Transcript Chapter6 Cargo Insurance
Chapter6
Cargo Insurance
Basic concepts of insurance
The definition of risk Uncertainty, probability and chance The components of risk Hazard: physical, morale, moral peril Loss
The basic principles of insurance
1. principle of insurable interest A person has an "insurable interest" in something when loss or damage to it would cause that person to suffer a financial loss or certain other kinds of losses.
legal, financial interest, definite: present and expected the principle which requires a person effecting insurance to have a legally recognized relationship to the subject matter of the insurance
2. principle of utmost good of faith (uberrimae fidei) the duty of good faith imposed on both parties to an insurance contract to disclose all material facts. Representations Oral or written form, important information warranty Express: promissory(future) & affirmative(past and present) Implied: practice and customs waiver and estoppel (mainly for the insurer)
3.principle of indemnity the placing of the insured in the same financial position after a loss as he was in immediately prior to the occurrence.
restrictions: Actual loss, sum insured, insurable interest
4.principle of proximate cause the direct cause of a loss. identification of proximate cause Single cause; multiple cause
Scope of cargo insurance
Ocean marine cargo insurance Overland transportation cargo insurance Air transportation cargo insurance Parcel post insurance 1. Ocean marine cargo insurance 1) risk
Perils of the sea
海上风险
/
海难
a. Natural calamities:
自然灾害
Caused by the forces resulting from the changes of nature, e.g. vile weather, thunder, lightning, tsunami, earthquake, flood, etc.
b. Fortuitous accidents:
意外事故
The accidents resulting from unexpected causes, the carrying conveyance being grounded, stranded, or in collision with floating ice or other objects, as well as fire or explosion.
Extraneous risks
外来风险
a.General extraneous risks
（一般外来风险）
:
theft, shortage, leakage, dashed by fresh and rain water, sweating and heating, intermixture and contamination, taint of odor, hook damage, breakage of packing, rusting, etc.
b.Special extraneous risks
（特殊外来风险）
:
on deck, war, strikes, failure of delivery, rejection, etc.
2. Ocean losses and expenses
Total loss
全部损失
It is classified into 2 kinds: Actual Total Loss:
实际全损 T
he insured subject matter is totally and irretrievably lost.
Constructive Total Loss:
推定全损
It is estimated that the actual total loss of cargo is inevitable or the cost of salvage or recovery could have exceed the value of the cargo.
Partial loss
部分损失
General Average:
共同海损 It refers to a certain special sacrifice and extra expense intentionally incurred for the general interests of the
ship owner
,
the insurer
, and
the owners of the various cargoes
abroad the ship.
Particular Average:
单独海损 It means that a particular cargo is damaged by any cause and the degree of the damage does not reach a total loss, i.e., only a partial loss, which shall be borne by the owner of this individual consignment.
Expenses
Sue and labor charges:
施救费用 The reasonable expenses to save, protect, or reduce the loss by insured and the policy beneficiary. It shall be covered by the insurer.
Salvage charges:
救助费用 The expenses of the third party to save the cargo and the ship successfully. According to the relative laws, the insurer shall pay to the salver. But there is a principle, i.e., “no cure no pay”.
Terms and coverage of ocean marine cargo insurance in China
Basic coverage and terms
Basic risks
三大基本险别： There 3 conditions:
F.P.A
.
Free from Particular Average (
平安险
) W.A. or W.P.A
With Average, With Particular Average
（水渍险）
All risks (
一切险
)
F.P.A.
8 circumstances: (1) Actual total loss or constructive total loss from natural calamity, i.e.
vile weather, bore, earthquake, flood
…
The Insured must authorize the insurer if it is the constructive total loss.
(2) Total loss or partial loss caused by fortuitous accidents, i.e.
collision with floating ice or other objects, fire or explosion…… stranded,
(3) Partial loss caused from natural calamity again before and after fortuitous accidents (4) Total or partial loss of one or several pieces of cargo dropping into the sea when shipment or transshipment.
(5) Reasonable expenses to save, protect, or reduce the loss by insured, but no more than the insured value. (6) Special expenses of unloading, storage and shipping in harborage after ship getting perils of the sea.
(7) The sacrifice, sharing and the charges of general average. (8) If the term of “
collision with ships
” is involved in transport contract, the owners of the cargoes should compensate the loss of the ship’s owner.
W.A. or W.P.A.
( 水渍险 ) It covers
partial loss
due to vile weather, lightning, tsunami, earthquake and/or flood as well as the risks covered under
F.P.A. condition
as mentioned above.
All risks
( 一切险 ) Aside from the risks covered under the
F.P.A. and W.A. conditions
as above, it also covers all risks of losses or damage to the insured goods whether partial or total, arising from
external causes
in the course of transit (extraneous risks) .
W / W Clause “
仓至仓”条款
Warehouse to warehouse clause:
From the warehouse in departure to the final warehouse in destination or 60 days after unloading.
W.P.A.(W.A.) = F.P.A. + Particular Average caused by natural calamity All Risks = W.P.A. + General Additional Risks
Additional risks
附加险 This kind of risk can’t be covered independently; they shall be underwritten depending on one kind of the basic risks.
General additional risks
一般附加险 1.
Clash & breakage
2.
Taint of odor
/ 串味险 / 碰损破碎险 3.
Fresh water &/or rain damage
4.
T.P.N.D.
货不着险 / 淡水雨林险 Theft, pilferage and non-delivery / 偷窃、提 5.
Shortage
/ 短量险
6.
Leakage
/ 滲漏险 7.
Intermixture & contamination
险 / 混杂玷污 8.
Hook damage
/ 钩损险 9.
Sweat and heating
/ 受潮受热险 10.
Rust
/ 锈损险 11.
Breakage of packing
/ 包装破碎险
Special additional risks
特殊附加险 1.
War risks
/ 战争险 direct loss & general average of it; only on board of ship or lighter, but not for loss of atom bomb.
2.
Strike risks
/ 罢工险 3.
Aflatoxin
/ 黄曲霉素险 direct loss & general average of it 4.
Failure to deliver
5.
On deck
/ 舱面险 / 交货不到险 no after 6 months 6.
Import duty
/ 进口关税险 7.
Rejection
/ 拒收险 total duty for damaged goods.
rejected by importing government 8.
F.R.E.C.
Fire risk extension clause
火险险扩展条款 / 港澳存仓
Ocean insurance-frozen products Ocean insurance-wood oil bulk Ocean insurance-livestock & poultry insurance
Overland transportation insurance
Overland transportation Overland transportation all risks Frozen products War risks
Air transportation insurance
Air transportation risks Air transportation all risks Air transportation war risks
Parcel post insurance
Parcel post risks Parcel post all risks Parcel post war risks
Institute Cargo clauses
Institute Cargo Clauses A:most extensive coverage, except: General exclusions Unseaworthiness and unfitness exclusions War exclusions Strikes exclusions Institute Cargo Clauses B: Institute Cargo Clauses C:
Determination of insurance amount
Rate of Insured Addition : CIF or CFR x 10%
Insured amount
=
CIF
( or
CIP
)
x
(
1+10%
)
If an importer covers the insurance under FOB term:
Insured amount
=
FOB (or FCA) x
(
1+ average transit rate + average insured rate
)
If CFR or CPT price is given:
CIF
(
CIP
) =
CFR (or CPT) / 1 -
【
premium rate x
(
1+10%
) 】
Premium
=
CIF
( or
CIP
)
x
(
1+10%
)
x Premium rate
Insurance document
Policy Insurance certificate Open policy endorsement
Claim
Loss notice Reasonable measures to salve Right of subrogation