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RISKS, TITLE AND INSURANCE

Quynh Trang A3 CLCKT Huong Ly A3 CLCKT Anh Huy A3 CLCKT Hong Hai A3 CLCKT

Content
Risks, title of goods Policy, certificate or letter of insurance Institute cargo clauses A/B/C

RISKS AND TITLE OF GOODS

Types of risks
Classification according to origins

Force majeure

Storm, tsunami, volcanic eruption

Risks

Perils of the sea

Stranding, grounding, sinking, collision, missing

Others

Peoples mistakes, inherent nature of goods, war, strikes, riots or insurrections

Types of risks
Types of risks in the institute cargo clauses

Marine risks

Acts of God; unexpected events in the sea

Risks

Extraneous risks

Rain fresh water damage, nondelivery, thief, pilferage, leakage, breakage, bending and denting, sweating and heating

Excluded risks

Risks relating to war, strike, willful misconduct of the assured, use of nuclear weapon

Loss of goods
Two ways of classifying loss of the goods

According to loss extent


Partial loss: the loss of a part of goods Total loss: total goods are lost

According to two sides responsibility


Particular average: loss of one side General average: loss of both sides

Passing of risks and title


The principle: The risk of damage to or loss of goods, as well as the obligation to bear the costs relating to the goods, passes from the seller to the buyer when the seller has fulfilled his obligation to deliver the goods

Point of passing risks and title


Modes of transport EXW FCA When goods are at the disposal of the buyer, at the sellers premises or at another named place When goods are given to the carrier or another person nominated by the buyer at the sellers premises or another named place When goods are delivered to the carrier or another person nominated by the seller at an agreed place When goods are delivered to the carrier or another person nominated by the seller at an agreed place When goods are once unloaded from the arriving means of transport, are placed the disposal of the buyer at a name terminal at the named port or place of destination CPT CIP DAT

DAP

When goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination When goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination

DDP

Sea and inland

FAS FOB

When goods are placed alongside the vessel nominated by the buyer at the named port of shipment When the seller delivers goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered

CFR CIF

When goods are on board the vessel or procures the goods already so delivered When goods are on board the vessel or procures the goods already so delivered

POLICY CERTIFICATE LETTER OF INSURANCE

Insurance policy

Term

Coverage

Premiums

Deductibles

The preparation of a policy of insurance takes some little time, particularly if there are a number of underwriters or several insurance companies, and when documents require to be tendered with promptness on the arrival of a steamer in order that expense may not be incurred through delay in unloading, its not always practicable to obtain actual policies of insurance. In order to facilitate business in circumstances such as these, buyers are accordingly in the habit of accepting brokers cover notes and certificates of insurance instead of insisting policies
Judgment in Wilson, Holgate & Co. v. Belgian Grain and Produce Co. (1920)

Certificate of insurance
A document issued by an insurance company/broker Verifies the existence of insurance coverage under specific conditions granted to listed individuals

A certificate of insurance (in general) lists: the effective date of the policy the type of insurance coverage purchased the type of insurance coverage purchased

Certificate of insurance
1) Certificate number 2) Shipment date 3) Assured 4) Insurer 5) Shipping details 6) Insured value 7) Place of origin 8) Final destination 9) Description of goods 10)Average terms and conditions 11)Conditions 12)Additional notes 13)Consignee 14)Claims agent 15)Claims procedures

Letter of insurance
A letter from the exporter to the buyer stating that the goods are insured Has no legal force except as evidence in a law suit against the exporters

Floating policy
An insurance cover for situations where the total insurable amount can be reasonably estimated but cannot be determined accurately-enough for computing correct premium, until the insurance policy comes to an end

Open cover
A marine cargo insurance that provides blanket cover against loss or damage to all goods transported by a specific carrier, or by a specific shipper, during a stated period Could be limited in time but normally is always open

Floating policy and open cover

Floating policy The sum insured is reduced by the value of each shipment declared until the sum insured is exhausted

Open cover Open cover is not usually subject to any aggregate limit of liability

Normally, be limited to twelve months


The assured receives a formal policy document

May be limited in time or permanent


No formal policy is issued and the arrangement is relatively informal

Valued and unvalued policy

Valued policy
State the value of the goods on the insurance documents Include not only the cost of the goods but also the expected profit

Unvalued policy
Do not specify the value of the subject-matter The assured can only recover the loss to the full extent of the insurable value at the time of loss, excluding the expected profit

Basis of valuation clause


A basis of valuation clause is usually incorporated in floating policy and open cover Eg: Institute Provisional Value Clause in Cargo Contracts In the event of loss accident or arrival before declaration of value it is agreed that the basis of valuation shall be the prime cost of the goods or merchandise plus the expenses of and incidental to shipping, the freight for which the assured are liable, the charges for insurance and %

Time policy and voyage policy


Covers risks arising during a specified period
Time policy

Voyage policy

Covers risks that arise during an entire transit period irrespective of how long it takes

Mixed policy

Covers both time and voyage periods

INSTITUTE CARGO CLAUSES

Institutes Cargo Clauses


Institute cargo clauses C - minimum cover Institute cargo clauses B - medium cover

Institute cargo clauses A - most extended cover


Institute war clauses

Institute strikes clauses

Clauses general form


Risks covered Exclusions Duration Claims Benefit of insurance Minimizing losses Avoidance of delay Law and practice

Risks covered ICC B,C

Risks covered ICC A


All risks of loss of or damage to the subject-matter insured except as provided in Clauses 4,5,6,7 (exclusions) General average clause Both to Blame Collision Clause

Exclusion

Insurance coverage CIP/CIF

The seller procures insurance for the benefit of the buyer

Low risk cargo (minimum cover) high risk cargo (more).

Insurance value equals to 110% the value of invoice

Cover is in the currency of the contract.