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Explain Sales Turnover Policy and Its Various Advantages

  • Author :
  • TATA AIG Team
  • Last Updated On :
  • 07/02/2025
  • 2 min read

In the dynamic world of commerce, businesses may face several distressing situations, particularly when goods are being transported across regions. Securing these goods is essential, and this is where insurance solutions designed to secure your wares come into play. Among these, sales turnover policy marine insurance has gained significant attention for its ability to protect businesses engaged in high-volume trade. In the context of marine insurance in India, this insurance policy shines as a preferred choice for businesses that are aiming to mitigate risks without burdening their operations. Designed to align with the business’s turnover, a sales turnover policy provides a streamlined, comprehensive approach to efficient risk management. This article explores the concept and highlights the importance of the policy for businesses.

What Is a Sales Turnover Policy?

A sales turnover policy is a special form of marine insurance policy that is designed to offer comprehensive coverage for businesses that are associated with marine transportation. Unlike traditional marine open policies that insure the value of individual shipments, this policy secures the entire annual sales turnover of a company as a single insured amount. It provides a streamlined approach to managing risks across all operations related to transit and is involved in the achievement of sales.

One standout feature of the marine sales turnover policy is its flexibility. It does away with the requirement to declare every consignment, and instead, only needs periodic submission of sales turnover figures. This approach lowers administrative burdens and leads to significant savings on premiums. This is because the premiums are calculated based on overall sales turnover.

Ideal for businesses with high turnover and diverse transit requirements, this policy provides seamless coverage, making it a critical element of marine risk management.

How Does a Marine Sales Turnover Policy Work?

A sales turnover policy marine insurance operates by insuring a company’s estimated annual sales turnover instead of the value of individual shipments. Let us unravel how the policy works with an example.

Imagine that a business operating in 2023 planned exports worth ₹100 crores and imports worth ₹50 crores. The premiums payable towards the policy are calculated based on the projected sales turnover of ₹100 crores. However, the coverage extends comprehensively to imports as well as exports totaling ₹150 crore, ensuring wholesome protection against losses or damages at the time of transit.

This flexibility makes it a preferred choice under marine insurance in India, especially when it comes to businesses that have a high trading value. By streamlining insurance coverage, marine insurance reduces administrative effort by eliminating the need to declare every consignment.

Instead, companies regularly submit turnover figures. Not only does this ensure comprehensive coverage but also enables businesses to optimise the premium costs while effectively managing risks.

Sales Turnover Policy Marine Insurance Inclusions and Exclusions

A sales turnover policy marine insurance is designed to offer comprehensive protection for businesses that are concerned with marine trade. Its inclusions and exclusions define the scope and limitations of coverage under this specialised marine insurance policy, making it essential for insurance holders to thoroughly understand its terms for efficient risk management.

-Inclusions

-Domestic Transactions: Coverage for purchases of raw materials, consumables and domestic sales. It also includes returns and inter-factory, inter-warehouse or inter-depot transfers.

-Imports and Exports: Safeguarding imports (including customs duty) and export sales under terms outlined by FOB or CIF.

-Transit Coverage: Inclusive of movement for job work and additional storage before final delivery.

-Risks During Transit: Offers protection against theft, piracy, fire, non-delivery and pilferage during transit.

-War & SRCC Risks: Secures from damages occurring from war or strikes, riots and civil commotions for inland, import as well as export shipments.

-Exclusions

-Willful Misconduct: If the mode of transport has sustained deliberate damage or suffers from misconduct by the insured.

-Packing Issues: Losses or damages to goods from inadequate or unsuitable packing.

-Ordinary Wear and Tear: This also comprises leakage, weight loss or inherent flaws in cargo.

-Carrier Insolvency: If the company becomes insolvent or financially unstable, which leads to damage or non-delivery of goods. These scenarios are excluded from coverage.

-Un-seaworthiness: If the damage ensues due to an unworthy vessel unfit for transit.

Advantages of Marine Sales Turnover Policy

A marine insurance solution like the Marine Sales Turnover Policy (STOP) provides several advantages for businesses that are concerned with high-volume trade. Here are some prominent benefits of the policy:**

-Cost-Efficiency: Premiums are calculated based on sales turnover as opposed to individual shipments causing significant savings. In addition to this, businesses can choose to make half-yearly or quarterly premium payments instead of paying the full amount upfront.

