International Cargo Transportation Insurance-Marine Cargo Insurance

In internatonal trade, good traveling long distances to another courtry,outof the physical control of bothe the buyer and the seller,may face all kinds of damages or losses and therefore must be insured again loss or damage at each stage of the journey.In this way, whatever mode of transport is being used, neither the exporter nor the importer suffers any loss.Obviously,cargo insurance is a contract whereby the insurer(insurance company) ,on the base of a premium paid,unertake to indemnify the insured against loss from certain risks or perils to which the cargo insured may be exposed.It is an indispensable adjunct of international trade. Without adequate insurance and protection of the interests of those with goods in transit,international trade can not be guaranteed.

*Marine Cargo Insurance
1.1.Types of Risks,Losses and Expenses Covered.
(1).Two types of risks are coverd by ocean marine insurance: one is the perils of the sea,including both natural calamities and unexpected accidents.Natural calamities include heavy weather,lightering,Tsunami,earthquake,volcanic eruption and so on.Accidents refer to fire,explosion,vessel being stranded,grounded,sunk or capsized,collision or contact of vessel with any external object other than water,etc.
The other type of risks is external (extraneous)risks including general external risks and special external risks.General external risks include theft and pilferage,contamination,leakage,breakage,sweating and/or heating,taint of odor,rusting,hook damage,fresh and/or rain water damage,short-delivery and noe-delivery,shortage in weight,clashing and so on.Special risks include war,strike,failure to delivery due to some special laws or regulations.

(2).Two types of losses are covered by marine cargo insurance,one is total loss and the orther partial loss.
Total loss is divided into actual total loss and constructive total loss.Actual loss means the complete loss of the insured cargo in value.A constructive total loss accurs when the cost of salvaging the shipment would be more than the salvaged value of the merchandise.The shipment insured is reasonably abandoned as any further efforts at salvage would be fruitless.Most insurance policies provide for the payment of a total loss up to the insured amount.

Partial loss means the total loss of part of the insured cargo.It can be divided into general average and particular average.
General average is based upon the relationship between the shipowner and the shippers who have cargo aboard the same vessel on a particular voyage.All these parties are bound together in the "adventure".Sometims,when the whole ship was threatened by a peril of the sea or some other hazard,in order to save the ship and some of the cargo,part of the cargo or vessel have to be sacrificed,then an act of general average would be declared.According to marine law,those interests whose property was saved must contribute proportional1y to cover the lossed of the one whose property was voluntarily sacrificed.
Particular average means a partial loss suffered by part of the cargo.It occurs when a storm or fire damages part of the shipper's and no one else's cargo has toe sacrificed to save the voyage.The cargo owner whose goods were damaged or lost should refer to his insurance company,provided his policy covers the specific type of loss suffered.

(3).Ocean cargo insurance also covers the expense incurred to avoid or reduce the damage or loss of the subject mattery insured.There are two main types of expenses. One is sue and labor expense paid by he assured or his agent.The other is salvage charge paid by the party other than the insuer and/or the insured.

*Main Types of Insurance
Thear are mainly two types of insurance coverage,basic coverage and additianal coverage.Basic coverage mainly includes FPA,WPA and All Risks.Additional coverage includes general additional coverage and special additional coverage.
(1). FPA(Free from Particular Average) is a limited form of cargo insurance coverage under which no partial loss or damage is recoverable.It only provides coverage for total losses and general average emerging from the actual "marine perils" like vessel being stranded,grounded or sunk.

(2).WPA(With Particular Average) is a wide cover than FPA.It provides extensive cover against all loss or damage due to marine perils throughout the duration of the policy,including partial loss or damage which may be attributed (ascribed) to natural calamities like heavy weather.

(3).All Risks is the most comprehensive of the thress basic coverage under which the insurer is responsible for all total or partial loss of ,or damge to the goods insured either arising from sea perils or general external causes.However,it does not cover loss,damage or expense caused by delay,inherent vice or nature of the goods insured,or special external risks of war,strike,etc.

(4).General additional risks include TPND (Theft,Pilferage and Non-delivery),Fresh Water Rain Damage,Risk of storage,Risk of Intermixture and Contamination ,Risk of Leakage,Risk of Clash and Breakage,Risk of Odor,Damage caused by Heating and Sweating,Hook Damage,Risk of Rust,etc.These additional risks can not be covered independently and should go with FPA or WPA and are included in All Risks coverage.

(5)Special additional risks include War Risk,Strike Risks,Failure to delivery Risk,Import Duty risk,Rejection Risk,etc.,among which War Risk and Strike risk are more common.These additional coverages are usually taken out with FPA,WPA and All risks.

Too choose an insurance coverage that is both economical and effective,the exporter or the importer should be aware of the possible losses to be expected of a particular consignment.Different items have different natures and may apply to different insurance types.For example,cargo like iron ore faces little risk of partial loss,so FPA will be sufficient.Most manufactured goods are covered against All Risks as they are prone to damage caused by sea perils or external risks.