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INTRODUCTION

What is clear to many cargo insurance (a type of property insurance), but why is it necessary?
The purpose of this article briefly and simply explains the need for this operation.
It is worth noting that the insurance of goods in the European Union is mandatory. We have it
voluntarily. Under the cargo insurance refers to the following operations: cargo insurance,
insurance of dangerous goods, international cargo insurance, and property insurance of cargo.
This is almost a complete list of what can be understood by the service of cargo insurance.
Most often, insurance protects against unexpected circumstances. Cargo can be protected, or
trust company, which had never been failures, but an unexpected and unpleasant turn of events,
is always possible. Cargo can be damaged or even worse lost completely. Insurance guarantees at
least compensation loss of cargo.
To insure your cargo not far to seek, insurance carried by most shipping companies.
The main thing to pay attention to the design contract for cargo insurance, it is not a mere
formality, always checks to see whether the documents issued for transportation.
Insurance can be arranged depending on the nature of the traffic. Company discharged or simple
policy for each shipment or general policy. General policy is valid for all types of transport
declared by the insured.
In determining the amount of payment for a particular transport necessarily consider the
following:
- Long-term relationship with the insurer;
- Statements of operations;
- Classification of the goods;
- Choose the insurance coverage;
- Conditions of carriage;
- Statistics of the insured losses.
Insured - a wise decision to resolve unexpected problems. And they believe, often occur in our
country transportation. Undue risk always leads to losses. Take care of your property, with the
support of professionals and proven companies.

TYPES OF CARGO INSURANCE


1) MARINE CARGO INSURANCE
2) TRUCK CARGO INSURANCE
3) AIR CARGO INSURANCE
4) RAILWAY CARGO INSURANCE

HOW TO VALUE CARGO FOR INSURANCE?


Normally, the insured value is calculated by taking the FOB (free on board) value, adding the
ocean or air freight, and adding 10% of that total. Thus, a shipment valued at $10,000 with
$2,000 ocean freight would have an insured value of $13,200. We can frequently arrange higher
buffer amounts upon request.

TYPES OF COVERAGE
The following are covered for when subscribing for cargo insurance:-

ALL RISK COVERAGE:This will cover merchandise for most types of perils that it may encounter. This coverage is
intended for approved or general merchandisethat which is new, export packed and not
unusually susceptible to losses breakage, theft, pilferage, scratching and the like. All Risk
coverage will insure against physical loss or damage from any external cause but
specifically excludes the following:

Improper packing

Abandonment of cargo

Rejection by Customs, FDA or other Government agency1

Failure to pay or collect accounts

Inherent vice (spoilage, infestation, failure of product to perform intended functions)

Loss caused by delay2

Loss of use and/or market3

Nuclear

Losses exceeding cargo policy limit

Losses at port city more than fifteen days after discharge4

Losses inland more than thirty days after discharge5

Losses in South America after sixty days6

Oceangoing barge movements (unless specifically endorsed)

Goods subject to an On-Deck bill of lading

Loss caused by temperature of pressure (air freight only)


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Failure to notify air carrier of preliminary loss in timely fashion:

Damage even days

Hidden damage fourteen days

Non-delivery 120 days

F.P.A. (FREE OF PARTICULAR AVERAGE):In insurance terms, this means free from partial loss, meaning that the insurance company is
free from partial loss. F.P.A. is frequently referred to as Total Loss only because in order to
recover anything under an F.P.A. policy, the customer usually must suffer a total loss of the
goods. F.P.A. will cover perils of the sea, such as stranding, sinking burning, or collision of the
vessel. It will also cover land perils that are generally out of mans control. F.P.A. coverage is
usually written for used merchandise, waste such as scrap metal or waste paper and merchandise
stowed on deck or as bulk cargo.

W.A. (WITH AVERAGE):With Average coverage is basically F.P.A. that is extended to provide for protection from
damage caused by exceptionally heavy weather. Both F.P.A. and W.A. can usually be extended
to include theft, pilferage and non-delivery of an entire shipping package.

WAR RISK:Marine insurance (this also includes air insurance) always carries a companion policy covering
war risks such as hostile actions and leftover mines. This insurance carries additional premium
that is usually two to three cents per $100 of insured value. However, war rates for countries
such as Iran and Lebanon are noticeably higher, for obvious reason.

DUTY INSURANCE
Duty and I. R. Tax do not accrue for goods that are totally lost in transit, but partially damaged
goods are frequently dutiable at full value. Depending on the duty rate, insuring the anticipated
duty amount may be prudent. Both require companion war coverage that is usually about half the
regular war coverage.
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WHAT IS GENERAL AVERAGE?


General Average means, literally, general loss. It can be involuntary, such as a collision
involving another ship. When a General Average loss occurs, each party involved participates in
the loss. General Average originated in the days of Marco Polos spice trains. Marco Polo put
together large groups of individuals with camels who would foray into China and other
countries, trading for spices and other goods. If, during their trip, they were attacked and one
trader lost his camel or his goods, the others in the train would chip in and replace his losses.
This noble thought survives in current transportation law so that when a vessel runs aground,
incurring substantial damage to the vessel, all of the firms having cargo on board the vessel help
to pay for the repairs. General Average liability is the first reason for purchasing cargo insurance.
All types of insurance cover General Average. There are many stories of customers that have
steadfastly refused to purchase cargo insurance, only to be involved in a General Average
condition that cost up to 25% of the value of their goods. Everyone should have cargo insurance,
even if they think their cargo is not worth covering. The liability for General Average makes it
essential.

CARGO INSURANCE EXCLUSIONS:Most Cargo Insurance Policies do not reimburse for losses caused by improper packing or when
customs officials reject the delivered goods.
Other claims that are excluded from most Cargo Insurance Policies include:
Abandoned cargo
Other party failing to pay
Spoilage or other damages due to the products nature
Losses caused by shipping delays
Employee dishonesty
Damages at port cities more than 15 days after cargo were unloaded.

For example, improperly packed rice can expand and spoil while in-transit. This would not be
covered under standard Cargo Insurance Contracts.
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TYPES OF CARGO INSURANCES


1) MARINE CARGO INSURANCE:Marine Cargo Insurance covers the loss or damage of ships, cargo, terminals, and any transport
or cargo by which property is transferred, acquired, or held between the points of origin and final
destination.

ORIGIN:Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek
and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and
other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied
with intuitive estimates of the variable risk from seasons and pirates.
The modern origins of marine insurance law in English law were in the law merchant, with the
establishment in England in 1601 of a specialized chamber of assurance separate from the other
Courts. Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging of
law merchant and common law principles. The establishment of Lloyd's of London, competitor
insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty
lawyers, bankers, surveyors, loss adjusters, general average adjusters), and the growth of the
British Empire gave English law a prominence in this area which it largely maintains and forms
the basis of almost all modern practice. The growth of the London insurance market led to the
standardization of policies and judicial precedent further developed marine insurance law. In
1906 the Marine Insurance Act was passed which codified the previous common law; it is both
an extremely thorough and concise piece of work. Although the title of the Act refers to marine
insurance, the general principles have been applied to all non-life insurance.
In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London
company insurers) developed between them standardized clauses for the use of marine insurance,
and these have been maintained since. These are known as the Institute Clauses because the
Institute covered the cost of their publication.

Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a
considerable freedom to contract between themselves.
Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance and
reinsurance. It traditionally formed the majority of business underwritten at Lloyd's. Nowadays,
Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form is
known by the acronym 'MAT'.

PRACTICE:The Marine Insurance Act includes, as a schedule, a standard policy (known as the "SG form"),
which parties were at liberty to use if they wished. Because each term in the policy had been
tested through at least two centuries of judicial precedent, the policy was extremely thorough.
However, it was also expressed in rather archaic terms. In 1991, the London market produced a
new standard policy wording known as the MAR 91 form and using the Institute Clauses. The
MAR form is simply a general statement of insurance; the Institute Clauses are used to set out
the detail of the insurance cover. In practice, the policy document usually consists of the MAR
form used as a cover, with the Clauses stapled to the inside. Typically each clause will be
stamped, with the stamp overlapping both onto the inside cover and to other clauses; this practice
is used to avoid the substitution or removal of clauses.
Because marine insurance is typically underwritten on a subscription basis, the MAR form
begins: We, the Underwriters, agree to bind ourselves each for his own part and not one for
another. In legal terms, liability under the policy is several and not joint, i.e., the underwriters are
all liable together, but only for their share or proportion of the risk. If one underwriter should
default, the remainders are not liable to pick his share of the claim.
Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is
generally known as "Hull and Machinery" (H&M). A more restricted form of cover is "Total
Loss Only" (TLO), generally used as a reinsurance, which only covers the total loss of the vessel
and not any partial loss.
Cover may be on either a "voyage" or "time" basis. The "voyage" basis covers transit between
the ports set out in the policy; the "time" basis covers a period of time, typically one year, and is
more common.
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PROTECTION AND INDEMNITY:A marine policy typically covered only three-quarter of the insured's liabilities towards third
parties. The typical liabilities arise in respect of collision with another ship, known as "running
down" (collision with a fixed object is a "harbor"), and wreck removal (a wreck may serve to
block a harbor, for example).
In the 19th century, ship owners banded together in mutual underwriting clubs known as
Protection and Indemnity Clubs (P&I), to insure the remaining one-quarter liability amongst
themselves. These Clubs are still in existence today and have become the model for other
specialized and noncommercial marine and non-marine mutual, for example in relation to oil
pollution and nuclear risks.
Clubs work on the basis of agreeing to accept a ship owner as a member and levying an initial
"call" (premium). With the fund accumulated, reinsurance will be purchased; however, if the loss
experience is unfavorable one or more "supplementary calls" may be made. Clubs also typically
try to build up reserves, but this puts them at odds with their mutual status.
Because liability regimes vary throughout the world, insurers are usually careful to limit or
exclude American Jones Act liability.

