Transcript 7.1 Scope of Cargo Insurance

Chapter 7
Cargo Insurance
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Aims and Requirements
7.1 Scope of Cargo Insurance
7.2 Terms and Coverages of Ocean Marine Cargo Insurance
7.3 London Insurance Institute Cargo Clauses (I.C.C.)
7.4 Cargo Insurance Practice in Import and Export Business
7.5 Insurance Clauses in Sales Contract
Aims and Requirements
Aims:
To grasp ocean marine cargo insurance;
To learn how to write insurance clause.
Key Points:
General Average and Particular Average, FPA,
WRA, All Risks, ICC, Insurance Clause
Teaching Methods:
Discussion, Comparison, Case Study, Team Study,
English Teaching
The Basic Principle of Insurance
Principle of Insurable Interest (保险利益)
Principle of Utmost Good Faith (最大诚信)
Principle of Indemnity (补偿原则)
Principle of Proximate Cause (近因原则)
7.1 Scope of Cargo
Insurance
 7.1.1 Risk or Peril
 7.1.2 Loss and Expense
 Case Study
7.1.1 Risk or Peril
Perils are mainly divided into two kinds:
Sea Peril
(1) Natural calamities
Heavy weather, lighting,
tsunami, earthquake,
flood and volcanic
eruption etc.
(2) Accidents
The carrying vessel being
grounded, stranded, sunk,
burnt or in collision, fire,
explosion etc.
Extraneous risks
(1) General extraneous
risks
Theft, fresh or rain water
damage, shortage, leakage,
breakage, sweating and
heating, intermixture and
contamination, hook damage,
breakage of packing etc.
(2) Special extraneous
risks
War, strike, non-delivery and
rejection etc.
7.1.2 Loss and Expense
Loss
Total loss
Partial loss
Total Loss
Actual total loss
Constructive total loss
Partial Loss
General Average
Particular Average
Loss
Expense
Expense
Sue and labor charges
Salvage charges
Total Loss
Actual total loss
1. Totally lost;
2. So damaged to the extent
that it is without its original
shape and validity;
3.
No longer be in the
possession of the insured;
4. Missing for a certain period
of time without any
information.
Constructive total
loss
1.
2.
3.
The actual total loss of
cargo is inevitable or
unavoidable;
The cost of salvage or
recovery could have
exceeded that the value of
the cargo;
the insured shall submit to
the insurance company the
notice of abandonment
（委付通知）
Partial Loss
General Average
--- refers to sacrifices voluntarily
made and extraordinary
expenses incurred to rescue a
ship and its cargo from
impeding danger or for the
common safety under
fortuitous circumstance while it
is at sea or at anchor in port.
--- when such a loss occurs, it is
paid on a pro rata basis by the
ship owner and all cargo
owners (General average
contribution)
Particular Average
--- refers to a partial loss of the
subject matter insured
proximately caused by an
insured peril, other than a
general average loss.
--- The loss should be borne by
the party who suffers.
Distinctions
Usually caused
Particular Directly by sea
perils
Average
General
Average
By intentional
measures taken
The loss is often borne by
The party whose cargo is
damaged
All the benefited parties
proportionately
Expenditures
Sue and labor
charges
--- when the insured cargo
suffers natural calamities or
fortuitous accidents within
the scope of insurance cover,
the insured or his agent or
any employees pays the
expenses caused in saving
the insured cargo in order to
prevent the losses from
further expending. These
charges shall be covered by
the insurer.
Salvage charges
--- when the insured cargo
suffers a natural calamity or
a fortuitous accident within
the scope of insurance cover,
the third party who has no
contracted relations with the
insured and the insurer
salvages the cargo
successfully. The insurer
shall pay to the salvor.
--- Principle:" no cure-no pay”
Case Study 1
某货轮从天津新港驶往新加坡，在航行途中船舶货舱
起火，大火蔓延到机舱，船长为了船货的共同安全，
下令往舱内灌水，火很快被扑灭。但由于主机受损，
无法继续航行，于是船长雇用拖轮将船拖回新港修理，
修好后重新驶往新加坡。这次造成的损失主要有：（1）
600箱货被火烧毁；（2）500箱货被水浇湿，无其他损
失；（3）200 箱货既受热熏损失，又受水渍损失，但
未发现任何火烧的痕迹； （4）100 箱货被火烧过且
有严重水渍；（5）主机及部分甲板被烧坏；（6）拖
轮费用；（7）额外增加的燃油和船上人员工资。试分
析上述损失的性质，并指出需投保何种险别，才能取
得保险公司的赔偿？
7.2 Terms and Coverage of
Ocean Marine Cargo
Insurance
 7.2.1 Basic Coverage
 7.2.2 Additional Coverage
 7.2.3 Terms and Coverages of Other Modes of
Transportation Cargo Insurance
7.2.1 Basic Coverage
Basic coverage is also called main insurance which may be
underwritten independently. It is classified into three
conditions:
F.P.A.
W.A.
Free from
Particular
Average
With
Average
All
Risks
Include
F.P.A.
and W.A.
The Commencement and Termination of
Basic Coverage
The commencement and termination of basic
insurance are usually stipulated by adopting
the customary “W/W” (warehouse to
warehouse ) clause.
But the policy provides an overriding（溢额）
time limit of sixty days after the completion of
discharge of the insured goods from the
seagoing vessel at the final port of discharge.
