MARINE CARGO INSURANCE

When we talk about the marine cargo insurance, the following contents that we should concern are as below:

     -     Perils Insured Against

     -     Marine Transportation Loss

     -     Types of Insurance

I-    Perils Insurance Against:

Each shipment in transit may into various types of dangers. The risks which are converted by insurance can be basically divided into two types:

     1-   Perils of the sea

     2-   Extraneous risks

The perils of the sea include not only the natural calamities such as storms, floods, earthquakes, lighting… etc. but also fortuitous accidents like fire, collision, explosion and sinking of the carrying vessel… etc.

The extraneous perils are usually caused by external factors, which can be classified into two kinds:

     1-   The ordinary perils

     2-   Special perils

The ordinary perils include theft, pilferage, leakage, shortage and contamination. The special perils, however, refer to war, strike, import duty, fail to delivery and rejection and so on.

II-   Marine Transportation Loss:

The marine transportation loss can be divided into two kinds:

                                      Actual Total Loss

 1-   Total Loss                                                  

                                      Constructive Total Loss

                                      General Average (Loss or Damage)

 2-   Partial Loss 

                                     Particular Average (Loss or Damage) 

III- Types of Insurance:

The types of insurance can be classified into three kinds:

     1-   Free from Particular Average (F.P.A):

     2-   With Particular Average (W.P.A):

     3-   All Risks:

The above-mentioned insurance is called the basic risks. Except the basic risks, there is another type of risk – additional risk, which can be divided into two – general additional risks and special additional risks.

     A-   General Additional Risks:         

     - Theft, pilferage, and non-delivery.

     - Shortage, leakage and breakage of packing

     - Contamination and rain damage

     B-   Special Additional Risks:

     - War risk

     - Strikes

     - Failure to deliver

     - On desk

     - Import duty

     - Rejection

The insurance value is calculated as below:

If the transaction is conducted on CIF basis, we usually effect insurance for 110% of the invoice value against risk. That is to say, 100% is for CIF invoice value and 10% is to cover a reasonable profit and some expenses.

In international trade, the marine cargo insurance is very important for the importer and exporter because it can provide financial protection against unexpected misfortunes. The people can buy the insurance through insurance agent or insurance company. When loss or damage happens, they can claim payment for loss from the insurance company with the following documents:

1-        Insurance Policy.

     2-   Advice for Inspection of Goods Damage.

     3-   Document and Evidence for Claim.

     4-   Claim Time Limited.

All claims must be submitted within three weeks subsequent to the receipt of the said goods at the port of destination. The claim will be refused if the said goods are used or sold partially or wholly to the third party.

 top