Marine Sales Turnover Policy

What is a Marine Sales Turnover Policy?

A Marine Sales Turnover Policy, also known as a STOP Insurance Policy, is a type of Marine Insurance Policy which covers all legs of transit such as Domestic Sales, Export Sales, Imports, Local Purchases, Inter-Factory Movements, Job-Worker Movements, Capital Equipment and Container Movements under a single policy. The Premium Rate is applied on the Sales Turnover of the Company, but the Insurance Policy grants automatic cover to the associated legs of transits such as Domestic Sales, Export Sales, Imports, Local Purchases, Inter-Factory Movements, Job-Worker Movements etc. The rationale behind a Sale Turnover Policy is that everything which goes as an Input to get an Output gets covered under a Sales Turnover Policy. The Insured Company just needs to give declare Annual Sales Figure on a periodic basis.

How does a Sales Turnover Policy Work?

The Insured seeking a Sales Turnover Policy must share the Estimated Sum Insured for the following legs of transit:

1. Import Purchase
2. Domestic Purchase
3. Domestic Sales
4. Export Sales
5. Inter-Factory/Inter-Depot Movements
6. Sum Insured for Outsourced Processing Activity and Job Worker Movements along with Return Transits (Raw Materials sent to Job Workers and Intermediate and Finished Goods received; there will be a difference in valuation between Raw Materials and Intermediate/Finished Goods)
7. Refused and Return Transit (Refused and Returned Goods can be a substantial % in case of some industries)
8. Separate Sum Insured has to be declared for Capital Equipment as Sales Turnover does not include Capital Goods which are not charged to P&L Statement
9. Sum Insured for Container Movements
10. Mercantile Trade
11. Exhibitions

The Insurance Company will calculate the Insurance Premium based on the estimated Sum Insureds declared for various legs of transit and then apply a Weighted Average Rate on the Sales Turnover of the Company. The Premium Rate for a Sales Turnover Policy is a Weighted Average of Premium Rates applied on the various legs of transits such as Domestic Sales, Export Sales, Imports, Local Purchases, Inter-Factory Movements, Job-Worker Movements etc.

The Policyholder declares the estimated Sales Turnover of the Company based on which the Premium is charged. The Sales Figures need to be submitted to the Insurance Company on a monthly basis. If the Actual Sales Figure exceeds the Estimated Sales Turnover submitted at the Policy Inception, the Insured can enhance the Sum Insured by paying additional Premium. Similarly, If the Actual Sales Figure is below the Estimated Sales Turnover submitted at the Policy Inception, the Insured receives a refund from the Insurance Company subject to a Minimum Retention Premium.

What are the advantages of a Sales Turnover Policy?

1. The advantage of a Marine Sales Turnover Policy is that the Insured does not need to make declarations for each and every transit as under a Marine Open Policy. The Policyholder just needs to submit the Sales figure on a Periodic Basis. Thus, a Sales Turnover Policy is very convenient and reduce the time and cost for the Insured and the Insurance Company.
2. Another advantage of a STOP Insurance Policy is that the Insured does not need to maintain a separate Policy for different legs of transit since all transits are covered under a single policy.
3. The third advantage of a STOP Insurance Policy is that the Insured can pay Premiums in Installments

Conclusion

A Marine Sales Turnover Policy is a very convenient Marine Insurance Policy that does away with the administrative hassle of submitting declarations. The Policy is suitable for large businesses which have multiple transits. If you wish to purchase a Sales Turnover Policy for your business, email us at insurance@qian.co.in or call us on 022-35134695. We would be glad to assist you.