With the rapid development in trading business, cargo insurance has become an integral part of commercial activities. The purchase of a cargo insurance not only covers the loss caused by accident, but it also protects a reasonable profit.
Currently, the common regulation for cargo insurance is the Institute Cargo Clauses, which can be divided into three clauses: A, B and C. Clause A has the most extensive coverage and C has the least. The coverage is as follows:
Institute Cargo Clause (A)
Institute Cargo Clause (B)
Institute Cargo Clause (C)
The coverage of insurance is extensive and all risks are insured with the exceptions, such as the intentional act of the insured, natural leakage of the insured cargoes, natural loss of weight and volume, natural wear and tear, improper packing, the inherent flaw and characteristics of the insured cargoes, delay of voyage, the owner of the vessels suffering from bankruptcy or refusal to pay debt, atomic or nuclear radiation; vessel not suitable for sailing and the loss and fees caused by war, strike and riots. All other accidents that happened in transit are within the scope of insurance coverage.
Land Cargo Insurance
The scope of insurance covers the loss of cargoes caused by the derailment of the carrying vehicle or train, vehicle crash, vehicle overturns, collapse of tunnels and bridges as well as fire.
Air Cargo Insurance
The insurance covers the damage or loss of cargoes caused by the collision, crash, fire, explosion or other accidents of the airplanes of carriage.
The damage and loss of cargos due to detention, robbery, detain of the carrying vessel or the results caused by the aforesaid cases.
The damage and loss caused by hostile acts, actions similar to war, civil war, revolution, rebellion.
The damage and loss caused by naval mines, torpedo, bombs or other battle tools.
The common damage caused by sea and relief charges caused by the danger of war.
With the request of the insured, the following additional insurance can be added on the basis of the covered Institute Cargo Clauses C or B (subject to the features of the cargoes)
Theft, Pilferage and Non-delivery Risk (T.P.N.D.)
“Theft “means the whole cargo is stolen; “pilferage” means part of the cargo is stolen; “non-delivery” means shortage of cargoes in delivery.
Rain and Fresh Water Damage (R.F.W.D.)
The loss caused by fresh or rain water stains during loading, unloading or transit.
The damage and loss in transit caused by vibration, crack of packing, leakage and weight loss
The damage and loss during loading and unloading caused by the use of hand hooks, cranes or other tools
Damage caused by the Contact with Oil and/or other Cargo
The covered cargo suffers from contamination by oil or other cargoes.
Insurance on Deck
Some cargos, such as inflammables, dangerous chemicals, vehicles or fruits and vegetables, are customary stored on deck: the insured must declare these goods to the insurance company and pay for an additional insurance for the deck. The goods on deck are limited to Clause C excluding Clause A, Clause B and the above 5 additional risks mentioned.