The creation of a fund by an insurer to absorb losses beyond its normal retention. It is used in place of buying reinsurance.

Seller’s Interest Insurance Clause : Seller under FOB and C & F contracts may effect a contingency Insurance to cover their interest if the consignee refuses damaged goods or is unable to take delivery by paying for the goods because of insolvency. A sellers’ contingency Policy covers physical loss/damage to the cargo insured subject to the terms and condition of the Policy to protect only interest of the insured. This Insurance is not assignable except to a banker operating in India. The “interest of the seller” refer to the fact that he remains unpaid under this contract of sale. Following a physical loss or damage to the cargo insured, either total or partial, the buyer should have rejected the entire consignment/contract. Partial deduction of amount from an invoice for partial damage is not covered. There is also a warranty of secrecy i.e., the existence of this insurance should not be made known to the buyer of the goods. Claims are to paid to Insured in Indian currency. Subrogation applies.

The insurable interest of a seller, which ceases when the title in property passes to the buyer.

Applicable to the value of goods that have been damaged or destroyed by an insured peril. This clause insures the profit that would have been earned if the goods had been sold. It sets the insurable value of the property that has been sold, but not delivered, at the amount at which it was sold, less any charges not incurred.

Either of two alternative provisions in property Insurance policies defining valuation procedure for damaged merchandise. The first clause defines the insurable value of merchandise which has been sold but not delivered as its selling price less any charges not incurred. The second clause, applicable only to goods still in possession of the manufacturer that produced them, defines insurable value as the value of such goods at the net price at which they could have been sold instead of the cost to reproduce them.Sending by Post, Transit Insurance : The cover is usually given on all risks terms by ITC-A or ICC-A with the corresponding strikes and SRCC cover. The Policy however will have to be suitably amended by including therein the following clauses and warranty:
“Warranted that the subject matter insured in the parcel is insured with the post office for a minimum amount of INR__________.”

Duration: This insurance attaches from the time the subject matter insured is registered at the post office at the place named in the policy and continues until it is delivered to the addressee or his representative at the destination named I the policy or until the expiry of 15 days counting from the midnight of that day on which the notice of arrival of the subject matter insured was given to the addressee by the Post Office at destination, whichever shall first occur.

In case of loss, claim in writing must be immediately filed against the postal authorities, and a copy thereof and reply thereto must accompany any claim presented under the policy. In case of loss Post office receipt will be required as proof in case of a claim for non-delivery. No clam if proved to be due to incorrect/ambiguous/insufficient address or for loss/damage resulting from any disposal by the postal authorities by reason of the interest having become undelivered to or having been unaccepted by the addressee. No claim for loss of contents from packages delivered with seals intact.