ĐẠI HỌC TÀI CHÍNH – MARKETING

KHOA THƯƠNG MẠI

----------

TRANSPORT AND INSURANCE

FOR IMPORT & EXPORT CARGO

GVHD: Nguyễn Thanh Hùng

SVTH: Nguyễn Trần Kim Thanh
Trương Thị Linh Trang
Bùi Kiều Anh
Nguyễn Hà Minh Duyên
Nguyễn Thị Thu Hiếu
Lớp: CLC_DTM07
2. What is the non- delivery (1.4 ICC C)?

Non-delivery: This risk means that an entire air event is delivered at the gate and there
is no evidence of a cause loss. We could equally call a job that lacks a guarantee as a
non-delivery. It also means that the shipment is stolen but not enough proof to confirm

3. Under version ICC 2009, we has A, B, C for sea way. How about air way ?

ICC stands for: Institute Cargo Clause.

ICC A, B, C applicable to marine insurance. And, in air way, we use Institute Cargo
Clauses (Air) (1/1/2019)

4. What difference are latent defects and inherent vice?

A latent defect is one that is both not readily observable and not discoverable to any
but the most searching examination.

Inherent vice implies that no external or extraneous peril caused the loss; rather, the
loss or damage results from the internal composition of the property, or some aspect
of the property that brings about its own destruction.

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

If you want to insurance cover grounding to your shipment, you should buy ICC A
version 1982 to cover it.

6. ICC 1982 were recently revised and updated to icc2009. So for now can we
choose icc 1982 or only choose 2009?

Because a later version of ICC comes out without losing the value of the previous
version, so we can choose whichever version best fits the sales contract.

7. What is refuge port?

A port of Refuge is a port or place that the vessel diverts to when her master considers
it 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 lolling, there is a serious fire on board, etc

8. What is the difference between stranding & grounding?

Stranding: a vessel is stranded when it is aground and can not be refloated without
assistance.
Grounding: a vessel is grounded when it is aground and can be refloated without
assistance.

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

Deductible: is the amount paid out of pocket by the policyholder before an insurance
provider will pay any expenses. A deductible can be either a specific dollar amount or
a percentage of the total amount of insurance on a policy. When a disaster strikes your
home or you have a car accident, the deductible is subtracted, or "deducted," from
what your insurance pays toward a claim. Deductibles are how risk is shared between
you, the policyholder, and your insurer.

Franchise: Franchise determines the minimum threshold of the insurance companies'

financial responsibility. Insurance companies will not be paying any amount for the
losses, which do not pass the mentioned franchise value on the insurance policy.

They are not the same. The difference between deductible and franchise is that,
when the franchise is exceeded the loss is recoverable under the policy. A deductible
represents a part of the expense for which the insurer is not liable, but the franchise is
the minimum threshold of the insurance companies' financial responsibility.

10. What is port of distress?

It is the place of refuge; underground shelter; shelter; port of distress; asylum; hiding
place; lurking-place; free port; safety zone; haven of refuge; port of refuge. They are
the place that the vessel diverts to when her master considers it unsafe to continue the
voyage due to peril that threatens the “common safety”

11. What is the difference between collision risk and collision responsibility?

Collision risk: means when a ship or other means of transport collides with each other
or collides with a fixed object, a moving object, a floating object including ice but not
water.

In which, the ship is understood as follows:

- A floating object or floating crane that travels from one place to another in an
engine or tugboat port is called a ship
- A sunken ship that still hopes to be rescued and repaired to continue running is
also called a ship
- The net of a fishing boat is not considered a ship

Collision responsibility: Is a form of responsibility to a third person in relation to

other ships or other goods. Collision liability is divided into two categories:
 - Is a ship that collides with other outside objects
- As ships collide: there are 3 cases
1. Both ships are not at fault: For example, when two ships are parked
close to each other, they encounter a big storm and crash into each other.
So both ships are not at fault
2. One side is completely at fault: The party at fault will compensate the
other party for all loss of goods and ships caused by the risk of collision.
If the shipowner has purchased insurance, the insurance will be
responsible for compensation for damage to the cargo
3. Both sides are at fault: Both sides made mistakes that led to the
collision. Ship owners compensate according to the level of liability
- Under single responsibility: The owner of the ship with a small
loss will have to pay to the other ship 1/2 of the difference in loss
between the two ships
- According to cross-responsibility: The degree of fault of the two
parties is demarcated to make payment for each other's
compensation reasonable

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

- It is not the same. The particular is just a part of partial loss. Because partial
loss has 2 parts: Particular average and general average. In which, the general
average is damages caused by the intentional expenses or sacrifices of those on
board for the purpose of saving the ship, saving the cargo from an accident
during the common voyage at sea. Meanwhile, the particular average is due to
a natural disaster or an unforeseen accident causing the loss of each insurance
- 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.
(Marine Insurance Act 1906)

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

The insurer refuse to compensate general average in cases:

- Lossed, damages or expenses incurred in respect of damage to the environment

or in consequence of the escape or release of pollutant substances from the
property involved in the common maritime adventure.
- In the absence of express stipulation, the insurer is not liable for any general
average loss or contribution where the loss was not incurred for the purpose of
avoiding, or in connexion with the avoidance of, a peril insured against.
14. What doe’s unseaworthy vessel?

