to gradually reducing the product's mass due to moisture loss, evaporation, or similar natural processes. This exclusion is particularly relevant for industries dealing with bulk goods or perishables.

2. Willful Misconduct with the Shipment

Insurance does not cover losses resulting from intentional acts or negligence by the shipper or other involved parties. This ensures that claims can only be made in the event of genuine accidents or unforeseen incidents, protecting insurers from fraudulent claims.

3. Improper Packing and Handling

Losses arising from improper packing or handling of goods are excluded. If the goods are not adequately packed or secured for the journey, the insurance will not cover any damage from this oversight. Proper packaging ensures that goods remain undamaged throughout the supply chain and logistics process.

4. Situations Like War, Riots, Strikes, or Civil Commotion

Many marine insurance policies exclude coverage for damage caused by politically motivated acts, such as war, riots, strikes, or civil commotion. While additional insurance may be available to cover these risks, standard transit clauses do not typically protect against these events unless specified in the policy.

5. Inherent Vice or Insolvency of Carriers

Another exclusion includes damages resulting from inherent vice—a defect in the goods themselves, such as perishable items deteriorating naturally—or the insolvency of the carriers responsible for transporting the goods. The insurance policy does not offer coverage in such cases, as the loss is predictable or inevitable.

And that leads us to a modern solution that can help manage these complexities.

Pazago: Simplifying Marine Cargo Insurance and Global Trade

Navigating the complexities of global trade and marine insurance is no easy feat, but Pazago offers an integrated solution to simplify every aspect of your operations. 

Supporting businesses across 110+ countries, Pazago reduces costs by 20% and cuts turnaround time (TAT) by 50%, making it an essential tool for import and export, freight forwarding, and logistics companies.

Key Features of Pazago:

• Digital Trade Management: Streamline your trade processes from procurement to fulfillment with automation and centralized control.
• Real-Time Cargo Tracking: Monitor shipments across 180+ shipping companies worldwide, ensuring timely and secure delivery.
• Seamless Payment Processing: Enjoy fast international payments with low Forex rates and receive funds within hours.
• Document Management: Create, manage, and store essential trade documents like bills of lading and customs forms securely in one place.
• Proactive Planning: Get automated notifications to avoid delays, helping you maintain smooth trade flows.

Comprehensive Marine Insurance with Pazago

In addition to efficient trade management, Pazago offers marine cargo insurance through ICICI Lombard. This insurance covers all types of cargo—reefer, dry goods, or valuable items—ensuring complete protection during transit.

• Digital Insurance: A hassle-free, paperless process to quickly secure your cargo.
• Full Coverage: Protects your cargo against a wide range of risks, far exceeding the limitations of standard carrier liability.
• Quick Claims: Enjoy a seamless claims process without needing to prove carrier fault, ensuring quick reimbursement and minimizing delays.

Why Choose Pazago?

"Security drives success" 🔑—and Pazago delivers on that promise. From seamless trade management to full digital cargo insurance, we've covered every aspect of your shipment. 🌍

Ready to shield your cargo from risk? Explore how Pazago’s all-encompassing insurance solutions can safeguard your global operations.

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FAQs on Transit Clause in Marine Insurance

What is a transit clause?

A transit clause in marine insurance defines the duration and scope of the insurance coverage during the transportation of goods. It specifies when the coverage begins and ends, typically starting when the goods leave the warehouse and ending upon delivery.

What is marine transit insurance?

Marine transit insurance provides coverage for loss or damage to goods while they are being transported by sea, air, or land. This insurance covers the goods during their journey from the point of origin to the final destination, protecting against risks such as theft, damage, and accidents.

What is the coverage of the inland transit clause A?

Inland Transit Clause A provides all-risk coverage for goods transported over land. This clause ensures that goods are protected from a wide range of risks during their journey by road or rail, offering comprehensive protection compared to other transit clauses.

What is transit insurance?

Transit insurance covers goods in transit from one location to another. This type of insurance applies to transporting goods by various means, including road, rail, air, and sea, offering protection against risks such as damage, theft, or loss.

What is clause C in marine insurance?

Clause C in marine insurance is a basic level of coverage that protects against major risks such as fire, collision, and sinking. It does not cover partial losses or damage due to general handling or weather-related incidents.

What is a multi-transit clause in marine insurance?

The multi-transit clause in marine insurance covers goods transported through multiple modes of transport (e.g., sea, air, and land) during a single journey. This clause ensures the cargo is protected at every stage of its transit, regardless of the transportation method.

What is the per transit limit in marine insurance?

The per-transit limit in marine insurance refers to the maximum amount the policy will cover for a single shipment or transit. This limit helps set the boundaries for compensation in case of loss or damage to the cargo during a specific trip.

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