MEMBERS:

1. Phạm Hải Nguyên

2. Ngô Quang Vũ

1. What main difference FPA&WA?

- WA is responsible for partial loss due to natural disasters, unexpected accidents not
accompanied by 4 main risks (crash, collision, explosion and stranding) and particular
average while FPA is not responsible.

2. What difference latent defect and inherent vice?

Latent defect: is a hidden defect that is difficult to detect but cannot be detected
by normal checks in the delivery and receipt of goods. Most of the hidden axioms take
time or use to be discovered.

For example: Errors in the manufacture of machinery and equipment that were
difficult to detect during initial inspection and encountered breakdowns when they were
put into use.

Inherent vice: A defect that occurs due to the nature of the goods. Interior spleen
is often used to describe the cause of loss due to the nature of the goods. This cause can
be due to living organisms, insects, bacteria, molds... Activity leads to heat, rot, and
mold.

For example: Food products are moldy, the initial cause is determined to be poor
ventilation or contact with other wet goods.

The term “inherent vice” is more narrowly than latent defect: Inherent vice
means deterioration which arises solely from a principle of decay or corruption inherent
in the subject matter insured, or from its proper vice, whereas a “latent defect” may be
any kind of defect, whether arising from inherent characteristics of the goods, from the
sensitivity of the goods or from something else.

3. Under ICC B version 1982, ICC B cover stranding, how about grounding?

ICC B version 1982 not cover grounding. Because:

• In the exclusion part regulate: loss damage or expense proximately caused by

delay, even though the delay be caused by a risk insured against (except expenses
payable under Clause 2 above) and
• Grounding definition is when the ship is in a normal position, but then the
problem occurs. For example, if a ship is bottomed due to low tide, it must be
stopped for a while to wait for high tide to get out of the shallows and continue
its journey. However, it is not specified that the ship must stop. stay there for a
long time before it is called aground. In fact, the ship must be so entangled in the
river or seabed that the voyage is interrupted for a considerable time.
 • If according to the definition of stranding given above. When ships run aground
it will be delayed but icc B version 1982 exclude loss damage or expense
proximately caused by delay, even though the delay be caused by a risk insured
against.

→ So ICC B version 1982 not cover grounding.

4. What is refuge port?

- Port of Refuge is a port or place that the vessel diverts to when her master considers it
is unsafe to continue the voyage due to peril that threatens the “common safety”, e.g.
when there is a dangerous ingress of water into a vessel, a dangerous shift of cargo. the
vessel adopts an angle of loll, there is a serious fire on board etc

– When such a deviation is made for the preservation from peril of property involved in
a common maritime adventure, it will usually constitute a general average act and the
costs of the deviation to stay at the port of refuge in general average