- Merriam-Webster defines unseaworthy as "not fit for a sea voyage: not

seaworthy."
- Maritime employers have an obligation to provide seaworthy vessels. They
must also maintain a vessel so it remains seaworthy. Under maritime law,
"seaworthy" means more than just a vessel that can remain afloat and move
through the water. It must be fit enough to serve its intended purpose.
- An unseaworthy vessel is not only one that is prone to capsizing or sinking
because of its poor condition. Unseaworthiness can apply to the vessel itself, its
ability to navigate the water, and even the size and competence of its crew. If a
vessel does not provide a reasonably safe work environment for its crew, it may
be considered unseaworthy.

15. What is the perils in marine transportation?

Act of Dod: It refers to an inevitable, unpredictable, and unreasonably severe event

caused by natural forces without any human interference, and over which an insured
party has no control, such as an earthquake, flood, hurricane, lighting, snowstorm and
volcanic eruption. An insurance policy often covers for damage caused by acts of God

Perils of sea: Perils of the sea refers to the natural accidents peculiar/unusual to the
sea. It can be maritime accidents and dangers such as collision of the vessel, fire,
smoke and noxious fumes, sinking, stranding, collision, capsizing, loss of propulsion
or steering, and any other hazards resulting from the unique environment of the sea.
However, natural and inevitable actions of the winds and waves resulting in wear and
tear are not considered as perils of the sea

Political risk: They are risks arising from a certain government or political act such as
confiscation/expropriation, nationalization, civil war and insurrection

War risk: It usually refers to acts of war, warlike, operations or similar hostile acts

Man-made risks: They are risks caused by human’s actions, such as improper
package and poor packing

Extraneous risk: They are risks caused by theft, rain leakage, breakage, dampness,
heating, hooking, rusting

Inherent vice/ Hidden/ latent risks: Such risks are resulted from the nature of goods
or property. Such characteristics or defects make the item an unacceptable risk to a
carrier or insurer
17. Piracy is war risk. How about your opinion?

In my opinion, clause 6 in Institute cargo clauses B and C expressly excludes loss,

damage, or expenses caused by an act of war, the case of a mine collision, or mines
left from previous hostilities.

While clause 6 in Institute cargo clauses A, piracy is considered a risk in marine under
the new clause, include the term “All risks” of the Clause A term of insurance.

In short, piracy is war risk in clause B&C and not in clause A.

18. What difference between constructive & actual total loss?

Criteria Actual total loss Constructive total loss

Concept A constructive total loss means

Actual total loss is the fact that
the entire subject-matter
insured is lost, damaged or
destroyed, and cannot be
recovered as at the time of
insurance. In this case, the
insurer must indemnify the
entire insured value or sum
insured
that the damage is so extensive
that repairs would equal or
surpass the cost of the property
or its insurance limit BUT does
not prevent the property from
performing its function. In such
cases, the insured party may
allow the insurer to assume all
nights over the insured property
as part of the claim settlement.

Circumstances - It is a constructive loss when

- The goods were completely
destroyed. (the ship was in an
accident, the cargo fell into the
sea, unable to retrieve it).
- The stolen goods cannot be
recovered (due to pirates).
- Goods are no longer insured
objects (goods that have lost
the insured perils deprive the
policyholder of the possession of
goods. Moreover, it is highly
unlikely for the policyholder to
recover the ship or goods.
Furthermore, the cost of
recovering the ship is more than
its recovery value.
- When the ship is severely
damaged by an insured peril and
the cost of repairing a ship is
more than its value.
 commercial value or its use as
molded rice).

- The goods on board were

declared missing (a ship was
declared missing for some
time and had not received
news).

Insurance The entire commercial value
of the subject-matter insured
has been lost=> The Assured
may claim the insurer for the
full sum insured
The loss is not yet total but this
loss will occur completely is
really unavoidable or to avoid
this loss, it must cost more than
the insurance amount of the
goods => The Assured must send
a declaration of abandonment of
the subject-matter insured to the
insurer before making a claim =>
If the insurance company agrees
to abandon the goods of the
insured, the company will
compensate 100% of the value of
the commission => if the
insurance company does not
agree, the abandonment of the
goods is not approved, the
insurance company will follow
the actual loss that compensation
under the insurance contract.

