Unit 7 – Exercises

I. Read the passage and do these exercises below

CARGO INSURANCE

Why insure cargoes?

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.
What is an insurance contract?
In an insurance agreement one party, usually an insurance company, undertakes to indemnify
the other party (the assured) if loss or damage is suffered due to a specified event (the risk). In
return, the insurer pays an agreed amount of money (the premium). The terms of the agreement
define what risks have been insured against (the cover). These will be set out in the insurance
policy.
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.
Who insures the goods?
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.
With whom are the goods insured?
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. You will find the meanings for most of these words in the text. Write the meaning
beside each word:

- insurance policy: …………………………………………………………………………

- premium: ………………………………………………………………………………….

- assured party: ……………………………………………………………………………..

- indemnify: …………………………………………………………………………………

- cover: ………………………………………………………………………………………

- marine insurance: ……………………………………………………………………………

 2. According to text, answer the following questions:

1. Why do buyers or sellers insure their cargoes?

………………………………………………………………………………………

2. Between which two parties is an insurance contract made?

…………………………………………………………………………………………

3. What agreement is usually made in an insurance contract?

…………………………………………………………………………………………

4. Does the buyer or the seller insure the cargo?

………………………………………………………………………………………

5. Explain the following:

-‘undertakes to indemnify’: …………………………….………………………………
-‘has been largely standardized’: …………………………………….…………………
-‘follow marine insurance practices’: ………………………………………..…………
-‘obliged to’: ………………….………………………………………………………..
-‘a party with insurance contract’: ………………………………………..……………

6. What is the actual insurance contract?

II. Complete the passage with an appropriate word in each blank

affluent commission indemnify retires catastrophes gilts

insurance brokers sums claims huge policy underwritten

Insurance is designed to provide a sum of money to compensate for any damage suffered as the
result of a risk that has been insured against in a specific insurance (1) __________, such as fire,
accident, theft, loss, damage, injury, or death. Thousands of people pay premiums to insurance
companies, which use the money to (2) __________ people who suffer loss or damage, etc. Some
people also use insurance policies as a way of saving. Life assurance policies, for example, usually
pay a certain sum on a specific date – for example, when a person (3) __________, or earlier if the
person dies.

Insurance companies, like pension funds, are large institutional investors that place great (4)
__________ of money in various securities: shares, bonds, (5) __________, etc.
Insurance companies generally employ their own agents who sell insurance to customers, but there
are also (6) __________ who work with several companies, selling insurance in return for a (7)
__________.

If a particular insurance company considers that the risk it has (8) __________ is too big, it might
share the business with other companies, by way of reinsurance. Lloyds of London underwrites a
great many risks which are spread among lots of syndicates, made up of groups of (9) __________
people known as “names”. In return for earning a percentage of the insurance premiums, the names
have unlimited liability for losses. After a series of (10) __________ following lots of (11)
__________ (shipwrecks, earthquakes, hurricanes, and so on) in the late 1980s, many Lloyds
syndicates had to make (12) __________ pay-outs, and many names were bankrupted.

III. Choose the best alternative to complete each sentence

1. Insurance companies can be considered as professional ________ takers.

a. life b. risk c. chance d. misfortune

2. Some of the language in insurance ________ is incomprehensible to most ordinary people.

a. premiums b. policies c. rates d. invoices

3. The company will________ the policyholder against loss of or damage to the insured vehicle.

a. identify b. respect c. indemnify d. engage

4. Insurance companies like you to ________ your claim as soon as possible.

a. process b. submit c. assure d. proceed

5. Go to an insurance ________ and see if you can get a better deal.

a, breaker b. broker c. speculator d. merchant

6. In these inflationary times it is important to keep the value of your policy closely ________ to
the value of your property.

