1. Lecture11 Insurance

2. 1.Insurance in Foreign Trade
2.Marine Insurance
3.Types of Coverage
4.Effecting Insurance

3. 1.Insurance in Foreign Trade
Cargo insurance protection is an aid to commercial negotiations. It allows traders to proceed with confidence in the knowledge that each party to the transaction is properly protected.

4. Basically, anyone who has insurable interest in a cargo shipment, i. e
Basically, anyone who has insurable interest in a cargo shipment, i.e. anyone who would suffer a loss if the goods were damaged or destroyed or who would benefit from the safe arrival of the cargo, has a need for ocean cargo insurance. One of the reasons for this is the fact that ocean shipments are still exposed to a number of hazards.

5. Damage or loss of cargo is, however, still a real possibility from such causes as heavy weather, tsunami, earthquake, fire, stranding, collision, moisture, theft, etc.

6. 2.Marine Insurance
Insurance for international trading includes overland transportation insurance, Air transportation insurance, parcel post insurance and marine insurance. However, in most cases, marine insurance is of prime importance because the great majority of international trading cargoes are delivered by sea.

7. 1) Risks covered under marine insurance are divided into two kinds
2) Marine losses caused by the happening of risk are generally classified into the following categories

8. 1) Risks covered under marine insurance are divided into two kinds
perils of the sea
extraneous risks

9. perils of the sea
nature calamities, such as heavy weather, wing storms, lighting, tsunami, earthquake, or volcanic eruption, etc.
accidents, such as stranding, touch and go, sinking, collision, missing, fire, etc.

10. extraneous risks
general extraneous risks, such as theft, shortage, breakage, leakage, moisture, rust, fresh water, etc.
special extraneous risks, such as war, strike, aflatoxin, failure to deliver, etc.

11. 2) Marine losses caused by the happening of risk are generally classified into the following categories
total loss
Partial Loss
Marine Charges Marine charges are the expenses closely related to partial loss.

12. total loss
total loss means all the insured goods have been lost totally because of the occurrence of sea perils or some other causes.

13. accrual total loss also absolute total loss, all the goods insured have been lost, and nothing is left.
Constructive total loss also technical total loss
The insured cargo is not actually lost, but is so seriously damaged as to make the goods no longer of any use for the purpose originally intended. For example: will tea leaves be of any use after they have been soaked in sea water for days?

14. Partial Loss
Partial Loss means parts of the insured goods are lost or damaged.
There are two kinds of Average in the practice of insurance.

15. 1) General Average (GA) It is a loss that affects all cargo interests on the ship itself. It has been defined as a partial and deliberate sacrifice of the ship, freight, or goods undertaken for the common safety of the adventure in time of peril. The idea of its liability is to spread the losses suffered by only some individuals involved in a voyage, so that all interested parties assume their fair share.

16. Today the most typical cause for general average losses is fire where, in the process of its being put out, some goods are damaged by water. In such cases it is well established that those interests, whose properly was saved must contribute proportionally to cover the losses of the one whose property was voluntarily sacrificed.

17. 2) Particular Average It is a partial loss or damage accidentally caused to the ship or to a particular lot of goods. When there is a particular average loss, othe interests in the voyage do not contribute to the partial recovery of the one suffering the loss.

18. 3．Marine Charges Marine charges are the expenses closely related to partial loss.
1) Sue and Labour Charges In case the covered risk occurs, the money to be paid by the insured or his agent or transferee for the rescue in order to reduce the damage and loss is called the Sue and Labor Charges, which should be compensated for by the insurer even the total amount of this compensation and the indemnity for the loss of goods exceeds the premium.

19. 2) Salvage Charges Salvage Charges are the payments made by a ship owner and a cargo owner in proportion to the rescuer. This expense of the insured should be compensated for by the insurer.