Unit 7 Cargo Insurance

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???? ????????(III)?????????????? ??
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Unit 7 Cargo Insurance

• Text I Policies, Coverage and Exclusions
• -To learn about insurance policies, kinds of
  coverage and exclusions in cargo insurance
• Text ? Fundamental Principles of Cargo
  Insurance
• -To understand the application of the three
  fundamental principles of cargo insurance
• Typical Sentence Patterns Contract (II)

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Text I Policies, Coverage and Exclusions

• Useful expressions in transit, be insured
  against, the insurer cf. the insured, save sb.
  the trouble of, quote a landed sales price,
  interested party, assumeshare, cargo hold (n.),
  be reimbursed for, in particular terms, heavy
  weather, fortuity (n.) / fortuitous (adj.), under
  normal conditions, turn rancid, sensitive product
• Terms pilferage, insurance policy, certificate
  of insurance, shipping documents, collateral
  security, advance (n.), open cover, coverage,
  general / particular average, FPA, WA, AR,
  franchise (n.), force majeure, inherent vice,
  exclusion clause

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Pre-reading terms and expressions

• insurer (insurance company, insurance
  underwriter, assurer)
• insured (assured)
• (insurance) premium
• insurance policy
• cover (BrE), coverage (AmE), (v.) cover / insure
  sb./ sth. against sth.
• insurance broker/agent

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Outline of Text 1

1. Introduction necessity of procuring insurance
2. Insurance policies definition and types of
   policies
3. Kinds of coverage general average particular
   average, three main categories of general cargo
   insurance
4. Exclusions inherent vice and delay

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Questions based on Text 1

1. What is an insurance policy?
2. What is an open cover?
3. How to distinguish between general average and
   particular average?
4. What are the major types of international marine
   cargo insurance?
5. How to understand the word risk in insurance?

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Questions (continued)

• 6. What are the exclusions introduced in Part IV
  of the text?
• 7. What is the inherent vice of goods? How many
  examples are given in the text to illustrate it?
  And in what way is inherent vice of goods
  significant in insurance?
• 8. What products can be labeled as sensitive
  products?

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Terms

• insurance policy ?(?)?
• certificate of insurance ?????,????

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• shipping documents ????
• -certain documents which, under the system
  known as documents for collection, are sent by an
  exporters bank to the banks branch or agent in
  the importers country, who delivers them to the
  importer when he pays or accepts a bill of
  exchange. The shipping documents consist of
  commercial export invoice, bill of lading,
  forwarders receipt, consignment note, insurance
  policy, insurance certificate, and if necessary,
  certificate of origin, consular invoice, weight
  certificate, sanitary certificate, letter of
  hypothecation, export licence(s). Most if not all
  these documents are needed by the importer to
  obtain delivery of the goods, to clear them
  through customs and to claim on insurance if they
  are lost or damaged.

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• collateral security ?????,?????,??
• -extra security provided by or for a borrower
  to support his intention to repay a loan
• advance (n.) ???
• -money paid as a loan or as a part of a
  payment, which is to be completed later

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open cover (also open (cargo) policy)?????????????
??? -coverage normally used on an indefinite
basis under ocean marine insurance and inland
marine insurance While the policy is in force,
the shipper is required each month to submit to
the insurance company reports on goods being
shipped to be covered by the policy premiums are
also submitted at that time. An open policy
offers the convenience and protection of covering
all shipments by the shipper of certain types of
goods to certain destinations and over specified
routes.
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• coverage (AmE) ????,???? (cover BrE)
• -the protection an insurance gives you, so that
  it pays you money if you are injured, or sth is
  stolen
• average ??
• -any loss or damage due to insured perils that
  is less than a total loss

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general average ????(?????????????????)
-sharing of the cost of the lost goods by all
parties to an insurance an ocean marine loss
that occurs through the voluntary sacrifice of a
part of the vessel or cargo, or an expenditure,
to safeguard the vessel and its remaining cargo
from a common peril If the sacrifice is
successful, all interests at risk contribute to
the loss borne by owner of the sacrificed
property based on their respective saved values.
A party can insure their portion of such a loss
under an ocean marine policy.
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How to prove a general average claim?

• The claimant must show that
• (1) the ship, cargo, and crew were threatened by
  a common danger
• (2) the danger was real and substantial (the
  older cases required that the danger also be
  imminent), and
• (3) the cargo or ship was voluntarily sacrificed
  for the benefit of both, or extraordinary
  expenses were incurred to avert a common peril.

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• particular average ????(??????????????????,??????
  ??????????)
• -situation where part of a shipment is lost or
  damaged and the insurance costs are borne by the
  owner of the lost goods and not shared among all
  the owners of the shipment a method of loss
  allocation in the event that a portion of cargo,
  hull or freight is jettisoned at sea in order to
  save the remainder
• The loss is borne entirely by the individual
  who owns the property that is damaged or
  sacrificed. The loss must be less than total and
  not subject to the provisions of general average.
  Some ocean marine policy forms provide limited
  coverage for a particular average loss.

