Transcript CHAPTER I INTRODUCTION Classical Theories of International

CHAPTER VIII
MARINE CARGO INSURANCE
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Risks Covered
Voyage and Time Policies
Causes of Loss Covered
Coverage by Additional Endorsements
Conveyances Covered
Types of Marine Cargo Insurance Coverage
War Risk Only Policy
Rejection Clause, Warranties, Express or Implied
 Amount of Insurance, Insurance Documents,
Claims
 Letter of Credit and Marine Insurance Policy
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Types of Marine Insurance
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Property Insurance
 Hull Insurance: Loss or damage to the vessel
itself
 Cargo Insurance: Loss or damage to the cargo
 Freight Insurance: Loss of freight income
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Indemnity Insurance: Liability of ship owners
 Collision liability insurance: Liability of insured
vessel for damage resulting from collision
 Protection and indemnity insurance: Liability
for bodily injury including death or property
damage and unexpected vessel related
expenditures
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Risks Covered by Marine
Cargo Insurance
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Loss of or damage to the cargo occurred
during the insured voyage
 Loss: Disappearance of the cargo
 Damage: Arrived not intact. Not the same
condition as shipped by the seller
Total loss:
 Actual total loss
 Constructive total loss
Partial loss : Average
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Partial Loss
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Particular average:
 Total loss of part of the shipment: one
container out of 5
 Partial loss to the whole shipment
General Average
 Extraordinary sacrifice for the common
safety: Jettison of cargo, Damage from fire
fighting, Voluntary stranding, Repairing the
vessel
 To be borne proportionately by all interests:
owners of vessel and cargoes
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Voyage Policy and Time Policy
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Voyage policy:
 Duration of a particular voyage in the policy
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Time Policy: Duration of a particular period of
time, usually one year
 Open cargo policy or Open policy
 A beginning date but no expiry date
 Cancelable by either party with 30 days written
notice
 All lawful merchandise
 All shipments from or to all countries except
those excluded in the policy such as
embargoed countries
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Causes of Loss Covered
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8.
Heavy weather, lightning, barratry of the
masters and mariners & assailing thieves
Fire or explosion
Vessel being stranded, sunk or burnt
Collision or contact of vessel with any external
objects including ice except water
Jettison
Bursting of boilers, latent defect in the
machinery or hull
Faults or errors in the navigation or
management of the vessel
Discharge of cargo at a port of refuge or
distress
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Causes of Loss Covered
Fumigation of the vessel or dock
10. While ashore, sprinkler leakage, earthquake,
cyclone, hurricane, collapse of docks and flood
11. Accidents during loading or unloading from the
vessel
9.
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Coverage with Additional
Endorsements to Open Cargo Policy
1. FOB & FAS shipments coverage: Transit
between premises and vessel
2. Export contingency (Unpaid vendors)
coverage: FOB or CFR without L/C &
buyer fails to buy insurance & refuses to
pay for damaged goods
3. Difference in Conditions(D.I.C.) Coverage:
Difference between two coverages by the
seller and the buyer
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Coverage with Additional
Endorsements to Open Cargo Policy
4. Warehouse to Warehouse Clause: The
seller's warehouse to the buyer's
warehouse, but if not delivered after
discharge, ceases after 15 days if the final
warehouse is within port or 30 days
outside the port limit
5. Marine Extension Clause: From the
seller's warehouse to the buyer's
warehouse without a specific time limit
6. South American Clause: Warehouse to
warehouse but 60 days after discharge
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Conveyances or Carriers
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Metal self-propelled vessel
Aircraft
Metal barge
Mail or express
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Institute Cargo Clauses
 Sets of terms for marine cargo insurance
policies internationally recognized and
voluntarily adopted in 140 countries
 Latest 2009 version by Lloyd’s Market Assn.
and International Underwriting Assn. of
London
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Marine Cargo Insurance
Coverage
Three Levels of Coverage
 Institute Cargo Clauses (A):
– Similar to former AR (All Risks) coverage
 Institute Cargo Clauses (B):
– Similar to former WA (With Average)
coverage
 Institute Cargo Clauses (C):
– Similar to former FPA (Free of Particular
Average)
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Institute Cargo Clauses (A)
 Covers all risks of loss of or damage to insured
cargo except as excluded by
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General Exclusion Clause
Unseaworthiness & Unfitness Exclusion Clause
War Exclusion Clause
Strikes Exclusion Clause
 Broadest coverage: Loss or damage from any
external cause
 Similar to former AR (All Risks) coverage
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Institute Cargo Clauses (A)
 General Exclusion Clause
– Willful misconduct of the assured
– Ordinary leakage, loss, wear & tear
– Insufficiency or unsuitability of packing or preparation
of insured cargo
– Inherent vice or nature
– Delay
– Insolvency or financial default of owners or operators
of vessel
– Weapon or device employing atomic or nuclear fission
and/or fusion or radioactive force
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Institute Cargo Clauses (A)
 Unseaworthiness & Unfitness Exclusion Clause
– Unseaworthiness or unfitness of vessel or craft: If
the assured are privy to unseaworthiness or
unfitness at the time the insured cargo is loaded
– Unfitness of container or conveyance: If the assured
are privy to unfitness at the time of loading
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Institute Cargo Clauses (A)
 War Exclusion Clause
– War, civil war, revolution, rebellion, insurrection, or
civil strife
– Capture, seizure, arrest, restraint or detainment but
piracy is excepted, that is, covered
– Derelict mines, torpedoes, bombs or any derelict