-Comprehensive Coverage: The policy ensures wholesome protection from the time the raw materials are bought through immediate storage and transit. This minimises coverage gaps and offers end-to-end security.

-Simplified Administration: Unlike traditional marine insurance policies, business entities do not have to declare every consignment. Insurance holders will only need to submit monthly sales figures, thereby reducing administrative sales efforts.

-Customisable Features: Intermediate storage coverage could also be incorporated to provide flexibility and address unique logistical challenges faced by industries.

-Worldwide Applicability: The policy offers global coverage, protecting cargo in transit across various locations, thereby providing peace of mind.

For businesses navigating the complexities of marine insurance in India, the Marine STOP Policy offers a customisable and cost-effective solution, offering flexibility and wholesome coverage to adhere to diverse operational requirements.

Difference Between Marine Open Policy Vs Sales Turnover Policy

Parameters Sales Turnover Policy  Marine Open Policy
Coverage Offers comprehensive coverage, including exports, imports, domestic transits, internal transport, return transits and job works - all under a single policy.  Curated for frequent shipments that take place within a 12-month period. This policy is exclusively designed for marine-related risks for multiple shipments during the policy term. 
Premium Costs  The cost of premiums is based on annual sales turnover. This provides flexibility and enables business entities to budget efficiently.  Premiums are paid upfront, based on the anticipated value of shipments. 
Operational Processes With a sales turnover policy, the processes are both simplified and streamlined. Businesses only require periodic declaration of sales figures. This is typically offered monthly or when significant changes occur. This reduces administrative burdens, thereby enabling businesses to focus on operations.  Requires meticulous reporting of shipments and adjustments to maintain coverage. 
Examples Consider that a manufacturing firm procures raw materials from overseas and distributes finished goods domestically and benefits globally from simplified management under a single coverage. Premiums are based on annual turnover, thereby ensuring cost efficiency.     Imagine that a firm engages in frequent international shipments of high-value goods and gains advantages from consistent coverage. 

Both policies serve distinct business requirements, with the sales turnover policy marine insurance providing broader coverage with simplified processes, and the marine open policy catering to businesses with regular and high-value shipments

Key Takeaways

  • A sales turnover policy marine insurance offers comprehensive coverage for businesses, including exports, imports, domestic transits, and job works under a single policy.

  • Premiums are based on annual sales turnover providing cost efficiency and predictability for businesses.

  • Unlike traditional marine insurance policies, it removes the need for frequent declaration of consignments, streamlining administrative processes.

  • It promises seamless coverage from raw material purchase to final delivery, minimising gaps in coverage.

  • The policy is curated for businesses with various transit needs, providing flexibility, global applicability and customisable solutions for operational challenges.

The Bottom Line

A well-structured marine insurance policy is imperative for businesses that are engaged in high-volume trade and transportation. The sales turnover policy marine insurance makes risk management easier by covering all transit types under a single coverage, thereby reducing administrative burden.

In marine insurance in India, choosing a reliable insurer is essential. TATA AIG offers customisable solutions that align with unique business needs. This ensures robust protection and operational efficiency. Marine insurance by TATA AIG offers business entities flexible premium options, global coverage, and seamless claims processes.

Whether they are dealing with imports, exports, or domestic transits, businesses can rely on TATA AIG to effectively secure their operations. By opting for the right policy and insurer businesses can navigate trade complexities with ease and secure their growth against unforeseen challenges.

Frequently Asked Questions

-Who should invest in a sales turnover policy marine insurance?

Businesses that are involved in high-volume trade, engage in multiple transit types (domestic and international) or those looking for streamlined insurance management should consider investing in this policy.

-Is marine insurance limited to goods transported by sea?

No, marine insurance is not exclusively meant for sea transport but also extends to goods transported via other modes like air, road, or rail.

-Does the policy cover returns or damaged goods during transit?

Yes, the policy secures goods in transit, including returns, ensuring financial protection even for reverse logistics.

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Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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