Chapter 4: Insurance of International Transport

Abstract：This chapter tells mainly insurance cover of marine transport, and some insurance
coverage and clause in our country, and some insurance practices.Section1: General knowledge of
insuranceSection2 ：Insurance coverageSection3 ：Insurance averageSection4 ：Institute Cargo
ClausesSection5：Transportation insurance under other transportation waySection6: Insurance
Practice

2  Section 1：General knowledge of insurance

Basic Principles of Insurance1、Utmost good faith2、Insurable interest3、Principle of
indemnity4、Principle of proximate cause5、Principle of subrogatio2019/1/2 国际贸易实务讲义

3  Section2: Insurance Coverage

一、Perils of the Sea（一）Natural Calamity（二）Fortuitous Accidents 二、Loss and cost of the
Sea（一）Loss of the sea1、Degree of loss: total loss and partial lossActual total lossTotal
lossConstructive total loss2019/1/2 国际贸易实务讲义

4  .When constructive loss happens, the insured can ask for compensate the partial loss or total
loss, but at this moment, he must give the Abandonment notice.2019/1/2 国际贸易实务讲义

5  2、Property of loss: General Average and Particular Average

（1）The definition of General Average and Particular Average( 2 ) Conditions of Genaral
Average（3）Difference of Genaral Average and Particular Average:reason for lossobligation for
loss2019/1/2 国际贸易实务讲义

6  （4）、Contribution of General Average

Related Parties: Owner, shipper, payerTwo principles of General Average Contribution:Firstly,
contribution according to the actual loss and extra chargesSecondly, contribution according to the
article’s value in proportion2019/1/2 国际贸易实务讲义

7  Salvage charges is ‘No result, no compensate’

（二）Charges of the sea1、Sue and labor charges2、Salvage chargesInsurer must compensate
Sue and labor charges no matter the resultSalvage charges is ‘No result, no
compensate’三、Extraneous risks and losses(一） General extraneous risks and losses（二）
Special extraneous risks and losses2019/1/2 国际贸易实务讲义

8  四、Exclusions for insurance company:

This insurance does not cover : .
1. Loss or damage caused by the intentional act or fault of the insured.
2. Loss or damage falling under the liability of the consignor.
3. Loss or damage arising from the inferior quality or shortage of the insured goods prior to the attac
hment of this insurance.
4. Loss or damage arising from normal loss， inherent vice or nature of the insured goods ， loss of 
market and/or delay in transit and any expenses arising there from..
5. Risks and liabilities covered and excluded by the ocean marine (cargo) war risks clauses and strik
e ， riot and civil commotion clauses of this Company.2019/1/2 国际贸易实务讲义
9  Section 3：Insurance average in our country
According to the China Insurance Clauses, insurance are deviede into basic average and additional
average 一、Basic Average（一）FPA: Free from particular average2019/1/2 国际贸易实务讲义

10  （二）WPA: With average of with particular average （三）All Risks

Comparing the obligations of 3 average2019/1/2 国际贸易实务讲义

11  二、Coverage of Insurance responsibility of Basic Average

（一）The meaning of Warehouse to Warehouse Clause2019/1/2 国际贸易实务讲义

12  三、Additional Average （一）General Additional Average

Theft,Pilferage and Non-Delivery:TPNDFresh Water and Rain DamageRisk of LeakageRisk of
ShortageHook DamageRisk of ContaminationRisk of Clash and BreakageRisk of RustRisk of
OdourDamage Caused by Heating and Sweating2019/1/2 国际贸易实务讲义

13  （二）Particular Additional Average 1、War risk

Notice：General additional risk can’t be covered alone，if we have covered All Risks, it needn’t to
cover General additional risk.（二）Particular Additional Average1、War riskCoverage: On
water2019/1/2 国际贸易实务讲义

14  2、Risk of Strike,Riots and Civil Commotions:SRCC

Notice：The commencement and termination of the Risk of Strike is Warehouse to Warehouse;War
Risk have be covered, if you want to cover Strike Risk additionally, it mustn’t give more
charges.2019/1/2 国际贸易实务讲义

15  8、ppending Clause of warehouse fire risk

3、Failure to deliver4、Import duty risk5、On deck risk6、Rejection risk7、Aflatoxin
risk8、ppending Clause of warehouse fire risk2019/1/2 国际贸易实务讲义

16  Section4: Institute Cargo Clauses

Institute Cargo Clause，ICC 一、Varieties of Institute Cargo
Clauses1、ICC（A）2、ICC（B）3、ICC（C）4、Institute War Clauses-Cargo5、Institute Strikes
Clauses-Cargo6、Malicious Damage ClausesExcept this，others can be covered alone2019/1/2 国
际贸易实务讲义