Case Study 2
一批货物投保F.P.A.,载运这批货物的海轮
于5月3日在海面遇到暴风雨的袭击，使
该批货物受到部分水渍，损失货值1000
元，该货轮继续航行中，又于5月8日发
生触礁事故，又是该批货物损失1000元。
试问：保险公司如何赔偿？
Case Study 3
某进出口公司向澳门出口坯布100包，按
合同规定投保W.P.A，货物运输途中因舱
内食用水管漏水，致使30包浸有水渍。
保险公司应如何赔偿？
7.2.2 Additional Coverage
Additional coverage
can not be covered
independently, they
shall be
underwritten
depending on one
kind of the basic
coverages.
General
additional
risks
Special
additional
risks
Attention
Theft, Pilferage & Non- delivery (T.P.N.D)
c.f. Failure to Delivery
War Risk
Strike Risk (S.R.C.C)
On Deck
Aflatoxin Risk
Commence and termination of Marine
War Risk
The insured goods are covered from the time when
they are loaded on board the ship or lighter at the
port of shipment named in the policy and continue to
be covered until they are discharged at the port of
destination named in the policy. (以水上危险为
限,waterborne risks)
If the cargoes are not discharged from the ship or
lighter, then the time of insurance duty shall be
limited to 15 days counting from the midnight of the
day when the vessel arrives at the port of destination.
Strike risk follows the W/W clause too.
Case Study 4
我按 CIF 条件向中东某国出口一批货物，
根据合同投保了W.P.A.plusT.P.N.D。但在
海运途中，因两伊战起船被扣押。尔后
进口商因提货不着便向保险公司进行索
赔。保险公司是否理赔？应投保何种险
别更为合理？
Case Study 5
我按 CIF 出口冷冻食品一批，合同规定
投保F.P.A. plus War Risk and Strike Risk 。
货到目的港后恰逢码头工人罢工，港口
无人作业，货物无法卸载。不久货轮因
无法补充燃料以致冷冻设备停机。等到
罢工结束，该批冷冻食品已变质。问这
种由于罢工而引起的损失，保险公司是
否负责赔偿？
7.2.3 Terms and Coverages of
Other Modes of Transportation
Cargo Insurance
Overland Transportation Cargo
Insurance – Train, Truck
Air Transportation Cargo Insurance
Parcel Post Insurance
7.3 London Insurance
Institute Cargo Clauses
(I.C.C.)
The newly revised London Insurance Institute
Cargo Clauses (I.C.C) include 6 kinds:
I.C.C.(B)
I.C.C.(C)
I.C.C.(A)
Institute
War Clause
Malicious
Damage
Clause
Institute
Strikes Clause
The commencement and termination of I.C.C. follows the customary
“W/W” clause too.
7.4 Cargo Insurance
Practice in Import and
Export Business
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7.4.1 To Determine Insurance Amount
7.4.2 To Make an Application and Pay Insurance Premium
7.4.3 To Obtain an Insurance Document
7.4.4 Claim
7.4.1 To Determine Insurance Amount
Insurance amount is the highest
amount of indemnity or benefit of an
insurance contract and also the basis
which the insurer calculates the
insurance premium.
The insurance amount under CIF trade term
includes:
①Invoice value which is made up of 3 parts, i.e.,
cost of the goods, amount of freight, insurance
premium.
②Markup percentage which is usually 10 percent of
the CIF value.
The formula used to calculate the insurance
amount under CIF trade terms is shown as
follows:
Insurance amount
= CIF price× (1+markup percentage)
Under FOB or CFR terms, in order to simplify
procedures, foreign trade enterprises usually sign open
policies with the insurance company in which an
average freight rate and an average insurance premium
rate are stipulated. The formula is as follows:
If under FOB trade terms
Insurance amount
=FOB price× (1+average freight rate + average premium rate)
If under CFR trade terms
Insurance amount
=CFR× (1+average premium rate)
7.4.2 To Make an Application and
Pay Insurance Premium
Fill in the application form, state all the
description of goods and coverage, pay the
premium.
Formula of Insurance Premium computation:
Premium=Insurance Amount × premium rate
Premium=CIF price × (1+markup percentage) ×premium rate
Premium=FOB price× (1+average premium rate + average
freight rate) ×average premium rate
Premium=CFR price× (1+average premium rate) × average
premium rate
7.4.3 To Obtain an Insurance Document
Insurance Policy
Insurance Certificate
Open Policy
Combined Certificate
Endorsement
7.4.4 Claim
To send out a loss notice
To lodge a claim against the carrier or
other responsible parties
To take reasonable measures to salve
and recondition the damaged goods
To get all claim documents ready
Right of subrogation
7.5 Insurance Clauses in
Sales Contract
所保的货物 “ ~+on”，如insurance on the
100 tons of soft wool；
投 保 的 险 别 “ ~+against” ，如insurance
against all risks；
保额 “ ~+for” ，如insurance for 110% of
the invoice value；
保险费或保险费率 “ ~+at” ，如insurance at
a slightly higher premium, insurance at the
rate of 5%；
向保险公司投保 “ ~+with” ，如insurance
with the People’s Insurance Company of
China．
Exercise
Translate the following sentence into English:
由卖方根据中国人民保险公司1981年1月1日有
关海洋货物运输保险条例，按发票金额的
110%投保一切险和战争险。
To be covered by the Seller for 110% of total
invoice value against All Risks and War Risk
as per relevant Ocean Marine Cargo Clause of
the China Insurance Clauses of January 1,
1981.