ACTUAL TOTAL LOSS AND CONSERVATIVE LOSS:These two terms are used to differentiate the degree of proof where a vessel or cargo has been
lost. An actual total loss occurs where the damages or cost of repair clearly equal or exceed the
value of the property. A constructive total loss is a situation where the cost of repairs plus the
cost of salvage equal or exceed the value.
The use of these terms is contingent on there being property remaining to assess damages, which
is not always possible in losses to ships at sea or in total theft situations. In this respect, marine
insurance differs from non-marine insurance, where the insured is required to prove his loss.
Traditionally, in law, marine insurance was seen as an insurance of "the adventure", with insurers
having a stake and an interest in the vessel and/or the cargo rather than simply an interest in the
financial consequences of the subject-matter's survival.

AVERAGE:The term "Average" has one meaning:


Average in Marine Insurance Terms is "an equitable apportionment among all the interested
parties of such an expense or loss."
General Average stands apart for Marine Insurance. In order for General Average to be properly
declared, 1) there must be an event which is beyond the ship owners control, which imperils the
entire adventure; 2) there must be a voluntary sacrifice, 3) there must be something saved.
The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or
damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in
damages.
"General Average" requires all parties concerned in the maritime venture
(Hull/Cargo/Freight/Bunkers) to contribute to make good the voluntary sacrifice. They share the
expense in proportion to the 'value at risk" in the adventure.
"Particular Average" is the term applied to partial loss be it hull or cargo. Co-insurance is the
situation where an insured has under-insured, i.e., insured an item for less than it is worth,
average will apply to reduce the amount payable.
An average adjuster is a marine claims specialist responsible for adjusting and providing the
general average statement
To insure the fairness of the adjustment a General Average adjuster is appointed by the ship
owner and paid by the insurer.

EXCESS, DEDUCTIBLE, RETENTION, CO-INSURANCE AND


FRANCHISE:An excess is the amount payable by the insured and is usually expressed as the first amount
falling due, up to a ceiling, in the event of a loss. An excess may or may not be applied. It may
be expressed in either monetary or percentage terms. An excess is typically used to discourage
moral hazard and to remove small claims, which are disproportionately expensive to handle. In
marine the term "excess" signifies the "deductible" or "retention".

A co-insurance, which is typically governs non-proportional treaty reinsurance, is an excess


expressed as a proportion of a claim in percentage terms and applied to the entirety of a claim.
Coinsurance is a penalty imposed on the insured by the insurance carrier for under
reporting/declaring/insuring the value of tangible property or business income. The penalty is
based on a percentage stated within the policy and the amount under reported. As an example:
A vessel actually valued at $1,000,000 has an 80% coinsurance clause but is insured for only
$750,000. Since its insured value is less than 80% of its actual value, when it suffers a loss, the
insurance payout will be subject to the underreporting penalty. The insured will receive
750000/1000000th (75%) of the claim made less the deductible.

TOONERS AND CHINAMEN:These are both obsolete forms of early reinsurance. Both are technically unlawful, as not having
insurable interest, and so were unenforceable in law. Policies were typically marked P.P.I.
(Policy is Proof of Interest). Their use continued into the 1970s before they were banned by
Lloyd's, the main market, by which time, they had become nothing more than crude bets.
A "tonner" was simply a "policy" setting out the global gross tonnage loss for a year. If that loss
was reached or exceeded, the policy paid out. A "china-man" applied the same principle but in
reverse: thus, if the limit was not reached, the policy paid out.

SPECIALIST POLICIES:Various specialist policies exist, including:New building risks: This covers the risk of damage to the hull while it is under construction.
Yacht Insurance: Insurance of pleasure craft is generally known as "yacht insurance" and
includes liability coverage. Smaller vessels such as yachts and fishing vessels are typically
underwritten on a "binding authority" or "lineslip" basis.
War risks: General Hull insurance does not cover the risks of a vessel sailing into a war zone. A
typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf War. The war
risks areas are established by the London-based Joint War Committee, which has recently moved
to include the Malacca Straits as a war risks area due to piracy. If an attack is classified as a
"riot" then it would be covered by war-risk insurers.
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Increased Value (IV): Increased Value cover protects the ship Owner against any difference
between the insured value of the vessel and the market value of the vessel.
Overdue insurance: This is a form of insurance now largely obsolete due to advances in
communications. It was an early form of reinsurance and was bought by an insurer when a ship
was late at arriving at her destination port and there was a risk that she might have been lost (but,
equally, might simply have been delayed). The overdue insurance of the Titanic was famously
underwritten on the doorstep of Lloyd's.
Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with coverage
on an A, B, or C basis, A having the widest cover and C the most restricted. Valuable cargo is
known as specie. Institute Clauses also exist for the insurance of specific types of cargo, such as
frozen food, frozen meat, and particular commodities such as bulk oil, coal, and jute. Often these
insurance conditions are developed for a specific group as is the case with the Institute
Federation of Oils, Seeds and Fats Associations (FOFSA) Trades Clauses which have been
agreed with the Federation of Oils, Seeds and Fats Associations and Institute Commodity Trades
Clauses which are used for the insurance of shipments of cocoa, coffee, cotton, fats and oils,
hides and skins, metals, oil seeds, refined sugar, and tea and have been agreed with the
Federation of Commodity Associations.

WARRANTIES AND CONDITIONS:A peculiarity of marine insurance and insurance law generally, is the use of the terms condition
and warranty. In English law, a condition typically describes a part of the contract that is
fundamental to the performance of that contract, and, if breached, the non-breaching party is
entitled not only to claim damages but to terminate the contract on the basis that it has been
repudiated by the party in breach. By contrast, a warranty is not fundamental to the performance
of the contract and breach of a warranty, while giving rise to a claim for damages, does not
entitle the non-breaching party to terminate the contract. The meaning of these terms is reversed
in insurance law. Indeed, a warranty if not strictly complied with will automatically discharge the
insurer from further liability under the contract of insurance. The assured has no defense to his
breach, unless he can prove that the insurer, by his conduct has waived his right to invoke the
breach, possibility provided in section 34(3) of the Marine Insurance Act 1906 (MIA).
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Furthermore in the absence of express warranties the MIA will imply them, notably a warranty to
provide a seaworthy vessel at the commencement of the voyage in a voyage policy (section
39(1)) and a warranty of legality of the insured voyage (section 41).

SALVAGE AND PRIZES:The term "salvage" refers to the practice of rendering aid to a vessel in distress. Apart from the
consideration that the sea is traditionally "a place of safety", with sailors honor-bound to render
assistance as required, it is obviously in underwriters' interests to encourage assistance to vessels
in danger of being wrecked. A policy will usually include a "sue and labour" clause which will
cover the reasonable costs incurred by a ship-owner in his avoiding a greater loss.
At sea, a ship in distress will typically agree to "Lloyd's Open Form" with any potential salvor.
The Lloyd's Open Form is the standard contract, although other forms exist. The Lloyd's Open
Form is headed "No cure no pay"; the intention being that if the attempted salvage is
unsuccessful, no award will be made. However, this principle has been weakened in recent years,
and awards are now permitted in cases where, although the ship might have sunk, pollution has
been avoided or mitigated. In other circumstances the "salvor" may invoke the SCOPIC terms
(most recent and commonly used rendition is SCOPIC 2000) in contrast to the LOF (Lloyd's
Open Form) these terms mean that the salvor will be paid even if the salvage attempt is
unsuccessful. The amount the salvor receives is limited to cover the costs of the salvage attempt
and 15% above it. One of the main negative factors in invoking SCOPIC (on the salvors behalf)
is if the salvage attempt is successful the amount at which the salvor can claim under article 13
of LOF is discounted.
The Lloyd's Open Form, once agreed, allows salvage attempts to begin immediately. The extent
of any award is determined later; although the standard wording refers to the Chairman of
Lloyd's arbitrating any award, in practice the role of arbitrator is passed to specialist admiralty
QCs.
A ship captured in war is referred to as a prize, and the captors entitled to prize money. Again,
this risk is covered by standard policies.