5. What is exclusion of every single insurance conditions under ICC 1963 & 1982.

ICC 1982:
Clause C
In no case shall this insurance cover
4.1 loss damage or expense attributable to wilful misconduct of the Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear
of the subject-matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of packing or
preparation of the subject-matter insured (for the purpose of this Clause 4.3 "packing"
shall be deemed to include stowage
in a container or liftvan but only when such stowage is carried out prior to attachment
of this insurance or by the Assured or their servants)
4.4 loss damage or expense caused by inherent vice or nature of the subject-matter
insured
4.5 loss damage or expense proximately caused by delay, even though the delay be
caused by a risk insured against (except expenses payable under Clause 2 above)
4.6 loss damage or expense arising from insolvency or financial default of the
owners managers charterers or operators of the vessel
4.7 deliberate damage to or deliberate destruction of the subject-matter insured or
any part thereof by the wrongful act of any person or persons
4.8 loss damage or expense arising from the use of any weapon of war employing
atomic or nuclear fission and/or fusion or other like reaction or radioactive force or
matter.
5 5.1 In no case shall this insurance cover loss damage or expense arising from
unseaworthiness of vessel or craft, unfitness of vessel craft conveyance container or
liftvan for the safe carriage of the subject-matter insured, where the Assured or their
servants are privy to such unseaworthiness or unfitness, at the time the subject-matter
insured is loaded therein.
5.2 The Underwriters waive any breach of the implied warranties of seaworthiness
of the ship and fitness of the ship to carry the subject-matter insured to destination,
unless the Assured or their servants are privy to such unseaworthiness or unfitness.
6 In no case shall this insurance cover loss damage or expense caused by
6.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom,
or any hostile act by or
against a belligerent power
6.2 capture seizure arrest restraint or detainment, and the consequences thereof or
any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war.
7 In no case shall this insurance cover loss damage or expense
7.1 caused by strikers, locked-out workmen, or persons taking part in labour
disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions
7.3 caused by any terrorist or any person acting from a political motive.
Clause B
4 In no case shall this insurance cover
4.1 loss damage or expense attributable to wilful misconduct of the Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear
of the subject-matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of packing or
preparation of the subject-matter insured (for the purpose of this Clause 4.3 "packing"
shall be deemed to include stowage in a container or liftvan but only when such stowage
is carried out prior to attachment of this insurance or by the Assured or their servants)
4.4 loss damage or expense caused by inherent vice or nature of the subject-matter
insured
4.5 loss damage or expense proximately caused by delay, even though the delay be
caused by a risk insured against (except expenses payable under Clause 2 above)
4.6 loss damage or expense arising from insolvency or financial default of the
owners managers charterers or operators of the vessel
4.7 delibarate damage to or deliberate destruction of the subject-matter insured or
any part thereof by the wrongful act of any person or persons
4.8 loss damage or expense arising from the use of any weapon of war employing
atomic or nuclear fission and/or fusion or other like reaction or radioactive force or
matter.
5 5.1 In no case shall this insurance cover loss damage or expense arising from
unseaw orthiness of vessel or craft, unfitness of vessel craft conveyance container or
liftvan for the safe carriage of the subject-matter insured, where the Assured or their
servants are privy to such unseaworthiness or unfitness, at the time the subject-matter
insured is loaded therein.
5.2 The Underwriters waive any breach of the implied warranties of seaworthiness
of the ship and fitness of the ship to carry the subject-matter insured to destination,
unless the Assured or their servants are privy to such unseaworthiness or unfitness.
6 In no case shall this insurance cover loss damage or expense caused by
6.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom,
or any hostile act by or against a belligerent power
6.2 capture seizure arrest restraint or detainment, and the consequences thereof or
any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war.
7 In no case shall this insurance cover loss damage or expense
7.1 caused by strikers, locked-out workmen, or persons taking part in labour
disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions
7.3 caused by any terrorist or any person acting from a political motive.
Clause A
4 In no case shall this insurance cover
4.1 loss damage or expense attributable to wilful misconduct of the Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear
of the subject -matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of packing or
preparation of the subject ­ matter insured (for the purpose of this Clause 4.3 "packing"
shall be deemed to include stowage in a container or liftvan but only when such stowage
is carried out prior to attachment of this insurance or by the Assured or
their servants)
4.4 loss damage or expense caused by inherent vice or nature of the subject -matter
insured
4.5 loss damage or expense proximately caused by delay, even though the delay be
caused by a risk insured against (except expenses payable under Clause 2 above)
4.6 loss damage or expense arising from insolvency or financial default of the
owners managers charterers or
operators of the vessel
4.7 loss damage or expense arising from the use of any weapon of war employing
atomic or nuclear fission and/or fusion or other like reaction or radioactive force or
matter.

5 5.1 In no case shall this insurance cover loss damage or expense arising from
unseaworthiness of vessel or craft, unfitness of vessel craft conveyance container or
liftvan for the safe carriage of the subject -matter insured, and where the Assured or
their servants are privy to such unseaworthiness or unfitness, at the time the subject-
matter insured is loaded therein.
5.2 The Underwriters waive any breach of the implied warranties of seaworthiness
of the ship and fitness of the
ship to carry the subject-matter insured to destination, unless the Assured or their
servants are privy to such
unseaworthiness or unfitness.

