UnitElevenInsuranceLearningobjectivesTodescribeperils,lossesincargotransitToidentifythescopeofF.P.A,W.P.A.andAllrisksToknowhowtoasktheotherpartytocoverinsuranceGeneralView1、perils,lossesincargotransit

Oceanshipmentsareexposedtoanumberofuniquehazards.Damageorlossofcargois,however,arealpossibilityfromsuchcausesasfire,stranding,collision,rollingofftheshipinheavystorm,tornado,moisture,theft,etc.

Insuranceallowstraderstoproceedwithconfidenceintheknowledgethateachpartytothetransactionisproperlyprotected.

GeneralViewThepurposeofinsurance

Thepurposeofinsuranceistoobtainindemnityintheeventofanydamageorloss,somarineinsuranceisacontractwherebytheinsurer(insurancecompany),onthebasisofapremiumpaid,andundertakestoindemnifytheinsuredagainstlossformcertainrisksorperilstowhichthecargoinsuredmaybeexposed.GeneralView

2.ThreekindsofbasicinsurancecoverageFreeFromParticularAverage(F.P.A)WithParticularAverage(W.P.A)AllRisksGeneralViewFreeFromParticularAverage(F.P.A)Itisalimitedformofcargoinsuranceinthatnopartiallossordamageisrecoverableformtheinsurersunlessthatactualvesselorcraftisstranded,sunkorburnt.Underthelattercircumstances,theF.P.AcargopolicyholdercanrecoveranylossesoftheinsuredmerchandisewhichwasonthevesselatthetimeaswouldobtainunderthemoreextensiveW.P.A.policy.TheF.P.A.policyprovidescoveragefortotallossesandgeneralaverageemergingfromactual“marineperils”.GeneralView2)WithParticularAverage(W.P.A)WithParticularAveragecoverswiderthanF.P.A．AsidefromtheriskscoveredunderF.P.A.，thisinsuranceprovidesextensivecoveragainstalllossordamageduetomarineperilsthroughoutthedurationofthepolicy,includingpartiallossordamagewhichmaybeattributedtonaturalcalamitieslikevileweather，lightning，tsunami，earthquakeand／orflood.GeneralView

3)AllRisks

AsidefromtheriskscoveredunderF.P.A.,andW.P.Aconditions，theinsurerisresponsibleforalltotalorpartiallossof,ordamagetothegoodsinsuredeitherarisingfromseaperilsorgeneralexternalcauses.The“AllRisks”clauseexcludescoverageagainstloss,damageorexpensecausedbydelay,inherentviceornatureofthegoodsinsured,orspecialexternalrisksofwar，strikes，riots，etc.AllRisks

coversonlyphysicallossordamagefrom

externalcauses.GuidelinesforWritingWhenwritinglettersrelatedtoinsurance,thewriteroughttobearthefollowingpointsinmind:1).Themethodsofinsurance(whetherit’sapolicyoranopenpolicy)2).Theriskorriskstobecovered3).Theconsignmenttobeinsured4).Thevoyagetobecovered5).Thepremiumrate6).Themodeofpayment7).ThevalidityoftheinsuranceGuidelinesforWritingPatternModelI:ImporterAsksExportertoCoverInsuranceParagraph1:Mentionthecontract,goodsetc.

WereferyoutoContractNo…

Withregardtoourcontract…

Paragraph2:Suggestthetermsofpaymentandthereason.

As…weshallbegladifyou…

Asyouknow,wesuggest…Paragraph3:Wishthereadertoacceptandshipthegoodsearly.

Wewishyoucanaccommodateusinthisrespect.

Wehopetoreceiveyourfavorablereply.GuidelinesforWritingPatternModelII:

Seller’sreplytothebuyerParagraph1:Statethatyouhavereceivedtheirletter.

Yourletterdated…havebeenreceived.

Paragraph2:Giveyourreplyofagreeingorrefusingand

yourreasons.

Weagreeto…Withregardto…weregretbeingunabletoaccept…

Paragraph3:Statethegoodswillbesentsoon,etc.

Wesincerelyhopethatwecan…

Wehaveinsuredthegoods…GuidelinesforWriting3、asktheotherpartytocoverinsurance1.