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MARINE INSURANCE ACT, 1906:The most important sections of this Act include:
4: a policy without insurable interest is void.
17: imposes a duty on the insured of utmost good faith.
18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance
and rating of the risk. Failure to do so is known as non-disclosure or concealment (there are
minor differences in the two terms) and renders the insurance voidable by the insurer.
33(3): If [a warranty] be not [exactly] complied with, then, subject to any express provision in
the policy, the insurer is discharged from liability as from the date of the breach of warranty, but
without prejudice to any liability incurred by him before that date.
34(2): where a warranty has been broken, it is no defense to the insured that the breach has been
remedied, and the warranty complied with, prior to the loss.
34(3): a breach of warranty may be waived (ignored) by the insurer.
39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the
purpose of it (voyage policy only).
39(5): no warranty that a vessel shall be seaworthy during the policy period (time policy).
However if the assured knowingly allows an unseaworthy vessel to set sail the insurer is not
liable for losses caused by unseasworthiness.
50: a policy may be assigned. Typically, a ship owner might assign the benefit of a policy to the
ship-mortgagor.
60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a
constructive total loss with the insurer becoming entitled to the ship or cargo if it should later
turn up. (By contrast an actual total loss describes the physical destruction of a vessel or cargo.)
79: deals with subrogation, i.e., the rights of the insurer to stand in the shoes of an indemnified
insured and recover salvage for his own benefit.
Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy
wording.

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TYPES OF MARINE INSURANCE POLICIES:The major types of marine insurance policies are
1. Time policy:Hull insurance is often sold in time policies, which cover risks during a stated period of time. An
insured vessel is not bound to a particular route and all voyages within the stated policy period
are covered. If a voyage is not complete at the policy's expiration date, many time policies
contain a "continuation clause" extending coverage until the boat reaches its destination.

2. Voyage policy:Voyage policies protect a certain ship traveling a certain route regardless of length of time. In
these cases the insurance would not be effective until the voyage begins and would terminate
when the voyage ends.

3. Mixed policy:This policy is the combination of time and voyage policy. It, therefore, covers the risks for both
particular voyage and for a stated period of time.

4. Floating policy:Floating policy is taken for a relatively large sum by the regular suppliers of goods. It covers
several shipments which are declared afterwards along with other particulars. This policy is most
situated to exporter in order to avoid trouble of taking out a separate policy for every shipment.

5. Valued policy:Under its terms the agreed value of the subject matter of insurance is mentioned in the policy
itself. In case of cargo this value means the cost of goods plus freight and shipping charges plus
10% to 15% margin for anticipated profit. The said value may be more than the actual value of
goods.

6. Unvalued policy (Open Policy):Where the value of the subject matter of insurance is not declared but left to be ascertained and
proved later it is called unvalued policy.
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7. Builder's risk policy:This policy is issued for more than one year. This covers the risk of damage to vessels from the
time its construction commences until its trail is completed.

8. Blanket policy:Under the condition of the blanket policy the maximum limit of the required amount of
protection is estimated which is purchased in lump sum. The amount of premium is usually paid
in advance. This policy describes the nature of goods insured, specific route, ports and places of
the voyages and covers all the risk accordingly.

9. Port risk policy:This policy covers all the risk of a vessel while it is standing at a port for particular period of
time.

10. Wager policy:Where the assured has no insurable interest in the subject matter of insurance that is known as
wager policy. As this policy has no legal effect so it cannot be taken to a court of law. If
underwrite refuses to accept the claim the policy holder cannot take any legal action against him.
It is, therefore, also called as gambling policy.

11. Special hazards policy:This policy covers special risks incident to piracy and war. It provides protection to insured
under agreement against seizure, capture, detention and other war risks.

12. Composite policy:This type of policy is purchased from more than one under writers. If there is no any motive of
fraud then insured will be indemnified by each under writer separately in case of loss.

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13. Block policy:This policy is particularly purchased to gold diggers. It covers all the risks of damage to gold
from the time of its recovery to its distinction. These types of policy have been introduced in
Africa and are very popular in the mine fields of gold.

14. Hull insurance:Hull insurance covers physical damage to an insured vessel as well as salvage costs and limited
property damage liability. It is similar to collision coverage for an automobile. Builder's risk
policies protect these same vessels during construction until they are ready for operation.

EXCLUSIONS OF MARINE CARGO INSURANCE:Loss or damage due to Delay


Loss or damage due to Insufficiency of packing
Loss or damage due to insolvency, financial default of ship owners, etc.

COMPANIES IN INDIA OFFERING MARINE CARGO INSURANCE:GSI LOGISTICS PVT. LTD, NEW DELHI
MARS SHIPPING AGENCY, MUMBAI
URANUS CLEARING AND FORWARDING SERVICES, CHENNAI
TRV FREIGHT SOLUTION PVT. LTD, NEW DELHI
FLOMIC FREIGHT SERVICES PVT. LTD

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A MARINE CARGO INSURANCE APPLICATION FORM


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2) AIR CARGO INSURANCE:A type of insurance policy that protects a buyer or seller of goods being transported through the
air. Air cargo insurance is designed to protect the insured against items damaged, destroyed or
lost. Cargo insurance is offered through insurance companies, some freight forwarders and trade
service intermediaries. The amount of coverage and deductible required with this insurance
varies, with each insurance provider.

PAST AND PRESENT OF AIR CARGO INSURANCE:The man has long dreamed of learning to fly. This dream was realized humanity in the last
century with the establishment of the Wright Brothers first powered airplane. But it soon turned
out that the possibility of air transport are not limited to transport people from one airport to
another. Therefore, from the second decade of XX century began to develop actively cargo
flights. And by the end of 1920, all formed at that time began to offer airline cargo delivery by
air.

The air transports of the time are not known for carrying capacity. However, over time all
aircraft reached great heights. If initially it was possible to carry on a plane not more than a
thousand pounds of cargo, by the end of the third decade of the XX century, appeared in the air
transport, air cargo has made possible to a million pounds of weight. And one of the first
companies to include in the active development of air cargo was Boeing. This company belongs
to the glory of creating the first mail plane in the U.S., known as the Model 40.

Before the Second World War, a commercial airline could not fully express themselves in the
development of transportation because of the limitations. But in 1941, some of them managed to
get permission for this activity. As a result, by American Airlines in 1942 have been mastered
transcontinental cargo flights. And one of the first aircraft used by the company was a Douglas
DC-3. This model is due to its flight and lifting qualities aroused great interest of the U.S. Army.

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By the end of the war were fired more than ten thousand of these aircraft. It is on the Douglas
DC-3 that makes the first trucking company Lufthansa from Europe to America in 1957.

Regular intercontinental air freight began with the appearance of Douglas DC-6. The model is
designed for the transportation of cargo, entered service in 1949. It's a plane with excellent for
the time characteristics, having increased capacity to withstand heavy payload, with a spacious
interior - extremely popular air transport equally well used for the transport of persons, and for
the delivery of goods.

The next stage in the development of trucking is the creation of a giant cargo and passenger
Boeing 747. For the release of such powerful in size aircraft had to build a new plant in the
United States, where they began to be produced from the 70's. The demand for huge Boeing
began to decline only with the beginning of the new millennium. During this time, a lot of
modifications as Boeing 747 passenger and cargo destinations. At the moment, for passenger
airlines, this model is no longer sold, but airfreight famous Jumbo Jet still performs with
surprising regularity.

Current level of development of transportation by air creates more competition among the many
companies offering trucking. And choosing among them is suitable for specific purposes can be
difficult without the help of professionals. The company "Borger" is ready to take on the full
range of services to ensure the safe delivery of any goods by air, on certification of goods and
customs clearance to the construction of the optimal route, the choice of airline and freight
forwarding to the destination.

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COVERAGE:Warehouse-to-warehouse coverage for physical loss or damage to goods caused by an external


event. Coverage for litigation and labor expenses incurred to prevent or mitigate a loss.
Coverage for landing, warehousing and forwarding charges incurred as the result of an insured
peril. It can be extended to include inland transit and warehouse risks as well as coverage for
war, strikes, riots and civil commotion, terrorism, theft, hijacking, shortage and non-delivery.

BRIEF OVERVIEW:Air cargo services are characterized by tighter control over its cargo due to short transportation
time. Short transportation time and tight control reduce the cargo exposure to theft, pilferage and
damage. Freight, packaging and labor costs can be saved dramatically with air freight services
due to faster delivery and better security.

ADVANTAGES OF AIR CARGO INSURANCE:The first and the undeniable advantage air cargo are certainly operative. Because at the moment
there is no faster shipping method than by air transport. And speed is a major factor in many
situations, so often the high cost of the rapid movement of goods does not bother the owners of
cargo.

Quick transportation of perishable goods - the main condition for the preservation of their
quality. This category includes not only products that are easily stored, and for a long time, say,
in a deep freeze.

Speed of delivery is of particular importance in air cargo related to health care. These drugs with
a limited shelf life, and organs for transplantation, and donor blood.

