Chapter 7 Ocean Marine Cargo Insurance
Overview of Ocean Marine Insurance Coverage of Ocean Marine Cargo Insurance
Section One: Marine Insurance
Section Two: RisksLosses and Expense Section Three: Marine Insurance Coverage
Section Four: Insurance Value
Section Five: Insurance Premium
Section Six: Forms of Marine Insurance Contract
Coverage of Ocean Marine Cargo Insurance
According to the loss or damage caused by risks included in different coverage and the expenses involved, the insurance company is responsible for indemnifying the insured goods. Obviously, risk, loss and coverage are closely related to each other. In order to have a clear understanding of the contents of insurance, these three terms should be clarified.
Risks While the cargo traveling to another country, it is likely to encounter various perils which may cause the goods to suffer loss of one kind or another. Marine risks in connection with cargo in transit can be classified into two types: perils of the sea and extraneous risks. Perils of the sea are caused by natural calamities and fortuitous accidents; the latter, by various extraneous reasons, including general extaneous risks and special extraneous risks. a. Marine Risks: a. Perils of the sea: Natural calamities and Fortuitous accidents b. Extraneous risks: General extraneous risks; Special extraneous risks
Losses Covered by Marine Insurance ( ) Natural Calamities
Perils
Perils of the Sea
Fortuitous Accidents
General
Extraneous risks and losses
Special
Losses sustained by the insured because of the risks come from not only the loss of the goods or the damage done to the goods, but also from the expenses the insured sustained in rescuing the goods in danger. Transportation insurance not only insures the losses caused by risks but also the losses of expenses.
Sue and labor expenses
Expenses Salvage charges
Losses Marine Losses:
a. Total Loss: Actual total loss Constructive total loss b. Partial Loss: General average Particular average
Expenses
Losses sustained by the insured because of the risks come from not only the loss of the goods or the damage done to the goods, but also from the expenses the insured sustained in rescuing the goods in danger. Transportation insurance not only insures the losses caused by risks but also the losses of expenses. The main expenses include
1) Sue and labor expense
2) Salvage charges
Three Marine Insurance Coverage
the insurance is mainly classified into two groups: Basic Insurance CoverageFPAWPA and AR and Additional Insurance Coverage.
Additional Insurance Coverage 1 General Additional Insurance Coverage Theft, Pilferage and Non-Delivery: TPND Fresh Water and Rain Damage Risk of Leakage Risk of Shortage
Hook
Damage Risk of Contamination Risk of Clash and Breakage Risk of Rust Risk of Odour Damage Caused by Heating and Sweating)
2) Special Additional Risk
*War Risk *Strike Risk *On deck risk *Import duty risk clause
Insurance Documents
1) Insurance Policy
The insured
Claim at
The Sellertransferable after endorsement Destination Not late than B/L
Date of Insurance
2) Insurance Certificate 3) Combined Certificate
When the goods are exported to Hong Kong, and some countries in Southeast Asia, the insurance company sometimes adds the coverage and insurance amount on the commercial invoice which is made out by a foreign trade company. This is a certificate which combines the invoice with the insurance policy. It is the simplest insurance certificate in use.
4) Endorsement
After insurance has been taken out, if the insured wants to replenish or change the contents of the policy, he may apply to the company for the same. After agreement by the company, another certificate which indicates the relative amendment will be issued. This certificate is called endorsement.
Open Policy
This type of policy is of great importance for export business, it is convenient method for insuring the goods where a number of consignments of similar export goods are intended to be covered. An open policy covers these shipments, as soon as they are made, under the previous arrangement between the insured and the insurance company.
6 Choosing the right coverage
Special Additional Risk 1War risk
2Risk of Strike,Riots and Civil Commotions:SRCC
3 Failure to deliver
6
4 Import duty risk
5 On deck risk 6 Rejection risk 7 Aflatoxin risk 8Fire Risk Extension Clause for Storage of Cargo at Destination Hong Kong including Kowloon or Macao
Section Four Insurance Value
Insurance value, in marine cargo insurance, is the actual value of the insurable cargo. It is generally calculated as: Cost of goods+amount of freight+insurance premium+percentage of the total sum to represent a reasonable profit for the buyer. Insurable value is the maximum amount payable by the insurance company in case of loss and premium is calculated and paid on the basis of this amount. Section Five Insurance Premium
The insurance premium is payable to the insurer when he issues the insurance policy or certificate. The premium charge for the insurance policy is calculated according to the risks involved. A
As to the Insurance Documents, please refer to the text book and understand how to make all those documents
Introduction of the insurance coverage of marine cargo transport Take out Insurance
Practice of marine cargo insurance
Cautions for insurance
Insurance claim
Introduction of the insurance coverage of marine cargo transport
the exclusion of basic coverage
Basic risks
additional risks
responsibilities and time limit of insurance
F.P.A
W.P.A
All risks
General additional risks
Special additional risks
1Insurance: To covered by the Seller for % of total invoice value against and as per and subject to the relevant ocean marine cargo clause of the Peoples Insurance Company of China, dated
XX% XXXX X X X [Link]: To be covered by the Seller for 110% of total invoice value against All Risks and War Risks.
110% [Link]: To be covered by the Seller on behalf of the Buyer for 130% of CIF invoice value against with Particular Average, as per Ocean Marine Cargo
Clauses of the Peoples Insurance Company of China, dated 1981.1.1, Premium to be for Buyers account. CIF 130% 198111
4 Including Risk of Theft, pilferage and non-delivery.
5 Including shortage in weight in excess of 0.5% on the whole consignment. 0.5%
