Marine insurance
Grammar test
What …. marine insurance cover?
a) does; b) do; c) is.
All losses …. by the Shippers.
a) was fully met; b) were fully met; c) fully meet.
This vessel ….. to the scrap yard.
a) will be written off; b) will write off; c) were written off.
Goods ….. for the full value.
a) have insured; b) has been insured; c) have been insured.
We ….. losses. Please take this into considerations.
a) are suffering; b) are suffered; c) are suffer.
….you obtained an indemnity yet?
a) did; b) have; c) are.
They ….. insurance cover of these risks if they pay an extra premium.
a) are obtain; b) will be obtained; c) will obtain.
What …. the word average mean?
a) is; b) does; c) do.
Ship …..now.
a) is building; b) is built; c) is being built.
Cargo insurance …..to cover goods of every kind.
a) is taken out; b) are taken out; c) were taken out.
….you intend to take out insurance against unforeseen casualties?
a) are; b) do; c) have.
All losses ….between contracting parties?
a) shared; b) is shared; c) were shared.
Our vessel…..
a) is sunk; b) has sunk; c) has sink.
Goods ….by vermin.
a) were damaged; b) damaged; c) were damaging.
The Shipowner ….a percentage of the value of their goods.
a) will be pay; b) will paid; c) will pay.
Rates for each type of the goods ….every year.
a) is fixed; b) are fixed; c) was fixed.
An agreed value ….on the subject matter.
a) is placed; b) are placed; c) is place.
….you declare the exact value of each shipment?
a) are; b) will; c) does.
How often …you issue new policies?
a) are; b) is; c) will.
In this case a clause ….in the policy stipulating “the limit per bottom”.
a) will be inserted; b) will be insert; c) will insert.
Topic 1. Marine Insurance
The export trade is subject to many risks. Ships may sink or collide; consignment may be lost or damaged. Most businessmen insure goods for the full value. The ship and cargo owners (the insured) each pay a percentage of the value of their goods (the premium) into a fund administered by the Insurance Company (the insurer). If the insured suffers a loss, he can claim compensation from the insurer for this. Furthermore, he will receive money from the fund to the value of the loss he suffered.
So, the idea of insurance is to obtain indemnity in case of damage or loss.
As soon as the goods are in transit they are insured against pilferage, damage by water, breakage or leakage. Other risks may also be covered.
Some of the risks against which it is possible to take out insurance include:
so-called Acts of God such as fire, flood, earth-quake etc.;
loss of the goods through being washed overboard;
damage to the goods, e.g. by breaking, bending etc.
damage to the goods by vermin such as rats and mice;
loss of the ship on which the goods are being transported, e.g. by sinking or collision with another ship;
loss of the goods through theft or non-delivery.
Standard insurance policies generally do not cover political risks such as war and strikes. However, it may be possible to obtain insurance cover of these risks by paying an extra premium.
The insured is better protected if his goods are insured against all risks. The goods may be also covered against general and particular average. In the insurance business the word average means loss.
Particular average refers to risks affecting only one shipper’s consignment.
General average refers to a loss incurred by one contracting party but shared between other parties who use the same vessel on the same voyage.
Insurance is very important, but in certain countries, such as the UK, Shipowners and Shippers are not obliged by law to insure against loss even on the third party basis. If the Shippers have to meet their losses themselves and if the damage is really huge this could easily lead to bankruptcy. Thus to protect themselves against unforeseen casualties in their trade ventures they take out marine insurance.
So referring to property insurance. We have different types of insurance policies covering the ship from when she is being built up to the date she is sent to the scrap yard or is written off as a total loss at sea. At first it is hull insurance. For the owners of a ship the policy will be the most important. As it covers not only the hull, but also deck and engine room machinery and inventory covering loading/discharging equipment, navigation instruments, anchors, chains etc.
Then it is cargo insurance. It may be taken out to cover goods of every kind which are being transported by ship under a B/L or C/P. Cargo may be insured by anyone who has a financial interest. Also there is freight insurance. The term “freight” means the cost of transporting the goods. It may also be used when referring to the hire of a vessel. In certain cases, where the Shipowner is not to receive payment until the task is carried out, he can insure against the freight being all or partially lost if the ship fails to reach the port of destination.
There are several different types of policies available. The type chosen depends upon the requirements of the assured.
The voyage policy covers the risks of a particular voyage and provides cover from the port of departure to the port of destination. Cargo insured under a voyage policy is normally covered from warehouse and this terminates 60 days after unloading at destination. The voyage policy does not stipulate how long the voyage will take.
The time policy is for a specific period of time, but not more than 12 months. Hull insurances are normally effected on this basis.
The mixed policy is a combination of time and voyage insurance, and a longer period of time is allowed after the vessel has arrived at its port of destination.
The building risk policy is used when a vessel is being constructed and until the vessel has been successfully launched and delivered to its owner. This policy is also used when the vessel is under repair.
The valued policy is a policy in which an agreed value is placed on the subject matter.
The unvalued policy is a policy in which there is no agreed value placed on the subject matter.
Floating policies are used in the insurance of cargo. Exporters with many regular shipments per year often use floating policies. Their shipments are thus covered as long as they declare the exact value of each shipment. The advantage of floating policies is that there is no need to issue a new policy every time a new shipment is made. In this case a clause will be inserted in the policy stipulating “the limit per bottom”, which is the value of the cargo that can be carried by one ship.
Open cover is an agreement between the shipper and the underwriters to insure the shippers proposed shipments for the next 12 months. There is no total lump sum per year but there are fixed conditions and rates for each type of goods. Shippers declare each shipment as it is made and the underwriters then issue a separate policy for each of these shipments.