This also is attributed transported plants and animals, as well as the press, that sounds pretty
unexpected, but logical.
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Another advantage of air cargo is the ability to deliver to hard for all other transport areas. This
is especially true for regions, the way in which to train and freight wagons block the mountains
or rivers. Even in cases where the message cut off from the mainland area may land or water,
often bring back the goods "on the chaise," using the roads and railways, and trucks and ferries
or barges, repeatedly overloading the product. This method of delivery as a result is not only
time consuming but also very expensive, so air travel in this situation is more suitable.

And, of course, to the advantages of air cargo should include the safety of this mode of
transportation. Sending goods by air do not worry about their safety, regardless of the distance,
which he has to overcome. When air travel is lost nothing, does not deteriorate, and always
delivered on time. And to provide even more reliable delivery of cargo by air, which not only
help you make the best route to choose a suitable carrier and competently prepare all necessary
documents, but will provide professional support to the shipping destination.

DISADVANTAGES OF AIR CARGO INSURANCE:High cost of freight air. When the delivery is not as per the mentioned time, it becomes in
appropriate along with the value and importance of goods.

In cases where it is not too high, air transport is simply not profitable. Therefore, for leisurely
delivery cheap goods is another preferred type of transport, for example, by water, in the case of
delivery of cargo from one continent to another, or trains, when the destination is on the same
continent. In the latter case is not as popular, and delivery trucks.

Another negative point may be difficulties with delivery of small loads by air. When it comes to
small-sized goods, air cargo relevant is only when supplying them in large quantities. Otherwise,
the cost of shipping will be higher than the cost of transported goods. But this deficiency can
usually be overcome by choosing to air transportation of cargo delivery as urgent transport of
small parties small items required infrequently.

21

FEATURES AND CUSTOMS OF AIR CARGO INSURANCE:International transport of goods is most often carried out by air, because it is the most rapid and
secures way to deliver the goods. So you can carry not only lightweight and small things, but
also very significant in weight and size. Air Cargo can quickly move oversized cargo in small
batches over long distances. Provided competent package and secure international air
transportation cost with almost no loss of quality, regardless of the characteristics of the goods.

In case of non-flying conditions or other unforeseen circumstances, there is air cargo insurance,
which reduces the risks associated with this mode of transportation to a minimum. But the
peculiarity of international air travel is that a great deal is also customs. Customs procedures
remain virtually unchanged from the time of its formation. Moreover, they are similar enough for
freight and passenger traffic.

The main function of the customs authorities in both cases is the control of goods transported on
international flights. That's what the customs officers at airports check. In international air travel
for passengers checking the luggage at a special place on the airport. In the departure lounge
customs, inspection is carried out before the registration desk. After customs clearance
passengers are recorded in counters, they have to present a passport and issue the luggage of
transportation. Next, there is a special check conducted for the presence of prohibited items for
carriage.
To prevent unauthorized cargo, Customs cooperate with services by air monitoring. Indeed, apart
from the official flight, there are also private flights. And international air travel has a feature
that consists of the fact that the foreign aircraft in the territory of any State may be inspected only
in case of emergency. Therefore, the interaction of the air and ground services helps to take
control of the airfield, checking all aircraft for possible hiding place of facts.
There are certain rules governing international air freight. These rules are determined by the
allowable size and weight, packaging, labeling and matching contents of consignment. Flight
transported goods must comply with safety standards and do not pose a threat to other crew's
baggage and cargo ship. There are clear instructions for the transport of perishable goods.

22

Unfortunately, the rules are not always respected, and a violation of the tracking is also included
in the task control services.

VARIOUS GOODS CARRIED IN AIR CARGO:Special Handling:Fragile item transport applies for those articles that because of their characteristics, form, or
packaging may break or be damaged upon being transported by COPA AIRLINES COLOMBIA.
This type of cargo must be properly packed with materials that protect, particularly with a
cushioning material that keeps goods protected.
Some of these articles include: computers, dishes/plates, cellular telephones, LCD and plasma
TVs, ceramics, and crystal. All of these items must be in perfect condition and provided
packaging that protects them during transport.

Perishable Goods:Goods that when not kept under certain conditions are affected in a way that compromises their
essential qualities.
Perishable goods include products such as: fruits, flowers, vegetables, meats, eggs, medicines
and transplants, organs, fish, etc. This type of cargo is usually evaluated to make sure that there
is no leakage and that internal packing is sufficient for absorption if any spillage does occur
during transport.

Personal Belongings:Personal belongings must include a packing list in order to be received as cargo. If they are not
accompanied by a packing list, they must be stamped with a shipping label that relieves Copa
Airlines Colombia of any responsibility in losses during shipment. This includes luggage (excess
luggage), and household items (moves). Passengers generally find out about this cargo service
when they have excess baggage and prefer the service for its value.

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Human Remains:Human remains include:


1. Cadavers: the human body.
2. Incinerated remains: ashes of a human body.

Cadavers:
Must be embalmed and packed in this order: a zinc or iron metal box (hermetic), absorbent
material, a wooden box (casket), cardboard, and finally a wooden crate with handles.

Incinerated Remains:Must be contained in a funerary urn, stored in external packaging, and contained with sufficient
and proper cushioning material.

Note:Human remains from individuals that have passed away as a result of an infectious disease must
be cremated in order to be transported in any way.

Valuable Goods:Valuable goods are any that include gold, platinum, bank notes, securities, stock shares, cash,
etc. For the transport of said goods, commercial agreements and procedures must be agreed upon
before transport.

Live Animals:Live animals may be accepted as air cargo provided they comply with the following requisites:
They are domesticated or otherwise non-harmful animals.
They are kept in cages or packaging that is suitable and safe.
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Documentation:Dogs must be accompanied by vaccination documents.

Dangerous Goods
Are articles or substances that may pose risks to human health, safety, security, property, or the
environment.

Types of Dangerous Goods:

Explosives such as firecrackers, fireworks, ammunition, bullets, sparklers, etc.

Gases such as extinguishers, camping fuel, aerosols, sprays, inhalers, lighters, oxygen
bottles, compressed gases, etc.

Flammable liquids such as adhesives, glues, acetone, paints, resins, oil products,
varnishes, perfume products, etc.

Flammable solids such as candles, metallic dusts (zinc, magnesium), lithium, sodium,
activated carbon, etc.

Oxidants and organic peroxides such as fertilizers, ammonium nitrate, chlorine, oxygen
generators, etc.

Infectious and toxic substances such as pesticides, herbicides, disinfectants, contaminated


blood, infected samples, etc.

Radioactive materials such as smoke detectors, plutonium, uranium, and any other
materials that give off ionizing radiation.

Corrosive substances such as acids, bases, mercury, ammonia, household cleaners, batteries, etc.
Miscellaneous dangerous goods such as magnetized materials, chemistry sets, dry ice,
motorcycles, vehicles, rescue materials, etc.

VARIOUS COMPANIES PROVIDING AIR CARGO SERVICES:Road Runner Logistic Services Pvt. Ltd, New Delhi
Linear Freight Logistics India Private Limited, Mumbai
BWI Logistics Private Limited (Import Agent), New Delhi
Vrl Cargo Packers and Movers, Ahmedabad
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Phoenix International, Rajkot

WORLD'S LARGEST AIR CARGO CARRIERS:1. TOTAL SCHEDULED AIR CARGO TONNES-KMS FLOWN
2. FedEx Express - 14.579 million
3. Korean Air - 8.264 million
4. Lufthansa Cargo - 8.040 million
5. United Parcel Service - 7.353 million
6. Singapore Airlines Cargo - 7.143 million
7. Cathay Pacific - 5.876 million
8. China Airlines - 5.642 million
9. Eva Airways - 5.477 million
10. Air France - 5.388 million
11. Japan Airlines - 4.924 million

TOTAL INTERNATIONAL SCHEDULED CARGO TONNES-KMS FLOWN


1. Korean Air - 8.164 million
2. Lufthansa Cargo - 8.028 million
3. Singapore Airlines Cargo - 7.143 million
4. Cathay Pacific - 5.876 million
5. China Airlines - 5.642 million
6. FedEx Express - 5.595 million
7. Eva Airways - 5.477 million
8. Air France - 5.384 million
9. British Airways - 4.771 million
10. Cargolux - 4.670 million

26

TOTAL DOMESTIC SCHEDULED CARGO TONNES-KMS FLOWN


FedEx Express - 8.984 million
United Parcel Service - 4.260 million
Northwest Airlines - 0.949 million
China Southern Airlines - 0.860 million
American Airlines - 0.576 million
Delta Air Lines - 0.557 million
Air China - 0.531 million
United Airlines - 0.525 million
Cargojet Airways - 0.517 million
China Eastern Airlines - 0.458 million

27

AN AIR CARGO INSURANCE APPLICATION FORM

28

3) RAILWAY CARGO POLICY:Rail freight transport is the use of railroads to transport cargo as opposed to human passengers. A
freight train or goods train is a group of freight cars or goods wagons hauled by one or more
locomotives on a railway, transporting cargo all or part of the way between the shipper and
intended destination as part of the logistics chain. Trains may haul bulk material, intermodal
containers, general freight or specialized freight in purpose-designed cars. Rail freight practices
and economics vary by country and region.