6 In no case shall this insurance cover loss damage or expense caused by

6.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or
any hostile act by or against a belligerent power
6.2 capture seizure arrest restraint or detainment (piracy excepted), and the
consequences thereof or any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war.
7 In no case shall this insurance cover loss damage or expense
7.1 caused by strikers, locked-out workmen, or persons taking part in labour
disturbances, riots or civil commotions
7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil commotions
7.3 caused by any terrorist or any person acting from a political motive.

6. There is distinguish total loss and partial loss in FPA, WA. So, how about AR?

AR isn’t distinguished between total loss and partial loss

7. Assume your consignment has loss & damage due to piracy. Which insurance
condition in which the insurer compensate for that under ICC 1963?

WA and AR

8. What difference between stranding & grounding?

• Groundings and strandings are probably the most common types of marine
casualties. A grounding is when a ship strikes the seabed, while a stranding is
when the ship then remains there for some length of time. Both can damage a
vessel and result in oil spills depending on the ocean bottom type (rocky, sandy,
muddy?), sea conditions, and severity of the event (is the ship a little scraped or
did it break open?).
• Grounding: is when the ship is in a normal position, but then the problem occurs.
For example, if a ship is bottomed because of low tide, it has to stop for a while
to wait for high tide to get out of the shallow place and continue the journey. The
grounding was unintentional and was an accident. If the boat has hit the bottom
and no longer reacts to the helm, it is indeed a grounding. If it is only the keel
that touches the bottom and the boat still reacts to the helm, it is called a heel.
The boat can still sail, but the impact could have caused damage, such as a
waterway for example.
• Stranding: is when the bottom of the ship touches the ground or hits an obstacle
and makes the ship unable to move and often requires another external force to
pull the ship out of the place of stranding. Stranding is voluntary, unlike
grounding. This is a deliberate act by the crew that will intentionally cause their
boat to hit the bottom. This is the case of hull slaughtering, which consists in
voluntarily grounding to work on the live works. Stranding is also used to land
on a beach, for example (for boats that allow it).

9. What is deductible and franchise. Are they the same or not?

• Franchise: When the loss exceeds the exemption rate, the insurance will
compensate in full.

The insurance contract says: “warranted free from particular average under 3%”,
This means that the insurer will not pay for losses less than 3% of the sum insured
or the insured value, but if the loss exceeds 3%, the insurance pays the full value
of the loss.
 • Deductible: When the loss is below the deductible, the insurance does not pay,
if it exceeds the deductible, the insurance only compensates from the deductible
level or more. If the goods are total loss, the exemption rate will not apply, but
100% compensation.

The insurance contract says: “Free from 3%” or “Free from first 3%”.

Deductible exemptions are made by a percentage as mentioned above commonly

used in cargo insurance policies, or by a specific amount commonly used in
marine insurance policies.

• Deductibles mainly apply to special risks such as shortages, leaks or rainwater.

A franchise and deductible are fundamentally different from each other.

10. What is port of distress?

• A port, other than the port of discharge, at which a carrier terminates the voyage
due to an accident to the vessel, frustration of the voyage or other liberties
granted to him in the bill of lading.

11. what different between collision risk and collision responsibility?

Collision risk is the insurer's responsibility for the insured goods and the the loss
of the cargo vessel

Collision responsibility is the insurer's responsibility to a third party, in relation

to another ship, the goods carried on another vessel

12. Refer to particular average & partial loss. Someone said that they are the same.
How about your opinion?

Salvage charges, general average and sue and labour are all forms of loss incurred at a
time of emergency; though somewhat closely interwoven, they also remain distinct and
separate in so far as their recoverability under a policy of marine insurance is concerned.
They all come under the umbrella of ‘partial loss’ And, though a ‘particular average
loss’ is also partial loss, the Act has not included all forms of partial losses within the
realm of ‘particular average’.