TheInsuranceInsured

Ininsurancebusinesstheinsuredisonewhopaystheinsurancecompanyforthecoverageofrisksofthecargo.Theinsureristheinsurancecompanythatagreestomakepaymentincaseoflossordamageoccurredtotheinsured.Theinsuredandtheinsurerareboundbyacontractknownastheinsurancepolicy.Inexporttrade,whowilleffectinsurancedependsontheparticulartradetermadopted.GuidelinesforWritingUnderCIFterms,itistheseller/exporterwhoarrangedinsurancewithaninsurancecompany.Thesellerisunderobligationtopresentamarineinsurancepolicyoraninsurancecertificateatthetimeofnegotiation.UnderthetermsasFOB,CFR,etc.,thebuyer/importereffectsinsurance,buthemayaskthesellertoarrangeinsuranceonbehalfofthebuyer.GuidelinesforWritingGenerallyspeaking,thestagesofcoveringinsuranceareasfollows:(1)Theinsuredcompletesaproposalform.(2)Theinsurerassessestheriskandfixesapremiumtobepaid.(3)Theinsuredpaysthepremiumandtheinsurancebecomesvalid.(4)Ifadamageorlossissuffered,theinsuredfilesaclaimforcompensation.(5)Theclaimisinvestigated,andifreasonable,thecompensationispaid.SpecimenLetter-1(ImporterAsksExportertoCoverInsurance)April5,2008DearSirs,Re：OurOrderNo.CM517Covering100M／TonsCannedMeatWewishtoreferyoutoourOrderNo.CM517for100M／TonsCannedMeat,fromwhichyouwillseethatthisorderwasplacedonCFRbasis.Aswenowdesiretohavetheconsignmentinsuredatyourend，weshallbemuchpleasedifyouwillkindlyarrangetoinsurethesameonourbehalfagainstAllRisksfor110％oftheinvoicevalue.Weshall，ofcourse，refundthepremiumtoyouuponreceiptofyourdebitnoteor,ifyoulike，youmaydrawonusatsightforthesame.Wesincerelyhopethatourrequestwillmeetwithyourapproval.Yoursfaithfully，MackLiu

SpecimenLetter-2(AskingforCFRTerms)May16,2008DearSirs,Re:InsuranceWethankyouforyourletterofMay9，quotingusfor3，000casesofIronNailsonCIFterms.Weregret，however，thatweprefertohaveyourquotationsand/oroffersonCFRterms.Foryourreference，wehavetakenoutanopenpolicywiththePeople’sInsuranceCompanyofChina.TheInsuranceCompanyisastate-operatedenterpriseenjoyingahighprestigeandhasagentinallmainportsandregionsoftheworld.Shouldanydamageoccurtothegoods,theiragentatyourendwilltakeupthematterwithoutdelay.AllwehavetodowhenashipmentismadeistoadvisethemoftheParticulars.Furthermore,weareonverygoodtermswiththem．Weusuallyreceivefromourunderwritersquiteahandsomepremiumrebateatregularintervals.Inthemeantime,weshouldappreciateitifyoucouldsupplyuswithfulldetailsregardingthescopeofcoverhandledbytheLloydInsuranceCompany,Londonforourreference.Welookforwardtohearingfurtherfromyouatanearlydate.Yoursfaithfully,ConanSmithSpecimenLetter-3(CoveringInsurancefortheBuyer)FarEastFoodstuffsCompanyLtd.616TaiyangdaoStreet,Harbin,China.Tel:(0451)59894763Fax:(0451)59894765E-mail:sunshine@126.comMay25,2008SouthAsiaTradingCo.Ltd31-bJalanStreet,KualaLumpurMalaysiaDearSirs,ContractNo.368for300casesWalnutMeatsWewishtodrawyourattentiontothefactthatthesubjectcontractisbookedonCFRbasis,whereasyourL/CcallsforCIF.Thisisobviouslyinconsistent.Wewouldhavefaxedyouforamendment，butonsecondthoughtswerefrainedfromdoingso.Toavoiddelayinshipment，thesimplestwaywouldbeforustoarrangethenecessarycoverhereandtodeductthepremium，whichwouldamounttoUS$20，fromthe2％commissionpayabletoyou.Anyleftoverwillberemittedtoyouassoonastheproceedshavebeencollectedfromtheletterofcredit.Wetrusttheabovesettlementwillbesatisfactorytoyou.Yoursfaithfully,ZhaoHai

