Transcript Cargo Transport Insurance

Cargo Transport Insurance
Topics in This Chapter
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Overview
Risks: Perils of the Sea and Extraneous Risks
Losses: Total Loss, Partial Loss and Expenses
Ocean Marine Insurance Under C.I.C
Institute Cargo Clauses
• Insurance Clause in an International
Contract
• Insurance policy
Overview
• Cargo transport insurance is to protect the interests of
importers and exporters from possible financial losses
caused by risks during the transit of the goods from the
factory or warehouse in a country of origin to the
warehouse in a country of destination.
• It is now an indispensable part to the import and export
practice.
• In insurance, the party who insures others against possible
losses or damage and undertakes to make payment in case
of loss is called the insurer.
• The party who is insured against possible losses and to
whom payment covering the loss will be made is called the
insured.
• The contract made between the insurer and the insured is
the insurance policy.
• The amount of money the insurer agrees to cover by
insurance against the subject matter is the insured amount
( which is usually the amount of 110% of CIF value of the
consignment in marine cargo transport insurance).
• The sum of money the insured agrees to pay the insurer for
an insurance policy is called premium.
Risks in Cargo Transport
• Risks in cargo transport are of many kinds.
• Different risks mean different losses,
• and different risks are covered by different insurance
clauses
• and different insurance clauses mean different premiums.
• So we need to have a good understanding of the different
risks and losses before we know how to effect insurance.
• In marine cargo transport insurance, risks fall into perils of
the sea and extraneous risks.
Perils of the Sea
• Perils of the sea can further be either natural calamity or
fortuitous accidents:
• Natural calamity refers to the perils under force
majeure(不可抗力) such as vile weather, thunder storm
and lightening, tsunami, earthquake, flood, volcanic
eruption, etc. (The ordinary action of the winds and waves
is not taken as natural calamities.)
• Fortuitous Accidents are such risks as ship stranding,
striking upon the rocks, ship sinking, ship collision,
colliding with icebergs or other objects, fire, explosion,
ship missing, etc.
Extraneous Risks
• Extraneous risks can further be general
extraneous risks and special extraneous risks.
• Risks caused by theft, rain, leakage, shortage,
breakage, dampness, mildewing, heating, taint of
odor, hooking and rusting are general extraneous
risks.
• Risks caused by war, strikes, failure of delivery
and rejection, etc. are special extraneous risks.
Losses
• Losses sustained by the insured due to the risks listed
above 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.
• The losses and the damages done to the goods can fall into
total loss and partial loss.
• Total Loss includes Actual Total Loss(实际全损 ) and
Constructive Total Loss.(推定全损).
• Partial Loss means that the loss or damage done to the
goods is only partial. Partial loss can be either general
average (共同海损 )or particular average(单独海损 ).
Total Loss
• Actual Total Loss means
the whole lot of the
consignment has been lost
or damaged or found
valueless upon arrival at
the port of destination.
• Constructive Total Loss is
found in the case where
the actual total loss of the
insured goods is
unavoidable, or the ship or
the consignment has to be
abandoned because the
cost of salvage or recovery
would exceed the value of
the ship and the
consignment in sound
condition upon the arrival
of the port of destination.
Partial Loss
• General Average is in use when
• both the ship and the consignments on
board are endangered
• and the captain intentionally and reasonably
does some sacrifices or makes some
expenses
• for the safety of the ship and the
consignments on board.
• For example, when a ship goes aground and both the ship
and the consignments on board are in peril, the captain,
after all his efforts to refloat the ship have failed, may
decide to jettison part of the consignments on board to
lighten the ship.
• The loss, the sacrifice done for that purpose, is to be borne
by both the carrier and the consignors in proportion to the
value of their interest thus saved. This is called general
average contribution.
• Particular Average means that a particular consignment is
partially damaged.
Expenses
• 1. Sue and labor expenses(施救费用) are made
by the insured or his agent to prevent them from
suffering further losses.
• 2. Salvage Charges(救助费用) are made to those
other than the insured, the carrier and the insurer
who come to the salvage of the ship and the
consignment.
Ocean Marine Insurance Under
C.I.C(China Insurance Clauses)
• Cargo transport insurance falls into ocean
marine insurance, overland transportation
insurance, air transportation insurance,
and parcel post insurance.
• Under China Insurance Clauses (C.I.C), for
each type of transportation insurance, there
are basic risks coverage and additional
risks coverage.
Basic Risks Coverage
• Under C.I.C., basic risks coverage falls into
three groups:
• Free from Particular Average (F.P.A.) ;
• With (Particular) Average (W.A.or
W.P.A.) ;
• All Risks .
• The insured may choose any one from these
suitable for the carriage of his goods.
Free from Particular Average
(F.P.A.)
• Free from Particular Average (F.P.A.) covers the
following losses:
• (1) Actual total loss or constructive total loss of the
consignment caused by natural calamities such as vile
weather, tsunami, earthquake, flood. When the
consignment is carried by a lighter to or from the ship, the
goods aboard the lighter can be taken as a whole
consignment.