This is made clear by Section 64 in The Marine Insurance Act, 1963, which declares
that:

(1)A particular average loss is a partial loss of the subject matter insured, caused by a
peril insured against, and which is not a general average loss.

(2) Expenses incurred by or on behalf of the assured for the safety or preservation of
the subject-matter insured, other than general average and salvage charges, are called
particular charges. Particularly charges are not included in particular average.
Particular charges are not included in particular average. Thus, though general average
and particular charges are partial losses, they are not particular average losses.

13. Are there any insurance conditions in which the insurer refuse to compensate
general average? If any, what are they?

Yes, there are. The Insurers waive any breach of the implied warranties of seaworthiness
of the ship and fitness of the ship to carry the subject-matter insured to destination,
unless the Assured or their servants are privy to such unseaworthiness or unfitness.

14. What does unseaworthy vessel?

An unseaworthy vessel is one that does not provide seamen with a safe and
suitable environment to perform his/her work. A vessel is seaworthy if its “hull,
equipment, and crew are reasonably adequate” in terms of vessel design and
maintenance. An unseaworthy vessel may still be able to sail and navigate.

15. What is the perils in marine transportation?

• Include 12 Marine Perils:

1. Perils of Sea
2. Fire
3. Man-of-War
4. Enemies
5. Pirates, Rovers, Thieves
6. Jettison
7. Barratry
8. Restraints and Detainments
9. The Free of Capture and Seizure Clause (F.C. & S. Clause)
10. Explosion
11. Strikes, Riots, and Civil Commotion Clause
12. All Other Perils

16. Why is deductible regulated in WA condition?

In the basic insurance conditions under ICC 1963, the premium for the FPA
condition is the lowest compared to the premium for the WA and AR conditions. As a
condition FPA is only liable for the following losses and expenses:

Total loss due to natural disasters, unexpected accidents at sea.

– Unloading at the port of refuge provided that it is a separate loss.

– Partial loss due to natural disasters, unexpected accidents and unloading at the port of
refuge caused by one of four main risks.

– Loss of the original package while loading and unloading, transshipment.

- General average contribution cost.

– Rescue costs for the shipment itself.

– Expenses at the port of refuge or port of call include the costs of loading, unloading,
storing and re-shipping the goods to the port of destination if it is a personal loss.

– Cost of prevention to limit losses when the loss has already occurred.

– Costs of proceedings, claims and costs of expertise due to the insured peril.

* The AR condition extends coverage for additional perils. The premium for the WA
condition is lower than the AR condition because in addition to the losses and expenses
WA is liable to indemnify, the AR condition. It also extends to all additional risks.

*The WA condition is further extended to part loss because of an additional accident

causing not limited to the 4 main perils and when unloading at the port of refuge, can
be purchased with an additional peril. And so the risks occur frequently such as damage
due to rain water, sea water, the insurer always applies the exemption rate for this WA
condition. Because these risks cause many losses, but they happen often.

• On the one hand, it helps the insurer avoid paying for insignificant losses.
• On the other hand, it encourages the insured to pay more attention to the
protection of the insured property.

17. Piracy is war risk. How about your opinion?

1. War insurance condition: Under this condition, the insurer must indemnify the
loss or damage of the goods due to:

- War, civil war, revolution, rebellion, insurrection or civil strife resulting from
such events or any act of hostilities;

- Appropriating, arresting, restraining or holding;

- Mines, mines, bombs or other weapons of war;

- General average and salvage costs

2. According to the 1982 United Nations Convention on the Law of the Sea
(UNCLLOS), one of the following acts is an act of piracy:

– Any unauthorized use of action or arrest or any looting by the crew or

passengers of a private vessel or aircraft, for private purposes, and for:

+ Against a ship or other aircraft, or against persons or property on board

a ship or aircraft parked at sea;

+ Against a ship or aircraft, person or property, in a place not under the

jurisdiction of any State;
 – Any act of voluntary participation in the use of a ship or aircraft, where the
participant knows from facts that the ship or aircraft is a pirate ship or aircraft ;

– Any act intended to induce others to commit the actions identified in points a
or b or committed with the intent to facilitate such actions.

