1、Chapter 5 InsuranceLearning ObjectivesnTo understand the functions of insurance in international sale transactionsnTo grasp main types of insurancenTo have a good knowledge of different types of insurance policiesnTo understand the relationships of the parties involved in insurance contractStructure
2、 of the ChapternSection One:Functions of InsurancenSection Two:Basic Principles of InsurancenSection Three:Types of Risks,Losses and Expenses nSection Four:Main Types of InsurancenSection Five:Types of Insurance Policies nSection Six:The Insurance Contract Section 1nProvide protection against future
3、 risks,accidents and uncertainty.nA device to share the financial loss of a few among many others.nPromote exportsSection 2nInsurable interest:the assured must have an insurable interest in the subject matter insured at the time of the loss.nUtmost good faith:If any fraud or deception is discovered,
4、the other party has the right to avoid the contract and asks for compensation.This concept includes:1)disclosure 2)representation 3)warrantynPrinciple of indemnity:the insured cannot recover more than his or her actual loss from the insurer.Section 3 external risks:1)general external risks:theft and
5、 pilferage,contamination,leakage,breakage,sweating and/or heating,taint of odor,rusting,hook damage,fresh and/or rain water damage,short-delivery and non-delivery,shortage in weight,clashing and so on 2)special external risks:war,strike and failure to delivery due to some special laws or regulations
6、.Section 3nTypes of loss:total loss,partial loss1)Total loss:actual total loss:There is an actual total loss of goods when they are destroyed,or so damaged as to cease to be the thing insured,or where the assured is irretrievably deprived of them.Section 3 constructive total loss:Goods may be still
7、in existence but must be considered from a commercial point of view as being totally lost either because an actual loss appears inevitable or because it would only be possible to save them at a cost greater than their value after being saved.Section 32)partial loss:general average loss particular ch
8、arges particular average lossSection 4Main types of insuranceBasic coverage:1)FPA:(Free from Particular Average)is a limited form of cargo insurance coverage under which no partial loss or damage is recoverable.2)WPA:(With Particular Average),a wider cover than FPA.It provides extensive cover agains
9、t all loss or damage due to marine perils throughout the duration of the policy.Section 43)All Risks:the most comprehensive of the three basic coverage under which the insurer is responsible for all total or partial loss of,or damage to the goods insured either arising from sea perils or general ext
10、ernal causes.Section 4nAdditional coverage1)General additional risks:TPND(Theft,Pilferage and Non-delivery),Fresh Water Rain Damage,Risk of storage,Risk of Intermixture and Contamination,Risk of Leakage,Risk of Clash and Breakage,Risk of Odor,Damage caused by Heating and Sweating,Hook Damage,Risk of
11、 Rust,Breakage of Packing,etc.Section 42)Special additional risks:War Risk,Strike Risks,Failure to delivery Risk,Import Duty risk,Rejection Risk,etc.Section 4Main exclusions of the insurers liability nLoss or damage attributable to willful misconduct of the assurednOrdinary leakage,loss of weight or
12、 wear and tearnDefects in packing.nInherent vice or nature of the cargo.nDelay.nInsolvency of financial default of carriers etc.Section 4nNuclear weapons of all kinds.This exclusion is separate from the normal war exclusions because such weapons create a risk of loss or damage far beyond any war zon
13、e.nUnseaworthiness if the assured or his servants are privy to it.If they are not,the insurers waive their rights under the warranty of seaworthiness implied in the contract by the Marine Insurance Act.nArrest,restraint and detention.Section 5nValued policy:a policy which specifies the agreed valued
14、 of the subject matter insurednUnvalued Policy:an unvalued policy states merely the maximum limit of the sum insured and leaves the insurable value to be ascertained subsequently.nVoyage policy:Under a voyage policy the subject matter is insured in transit from one point to anotherSection 5nTime pol
15、icy:Under a time policy the subject matter is insured for a fixed time.nMixed Policy:Under a mixed policy the subject matter is insured both for a particular journey and a certain period of time.nFloating Policy:The floating policy lays down the general conditions of insurance,but not the particular
16、s of the individual consignments intended to be covered.Section 5nOpen cover:another method of effecting general insurance for recurring shipments,the details of which are unknown when the insurance is taken out.nBlanket policy:usually provides that the assured need not advise the insurer of the individual shipments and that a lump sum premiuminstead of a premium at several ratesshall cover all shipments.nThe Period of CoverSection 6 nThe assured,the insurer and the brokernSample of insurance policy
