Marine Cargo Insurance in Iranian Law

Marine Cargo Insurance in Iranian Law

Marine cargo insurance under Iranian law is a form of commercial insurance under which the insurer undertakes to indemnify the insured for loss or damage to cargo, and, in certain structures, related maritime interests, occurring during carriage by sea. Under Iran’s Insurance Law of 1937 and the relevant regulatory instruments issued within the framework of insurance supervision, the insurer, in return for the premium, compensates the insured if an insured risk materializes.

Typical covered perils include sinking, collision, fire, piracy, jettison, and other natural or force majeure events, depending on the policy wording and selected coverage. Insurers must clearly present the policy’s general and special conditions. In the event of a dispute, adjudicating bodies generally begin with the policy text as the primary reference. For this reason, careful drafting of the marine cargo insurance policy and a clear understanding of the insurer’s obligations are essential. This insurance also operates within the broader Iranian principles governing contracts and civil liability.

The Insurer’s Liability When Cargo Is Damaged

If cargo is damaged during maritime transport, the insurer must compensate for the loss in accordance with the policy terms once the occurrence of a covered event is established and the insured submits the required documentation. Standard supporting documents commonly include the bill of lading, warehouse receipt, commercial invoice, and a loss or survey report.

Under Iranian insurance principles, the insurer is generally required to pay within a defined period after the claim file is complete. If the insurer refuses to pay, the insured may pursue the matter before the competent judicial authorities or the relevant insurance dispute resolution mechanisms. The insurer may be released from liability only if it proves legally recognized grounds, such as bad faith, fraud, or a policy exclusion that applies to the specific loss. In disputes over non-payment, the decision-maker typically reviews the contractual clauses first, then evaluates the parties’ conduct under general legal principles. As a result, insurer liability is the default position once coverage and loss are proven, unless the insurer establishes a valid defense.

Statutory and Regulatory Duties of Marine Cargo Insurers in Iran

Insurers are required to issue marine cargo policies in compliance with the Insurance Law and applicable regulations. The policy should clearly state the cargo type, packaging method, route, vessel details where relevant, the start and end of coverage, the sum insured and limits, exclusions, and the premium rate.

Under Iranian insurance contract principles, the insurer must also inform the insured of the conditions, limitations, covered risks, and the claims procedure at the time of contracting. Any ambiguity or silence in the policy is generally interpreted against the insurer, particularly where the insurer drafted the wording. If an insurer issues a policy without proper disclosure or in violation of regulatory standards, it may be held responsible for losses attributable to the insured’s reasonable misunderstanding of coverage. Insurers are expected to apply approved policy structures and should not alter standard terms without a clear written agreement. Non-compliance can lead to policy disputes and potential regulatory complaints.

Insurer Liability for Delay in Paying Compensation

Timely payment is a core obligation of the insurer. Where a claim is properly notified, and the insured submits the required documents, the insurer must process and pay within the timeframe required by law and the policy. If the insurer delays payment without a justified reason, the insured may seek compensation for the consequences of the delay, particularly where the delay causes measurable commercial loss.

In Iranian practice, delay can engage general civil law principles applicable to failure to perform obligations on time, including monetary damages for delay, where legally applicable and proven. The insurer is generally excused from delay liability only if it demonstrates that the claim file was incomplete, that the loss was not covered, or that there were legitimate grounds requiring further investigation. Insurers should therefore maintain a reliable internal claims process and avoid unnecessary delays once the documentation is complete, as this also affects public confidence in the insurance market.

Optional Coverages and the Insurer’s Responsibility

Marine cargo insurance commonly includes core coverages for standard maritime perils, while optional extensions may be added depending on the insured’s needs. Optional coverages may include theft, tearing of packaging, leakage, spillage, and, in some arrangements, delay-related losses where expressly insured.