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.

20. What is “held covered” term?

“Held covered” is the 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.

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

A stranding event within the scope of the insurer's liability is a case where there is an
intervention of an external force. It must be an objectivity in the normal course of
navigation.

In order to call a ship aground, the stranding must occur as a result of some random or
unusual event, causing the ship to touch the ground or another obstacle and stop there
until the ship is grounded. outside help. This stranding can happen on sandbanks, on
rocks or in corners near the harbour.

So in my opinion, a stranding event within the scope of the insurer's liability is a case
in which there is an interference by an external force. In addition, ships often get
entangled or run aground along the water with a periodic nature (landing), it cannot be
called a sudden accident. Therefore, the insurer did not pay compensation for losses in
this case.

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

- Risk occurs in container transportation:

The risk of goods arriving later than the specified time

Risk of loss or damage to the goods

Natural risks such as storms, big waves, rough seas often cause situations such as
capsizing, tilting the ship, even more serious, breaking the hull, causing cargo to leak
or break when pressed. on top of each other.

Risks come from people: such as theft, theft, shortage or non-delivery due to illegal
actions of the master or crew.

Risks from accidents: such as stranding, sinking, fire, explosion or collision, all
damage to the ship and cargo is leaked and lost.

Risks from the use of atomic, nuclear or radioactive weapons

Risks due to the unseaworthiness of the vessel

Risks due to acts of terrorism

Conditions A cover them.

23. What are exclusions under ICC 2009 & 1982. Are They the same or not?

Below are the exclusions under ICC 2009 & 1982. They have similarities and
differences such as:

*Similarities:

-Institute Cargo Clauses (A), (B) or (C) 1982 and 2009. This policy does not cover
certain losses such as:

-Loss damage or expense attributable to willful misconduct of the assured

- Loss damage or expense caused by inherent vice or nature of the subject matter
insured

- Ordinary leakage, ordinary loss in weight or volume or ordinary wear & tear of the
subject matter insured

-Loss damage or expense caused by insufficiency or unsuitability of packing or

preparation of the subject matter insured (“packing shall deemed to include stowage in
a container or liftvan but only when such stowage is carried out prior to attachment of
this insurance by the Assured or their servants)

- Loss damage or expense approximately caused by delay, even though the delay be
caused by a risk insured against.

- 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.

- War and Strikes (this is normally included by way of the Institute War & Strikes
Clause subject to additional premium)

* Differences

Institute Cargo Clauses (A), (B) or (C) 1982. This policy does not cover certain
losses such as:
-Loss damage or expense arising from insolvency or financial default of the owners
managers charterers or operators of the vessel.

-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.

- 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.

Institute Cargo Clauses (A), (B) or (C) 2009. This policy does not cover certain
losses such as:

-Loss damage or expense caused by insolvency or financial default of owners

managers charterers or operators of the vessel where at the time of loading of the
subject matter insured on board the vessel, the Assured are aware or in the ordinary
course of business should be aware that such insolvency or financial default could
prevent the normal prosecution of the voyage.

- This exclusion does not apply where the contract of insurance has been assigned to
the party claiming hereunder who has bought or agreed to buy the subject matter
insured in good faith under a binding contract.

Loss damage or expense arising from:

i) unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage
of the subject matter insured and where the Assured are privy to such unseaworthiness
or unfitness at the time the subject-matter insured is loaded therein.

ii) unfitness of container or conveyance for the safe carriage of the subject-matter
insured, where loading therein or thereon is carried out prior to attachment of this
insurance or by the Assured or their employees and they are privy to such unfitness at
the time of loading.

Exclusion (i) shall not apply where the contract of insurance bas been assigned to the
party claiming hereunder who has bought or agreed to buy the subject-matter insured
in good faith under a binding contract.

-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.

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

All-risks coverage provides coverage for any incident that an insurance policy doesn’t
specifically exclude. All-risks coverage, also called all-perils coverage, offers much
broader protection than any named risks coverage. Named risks coverage only covers
incidents the policy specifically includes.

KEY TAKEAWAYS

All-risks coverage provides coverage for any incident that an insurance policy doesn’t
specifically exclude.

All-risk coverage provides much broader protection than Term A because term A's
coverage only covers incidents that the policy specifically covers as: general
exclusions, the clause excludes ships that are unseaworthy and unfit for carriage, War
Exclusion Conditions, Strike exclusion clause

However, the wording of “all-risks coverage” is somewhat misleading because all

insurance policies contain numerous exclusions.

25. What are bad weather in marine insurance?

Severe weather, also known as 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.