When considered in terms of ton-miles or tonne-kilometers hauled per unit of energy consumed,
rail transport can be more efficient than other means of transportation. Maximum economies are
typically realized with bulk commodities (e.g., coal), especially when hauled over long distances.
However, rail freight is often subject to transshipment costs, which may exceed that of operating
the train itself, a factor that practices such as containerization aim to minimize. Bulk shipments
are less affected by transshipment costs, with distances as short as 30 kilometers (18.6 mi)
sufficient to make rail transport economically viable. However, shipment by rail is not as flexible
as by highway, which has resulted in much freight being hauled by truck, even over long
distances.
Traditionally, large shippers build factories and warehouses near rail lines and have a section of
track on their property called a siding where goods are loaded on to or unloaded from rail cars.
Other shippers have their goods hauled (drayed) by wagon or truck to or from a goods station
(freight station in US). Smaller locomotives transfer the rail cars from the sidings and goods
stations to a classification yard, where each car is coupled to one of several long distance trains
being assembled there, depending on that car's destination. When long enough, or based on a
schedule, each long distance train is then dispatched to another classification yard. At the next
classification yard, cars are resorted. Those that are destined for stations served by that yard are
assigned to local trains for delivery. Others are reassembled into trains heading to classification
yards closer to their final destination. A single car might be reclassified or switched in several
yards before reaching its final destination, a process that made rail freight slow and increased
costs. Many freight rail operators are trying to reduce these costs by reducing or eliminating
switching in classification yards through techniques such as unit trains and containerization. In

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many countries, railroads are built to haul one commodity, such as coal or ore, from an inland
point to a port.

A major disadvantage of rail freight is its lack of flexibility. In part for this reason, rail has lost
much of the freight business to road transport. Many governments are now trying to encourage
more freight onto trains, because of the environmental benefits that it would bring; rail transport
is very energy efficient.

In Europe (particularly Britain) many manufacturing towns developed before the railway. Many
factories did not have direct rail access. This meant that freight had to be shipped through a
goods station, sent by train and unloaded at another goods station for onward delivery to another
factory. When lorries (trucks) replaced horses it was often economic and faster to make one
movement by road. In the United States, particularly in the West and Mid-West towns developed
with railway and factories often had direct rail connection. Despite the closure of many minor
lines carload shipping from one company to another by rail remains common.
Many rail systems have turned to computerized scheduling for trains which has helped add more
train traffic to the rails. Many businesses ship their products by rail if they are shipping long
distance because it can be cheaper to ship in large quantities by rail than by truck; however barge
shipping remains a viable competitor where water transport is available. Economies of scale are
achieved because less labor and energy is required to haul the same amount of cargo.
In some countries rolling highway trains are used; trucks can drive straight onto the train and
drive off again when the end destination is reached. A system like this is used on the Channel
Tunnel between the United Kingdom and France. In other countries, the tractor unit of each truck
is not carried on the train, only the trailer. Piggy back trains are common in the United States,
where they are also known as trailer on flat car or TOFC trains, but they have lost market share
to containers (COFC), with longer, 53-foot containers frequently used for domestic shipments.
There are also roadrailer vehicles, which have two sets of wheels, for use in a train, or as the
trailer of a road vehicle.
There are also many other types of wagon, such as "low loader" wagons for transporting road
vehicles; there are refrigerator vans for transporting food, simple types of open-topped wagons
for transporting minerals and bulk material such as coal, and tankers for transporting liquids and
30

gases. Most coal and aggregates are moved in hopper wagons that can be filled and discharged
rapidly, to enable efficient handling of the materials.
Freight trains are sometimes illegally boarded by individuals who do not wish, or do not have the
money, to travel by ordinary means, a practice referred to as "hopping." Most hoppers sneak into
train yards and stow away in boxcars. Bolder hoppers will catch a train "on the fly," that is, as it
is moving, leading to occasional fatalities, some of which go unrecorded. The act of leaving a
town or area by hopping a freight train is sometimes referred to as "catching-out", as in catching
a train out of town.

REGIONAL DIFFERENCES:Railroads are subject to the network effect. The more points they connect to, the greater the value
of the system as a whole. Early railroads were built to bring resources, such as coal, ores and
agricultural products from inland locations to ports for export. In many parts of the world,
particularly the southern hemisphere, that is still the main use of freight railroads. Greater
connectivity opens the rail network to other freight uses including non-export traffic. Rail
network connectivity is limited by a number of factors, including geographical barriers, such as
oceans and mountains, technical incompatibilities, particularly different track gauges and railway
couplers, and political conflicts. The largest rail networks are located in North America and
Eurasia. Long distance freight trains are generally longer than passenger trains, with greater
length improving efficiency. Maximum length varies widely by system. See longest trains for
train lengths in different countries.

North America:Canada, Mexico and the United States are connected by an extensive, unified standard gauge rail
network. The one notable exception is the isolated Alaska Railroad, which is connected to the
main network by rail barge.

Rail freight is well standardized in North America, with Janney couplers and compatible air
brakes. The main variations are in loading gauge and maximum car weight. Most trackage is
owned by private companies that also operate freight trains on those tracks. Since the Staggers
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Rail Act of 1980, the freight rail industry in the U.S. has been largely deregulated. Freight cars
are routinely interchanged between carriers, as needed, and are identified by company reporting
marks and serial numbers. Most have computer readable automatic equipment identification
transponders. With isolated exceptions, freight trains in North America are hauled by diesel
locomotives, even on the electrified Northeast Corridor.
Ongoing freight-oriented development includes upgrading more lines to carry heavier and taller
loads, particularly for double-stack service, and building more efficient intermodal terminals and
transload facilities for bulk cargo. Many railroads interchange in Chicago, and a number of
improvements are underway or proposed to eliminate bottlenecks there.[4] The U.S. Rail Safety
Improvement Act of 2008 mandates eventual conversion to Positive Train Control signaling.
The Guatemala railroad is currently inactive, preventing rail shipment south of Mexico. Panama
has freight rail service, recently converted to standard gauge, that parallels the Panama Canal.
There has never been a rail line to South America, but a connection, FERISTSA, from Mexico to
Panama, has been proposed in the past.

EURASIA:Coal awaiting shipment to an electric generating plant in Germany


Train station in Tatarstan, Russia with container and tank cars
There are four major rail networks on the Eurasian land mass.
Most counties in the European Union participate in a standard gauge network. The United
Kingdom is linked to this network via the Channel Tunnel. The Marmaray project will connect
Europe with eastern Turkey, Iran the Middle East via a rail tunnel under the Bosphorus when it
opens in late 2013. Spain and Portugal are mostly broad gauge, though Spain has built some
standard gauge lines that connect with the European high speed passenger network. A variety of
electrification and signaling systems are in use, though this is less of an issue for freight,
however overhead electrification prevents double stack service on most lines. Archaic buffer and
chain couplers are generally used for freight, though there are plans to develop an automatic
coupler compatible with the Russian SA3. See Railway coupling conversion.
The countries of the former Soviet Union, along with Finland and Mongolia, participate in a
Russian gauge-compatible network, using SA3 couplers. Major lines are electrified. Russia's

32

Trans-Siberian Railroad connects Europe with Asia, but does not have the clearances needed to
carry double-stack containers.
China has an extensive standard gauge network. Its freight trains use Janney couplers. China has
ambitious plans to extend its high speed rail network to neighboring countries and far westward,
with an eventual goal of two day service to Europe.
India and Pakistan operate extensive broad gauge networks. India also has substantial meter
gauge trackage, but it has a Project Unigauge to convert much to broad gauge. Indo-Pakistani
wars and conflicts currently restrict rail traffic between the two countries to two passenger lines.
There are also links to Bangladesh and Nepal. India operates some double stack service without
the use of the special well cars needed elsewhere.
The four major Eurasian networks link to neighboring countries and to each other at several
breaks of gauge points. Containerization has facilitated greater movement between networks,
including a Eurasian Land Bridge.

SOUTH AMERICA:Brazil has a large rail network, mostly meter gauge, with some broad gauge. It runs some of the
heaviest iron ore trains in the world on its meter gauge network.
Chile and Argentina have Indian gauge networks in the south and meter gauge networks in the
north. The meter cauge networks are connected at one point, but the only rail link between the
broad gauge lines is currently not in service. Most other countries have isolated rail systems, if
any.

AFRICA:The railways of Africa were mostly started by colonial powers to bring inland resources to port.
There was little regard for eventual interconnection. As a result there are a variety of gauge and
coupler standards in use. A Cape gauge network with Janney couplers serves southern Africa.
East Africa uses meter gauge. North Africa uses standard gauge, but potential connection the
European standard gauge network is blocked by the Arab-Israeli conflict.

33

AUSTRALIA:Rail developed independently in different parts of Australia and, as a result, three major rail
gauges are in use. A standard gauge Trans-Australian Railway spans the continent.