a. adapted b. linked c. indicated d. dependent

7. My insurance company offers a wide ________ of cover.

a. range b. branch c. rank d. standard

8. His insurance company had told him not to admit ________ even though it was clearly his fault.

a. legality b. likelihood c. liability d. crime

9. My endowment policy will ________ when I’m sixty-five.

a. ripen b. mature c. flourish d. break

10. ________ insurance originated in the fifteenth century.

a. Boat b. Sea c. Navy d. Marine

11. The ________ form you fill in is the basis of your contract with the insurance company.

a. proposition b. application c. enrolment d. proposal

12. The insurance will be ________ if you omit any relevant information.

a. void b. valid c. invaluable d. priceless

13. You're allowed 30 days' ________ for the payment of the renewal premium.

a. grace b. favour c. way d. permission

14. Make sure all this equipment is insured ________ accidental damage.

a. over b. against c. with d. from

IV. Put the words into the correct spaces.

take out broker quote premium covered claim pay out fill
in

How to ______________ an insurance policy.

1. Choose an insurance ______________, or contact an insurance company direct.
2. Phone up and get a ______________ (or you can do this on the internet).
3. Pay the ______________.
4. Now you're ______________.
5. If you need to make a ______________, contact the insurance company.
6. You will probably have to ______________ a claim form.
7. You may have to wait several weeks for the insurance company to ______________.

V. Choose the best words to go into each space.

1. A person who assesses insurance claims is called a __________.
a. loss adjuster b. claim adjuster c. insurance adjuster
2. Your home insurance will be expensive if you live in a _________ area.
a. big risk b. risky c. high risk
3. An insurance broker usually __________ several different insurance companies
a. deals with b. contacts c. works for
4. In many cases, the insurance company doesn't take the financial __________.
a. problem b. risk c. damage
5. The financial risk is taken by _________ such as Lloyds of London.
a. underwriters b. undertakers c. underpasses
6. Natural disasters usually mean that insurance underwriters suffer __________.
a. heavy losses b. high expenses c. big debts
7. A __________ proves you have insurance while the policy is being processed.
a. cover letter b. cover paper c. cover note
8. If you agree to pay, for example, the first £200 of a claim, then your policy has a £200
__________.
a. surplus b. extra c. excess
9. A company giving insurance cover is known as the __________.
a. insurer b. insured c. insurance
10. A person who has taken out insurance cover is known as the __________…
a. insurer b. insured c. insurance
11. …or the __________.
a. policyholder b. policy-taker c. policy
12. A life insurance policy pays out __________ your death or after a set period, whichever is first.
a. in case of b. if c. in the event of

VI. Choose the correct prepositions

1. I've never claimed on / from my insurance.
2. Don't worry. It's covered by / with my insurance.
3. I'm insured for / by the Lion Rock Insurance Company.
4. This sculpture is insured for / at £100,000.
5. I'm insured to / for drive any car.
6. I'm covered by / for all risks.
7. Which insurance company are you with / in?

VII. Make phrases by matching an item from each column.

1. be legally for the difference
2. try to prove damages
3. award obliged to do something
4. be liable negligence
5. take out a renewal notice
6. take on an insurance policy
7. be sent the small print
8. check too much risk
VIII. Cross out the item which has a different meaning to the others.
1. to dispute, file, put in, submit a claim
2. to meet, pay, reject, settle a claim
3. considerable, high, potential, serious, significant risk
4. to avoid, face, run, take a risk
5. to assess, measure, minimize, weigh up the risks

IX. Underline the correct words in italics.

1. How much is the insurance to / on your car?
2. Do you have insurance for / to anyone to drive the car?
3. You have to take out /take up building and contents insurance as a condition of the
mortgage.
4. This policy provides insurance against / in favour of loss or damage by / up to €5,000.
5. We've insured all our IT equipment for / with over a million euros.
6. Can you claim the damage by / on your insurance?
7. They did / made a claim for /of damages.
8. There is a risk to / of consumers by / from these products.
We will have to withdraw them from the market.
9. We are at / with risk to be/ of being sued.
10. You should go to court / the judge - you have a right/ rightful claim.