TIẾNG ANH KINH TẾ insurance

UNIT 9: MARINE CARGO
INSURANCE


What risks are these?
Several people were walking along when suddenly tons of
earth came crash down the hillside and blocked the road
in front of them.
+Landslide
2. Over 50,000 people in Ethiopia have died of starvation in
the past month. Questions are being asked concerning the
delay in the supplies of rice and grain which were recently
sent to them.
+Famine
3. The winds have already strengthened considerably and the
sea is now very rough indeed. As a result, ferries across
the harbor have stopped sailing and all large ships have
put out to sea.
+Typoon
1.


4. The river overflowed in several places and huge areas of
farming land are now several feet under water. Boats are
being used to rescue people in nearby village.
+Flood
5. Suddenly the ground shook beneath our feet and the tall
building opposite the college began to sway. Windows and
doors rattled, and several bookcases in the college library
came crashing down.
+Earthquake

6. Tankers full of water were sent, but it was too late to save
many of the animals and crops there. The whole area was
like a vast desert.
+Drought
7. Smoke poured out of the crates but no one expected an
eruption. A week later, however, red hot lava began to flow
down the side of the mountain.
+Volcano


8. It swept onwards, covering everything in its path. The
travellers had to get off their camels and lie down until it
had eventually passed.
+Sandstorm
9. Flames swept through the block of offices, burning
everything inside. Two hours later only the empty shell of
the building remained.
+Fire
10. The first sign if illness was a pain in the chest, followed by
a great thirst and a burning fever. Few medical supplies
reached the area and consequently almost all the victims
died.
+Plague
11. It must have been at least twenty feet high as it swept
towards the shore. In a few seconds it destroyed all the
houses in its way, drowning everyone inside.
+Tidal wave


Other types of risks

1.

2.
3.

4.

5.

Operational risks: Regulatory non-compliance, supply
chain failure, or failure of governance within an
organization
Financial risks: cash flow, credit or exchange risks
Hazards: safeguarding the health, safety of employees,
the public natural events, consequent business
interruption impact, environmental impact
Strategic risks: market changes, increased competition,
failure to adapt or change by an organization
Risks faced by the buyer and the seller when goods are
transported: loss by accident, theft, pilferage or
damaged by fire, water, deterioration, force majeure,
difficulties getting custom clearance, strikes, port
congestion


Marine insurance
 Marine

Insurance covers the loss or
damage of ships, cargo, terminals, and

any transport or property by which cargo
is transferred, acquired, or held between
the points of origin and final destination.


Feature of marine insurance
It is based on “Utmost good faith”
-I.e: both the insured and the insurer’s must
disclosed:
- Everything which is in their knowledge and
- Can affect the contract of insurance
 It is a contract of indemnity
 Insurable interest
 Proximate cause



Types of marine insurance
Hull insurance relates to the vessel and its fixtures,
providing cover for loss or damage at sea.
-A time policy gives cover for a specified period.
-A voyage policy relates to a particular voyage
 Cargo insurance provides cover for loss or damage of the
cargo while it is in transit.
  Freight insurance provides the shipowner with indemnity in
case he has to repay the charge because of his failure to
deliver.
 Shipowners’ liability insurance gives the shipowner cover
for a variety of possible liabilities including those for
damaging another vessel in a collision, injuring the crew or

passengers, polluting beaches, etc.



Total loss or partial loss
Total loss: the insurer is entitle to take over
what ever may remain of the subject matter
 Partial loss: subrogation is to extent of loss
paid, excess recovery if any, is to be
disbursed to the insured



Parties involed
Carrier
 Charter
 Consignee
 Consignor



Average
In marine insurance, in the case of a partial loss, or
emergency repairs to the vessel, average may be
declared. This covers situations, where, for
example, a ship in a storm might have to jettison
certain cargo to protect the ship and the remaining
cargo.
“General average” requires all parties concerned in
the venture (Hull/Cargo/Freight/Bunkers) to

contribute to compensate the losses caused to
those whose cargo has been lost or damaged.
'Particular Average' is levied on a group of cargo
owners and not all of the cargo owners.


Insurance premium
Financial cost of obtaining an insurance cover,
paid as a lump sum or in installments during
the duration of the policy.
 A failure to pay premium when due
automatically cancels the insurance policy
which, upon payment of the outstanding amount
within a certain period, may be restored.



Calculation of Marine
Insurance
Amount/Premium:


Amount of premium depends on factors like
nature of cargo, scope of cover, packing,
mode of conveyance, distance and past
claims experience.
 Premium can be paid on a
monthly/quarterly/half-yearly/yearly basis.