weapons of war
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Institute Cargo Clauses (A)
 Strikes Exclusion Clause
– Caused by strikers, locked-out workmen,
participants in labor disturbances, riots or civil
commotions
– Resulting from strikes, lock-outs, labor
disturbances, riots or civil commotion
– Caused by any act of terrorism
– Caused by any person acting from political,
ideological or religious motive
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Institute Cargo Clauses (B)
 Loss or damage reasonably attributable to
– Fire or explosion
– Vessel or craft being stranded, grounded, sunk or
capsized
– Overturning or derailment of land conveyance
– Collision or contact with any external object except
water
– Discharge of cargo at port of distress
– Earthquake, volcanic eruption or lightning
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Institute Cargo Clauses (B)
 Loss or damage caused by
– General average sacrifice
– Jettison or washing overboard
– Entry of sea, lake or river water into vessel, craft, hold,
conveyance, container or place of storage
 Total loss of any package overboard or
dropped during loading or unloading
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Institute Cargo Clauses (B)
 General Exclusion Clause
– General Exclusion Clause Items 1 to 7 of Institute
Cargo Clause (A)
– 8. Deliberate damage or deliberate destruction of
insured cargo by wrongful act of any person (s)
 War Exclusion Clause
– All exclusions of War Exclusion Clause of Institute
Cargo Clauses (A) including Piracy
– Piracy is covered Institute Cargo Clauses (A) but not
under (B)
 Strikes Exclusion Clause
– The same as those of Institute Cargo Clauses (A)
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Institute Cargo Clauses (C)
 Loss or damage reasonable attributable to
– Fire or explosion
– Vessel or craft being stranded, grounded, sunk or
capsized
– Overturning or derailment of land conveyance
– Collision or contact with any external object except
water
– Discharge of cargo at port of distress
 Earthquake, volcanic eruption or lightning not
covered under Clauses (C)
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Institute Cargo Clauses (C)
 Loss or damage caused by
– General average sacrifice
– Jettison or washing overboard
 Entry of sea, lake or river water into vessel,
craft, hold, conveyance, container or place of
storage is not covered under Clauses (C)
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Institute Cargo Clauses (C)
 General Exclusion Clause
 Unseaworthiness and Unfitness Exclusion
Clause
 War Exclusion Clause
 Strikes Exclusion Clause
– The same as those of Institute Cargo Clauses
(B)
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Institute War Clauses (Cargo)
 Loss or damage caused by
– War, civil war, revolution, rebellion, insurrection, or
civil strife
– Capture, seizure, arrest, restraint or detainment
– Derelict mines, torpedoes, bombs or any derelict
weapons of war
 General Exclusion Clause
 Unseaworthiness and Unfitness Exclusion
Clause
– The same as those of Institute Cargo Clauses (B)
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Institute Strikes Clauses (Cargo)
 Loss or damage caused by
– Strikers, locked-out workmen, or persons taking part in
labor disturbances, riots or civil commotions
– Any terrorist or any person acting from a political
motive
 General Exclusion Clause: Additional exclusions
– Loss, damage or expense from the absence, shortage or
withholding of labor
– Loss, damage or expense caused by war, civil war,
revolution, insurrection or civil strife
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Marine Cargo Insurance
 Recommendation
– Purchase Institute Cargo Clauses (A)
– Purchase Institute War Clauses
– Purchase Institute Strikes Clauses
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Rejection Clause
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Covers the rejection of the goods by
the Government of importing
country
Fresh fruits, vegitables
 Foods
 Any good which must pass inspections
by federal or state government
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Express Warranties
 Exceptive warranties indicating causes
expressly excluded from the coverage
(a) FC & S (Free of Capture & Seizure) Warranty
• To cover, stamp word “DELETED” over
the exclusion clause and attach Institute
War Clauses (Cargo)
(b) FSR & CC (Free of Strike, Riot and Civil
Commotion) Warranty
• To cover, stamp word “DELETED” over
the exclusion clause and attach Institute
Strikes Clauses (Cargo)
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Warranties, Express or Implied
 Implied Warranties
 Warranties which are understood to apply
even though not actually printed in the policy
• Seaworthiness: Not older than 20 years,
over 1,000 net registered tons and classified
A-1 Seaworthiness is admitted because
cargo owners have no control
• No deviation: Covered with Marine
Extension Clause
• Legality: Voyage and cargo must be legal.
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Amount of Insurance
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Minimum amount of insurance coverage:
110% of CIF or CIP value
Insures against loss of expected profit
120% or 130% if both exporter and
importer agree
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Insurance Documents
Insurance date not later than shipment
date
 Same currency as that of the L/C
 Insurance policy
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Issued by insurer (insurance company)
Insurance certificate
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Issued by assured (exporter) under its open
cargo policy with insurer
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Claims for Loss or Damage
 Initiated by the importer or consignee
 Ocean B/L, Airway Bill, Post Office Receipt
 Original Marine Insurance Policy
 A copy of the claim filed against the carrier
 A copy of the shipper's invoice
 A copy of delivery receipt showing exceptions
 Confirmation of non-delivery from the carrier if
not delivered
 Customs entry report
 Survey report
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Marine Insurance Policy & Letter
of Credit
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Banks will not accept an insurance policy
or certificate:
 Coverage date later than the shipment
date
 Currency different from L/C
 Coverage less than 110% of CIF or CIP
 Different coverage from L/C
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Comparison of Marine Cargo Insurance
Coverage
 Institute Cargo Clauses (A)
 Institute Cargo Clauses (B)
 Institute Cargo Clauses (C)
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