26. What cases to choose icc 1982 or 2009?

The choice to use the ICC version is based on the content of the terms in each type of
insurance by understanding through comparison the differences between the 1982 and
2009 versions. For example, we only want to buy insurance for goods. (excluding
packaging, etc.), choose to use the 1982 ICC version because this version uses the
word "cargo" for the insured, which has a narrower meaning than the 2009 version.

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

For ICC 1982 and ICC 2009: War risks, strike risks

28. Refer to duration. Are there difference between ICC 1982&2009?

Yes. There are 2 differences:

TRANSIT CLAUSES:

- In ICC 1982: This insurance attaches from the time the goods leave the warehouse
or place of storage at the place named herein for the commencement of the transit.

- In ICC 2009: This insurance attaches from the time the subject-matter insured is first
moved in the warehouse or at the place of storage (at the place named in the contract
of insurance) for the purpose of the immediate loading into or onto the carrying
vehicle or other conveyance for the commencement of transit.

TIME OF INSURANCE TERMINATION:

- In ICC 1982: On completion of unloading

- In ICC 2009: On delivery to

29. What is deductible? Does deductible occur under ICC 2009. If any, what
conditions are they?

- A deductible is the amount of money that you are responsible for paying toward an insured
loss.

- Deductible occurs under ICC 2009. Conditions:

Change of Voyage

10. 10.1 Where, after attachment of this insurance, the destination is changed by the
Assured, this must be notified promptly to Insurers for rates and terms to be agreed.
Should a loss occur prior to such agreement being obtained cover may be provided but
only if cover would have been available at a reasonable commercial market rate on
reasonable market terms.

10.2 Where the subject-matter insured commences the transit contemplated by this
insurance (in accordance with Clause 8.1), but, without the knowledge of the Assured
or their employees the ship sails for another destination, this insurance will
nevertheless be deemed to have attached at commencement of such transit.

Increased Value

14. 14.1 If any Increased Value insurance is effected by the Assured on the subject-
matter insured under this insurance the agreed value of the subject-matter insured shall
be deemed to be increased to the total amount insured under this insurance and all
Increased Value insurances covering the loss, and liability under this insurance shall
be in such proportion as the sum insured under this insurance bears to such total
amount insured. In the event of claim the Assured shall provide the Insurers with
evidence of the amounts insured under all other insurances.

14.2 Where this insurance is on Increased Value the following clause shall apply: The
agreed value of the subject-matter insured shall be deemed to be equal to the total
amount insured under the primary insurance and all Increased Value insurances
covering the loss and effected on the subject-matter insured by the Assured, and
liability under this insurance shall be in such proportion as the sum insured under this
insurance bears to such total amount insured. In the event of claim the Assured shall
provide the Insurers with evidence of the amounts insured under all other insurances.

30. Does Partial loss occur under ICC 2009? Why or why not?

Partial loss occurs under ICC 2009 because ICC 2009 does not distinguish total and
partial loss, so partial loss cases of covered risk are still covered by insurance.

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

- Actual total loss: also known as "total loss," occurs when an insured property is totally
destroyed, lost, or damaged to such an extent that it cannot be recovered. In these cases, the
insured party should qualify to receive a payout from the insurance company for the full
insured value of the property.

- Constructive total loss: An insurer declares insured property to be a constructive total loss
when the estimated costs for its repair exceed the insured value of the property. It indicates
that the insurer has decided to pay out the insured value of the property rather than pay for it
to be restored to its previous condition.The insurance company then pays the claimant the full
insured value.

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

Perils in marine transport are inevitable. When an accident or risk occurs, marine
insurance will be an expense to help share the burden and damage to the insured
against random perils that humans cannot control such as natural disasters. Accidents
happen due to weather factors, natural disasters, war…

Accordingly, the insurer is responsible for indemnifying the insured for all reasonable
and necessary expenses used by the insured in order to prevent or limit losses under
the insurance liability; the costs of carrying out the instructions of the insurer.
Insurance for risks encountered during sea transportation is divided into two main
types:

- Insured risks: when there is a natural or unintended nature such as storm, tornado,
shipwreck, disappearance, stranding, collision or fire, the user of cargo insurance will
be insured by the service provider. absolute compensation.

- Perils covered separately: destructive activities from man (war, civil war, strike,
theft, piracy) to be covered requires some separate terms and agreements of both
parties. If the insurance user does not purchase insurance for each specific type of risk
specified in the contract of carriage -> these risks are considered to be in the exception
group.

- Exceptional risks: are risks caused by intentional actions of people or goods of a

natural nature that will not be insured.

Therefore, the insurer will compensate loss and damage due to perils if the perils are
not belong to the Exceptional.