STATISTICS:Rail freight by network, billion tonne-km

NETWORK

GT-KM

COUNTRIES

NORTH AMERICA

2863

CHINA

2451

RUSSIA

2351

Finland, Mongolia

INDIA

607

Includes Pakistan

EUROPEAN UNION

391

27 Member Countries

BRAZIL

269

Includes Bolivia

SOUTH AFRICA

115

Includes Zimbabwe

AUSTRALIA

64

JAPAN

20

U.S., Canada, Mexico

In 2011, North American railroads operated 1,471,736 freight cars and 31,875 locomotives, with
215,985 employees; They originated 39.53 million carloads (averaging 63 tons each) and
generated $81.7 billion in freight revenue. The largest (Class 1) U.S. railroads carried 10.17
million intermodal containers and 1.72 million trailers. Intermodal traffic was 6.2% of tonnage
originated and 12.6% of revenue. The largest commodities were coal, chemicals, farm products,
nonmetallic minerals and intermodal. Coal alone was 43.3% of tonnage and 24.7% of revenue.
The average haul was 917 miles. Within the U.S. railroads carry 39.9% of freight by ton-mile,
followed by trucks (33.4%), oil pipelines (14.3%), barges (12%) and air (0.3%).

Railways carried 17.1% of EU freight in terms of tonne-km, compared to road transport (76.4%)
and inland waterways (6.5%).

34

BULK CARGO:Bulk cargo is commodity cargo that is transported unpackaged in large quantities. It refers to
material in either liquid or granular, particulate form, as a mass of relatively small solids, such as
petroleum, grain, coal, or gravel. This cargo is usually dropped or poured, with a spout or shovel
bucket, into a bulk carrier ship's hold, railroad car, or tanker truck/trailer/semi-trailer body.
Smaller quantities (still considered "bulk") can be boxed (or drummed) and palletized. Bulk
cargo is classified as liquid or dry.

Bulk cargo constitutes the majority of tonnage carried by most freight railroads. Bulk cargo is
commodity cargo that is transported unpackaged in large quantities. These cargos are usually
dropped or poured, with a spout or shovel bucket, as a liquid or solid, into a railroad car. Liquids,
such as petroleum and chemicals, and compressed gases are carried by rail in tank cars

Hopper cars are freight cars used to transport dry bulk commodities such as coal, ore, grain, track
ballast, and the like. This type of car is distinguished from a gondola car (US) or open wagon
(UIC) in that it has opening doors on the underside or on the sides to discharge its cargo. The
development of the hopper car went along with the development of automated handling of such
commodities, with automated loading and unloading facilities. There are two main types of
hopper car: open and covered; Covered hopper cars are used for cargo that must be protected
from the elements (chiefly rain) such as grain, sugar, and fertilizer. Open cars are used for
commodities such as coal, which can get wet and dry out with less harmful effect. Hopper cars
have been used by railways worldwide whenever automated cargo handling has been desired.
Rotary car dumpers simply invert the car to unload it, and have become the preferred unloading
technology, especially in North America; they permit the use of simpler, tougher, and more
compact (because sloping ends are not required) gondola cars instead of hoppers.

EXAMPLES OF DRY BULK CARGO:1. Bauxite


2. Bulk minerals (sand & gravel, copper, limestone, salt, etc.)
3. Cement
35

4. Chemicals (fertilizer, plastic granules & pellets, resin powder, synthetic fiber, etc.)
5. Coal
6. Dry edibles (for animals or humans: alfalfa pellets, citrus pellets, livestock feed, flour,
peanuts, raw or refined sugar, seeds, starches, etc.)
7. Grain (wheat, maize, rice, barley, oats, rye, sorghum, soybeans, etc.)
8. Iron (ferrous & non-ferrous ores, ferroalloys, pig iron, scrap metal, pelletized taconite),
etc.)
9. Wood chips.

EXAMPLES OF LIQUID BULK CARGO:Non edible and dangerous liquids:

Dangerous chemicals

Gasoline

Liquefied natural gas (LNG)

Petroleum

Liquid edibles and non dangerous liquids:-

Cooking Oil

Fruit juices

Milk

Vegetable oil

Zinc Ash

HEAVY DUTY ORE TRAFFIC:The heaviest trains in the world carry bulk traffic such as iron ore and coal. Loads can be 130
tonnes per wagon and tens of thousands of tonnes per train. Daqin Railway transports more than
1 million tonnes of coal to the east sea shore of China every day and in 2009 is the busiest freight

36

line in the world Such economies of scale drive down operating costs. Some freight trains can be
over 7 km long.

CONTAINERIZATION:Containerization is a system of intermodal freight transport using standard shipping containers


(also known as 'ISO containers' or 'isotainers') that can be loaded with cargo, sealed and placed
onto container ships, railroad cars, and trucks. Containerization has revolutionized cargo
shipping. As of 2009 approximately 90% of non-bulk cargo worldwide is moved by containers
stacked on transport ships; 26% of all container transshipment is carried out in China. As of
2005, some 18 million total containers make over 200 million trips per year.
Use of the same basic sizes of containers across the globe has lessened the problems caused by
incompatible rail gauge sizes in different countries by making transshipment between different
gauge trains easier.
While typically containers travel for many hundreds or even thousands kilometers on the
railway, Swiss experience shows that with properly coordinated logistics, it is possible to operate
a viable intermodal (truck + rail) cargo transportation system even within a country as small as
Switzerland.

DOUBLE STACK CONTAINERIZATION:Most flatcars (US) or flat wagons (UIC) cannot carry more than one standard 40-foot (12.2 m)
container on top of another because of limited vertical clearance, even though they usually can
carry the weight of two. Carrying half the possible weight is inefficient. But if the rail line has
been built with sufficient vertical clearance, a double-stack car can accept a container and still
leave enough clearance for another container on top. This usually precludes operation of doublestacked wagons on lines with overhead electric wiring. China runs double stack trains with
overhead wiring, but does not allow two maximum height containers to be stacked.
In the United States, Southern Pacific Railroad (SP) with Malcom McLean came up with the idea
of the first double-stack intermodal car in 1977. SP then designed the first car with ACF
37

Industries that same year. At first it was slow to become an industry standard, then in 1984
American President Lines started working with the SP and that same year, the first all "double
stack" train left Los Angeles, California for South Kearny, New Jersey, under the name of
"Stacktrain" rail service. Along the way the train transferred from the SP to Conrail. It saved
shippers money and now accounts for almost 70 percent of intermodal freight transport
shipments in the United States, in part due to the generous vertical clearances used by U.S.
railroads. These lines are diesel operated with no overhead wiring.
Double stacking is also used in Australia between Adelaide, Parkes, Perth and Darwin. These are
diesel only lines with no overhead wiring. Double stacking is used in India for selected freightonly lines.

SPECIAL CARGO:Several types of cargo are not suited for containerization or bulk; these are transported in special
cars custom designed for the cargo.
Automobiles are stacked in open or closed autoracks, the vehicles being driven on or off the
carriers.
Steel plates are transported in modified gondolas called coil cars.
Goods that require certain temperatures during transportation can be transported in refrigerator
cars (or reefers - US) or refrigerated vans, but refrigerated containers are becoming more
dominant.
Center beam flat cars are used to carry lumber and other building supplies.
Extra heavy and oversized loads are carried in Schnabel cars.

38

VARIOUS COMPANIES IN INDIA OFFERING RAILWAY CARGO


SERVICES:

SAL Logistics Pvt. Ltd, New Delhi

AXIS Freight Solutions Pvt. Ltd, New Delhi

OMX, Delhi

A.R. Shipping and Logistics, Hyderabad

Royal Logistics, Chennai

Rays Logistics, Pune

39

A RAILWAY CARGO INSURANCE APPLICATION FORM

40

4) MOTOR TRUCK CARGO INSURANCE:Protection required under the Motor Carrier Act of 1935. The policy covers the motor truck
carrier if it is legally liable for the damage, destruction, or other loss of the customers property
being shipped. This includes lost packages, broken contents, and stolen articles.
This insurance policy, without question, requires careful thought and evaluation prior to
purchasing. In addition, the customer needs to be constantly evaluating the nature of his/her
freight to make sure the coverage meets the demands.
The Motor Truck Cargo policy can be, and usually is, tailored to meet customer's operations and
exposure. Significant exclusions create many situations where there might be no coverage. A
good insurance broker will ask the customer pertinent questions that properly address this
concern. The Motor Tuck Cargo policy can also contain provisions to insure the cargo when it is
in the customer's terminal or warehouse. This exposure results when the freight cannot be
delivered the same day or is consolidated with other shipments. The coverage exists so long as
there is no separate charge made for storage or warehousing.
Similar to Motor Truck Cargo is the insurance policy which protects the customer for the freight
his/her charge storage charges for. The customer needs to utilize a warehouse receipt, similar to a
bill of lading, for the storage which specifies the terms of his/her storage contract.
In truck cargo insurance, Whether the damage is caused by a collision, a fire, a load being
accidentally dumped onto a roadway, or even being run over while waiting to be loaded, the
related costs can be incredibly expensive. Its not just the cost of fixing or replacing the vehicle,
the carrier may face. It may well be the additional costs of replacing the goods in transit,
compensating the customer and supplier or paying for the clear up and associated costs of
pollution and debris removal. Never mind any legal expenses. These costs can be crippling to
any business.
Any goods which are being shipped are subject to a Bill of Lading. The bill is designed to protect
the carrier, rather than the owner of the cargo and it stipulates very clearly the maximum
amounts for which the carrier is responsible. These limits are very low if the goods are shipped
by truck - typically the default on a standard bill of lading limits liability for the carrier to $2/lb.
So if a Rolex watch (worth about $20,000) is lost in transit, the carrier would only have to pay
around $5 as compensation a long way from its true value, because it is so lightweight.
However, as part of their risk management strategies, more and more companies want truckers to
41

