The The Facul Faculty of International Business and ty of International Business and

Economics Economics
Cargo insurance
policy
The best way to predict the The best way to predict the
future is to create it future is to create it
Einstein Einstein
Cosmin Jolde, Univ. Lecturer
Content of presentation
1. Insured interest
2. The risks insured
3. Exclusions
4. Sum insured
5. Types of contracts and period of insurance
6. Modalities of payment of premium 6. Modalities of payment of premium
7. Currency
8. Claims procedure
9. Information necessary for providing an offer
1. Insured interest
What goods can be insured?
- all the goods that are being transported, e.g. raw materials, work
in progress, finished goods, equipment beeing brought to be
installed.
- the intermediary storage necessary during the transport can be
covered.
Who is making the insurance?
The owner of the goods, according to INCOTERMS or any other
person who has an insurable interest (e.g. a bank).
The carrier or forwarder can make their own insurance:
Carriers Liability or Forwarders Liability.
In some cases the owner of the goods impose to the forwarder
or transporter to cover all the risks related to goods. This
situation is atypical.
2. The risks insured
Insurance conditions
The standard coverage is provided by Institute Cargo Clauses (ICC):
ICC A - All Risks
ICC B
ICC C
To the above types of coverage some additional risks can be covered
by special clauses:
+ risks specific to the nature of the goods transported (e.g. + risks specific to the nature of the goods transported (e.g.
moisture, spotting, petrifaction, rusting etc.) moisture, spotting, petrifaction, rusting etc.)
+ war, civil war, revolution, riot + war, civil war, revolution, riot
+ strike, civil commotion + strike, civil commotion
2. The risks insured (continued)
ICC A:
All Risks - any risks of physical loss or damage not specified but not
expressly excluded
ICC B - risks covered by ICC C plus the following:
+ Earthquake
+ Washing Overboard (deck cargo)
+ Sea/river/lake water entering Ship, Conveyance
+ Loss overboard during Loading/Discharge (total loss only) + Loss overboard during Loading/Discharge (total loss only)
ICC C
Fire and Explosion
Overturning or Derailment of Land Conveyance
Contact of Ship, Craft or Conveyance with other object
(excludes Water but not Ice)
Discharge of Cargo at Port of Distress .
Jettison
General Average Sacrifice
3. Exclusions
Major exclusions
loss, damage or expense attributable to wilful misconduct of the
Assured
ordinary leakage, ordinary loss in weight or volume, or ordinary
wear and tear of the subject-matter insured
loss damage or expense caused by insufficiency or unsuitability of
packing or preparation of the subject-matter insured
loss damage or expense caused by inherent vice or nature of the
subject-matter insured
3. Exclusions (continued)
Special Exclusions
Theft / pilferage, non delivery - risks excluded in under clauses ICC
B and ICC C.
War risks
Strike , Riot and Civil Commotion
Terrorism
4. Sum insured
Production value or invoice value
In addition to this value the following expenses can be insured:
+ cost of transport (freight)
+ duty, VAT and other expenses
+ the insurance premium
+ over-insurance up to 10 % from the value of the goods (this item
covers other unforeseen expenses proved by documents and not covers other unforeseen expenses proved by documents and not
the expected profit.)
5. Types of contracts and period of insurance
Open policy
- Efficient for a high frequency of the transports.
- Usually concluded for a year.
One-off policy
- usual for casual transports.
- there is no time limit; the insurance is concluded Warehouse to - there is no time limit; the insurance is concluded Warehouse to
warehouse.
6. Modalities of payment of premium
Minimum and Deposit premium (usually between 70 and 80% from
annual estimated premium) at inception. The premium is adjusted
at the end of the policy year based on actual transported value.
Minimum premium means that this is the minimum amount
acceptable by the insurer. Deposit premium means that the amount
must be paid by the insured at the beginning of insurance.
Monthly payment of estimated premium
Quarterly payment of estimated premium.
7. Currency
Payment of premium
in ROL /RON)
in hard currency
Payment of indemnities
in ROL/RON
in hard currency, if the
invoices for the goods are
issued in currency.
equivalent in ROL of the
indemnity considering the
exchange rate at the date of
issuance of the policy.
8. Claims procedure
To inspect the cargo at destination. All the loss or damages
observed at arrival must be written into the transport documents.
To notify the loss or damages to the broker or insurer.
To take al the reasonable measures to mitigate the extent of loss
and to preserve the goods.
To sent Letters of Protest to all the parties involved (e.f. forwarder,
carriers) in order to hold them liable for the damages. carriers) in order to hold them liable for the damages.
To support the insurers representatives or designated surveyors in
order to determine the nature, cause and extent of loss/damage.
To collect all the documents relevant for the claim and which prove
the extent of loss and other expenses. To send them to insurer.
9. Information necessary for providing an offer
Description of the goods transported
Quantity / packaging list / weight / volume
Packing and labelling
Sum insured and what it contains
Routes
Places of transhipments
Means of conveyance Means of conveyance
Frequency of transports
Supervision at place of loading / discharging
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