Under contract principles, once an optional coverage is expressly included in the policy and the related premium has been paid, the insurer is bound to indemnify losses falling within that extension. If the insurer refuses to pay on the ground that coverage is optional, despite its inclusion in the policy, such refusal is generally inconsistent with contractual performance obligations. In disputes, adjudicators focus on the policy text and attached clauses. Insurers should therefore explain optional coverages transparently and ensure that the policy clearly reflects the insured’s selections.

Termination of Marine Cargo Insurance Policies in Iran

Termination of marine cargo insurance is governed by general contract rules and specific insurance principles. An insurer may terminate a policy where the insured has provided false information, committed fraud, or otherwise breached fundamental duties. Termination may also be relevant where the insured fails to pay the premium or where the insured risk changes materially, such as a significant change in route or cargo type.

The insured may also seek termination where the insurer breaches its contractual obligations or where the contractual basis materially changes. Termination should be made in writing, supported by lawful grounds, and carried out in accordance with procedural requirements. Unjustified unilateral termination may expose the terminating party to civil liability. In termination disputes, courts typically consider policy wording, good faith, and performance of contractual duties.

The Role of the Bill of Lading in Establishing the Insurer’s Obligation

The bill of lading is a principal shipping document and one of the most important evidentiary items in marine cargo claims. It commonly serves as evidence of entitlement to the cargo and provides key shipment information such as cargo description, packaging, shipment date, vessel identification, and carriage terms.

Insurers rely on the bill of lading to confirm shipment details, assess the nature of the claimed loss, and evaluate the scope of their obligation. If the bill of lading is incomplete or inconsistent with other documents, the insurer may pause payment pending clarification. If the bill of lading is forged or altered, the insurer may deny liability on grounds of fraud and documentary invalidity. In Iranian dispute practice, the original bill of lading is often treated as a decisive document. Insured parties should therefore promptly and accurately provide the bill of lading and related shipping documents to avoid delay or denial.

Policy Exclusions and the Limits of Insurer Liability

Marine cargo policies typically contain exclusions that remove certain risks from coverage. Common exclusions include inherent vice of the cargo, inadequate packaging, unjustified delay, the insured’s bad faith, and losses caused by war, civil commotion, or similar extraordinary events, unless separately covered.

The insurer’s liability is generally conditioned on the absence of applicable exclusions. However, insurers must clearly state exclusions in the policy and disclose them to the insured at inception. If exclusions are unclear or not properly disclosed, the insurer may face difficulties relying on them. In disputes, the burden of proving that an exclusion applies generally rests with the insurer. Careful drafting and interpretation of exclusions is therefore essential in determining the scope of coverage.

Legal Claims Against Insurers in Maritime Cargo Cases

If an insurer refuses to pay or otherwise breaches its obligations, the insured may bring a claim under the insurance contract before the competent court or the relevant insurance dispute resolution bodies. Jurisdiction is typically determined by the defendant’s domicile or the place of performance of the obligation. The claimant should submit the policy, bill of lading, invoice, expert survey report, and timely notice of loss.

In certain provinces and larger cities, specialized branches may handle insurance disputes more frequently. Arbitration is also possible where the policy includes an arbitration clause, and in such cases, the parties must generally follow the agreed procedure. Arbitral awards are binding unless they conflict with public order or mandatory legal rules. In addition to the principal indemnity, claims may include delay-related compensation where legally available and proven.

Oversight by the Central Insurance of Iran

The Central Insurance of the Islamic Republic of Iran, established under its governing statute, supervises insurers and protects policyholders. Insurance companies are required to comply with regulatory instructions regarding policy issuance, premium collection, and claims payment.

Policyholders who are dissatisfied with an insurer’s conduct may submit complaints to the relevant complaint handling mechanisms under the Central Insurance framework. Where regulatory violations are confirmed, corrective measures may be required, and serious non-compliance can lead to administrative sanctions, including suspension or cancellation of licenses. New policy forms and major product structures are typically subject to regulatory oversight. Insurers are therefore accountable not only under contract and civil liability principles, but also under ongoing regulatory supervision.

Frequently Asked Questions About Marine Cargo Insurance in Iranian Law