Air Cargo Insurance

23 June 2022

Air transport insurance or air cargo insurance is a type of transportation insurance that provides compensation protection for the risk of damage, destruction, or loss of goods in shipping by air.  In some cases, this airlift insurance also offers compensation for delays in delivery.  Acting as the insured in this insurance is the sender of goods or the recipient of the goods. 

Air cargo insurance is almost like the transportation of marine cargo insurance. Therefore, the form of policies and clauses used in air cargo insurance is a form of MAR Policy attached to clauses specific to air cargo insurance made by The Institute of London Underwriters (ILU) such as Institute Cargo Clauses (Air) (excluding sending’s by post) 1/1/82, Institute War Clauses (Air Cargo) (excluding sending’s by post) 1/1/82, and Institute Strikes Clauses (Air Cargo) 1/1/82. 

MAR Policy, which is a replacement for the Marine S.G. Policy for cargo contracts, is often used by cargo underwriters in the London Cargo Insurance Market for insurance closures for goods transported by aircraft (air cargo). In the Indonesian insurance market, the practice of closing air cargo insurance also follows the prevailing practices in the London Insurance Market. 

On the other hand, Air Cargo Insurance is also usually closed under a valued policy as practiced in the closure of Marine Cargo Insurance.  In fact, for underwriting considerations in general are also the same as those in marine cargo even though there are some adjustments. 

Meanwhile, the form of risk borne by the Institute Cargo Clauses (Air) (excluding sending’s by post) 1/1/82 is against all risks (all risks) such as insurance guarantees for goods transported by sea (marine cargo) with ICC (A) conditions 1/1/82. However, the notable difference between the two sets of ICC (Air) and ICC (A) is that it lies in matters relating  to the general average and both to blame collision which in ICC(A) 1/1/82 does not mention those things because such risks are not experienced in transport or travel by air (transit water). 

As for the risks excluded from ICC (Air) (excluding sending’s by post) 1/1/82, there is no provision on seaworthiness in ICC (water) (excluding sending’s by post) 1/1/82.  However, ICC (Air) (excluding sending’s by post) 1/1/82 imposes an exception to losses/damages or costs arising due to inadequate or appropriate physical condition (unfitness) of aircraft, conveyances, containers, or elevator vans to transport goods insured by name or safety. 

The matters excluded in ICC (air) (excluding sending’s by post) 1/1/82 are: 
    1. Loss of damage or cost resulting from a deliberate error by the insured. 
    2. Reasonable leakage, reduced weight or reasonable volume, or reasonable wear and tear of the insured object.
    3. Loss of damage or cost caused by inadequate or incompatible wrapping or preparation of the insured object. 
    4. Loss of damage or cost caused by self-damage or the nature of the insured object. 
    5. Loss of damage or costs arising from the inability of an aircraft container conveyance or car box for safe transportation of the insured object where the insured or its employees know the inaccuracy at the time the insured object is loaded into it. 
    6. Damage loss or cost that is Proxima is caused by a delay, even if the delay is caused by the insured risk. 
    7. Loss of damage or cost arising from insolvency or financial failure of the chartering manager owner or aircraft operator. 
    8. Loss of damage or cost arising from the use of any weapon of war that uses atomic power or fission and/or nuclear fusion or other reactions of the like or active radio forces or materials. 
The length of the coverage period in ICC (Air) (excluding sending’s by post) is to guarantee goods from warehouse to warehouse (from warehouse to warehouse) such as guarantees given under ICC (A) conditions 1/1/82 for marine cargo.  The reason with the warehouse to warehouse cover in ICC (A) 1/1/82 is about the time limit (bricks time) that is if in ICC (A) 1/1/82 time limit is 30 days after the goods are unloaded from the airplane.

This insurance comes into effect from the moment the goods leave the warehouse or storage area at the place mentioned as the beginning of the trip, valid continuously during a reasonable trip and ends when handed over at the destination. If there is a change in purpose by the insured, this insurance guarantee remains valid with a premium and with conditions that will be regulated with the provision of notification immediately submitted to the insurer. 

The premium rate for insurance for air cargo is in a percentage (e.g. 0.08%, 0.09% or another percentage) as is the case for Marine Cargo Insurance.  Because  water transit is generally shorter in time than sea transit, the  premium rate for Air Cargo Insurance is smaller or lower than  the premium rate for marine cargo insurance. The premium is the result of multiplication between  the agreed premium rate and the sum insured of  the air cargo in question.

In the claim process, the losses guaranteed in the policy under ICC (Air) (excluding sending’s by post) conditions 1/1/82 will be compensated as long as the losses  are not caused by Risks excluded by the  policy yang concerned which includes total loss (actual total) loss or constructive total loss) of the insured goods, partial loss of the goods insured, and cost incurred by the insured or his employees or agents in an effort to minimize a loss guaranteed by the policy.

In order to obtain compensation in this insurance, the insured must have an insurable interest in the insured object at the time of loss. 

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