Insurance Policy
-

Floating policy
Open policy
Valued policy
Unvalued policy
Time policy
Voyage policy
Time and voyage policy



MARINE STANDARD POLICY FORM
THE FORM CONTAINS THE FOLLOWING PARTICULARS:
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NAME OF INSURED:

-POLICY NO.:
SUM INSURED:
-PREMIUM:
STAMP DUTY:
-CONVEYANCE/STEAMER:
VOYAGE OR JOURNEY:
-B/L; LR/GR, RR, AWB NO.:
TYPE OF COVER:
AND DATE:
CLAUSES ATTACHED
INTEREST/PROPERTY : DESCRIPTION OF THE ITEM WITH
PACKING DETAILS :
NAME AND ADDRESS OF SURVEYOR AT DESTINATION
CLAIM SETTLING AGENT:
PLACE WHERE CLAIM SHALL BE SETTLED:
POLICY ISSUING OFFICE ADDRESS AND DATE:
SIGNATURE OF AUTHORISED PERSON:


Comparison Open cover/ open
policy


OPEN COVER



OPEN COVER: FOR REGULAR SHIPMENTS
AN AGREEMENT OF INSURANCE WITH THE INSURED



TO GOVERN THE INSURANCE COVERAGE OF FUTURE
TRANSITS OR SHIPMENTS



COVERAGE LIKE ICC-’A’ OR ‘B’ ETC. IS AGREED,



RATE, TERMS, WARRANTIES, CLAUSES, EXCLUSION ARE
AGREED



VOYAGE BY SEA OR AIR, TRANSHIPMENT IF ANY IS AGREED



BASIS OF VALUATION OF GOODS IS THERE BUT NO SUM
INSURED SPECIFIED IN THE OPEN COVER



LIMIT PER BOTTOM (SENDING) AND LIMIT PER LOCATION
( ACCUMULATION OF RISK)


OPEN COVER….



THE INSURER UNDERTAKES TO INSURE ALL SHIPMENTS
DECLARED BY THE INSURED



THE ASSURED UNDERTAKES TO DECLARE EACH AND
EVERY SHIPMENT WHICH COMES WITHIN THE SCOPE OF
OPEN COVER



PREMIUM AND STAMPDUTY PAYABLE AGAINST EACH AND
EVERY SHIPMENT



A MARINE POLICY OR CERTIFICATE OF INSURANCE SHALL
ISSUED DULLY STAMP DUTY AGINST EACH DISPATCH



A DEPOSITE PREMIUM, EQUIVALENT TO ONE TO THREE
MONTH’S TURNOVER SHALL BE ACCEPTED BY INSURER


OPEN COVER…..


FOR LEGAL PURPOSE OPEN COVER IS LIKE A COVERNOTE
AND THEREFORE A STAMPED POLICY OR CERTIFICATE IS
ISSUED AGAINST EACH SHIPMENT



THE ADVANTAGES ARE:





AUTOMATIC AND CONTINUOUS COVER IN REGARD TO
COVERAGE, RATE, TERMS AND CONDITIONS AND NO NEED FOR
ANY NEGOTIATION ON EACH SHIPMENT



ANY INADVERTANT OMMISSION TO INSURE OR DELAY IN
SHIPMENT ADVICE IS IGNORED BY THE INSURER PROVIDED
THERE IS SUFFICIENT DEPOSIT



SINCE THE RATE IS AGREED AT INCEPTION AND IT HELPS THE
INSURED TO KNOW THE COST OF INSURANCE

THE INSURER CAN CHECK THE RECORDS OF THE ASSURED
ABOUT THE SHIPMENTS COMING UNDER TERMS OF OPEN
COVER

OPEN POLICY



Open Policy/ Floating Policy: A stamped document
Sum Insured: Estimated Annual Turnover



Details of cargo or goods to covered, mode of transport,
voyage from –to, basis of valuation, Limit per sending,
Rate of premium etc. are mentioned on the policy



All the shipments coming under the scope are covered
to the extent sum insured is available



Policy can be issued for an amount to take care of
shipments for 03 months or so at the commencement
and can be increased subsequently but before the sum
insured is exhausted



Policy is issued for 12 months but lapses if the sum

insured is exhausted


Open Policy…..


For increase in S I additional premium at rate agreed is
paid



Fresh policy if sum insured is exhausted



Declarations are made, giving details of dispatches
made during the fortnight or month as agreed, to
Insurer and S I is reduced accordingly



Details of dispatch:
GR/RR no. Date Description of goods Qty/wt
Balance

Amount


Open Policy…….


A Certificate of Insurance is issued against
declarations for the fortnight or month as the case may
be.



Since policy is a stamped document, certificates are
not stamped.



Open policy is issued for inland transit



At the end of the policy period, the policy is adjusted
and premium against the balance unutilized S. I. is
refunded



Advantages of Open Policy:
 Automatic and continuous insurance protection
 Administrative labour is reduced
 Saving in stamp duty


Open Policy…….


The insurer can check the records of the insured in
regard to dispatches made in terms of the open
policy



The policy can be cancelled by either party after
giving a notice of 30 days



Location limit at any one location should not exceed
a specified amount mentioned in the open policy
conditions


Cargo insurance
 Cargo

insurance is underwritten on the
Institute Cargo Clauses, with coverage on
an A, B, or C basis, A having the widest
cover and C the most restricted. Valuable
cargo is known as specie