→ From 1 and 2 we see that piracy is a war risk.

18. What difference between constructive & actual total loss?

• Actual Total Loss: This type of loss occurs when the goods are completely
destroyed or damaged beyond recognition or in their original condition.
Constructive Total Loss: type of loss that occurs when goods need to be
discarded because it is not commercially viable to obtain them. Unlike actual
total loss, for constructive total loss is that the goods may not be completely
destroyed but it is not economically realistic to repair or restore to their original
condition. This usually happens when a ship is damaged because the cost of
repair can exceed the value of the ship

19. What is ISM Endorsement?

The International Safety Management (ISM) code was adopted by the SOLAS
convention and in 2002 , it was made applicable to all cargo ships. The aim- To ensure
safety of human life at sea & to avoid environmental pollution. All ships had to be ISM
Code- compliant or the owners/ charterers should hold a current Document of
compliance.

The endorsement states that if a ship in which the insured cargo is carried is NOT
ISM compliant or there is no Document of compliance produced, any loss, damage or
expense to the cargo would not be payable as a claim. This is however only if the insured
was aware of the vessel being not ISM compliant or as a prudent businessman should
have been aware of this fact. This exclusion would however not affect the rights of an
innocent third party( assignee) claiming under the policy.

20. What is “held covered” term?

A term, commonly used in Marine insurance, whereby the insured’s interest

remains covered in the event of a circumstance arising which would, without prior
agreement, cancel coverage.

This is a provision contained in many types of insurance policy. In war risks

insurance, it frequently appears in connection with entry to an area for which an
additional premium is chargeable by the underwriter. Generally, prior notice of entry is
required in order that the premium may be agreed, the underwriter may be put on notice
when the extra risk of greater danger arises and there may be certainty in the relationship
between the shipowner and the underwriter. There has long been the danger that the
insured ship may enter such an area without the shipowner’s knowledge; in the past this
has happened because there has been an accident on board and repairs are urgent, or
because sick or injured seamen have to be landed for medical treatment ashore, or
because the charterer requires the Master to load or discharge at a different port. News
of this may not reach the shipowner in time for prior notice to be given. To guard against
the shipowner losing his insurance cover inadvertently, an extra clause is added to
ensure that his insurance will continue and a typical provision is: “Or held covered at a
premium to be arranged.”

21. According to your speech, under FPA, partial loss will be discarded. Are there
any case in which the insurer compensate partial loss?

• The case in which the insurer compensate partial loss: a stranding, sinking, fire,
or collision event occurred.

22. Someone said that stranding & grounded will be accepted to compensate by
the insurer. How about you?

The vessel is Stranding or grounded with no loss or damage directly to the goods.
Even though the goods are loss or damaged due to delay by stranding or grounded. In
this case, stranding & grounded will not be accepted to compensate by the insurer.

23. What risk occurs in container transportation & what insurance conditions
covers them?

• Risk occurs in container transportation: Quay cranes incidents, rain and flood
damage, straddle carriers, lift trucks, truck and vehicles, ship in port, yard crane,
fire, theft, bad handling,...
• The insurance conditions covers them:
• Act of God: FPA ICC 1963 and ICC(C) 1982 and ICC 2009
• Perils of sea: FPA and WA ICC 1963, ICC(C) and ICC(B) and ICC 1963
and ICC 1982.
• War risk: war insurance
• Man-made risks: AR in ICC 1963, ICC(B) and ICC(A) of ICC 1963 and
ICC 1982.
• Extraneous risk: AR of ICC 1963, ICC(A) of ICC 1982 and ICC 2009

24. Are Term A & All Risks the same or not? Explain your choices

No, there are not. In exclusions article 6.2: “ capture seizure arrest restraint or
detainment (piracy excepted), and the consequences thereof or any attempt thereat”.
Term A provides that the risk of piracy is covered. Meanwhile, the terms in AR do not
stipulate this

25. What are bad weather in marine insurance?

• Bad weather, usually storms, whirlwinds, rough seas, big waves, etc. occur at
sea, causing ship capsizing or tilting ships, breaking hulls, breaking ships, and
damaging machinery. equipment, thereby causing damage to goods and
equipment, thereby causing damage to goods or transported on board such as
 goods overlapping, breaking, leaking.. It should be noted that the wind must be
from Level 8 or higher is considered a natural disaster risk.

