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19 - Trần Việt Đức - 1911110090 - UNIT 7
19 - Trần Việt Đức - 1911110090 - UNIT 7
CARGO INSURANCE
The handling and transportation of goods always involves the risk of loss or damage.
Owners of the goods protect themselves against these risks by insuring their goods in
transit. Who will be responsible for insuring the goods and for what part of their journey
will be written into the agreement made between seller and buyer.
Insurance for goods carried by sea (marine cargo insurance) has been largely
standardized. For goods carried by air (air cargo insurance) or going by land this is not yet
the case. However, insurance contracts for transport by land and air follow marine
insurance practices.
The basic principle of insurance is that of ‘insurable interest’. Only a party with
insurable interest in the cargo can be insured against its loss or damage. The terms of the
purchase contract normally determine at which point the risk transfers from seller to buyer
and who will be responsible for insuring the goods.
For FOB contracts the buyer is obliged to insure the goods once they pass the ship’s
rail at the port of origin. When the terms are CIF the seller has to provide minimum
insurance cover from the warehouse to the port of destination. If the buyer wants more than
minimum insurance cover, he must specify what additional clauses he wants included.
Sometimes the buyer may ask the seller to arrange the insurance on the buyer’s account
and according to the buyer’s instructions.
Goods can be insured directly with an insurance company or with a broker acting on
behalf of the insurer. The document which defines the terms of the contract and the rights
of each party is called the insurance policy.
1. Key words:
You will find the meanings for most of these words in the text. Write the meaning
beside each word:
- insurance policy: The document which defines the terms of the contract and the right
of each party.
- indemnify: The insurer pays when loss or damage is suffered due to a specified event
- cover: The terms of the agreement define what risks have been insured against.