• (2) Total loss or partial loss caused by fortuitous accidents
such as stranding, striking upon the rocks, icebergs or other
objects, collision, fire and explosion.
• (3) General average of the insured goods attributable to
vile weather, lightening and /or tsunami, where the ship
has been stranded, sunk, or burned, inspective of whether
the event took place after or before such accidents.
• (4) Partial or total loss consequent on failing of an entire
package or packages into the sea during loading, unloading,
and transshipment.
• (5) Reasonable expenses the insured makes for the salvage
of the goods insured, and for averting or minimizing the
losses, provided the expenses do not exceed the insured
amount.
• (6) Expenses incurred by discharge of the insured cargoes
at a port of distress following a sea peril as well as special
charges arising from loading, warehousing at an
intermediate port of call or refuge.
• (7) Sacrifice in and contribution to general average and
salvage charges.
• (8) Such proportion of losses sustained by the ship-owners
as is to be reimbursed by the insured under the Contract of
Affreightment “Both to Blame Collision” clause.
With Average (W.A.)
• Aside from the risks covered under the
F.P.A. condition as above, W.A. also covers
particular average of the insured goods
caused by vile weather, lightening, tsunami,
earthquake and / or flood.
All Risks
• Aside from the risks covered under the
F.P.A. and W.A. conditions as above, All
Risks also covers all risks or damage done
to the insured goods whether partial or total,
arising from general extraneous risks during
transit.
Additional Risks
• Additional risks complement the basic risks.
• Additional risks can not be used
independently.
• Additional risks under C.I.C. fall into
general additional risks and special
additional risks.
General Additional Risks
• General additional risks cover the losses
caused by general extraneous risks.
• General additional risks are covered by All
Risks in basic insurance coverage. Hence,
you do not need to ask for general
additional risks coverage if you have asked
for All Risks coverage.
• General additional risks fall into 11 types:
11 Types of General Additional
Risks
• General additional risks fall into 11 types:
• 1.偷窃提货不着险（Theft, Pilferage and Nondelivery, 简称T. P. N. D.）
• 2.淡水雨淋险（Fresh Water and /or Rain Damage，
简称F. W. R. D.）
• 3.短量险（Risk of Shortage）
• 4 . 混 杂 、 沾 污 险 （ Risk of lnter-mixture &
Contamination）
• 5.渗漏险（Risk of Leakage）
• 6.碰损、破碎险（Risk of Clash & Breakage）。
• 7.串味险（Taint of Odor）
• 8.受热、受潮险（Damage Caused by Heating &
Sweating）
• 9. 钩损险（Hook Damage）
• 10.包装破裂险（Loss or Damage Caused by
Breakage of Packing）
• 11.锈损险（Risks of Rust）
Special Additional Risks
• Special Additional Risks cover losses caused by special
extraneous risks. They include
• War Risks, Strikes,
• Failure to Deliver,
• Import Duty,
• On Deck,
• Rejection,
• Aflatoxin,
• Fire Risk Extension clause, (F.R.E.C.- for storage of
cargo at destination of Hongkong, including Kowloon, or
Macao.)
Warehouse to Warehouse Clause
• W/W Clause: Ocean marine insurance under C.I.C. takes
effect as soon as the insured cargo is taken away from the
warehouse listed on the insurance policy.
• Insurance terminates when the goods are carried to the
final warehouse listed on the insurance policy, or 60 days
after the goods are discharged from the ship in case they
fail to reach the warehouse during a reasonable period of
time.
• If within 60 days after the goods have been discharged
from the ship, the goods are taken to some other
destination other than one specified on the insurance policy,
the insurance terminates thereupon.
Institute Cargo Clauses
• The Institute Cargo Clauses, shortened as I.C.C. were set
forth by the Institute of London Underwriters. They have
exerted great influences in the development of
international insurance. Most countries in the world have
referred to them more or less in making their own
insurance clauses.
• The Institute Cargo Clauses have undergone revisions for
many times. The latest revision came into effect on Jan.1,
1982. The old clauses of I.C.C. were basically the same as
the ocean marine cargo clauses of the People’s Insurance
Company of China. The new version has a different system.
Insurance Coverage under the
New Version of I.C.C
• Insurance coverage under the new version of I.C.C.
falls into 6 clauses:
• Institute Cargo Clauses A (ICC A);
• Institute Cargo Clauses B (ICC B);
• Institute Cargo Clauses C (ICC C);
• Institute War Clauses- Cargo;
• Institute Strikes Clauses – Cargo;
• Malicious Damage Clauses.
Insurance Clause in an
International Contract
• The insurance clause in an international
contract must specify
• the insured amount,
• the risks to be covered
• and the clauses adopted.
• Example
Insurance Policy
• A legal document – a contract between the
insurer and the insured
• Binding upon both the insurer and the
insured
• Insurance certificate is a simplified
insurance policy without clauses on the
back but with the same legal effect as the
insurance policy.
Calculation
• 1. Insured Amount: CIF value x (1+10%)
• 2. Premium: Insured Amount x premium
Rate
• 3. Example