Bhilwara · Pali · yarn and fabric
Textiles in Transit: Water Decides Most Claims
A wetted bale is often a commercial total loss even when most of the cloth looks fine, because staining and shade variation make it unsaleable at grade. That is why the clause set matters more for textiles than the sum insured does: the narrow covers do not respond to water at all.
Key takeaways
- Water damage is the characteristic textile loss, and it is not a named peril under Inland Transit Clauses (B). A wetted consignment on ITC-B is usually an uninsured consignment.
- For export shipments, Institute Cargo Clauses (B) does include washing overboard and entry of sea, lake or river water, while ICC (C) does not.
- A partially wetted bale is frequently a total loss in commercial terms. Sum insured should reflect saleable value, not the value of the fibre.
- Letters of credit commonly require insurance at 110 per cent of CIF value. A policy that does not meet the LC terms can hold up payment even when nothing has gone wrong.
- Tarpaulin condition is the practical control. Most water losses on domestic movements come in through a torn or badly tied tirpal.
What actually goes wrong, and whether it is covered
Read this against your own policy schedule. The clause set named there decides which rows below you are insured for.
| Exposure | What it means in practice |
|---|---|
| Water ingress and staining | Rain through a torn tarpaulin, or water taken on at a flooded stretch. The physical damage is often small and the commercial damage total, because stained cloth does not sell at grade. |
| Shade variation after wetting | Wetting and drying moves shade. A consignment that no longer matches the buyer's approved sample is rejected whether or not the fibre is sound. |
| Contamination from adjacent cargo | Oil, chemicals or dye carried on the same vehicle. Relevant wherever loads are consolidated. |
| Theft and pilferage of bales | Not covered under ITC-B. Bales are portable, valuable and easy to move. |
| Fire | Covered under every clause set, and on baled goods it tends to be total rather than partial. |
If it happens: the first four things
In order. The first two are the ones people get wrong, and they are the ones that cannot be fixed afterwards.
- Photograph the tarpaulin and the load covering at both ends of the journey. On a water claim the first question is how the water got in.
- Do not open, dry or re-bale wetted stock before survey. Drying changes the evidence and shade movement can no longer be attributed.
- Keep the approved shade sample and the buyer's rejection in writing. The commercial loss is proved by the rejection, not by the wetting.
- Where the consignment moved under an LC, keep the insurance certificate and check it matches the LC terms before shipment rather than after.
Written notice to the transporter must go within 180 days of the booking date under section 16 of the Carriage by Road Act, 2007. Not from the date of loss, and a claim bill does not count as notice. The wording is ready to copy at our claim letters page.
The words the trade actually uses
Useful when the loss is being described by a driver, a munshi or a godown supervisor rather than by you.
| Hindi | What it means for the policy |
|---|---|
| गाँठ | bale |
| कपड़ा / धागा | fabric, yarn |
| तिरपाल | tarpaulin, where most water losses start |
| भीग गया | got wet, the loss ITC-B does not cover |
| शेड | shade, which moves after wetting |
Export and the sea leg
Textile exports move under Institute Cargo Clauses. Under CIF the seller must insure but only to ICC (C), which excludes most wetting, and for cloth that is close to no cover at all. Where the buyer specifies ICC (A) or (B), check the certificate says so. The inland leg from the mill to the port remains an Inland Transit risk and is frequently the uninsured part.
The clause sets themselves are set out in full on our marine cargo clauses page, including the seven named perils under ITC-B taken from an insurer's filed wording.
Frequently asked questions
Does transit insurance cover water damage to fabric?
Not under Inland Transit Clauses (B), where water damage is not among the named perils. On a domestic movement you need ITC-A for wetting to be covered. On an export, Institute Cargo Clauses (B) does include entry of sea, lake or river water and washing overboard, while ICC (C) does not.
Is a partially wet bale a total loss?
Commercially, often yes. Staining and shade movement make cloth unsaleable at grade even where the fibre is sound, and the buyer's rejection is what proves the loss. Sum insured should be set on saleable value for that reason.
What insurance do textile exporters from Bhilwara need?
An open marine policy covering the mill-to-port road leg under Inland Transit Clauses and the sea leg under Institute Cargo Clauses, written so the two join without a gap. Where a letter of credit is involved, the certificate usually has to show 110 per cent of CIF value in the currency of the credit.
Why does the LC ask for insurance at 110 per cent of CIF?
Article 28 of UCP 600 sets 110 per cent of the CIF or CIP value as the minimum where the credit itself does not specify a figure, the extra ten per cent being a notional allowance for the buyer's costs and expected profit. There is no maximum, and the certificate must be in the same currency as the credit. A certificate short of the required amount can be rejected as a discrepancy and hold up payment even where nothing has gone wrong with the goods.
What causes most textile transit claims?
Water, by a wide margin, and usually through a torn or badly tied tarpaulin on a domestic movement. Fire is less frequent and more severe. Theft of bales sits between the two and is not covered on the narrower clause sets.
Related: Marine cargo clauses explained · Textile mill insurance, Bhilwara · Marine insurance for textile exporters · Marine cargo quote · The letters to send after a loss.