SpecimenLetter-4(Agreeingtocoverinsuranceandarrangeshipment)

HongKongPro-richFiberInternationalLimitedNathanRoad,Kowloon,HongKong

Telax:00852-93603113E-mail:prorich@June2,2007ShanghaiFarEastTradingCo.,Ltd.651GubeiRoad,Shanghai200336,ChinaDearSirs,WetakepleasureinacknowledgingyourletterofMay25th,requestingustoeffectinsuranceonthe1000M/TonsChineseRiceforyouraccount.WearegladtoconfirmhavingcoveredtheshipmentwiththePeople’sInsuranceCompanyofChinaagainstAllRisksforUS$….Thepolicyisbeingpreparedaccordinglyandwillbepresentedtoyoubytheendofthismonthtogetherwithourdebitnoteforthepremium.Foryourinformation,thisconsignmentwillbeshippedbys/s

“Hope”duetosailonoraboutJune10th.Weshallsendyoushippingadviceinduecourse.Yourstruly,YaleStiffen

SpecimenLetter5-InsuranceCompanyAskstoCancelBreakageRisk22October2007DearSirs,AdditionalRiskofBreakageWerefertoyourL／CNo.F441coveringGlazedWallTiles，whichwehavejustreceived．PleasenoteforthisarticlewedonotcoverBreakage.Youhaveto，therefore，deletetheword“Breakage”fromtheinsuranceclauseinthecredit.Furthermore，wewishtopointoutthatforsucharticlesaswindowglass，porcelains，etc．evenifadditionalRiskofBreakagehasbeeninsured，thecoverissubjecttoafranchiseof5％.Inotherwords，ifthebreakageissurveyedtobelessthan5％，noclaimsfordamagewillbeentertained.Pleasemakeanamendmentimmediately.

Yoursfaithfully，

JohnsonMorgan

SpecimenLetter-6(AskingforAdditionalInsurance)

January23,2008DearSirs,WehaveinadvertentlywritteninourOrderConfirmationNo.OR166“W.P.A.&WarRiskinsurancetobeeffectedbysellers”，whereasweshouldhaveaskedforbroadercoverage.PleasehereaftertakeoutcoveronallourpurchasesofLeathersagainstT.P.N.D.，Contamination，Freshand／orRainWaterDamageinadditiontoW.P.A..WeencloseanamendedOrderConfirmation，whichistosupersedetheonepreviouslysent.Thankyouforyourcooperation.

Yoursfaithfully，ColinBrown

SpecimenLetter-7(ReplytoaRequestforExcessiveInsurance)January29,2008DearSirs,YourOrderNo．428for2000CasesToysWehavereceivedyourletterofJanuary23，askingustoinsurethecaptionedorderforanamountof30％abovetheinvoicevalue.Althoughitisourusualpracticetoinsureshipmentsfortheinvoicevalueplus10％，wearepreparedtocomplywithyourrequestforgettingcoverfor130％oftheinvoicevalue.Buttheextrapremiumwillbeforyouraccount.Wetrusttheabovewillbeacceptabletoyou.

Yoursfaithfully，WangLinGuidelinesforWriting

2.TheInsuranceClaims

Mostinsurancecompanypoliciesrequirethatimmediatenoticebegiventothenearestbranchoragencyintheeventofdamagegivingrisetoaclaimunderapolicyongoods.Whennotifiedofdamage,thecompany’sagentsappointasuitablesurveyortoinspectthegoodsandtoreportonthenatureandextentofthedamage.Acommonpracticeisforareportorcertificateoflossincorporatingthesurveyor’sfindingstobeissuedtotheconsignees,thelatterpayingthefee.Thiscertificateoflossisincludedwiththeclaimpapersand,ifthelossisrecoverableundertheinsurancecover,thefeeisrefundedtotheclaimants.GuidelinesforWriting

Insomecircumstances,theclaimpapersarereturnedtotheplacewheretheinsurancewaseffectedandsubsequentlypresentedtotheunderwriters.However,especiallywheregoodsaresoldonCIFtermsandthepolicyisassignedtotheconsignees，arrangementsaremadeforanyclaimstobepaidatdestination.Insuchcases,theconsigneesapproachtheagentsnamedinthepolicyforpaymentoftheirc