+ Lighting: the insured goods are damaged due to direct lightning or lightning
causing fire at sea or during transportation.

+ Tsunami: mainly refers to the earth's crust changes sharply, there is a place of
descent and a rise, so it causes strong tremors, thereby creating large waves, leading to
damage or loss of goods.

+ Earthquake or Volcanic Eruption: only loss to the insured goods caused

directly or indirectly by earthquake or volcanic eruption.

26. To distinguish constructive total loss and actual total loss?

• Actual Total Loss: this kind of loss occurs when the goods are completely
destroyed or damaged beyond recognition or initial state. If the policyholder is
deprived of the insured goods, that too would be considered as an actual loss of
goods.
Example: If a ship carrying your cargo sinks or is completely destroyed due to a
fire or other covered reasons, then this will be considered as an actual total loss.
If the policyholder can’t trace their ship or get their goods back, this too will be
considered as an actual total loss under which they are entitled to claim the full
amount of lost goods
However, it’s important to remember that once the claim is settled, the title of
goods will be transferred to the insurer. If they receive any amount from the sale
of the damaged goods, then the policyholder can’t claim any part from that
amount
• Constructive Total Loss: This usually happens when the cargo needs to be
abandoned as it is not commercially viable retrieve them. This can happen due
to certain situations; the cargo may not be destroyed completely but it is not
economically practical to repair or restore it to its original state. This is common
when ships are damaged as the cost of repairs may exceed the ship’s value
For Example: If the cargo is safe but the cost of retrieving it is more than the
cargo’s cost, it is better to abandon it. In such a case the policyholder surrenders
the interests to the insurer and gives them notice of abandonment. They can raise
a claim for total loss.

27. Someone said that the insurer always compensate loss and damage due to
perils. What is your opinion?

• “maritime perils” means the perils consequent on, or incidental to, the navigation
of the sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves,
captures, seizures, restraints and detainments of princes and peoples, jettisons,
barratry and any other perils which are either of the like kind or may be
designated by the policy

28. Refer to exclusions scope, are ICC 1982 & 1963 the same? If any, prove that.
 Clause C covers some more rules:

• The risk of goods being damaged

• Goods were thrown into the sea
• Overturned or derailed road transport vehicles

Clause C eliminates the risk of total loss of goods when loading and unloading
at the port or transshipment at the port along the way, the goods are stolen.

Clause B is similar to W.A, but it also covers the risk of goods being swept off
the ship by waves and thrown into the sea. Class B eliminates the risk of goods being
stolen.

Clause A is basically the same as AR, but additionally covers the risk of piracy

29. What difference between partial loss & particular average?

- Particular average is loss that causes damage only to one or several interests of
the shippers and shipowners on a ship. Partial loss is the loss of a part of the
goods or the insured goods are reduced in value.

30. Refer to stranding & grounding, which one has been compensated under ICC
1963 and 1982?

• Stranding has been compensated under ICC 1963 and ICC 1982.
• Grounding has been compensated under ICC 1982.

31. What risks can you buy more besides insurance conditions?

• ICC 1982: We can buy war insurance, strike insurance more besides insurance
conditions.
• ICC 1963: In order to ensure maximum financial safety, depending on the nature
of the goods and the type of insurance, the insurance buyer can also participate
in hedging of the secondary risks: tearing, flowing, warping, slits, slits, crane
hooks, steaming. , infection, rain water, sea water, rust, etc.