7/21/2011

Insurance of International Transport

Chapter 4: Insurance of International Transport

Section 1 a brief introduction of insurance

Basic Principle of Insurance

1 Utmost good faith

2 Insurable interest

3 Principle of indemnity

4 Principle of proximate cause

5 Principle of subrogation

varieties of marine Insurance

Section2 Marine Insurance Coverage

Perils of the Sea

1 Natural Calamity

2 Fortuitous Accidents

Loss and cost incident to transport by sea

1 Loss arising from transport by sea

Degree of loss: total loss and partial loss

Property of loss: General Average and Particular Average

The definitions of General Average and Particular Average

Conditions of Genaral Average

Differences between Genaral Average and Particular Average: reason for loss, loss obligations

General Average Contribution

Related Parties: Owner, shipper, payer

Two principles of General Average Contribution:

Firstly, contribution according to the actual loss and extra charges

Secondly, contribution according to the article’s value in proportion

Charges of the sea

1 Sue and labor charges

2 Salvage charges

Exclusions of insurance Company

1 Loss is caused by intentional behavior of the insured

2 Loss is caused by the sender

3 Loss is caused by the poor quality or quanlity short fall of the insured goods prior to the insurance policy come into effect.

4 Loss is caused by natural reasons, inherit drawback ,fall price and late shipment of the insured goods

Basic Average

1 FPA: Free from particular average

2 WPA: With average of with particular average

3 All Risks

Insurance responsibility of Basic Average

1 The meaning of Warehouse to Warehouse Clause

2 Coverage of W/W is effected by different Trade Terms

Under CIF, coverage of insurance responsibility is actual w/w

Under FOB or CFR, coverage of insurance responsibility is ship to warehouse

Damage Caused by Heating and Sweating

Additional Average

1 Normal Additional Average

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 Particular Additional Average

War risk

Risk of Strike,Riots and Civil Commotions:SRCC

Failure to deliver

Import duty risk

On deck risk

Rejection risk

Aflatoxin risk

Appending Clause of warehouse fire risk

Section 4 Institute Cargo Clauses

A):ICCA

Varieties of Institute Cargo Clauses

1 ICCA

2 ICCB

3 ICCC

4 Institute War Clauses-Cargo

5 Institute Strikes Clauses-Cargo

6 Malicious Damage Clauses

Insured fisks and exclusions of ICC

1 Insured fisks and exclusions of ICC(A)

2 Insured fisks and exclusions of ICC(B)

3 Insured fisks and exclusions of ICC(C)

4 Insured fisks and exclusions of War Risk

5 Insured fisks and exclusions of Srikes Risk

6 Insured fisks and exclusions of Malicious Damage

Coverage of Risks:

Coverage of Risks: W/W

Coverage of War Risks: Water transport

Section 5: Transportation insurance under other transportation way

Overland transportation risks

Overland transportation risks including: overland transportation risks and air transportation all risks, it adapts W/W clause

Air transportation risks

Air transportation risks including: air transportation risks and air transportation all risks, it adapts W/W clause

Parcel post risks

Parcel post risks including: parcel post risks and parcel post all risks, it adapts W/W clause

Section 6 Insurance Practice

Insurance

1’ Choices of the insurance average

Characters of Cargo

Packing of Cargo

Line and Port of Transport

Season of Transport

2’Deciding insured amount

Export: adding 10% to CIF or CIP

Insured value=CIF*(1+I%)

CIF=CFR/(1-(1+I%)*i)

CIF=CFR/(1-1.1R)

3’Payment of insurance premium

insurance premium=insured value*insurance premium rate

Insurance Document

1’Insurance Policy: form of Insurance Policy

2’Insurance Certificate

3’Combined Certificate

4’Endorsement: Endorsement is a certification that insured need to add or verify the content of insurance document

Insurance Claim

1’Lossing Advice

2’Chaiming to carrier

3’Reasonable Saving Measures

4 Preparing Claim documents

5’Subrogation

Counting the reparations

Notice: All loss are need to compensate or compensating according to the exclusive rate no matter IOP

It includes Deductible and Franchise.

PICC use Deductible

Insurance Clauses of sales contracts

1’Under “F” and “E” terms and CFR, CPT contracts, insurance clauses should be: To be covered by the buyer

2’ Under “D” terms contracts, insurance clause should be: To be covered by the seller

3’ Under CIF or CIP contracts, insurance clause should be: To be covered by the seller for …% of total invoice value against…, … as per and subject to the relevant ocean marine cargo clauses of the Pepole’s Insurance Company of China,dated…

Summary:

This chapter mainly introduces the coverage of marine insurance, the coverag and clauses of marine insurance in our country, as well as transportation insurance practice of imported $ exported goods,etc.the important one is marine insurance ,the difficult point is the choice of the coverage of insurance.

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