17  二、Insured fisks and exclusions of ICC

（一）Insured fisks and exclusions of ICC(A)Same to All Risks in our country: all risks deduct
exclusions（二）Insured fisks and exclusions of ICC(B)Same to WA in our country:
exclusionsDifference between ICC（B）and ICC（A）：（三）Insured fisks and exclusions of
ICC(C)Same to FPA in our country: serious accidenceCovered the risks of serious
accidence2019/1/2 国际贸易实务讲义

18  三、Coverage of Risks of ICC

（四）Insured risks and exclusions of War Risk（五）Insured risks and exclusions of Srikes
Risk（六） Risks and exclusions of Malicious Damage 三、Coverage of Risks of ICCCoverage of
Risks: W/WCoverage of War Risks: Water transport2019/1/2 国际贸易实务讲义
19  Sections5: Transportation insurance under other transportation way
一、Overland transportation risksOverland transportation risks including: overland transportation
risks and air transportation all risks, it adapts W/W clause 二、Air transportation risksAir
transportation risks including: air transportation risks and air transportation all risks, it adapts W/W
clause 三、Parcel post risksParcel post risks including: parcel post risks and parcel post all risks, it
adapts W/W clause2019/1/2 国际贸易实务讲义

20  Section6: Insurance Practice

（一） Choice of the insurance average1、Characters of Cargo2、Packing of Cargo3、Line and
Port of Transport4、Season of TransportCIF contract，there is no clear stipulations of insurance
average in L/C and contract, and FPA in insurance policy when deliver documents, and the goods
are breakages, soA、bank refuse to accept B、the buyer refuse to acceptC、FPA and risk of clash
and breakage should be coveredD、bank accept2019/1/2 国际贸易实务讲义

21  （二） Deciding insured amount

Export：adding 10% to CIF or CIPInsured value=CIF*(1+I%)CIF=CFR/(1-(1+I%)*i)CIF=CFR/（1-
1.1R）Import：basic on the CIF, no additionInsured value=CIFInsured value=FOB（1+average
freight rate）/（1-average insurance premium rate）Insured value=CFR/（1- average insurance
premium rate ）2019/1/2 国际贸易实务讲义

22  （三）Payment of insurance premium

insurance premium=insured value*insurance premium rate2019/1/2 国际贸易实务讲义

23  二、Insurance Document 1、Insurance Policy 2、Insurance Certificate

form of Insurance Policy ：2、Insurance Certificate3、Combined CertificateNotice：seldom to
use4、EndorsementEndorsement is a certification that insured need to add or verify the content of
insurance documentEndorsement is pasted on the insurance policy, and be stamped as a part of
insurance policy.2019/1/2 国际贸易实务讲义

24  三、Insurance Claim 1、Losing Advice 2、Claiming to carrier

Transfer of Insurance Policy：Can be transferred after endorsement as B/L, without agreement from
insurer. It can also be transferred effectively although the articles are be damaged.The date of
presentation of insurance policy is no later than the transport documents’三、Insurance
Claim1、Losing Advice2、Claiming to carrier3、Reasonable Saving Measures4、Documents
Preparing Claim5、Subrogation2019/1/2 国际贸易实务讲义

25  四、Counting the reparations

CIC:
The time of validity of a claim under this insurance shall not exceed a period of two years counting fr
om the time of completion of discharge of the insured goods from the seagoing vessel at the final por
t of discharge 四、Counting the reparationsNotice: All loss are need to compensate or compensating
according to the exclusive rate no matter IOPDeductibleFranchisePICC use Deductible2019/1/2 国际
贸易实务讲义

26  五、Insurance Clause of sales contract

（一）Under “F” and “E” terms and CFR, CPT contracts, insurance clause should be:Insurance:To
be covered by the buyer（二）Under “D” terms contracts, insurance clause should be:Insurance:To
be covered by the seller2019/1/2 国际贸易实务讲义
27  （三） Under CIF or CIP contracts, insurance clause should be:
To be covered by the seller for …% of total invoice value against…, … as per and subject to the
relevant ocean marine cargo clauses of the Pepole’s Insurance Company of China,dated…2019/1/2
国际贸易实务讲义

28  Summary:This chapter tells mainly that the range of transports, and our country transports cargo
insurance risk in our country, and such contents as the clause and transportation insurance practice
of cargoes imported and exported ,etc.2019/1/2 国际贸易实务讲义

29  Excercises1、What’s the difference of General Average and Particular Average？2、What’s the

W/W Clause？How to effect to the commencement and terminate of W/W Clause by the trade
terms？3、What’s content of the marine insurance？What’s the coverage？4、How to choose the
insurance coverage？5、How to decide the insurance amount？