insure their goods while they are in transit as it allows them to transfer the risk to the cargo
carrier. Therefore the focus then falls on the transport company to have the right insurance in
place.
Not all Motor Truck Cargo policies are the same. There are companies that typically use broad
all-risk legal liability coverage which has been specifically designed to cover the risks faced by a
trucking company hauling goods. Here are a couple of examples of what that means in practice:
companies wont recommend policies that exclude liability for a load if the power unit is
detached from the trailer and the trailer is left unattended or where loads are not insured
overnight unless inside a secure yard. In a nutshell, Insurance managers will only propose
coverage for clients that will actually cover all the reasonable legal liabilities that a trucking
company would expect to have covered, not just some of their operations. The companies
approach is firmly rooted in the real world meaning the customer is covered for the risks he is
actually likely to face in the regular course of his business.
By choosing a cost-effective policy from Insurance Companies cargo carriers will be able to rest
safe in the knowledge that their goods will be covered in case something happens to it while its
in their care. Insurance Companies can create stand-alone Motor Truck Cargo Insurance policies
for cargo carriers business or include it in a wider cargo and vehicle insurance portfolio. They
can provide coverage for almost any type of cargo from logging and drilling equipment,
livestock, mobile homes to other vehicles being transported and certain types of dangerous
goods. As people would expect, there are certain exclusions in a Motor Truck Cargo policy,
which companies would explain to people in detail to help them get the very best coverage.

WHO NEEDS TRUCK CARGO INSURANCE?


A growing number of risk managers require truckers to insure their cargo. You can meet that
requirement with Motor Truck Cargo Insurance. It pays when you are responsible for damage to
or loss of the cargo due to fire, collision or even hitting or running over the cargo that you
transport on behalf of a client.

42

VARIOUS COVERAGES UNDER TRUCK CARGO INSURANCE:Primary Liability:Primary Liability Insurance coverage protects carriers from damage or injuries to other people as
a result of a truck accident. This coverage is mandated by state and federal agencies and proof of
coverage is required to be sent to them. Companies provide coverage limits ranging from
$35,000 to $1,000,000. Pricing is dependent on region, driving records, and history of the
trucking operation.
Physical Damage:Physical Damage Insurance is coverage for carriers truck and trailer. This coverage is for repair
or replacement for damage resulting from things such as collision, fire, theft, hail, windstorm,
earthquake, flood, mischief, or vandalism to your owned vehicles. Truck Insurance pricing is
based on the value of the equipment and usually pays a percentage of that value. This coverage
may be required by the lien holder of the vehicle.

Motor Truck Cargo:Motor Truck Cargo insurance is needed to protect the carrier in case of lost freight or damaged
goods. There is a maximum load limit per vehicle with this policy. Truck insurance coverage
limits can range from $10,000 to $100,000 with excess policies available upon request. Pricing
for this insurance is mainly dependant on the type of cargo being hauled.

Trailer Interchange:Trailer Interchange Insurance is coverage for the legal liability of truckers for loss or damage to
non-owned trailers and equipment which are in the insured's possession under a written trailer
interchange agreement.

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Non-Trucking Liability:Non-Trucking Liability provides limited liability insurance for owner-operators who are
permanently leased to an ICC regulated carrier. It provides limited liability protection when the
owner-operator is not on dispatch, nor pulling a loaded trailer. For example, this truck insurance
coverage would apply when the owner-operator gets their truck washed or brings their trucks
into a shop for repairs. Once the owner-operator is under dispatch, they are covered under the
Primary Liability insurance policy of the company that they are leased to.

ICC Authority:Interstate Operating Authority is permission granted by the federal government to transport
regulated freight across state lines. Interstate Operating Authority is now granted by the Office of
Motor Carrier Safety Administration under the auspices of the Federal Highway Authority.
Unlike many of the other regulations governing interstate operations, there is no minimum
weight threshold that requires compliance. Any vehicle operating for hire in interstate
transportation of regulated freight or passengers must have operating authority. Our in-house
ICC practitioner can handle all of your necessary filings.

PURPOSE OF TRUCK CARGO INSURANCE COVERAGE:The purpose of motor truck cargo insurance coverage is to protect truck drivers from liability for
transported cargo that belongs to others. Coverage is available to common carriers who are
available for hire by the general public, and contract carriers, who haul cargo under terms of a
contract that is engaged with a specific entity.

DOCUMENTATION:In order to file a claim, the trucker must have a copy of the bill of lading, which is a document
that lists all of the items that make up the cargo as well as its destination and dollar value. With a
contract carrier, this information should be listed in the actual terms of the contract.

44

COVERAGE PERIOD:Coverage begins when the trucker takes possession of the cargo, and ends when delivery is
completed. In some cases, the bill of lading specifies a brief period for which the carrier is still
liable for the cargo after delivery to allow time for the delivery to be picked up, if necessary.
This normally does not exceed 72 hours.

DIFFERENCES:Coverage can vary depending on the insurance company. Policies may carry high deductibles or
co-payments which could mean that the carrier could pay a significant portion of a claim out of
pocket. Premiums can also vary depending on the commodity that is being hauled. Coverage can
be scheduled--which provides specific coverage for each truck--or composite, which encompass
an entire fleet.

LIMITS AND DEDUCTIBLES:When people purchase Cargo insurance, they have to select a limit for their coverage. This limit
determines the maximum amount insured's insurance company will pay for damaged or
destroyed cargo. People also need to choose a deductible. A deductible is the amount they agree
to pay out of pocket when they have a claim. Choosing a higher deductible is an easy way to
lower the price of their insurance, but they have to be sure to choose a deductible that they can
afford to pay out of pocket at any time.

45

RESTRICTIONS, EXCLUSIONS OR EXCEPTIONS TO TRUCK CARGO


INSURANCE:Motor Truck Cargo Insurance can only be obtained for for-hire trucking policies of the below
body types:

Tractor

Trailer (most)

Dump Truck

Cargo Vans

Car Haulers

Flatbeds

Cement Mixers

Box Trucks

Pick-Ups (Dually)

Motor Truck Cargo Insurance is not available for limos, buses, ice cream trucks, garbage
trucks, hearses, or passenger vans.

In addition to restrictions on the body type, there are also cargo exclusions. Cargo type
exclusions include:

Shipping containers

Live animals

Property not included on a Bill of Lading

Art

Jewelry

Money

Paper

Pharmaceuticals

Tobacco, alcohol, or contraband

Property owned by the insured

Radioactive or Explosive material

Greater than 72 hour storage


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Property in custody of another carrier

Other restrictions and exclusions may apply. Motor Truck Cargo Insurance may not be available
in every state.

TOP REASONS FOR PURCHASING TRUCK CARGO INSURANCE:Protect your financial interest:The insurance will automatically cover 100% of the insured invoice value, plus an additional
10%. The policy protects cargo against "all risk" of physical loss or damage from any external
cause no matter what the percentage of loss, and with no deductible.

Enjoy peace of mind:Coverage begins as soon as the goods leave the shipper and/or supplier, continuing throughout
transit to the final destination. Insurance remains in force for 30 days after cargo discharge or
delivery, whichever occurs first. Concealed damage must be reported within three days of
delivery, excluding Saturdays, Sundays, and holidays.
Take advantage of competitive rates:Companies work hard to secure the best cargo insurance rates for their customers. Using the
centralized purchasing department, companies have negotiated competitive rates with a major
international insurance company.

Fast claims resolution:In the unfortunate event the insured do have a claim, the companies experienced staff works
hand in hand with The Navigators Group to process the insured's claim quickly and without
hassle. Claims are usually settled in 30 days or less.

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VARIOUS COMPANIES PROVIDING TRUCK CARGO INSURANCE: Hi Grow Associates, Raj Nagar
Sainath Insurance Advisor, Rammurthy Nagar
Pramod Kumar Insurance Advisor, Laxmi Nagar
Excellent Investment Advisors, Rajouri Garden
Cashless Insurance Point, Shastri Nagar

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A TRUCK CARGO INSURANCE APPLICATION FORM


49

CONCLUSION:Since there are the 4 major types of cargo insurance, people should choose the one which they
find more convenient and also as per the priority of the goods to be transferred or received within
a particular time frame. Also, choosing cargo insurance provides safety and guarantee to the
product that has been shipped, in order to recover for any losses that occur during the shipment
stage. And hence, subscribing for cargo insurance is very convenient as it saves time and energy
and is also providing guarantee for the shipment of the goods.