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• FPA (Free of Particular Average) ??????,???
• -an ocean marine policy provision where
  coverage is provided only if a total loss of the
  insured property occurs from an insured peril
• A particular average loss is a partial loss to
  the insureds cargo. A policy designed FPA will
  not cover any partial loss. A policy FPA,
  followed by certain specified loss, will not pay
  for any partial or particular average loss of
  that nature.

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• WA (With (Particular) Average) ??????,???
• -coverage that can be added to an ocean marine
  policy that is free from particular average
  conditions
• Partial loss or damage to the property insured
  by the basic named perils is recoverable in full.

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AR (All Risks) ??? -a property or marine
insurance form that covers all risks of loss
except risks that are specifically
excluded All-risk policies always have some
exclusions or limitations regarding the insured
property, persons or protected interests, and
some policies may exclude certain causes of loss.
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• franchise (n.) ??????????????
• -an amount of loss below which in certain
  conditions the insurers are not bound to pay
  anything, but above which they are bound to pay
  in full. The purpose is to discourage very small
  claims.
• -franchise clause(??)????
• force majeure ????
• -something which happens which is out of the
  control of the parties who have signed a contract
  (such as strike, war, storm) and which prevents
  the contract being fulfilled

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• inherent vice ????
• -a quality within an object, material or
  property that results in its tending to
  deteriorate or destroy itself
• Inherent vice is excluded by most property
  insurance policies. Example The spoilage of
  fruit during storage or shipping would be
  excluded from a property policy. The destruction
  of unspoiled fruit by a fire, on the other hand,
  would be covered.
• exclusion clause (???????)???????????????????

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Further study

• sue and labour clause,York-Antwerp Rules,
• imminent cf. real and substantial danger
• See
• Schaffer Richard, Earle Beverley, Agusti
  Filiberto, 2004. International Business Law and
  its Environment (6th Edition) Chap. 6 P201-210.
  West Thomson Learning.
• Yu Jinsong Wu Zhipan ed. ?????(International
  Economic Law Chap. 5 P112-117), Peking
  University Publishing House, 2000

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Text ? Fundamental Principles of Cargo
Insurance

• Useful expressions stand inrelation to, be
  prejudiced by, recover from sb., subrogate sth.
  against sb., on commission, observe good faith,
  avoid a contract, injured / aggrieved / innocent
  / non-breaching / wronged party (cf. breaching /
  non-performing / guilty party, party in breach),
  indemnify / compensate sb. agaist sth., under a
  marine policy, in afashion, provide an indemnity
  for, market fluctuation, be out of pocket,
  balance, as regards, reduceliability to
  withinlimit, (goods) jettisoned for common
  safety

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• Terms insurable interest, good faith (uberrima
  fides), indemnity, disbursements (pl.) insurance,
  (insurance) premium, hull insurance, contract of
  insurance, / insurer / assurer (cf. the insured /
  assured), misrepresentation, proximate cause (cf.
  remote cause), subrogation

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Five Principles of Cargo Insurance

• principle of insurable interest ??????
• principle of good faith ??????
• principle of indemnity ??????
• principle of the proximate cause????
• principle of subrogation ??????

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Terms

• insurable interest ????,????
• -a direct monetary interest in an object or
  person being insured
• It is a ruling condition of insurance that the
  person who benefits from an insurance contract
  must himself be liable to suffer a loss that can
  be valued in units of money if the insured person
  is injured or dies. If this condition is not met,
  the interest is not insurable and the contract
  would not be supported in a court of law.

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(utmost) good faith ????,???? -a basic rule of
insurance law that a person making a proposal for
insurance is legally bound to give the insurers
all facts and information which might affect
their assessment of the risks to be insured. No
essential facts must be kept back. The insurers,
by the same legal rule, are legally bound not to
mislead the insured, e.g. by putting conditions
into the contract that are unfair or have not
been seen by or discussed with the insured.
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• indemnity ????
• -a basic idea in all branches of insurance
  (except life and personal accident) that the
  insured should be in the same position after a
  loss as he was immediately before it, i.e.
  neither richer nor poorer as a result of the loss

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• proximate cause ??
• -an act, event or omission that naturally and
  foreseeably results in a harm or loss, though it
  may not necessarily be the nearest or last cause
  something that produces a harmful effect in a
  natural chain of causation unbroken by any
  intervening efficient cause
• remote cause ??

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• subrogation ????,????
• -the legal right of an insurer to receive any
  money obtained by the insured as a result of his
  making use of his rights against third parties
• This reduced the cost of the loss to the
  insurer and prevents the insured from obtaining
  more than his full indemnity. Sometimes the
  conditions of the policy give the insurer the
  right to bring a legal action against a third
  party who is liable for any loss suffered by the
  insured.

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• underwriter / insurer / assurer ???,???,???
• the insured / assured ????
• disbursements insurance ??????
• hull insurance ????
• misrepresentation ?????, ??
• -a false oral or written statement made with an
  intent to deceive

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(insurance) premium ???????? -the price for
coverage of a particular risk or set of risks
described in the insurance policy during a
specific period of time. The premium is the price
(insured's cost) expressed as a periodic sum,
while the rate is the price per unit of coverage
(for example, the premium for each 100 of
property value)