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CASE STUDY
Policy no.

21/2009/320 dated: 2.12.2003 specific marine policy

Consignor:

M/S Manav International, New Delhi

Consignment: Readymade Garments in container meant for export in 304 cartons


Packing:

Container

Voyage:

From Delhi to Panama

Mode:

By Road/Sea

Sum Insured: Rs.67,93,000 on C&I + 10% (Rs.60,47,817 + 10%)


Coverage:

ICC A with War & SRCC

Bill of Lading: Delhi/0393 dated 8.12.2003


Invoice nos.: 03 & 04/2003 dated 4.11.2003
Status of container: Empty, noticed at consignees warehouse.
Claim lodged: Invoice value US $ 134250 + 13425 + SF US$ 381 + Freight US$
1985 = Total US$ 150041
Course of Action suggested: Verifications with various agencies involved in transit of goods
from - consignor, carriers, shipping line, Custom Authority, local suppliers, fabricators, and
consignee
Document Verification:Export Sales for yr. ending 31.3.2003: Rs. 4,24,41,593; GP =Rs. 45,22,854, (10.6%)
and NP= Rs.16,09,936 (3.79%)
Export Sales for yr. ending 31.3.2004: Rs.1,40,22,966 including the consignment;
GP= Rs.42,88,263 (30.58%) and NP= Rs. 19,79,320 (14.11%)
Local sales if any: Nil

Valuation of Cargo:

The policy is issued as per cover note = Invoice Value + 10% (USD 134250
+ 13425 = USD 147675). Taking the conversion rate at Rs. 46 the Sum
Insured was worked out at Rs. 67,93,000.
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Documents for export: Credit sales without letter of credit. Original B/L, Invoice, Packing list,
original shipping bills along with exchange control copy and export
promotion copy were submitted to the Bank for the purpose of clearance
of GR/SDF form.
Transshipments: The container carrying the garments was loaded at port of Nhava Sheva,
India and was transshipped at port of Singapore and again transshipped
at port of Hongkong and finally the container was discharged from the
vessel APL Tourmaline at the port of Manzanillo International Terminal
(MIT) Republic of Panama on 21.01.04
Previous similar claims: one similar claim by the same client in yr.2003
Claim Settling agent: M/S W.K Webster(Overseas) Ltd. Appointed to investigate into nature of
claim and movement of cargo
Indian Investigator: M/S J C & Co. Pvt. Ltd., New Delhi to investigate into as the consignor and
consignee were closely related, to investigate into right from sampling,
approval by importer, purchases of fabric, fabrication, finishing, packing
and voyage details upto receipt of container at Consignees warehouse
Brief facts of the case: 1. 1. The representative of the exporter visited the importer with
samples and got the necessary order for export, but no record/evidence
of such person having visited the importer to seek the order was
produced
1.2. No samples approval by the importer or their photos were retained
by the exporter nor any documentary evidence to have the samplegarments fabricated/manufactured was produced.

2. The purchase order dt.20.9.2003 from the importer had following


deficiencies:
(i) No specifications, whatsoever, of the garments ordered have been
given; and from the invoice and packing list, the goods have not been
exported as per the order
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(ii) As per the terms or the order the consignor is responsible till the
goods are received by the consignee in sound condition, therefore the
consignee is not responsible for payment in this case. However the
balance sheet of the consignor showed and outstanding amount due
from the consignee only Rs. 49 lacs approx. against a consignment of
Rs.60 lacs approx.
3.1. Purchases of fabric for manufacture of garment were arranged by
one Mr. Mohan Lal under the name Ganesh Trading Co, Katra Neel
Chandni Chowk, Delhi-06 and other firms with different addresses of
which no trace was found out and firms seemed to be nonexistent/bogus.
3.2 Surprisingly, even the purchases of the fabric started and delivered
to the fabricators before the order of importer.
4.1 The issuance of fabric to fabricators started before the date of
purchase order of the importer dated 20.9.03, without knowing the kind
of garments to be fabricated
4.2 A good number of garments were received after the date of invoice
dt.14.11.2003 but incorporated in the invoice and packing list
dt.14.11.03
4.2 In certain cases there was no sign/trace of fabricator who raised their
bills against fabrication of the reported garments
5. Corrugated cartons 655 were purchased before the import order for
no reason explained
6. Details for garments not suitable for export sent for refinishing and
repacking could not be substantiated by documentary evidence
Claim by Consignee: 1.1 On arrival of the container, the Importer Baby International found the
custom seal number changed. Letter from the port to the transporter
observed the numbers of both the seals of container were not visible. On
contacting the shipping lines M/s Mitsui OSK Lines Ltd and insurance
Surveyor Mc Larens Toplis, Panama the container was opened in the
warehouse of consignee in the presence of representative of OSK Lines
and the container was found totally empty.

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1.2 The consignee handed over the orginal B/L dated 8/12/03 issued by
M/s ARK Royale Agencies Pvt. Ltd. to their agent M/s Servicio
International De Carga to obtain the copy of master B/L dt 23.12.03 of
M/s Mitsui OSK Lines Ltd. dully endorsed in favour of M/s Baby
International. At this point of time the consignee did not bring it to the
notice of the Servicio International about the changes in the seal number
except a monetary claim letter dt. 23.3.04 was later lodged on them for
loss of entire consignment.
1.3 The delivery of the container were taken on 27.01.2004 through a
driver of a trailer of M/S Intertrans by handing over the endorsed master
bill of lading dt. 23.12.03 without any remarks of erasing of seal numbers.
Normally delivery in case of illegible seal number should not have been
taken without written communication to M/s Servicio International and
M/s Mitsui OSK Lines Ltd. An open assessment delivery should be taken
to find out the condition of the cargo inside the container. If any such
open delivery assessment is refused then only the delivery should be
taken under protest. More so when a similar empty container was
received by Consignees group M/s M & M Fashions barely a few days
ago, the consignee cannot afford to adopt such casual approach towards
tampering with the seal numbers of container and engaging the same
carrier M/s Intertrans to take delivery of container independently.
1.4 Further the wt 7600 kg of goods and tare wt 1600 kg of the container
should have came to notice of the driver of Intertrans easily to judge the
emptiness of the container when the seal numbers were illegible.
Consignee instructed the driver to take delivery of the container with a
certificate from MIT mentioning about the invisibility of seal numbers.
Invisibility of seal numbers did not ascertain if the seals were original or
same. The conduct of the consignee shows that they were not worried
about the cargo but to create evidence about the abnormality of seal
numbers only at the time of taking delivery. The consignee should have
insisted for open assessment delivery. The insured should have acted as
if uninsured.
Right of Recovery: The claimant has to establish that the goods have been lost/damaged whilst
in the custody of any of the parties enroute, to protect the recovery
rights. The consignee having noted invisibility of seal numbers should
have gone for open assessment delivery to note the condition of the
54

cargo. Nothing as such has been established or even attempted to be


established. No monetary claim was lodged on M/s Mitsui OSK Lines Ltd
N Delhi, India.
Insurable Interest:

1.1 The purpose of insurance is to indemnify the insured for the financial
losses suffered by him due to the operation of insured perils. The insured
can suffer loss only when he has financial interest in the subject matter of
insurance. This financial interest is called insurable interest as defined in
the Insurance Act. Also refer ICC clause 11.1.
1.2 As per the sale contract between the consignor and the consigneethe consignor will be responsible till the consignee received the
consignment in sound condition at their warehouse. The consignment
will be shipped at the risk and responsibility of the Consignor insured.
1.3 If insured has no interest at the time of the loss, he cannot acquire it
later after he is aware of the loss. Till the time of loss the consignee had
not made payment to the consignor. However, later the consignor has
confirmed that they have received the money of sale after some time of
the loss. The policy was assigned in favour of the consignee.

Admissibility of Claim:1.1 The invoices and packing lists were not found authentic. Lack of
Utmost Good faith was observed by the surveyor.
1.2 The insured did not act as if uninsured. The insured did not protect
the recovery rights.
1.3 As per the BL of dt 23.12.03 of M/s Mitsui OSK Lines Ltd. Mentions
place of delivery as Colon Door, which seems to be a case of door
delivery. But the consignee preferred to take delivery at MIT port and
made their own transportation arrangements from Port to their
warehouse without any consignment note issued by the transporter,
Intertrans. It shows that the contract of carriage entered into with the
shipping lines was terminated by the Consignee and the consignee
carried the container from MIT port their warehouse at their own risk
and responsibility.
1.4 The contract of carriage was terminated at MIT port and the
Consignee was duty bound to take open assessment delivery or delivery
under protest after survey by insurance surveyor since there was
apparent doubt about loss/damage to the cargo.
55

1.5 The claim of the consignee is not admissible for want of Insurable
interest.

Question:

What kind of policy was issued in this case? What was the valuation of
the policy? Whether freight was covered?

Question:

The rate of profit increased despite reduction in sale? Is the sale to single
importer-buyer ! Does it Show some close link between seller and buyer ?

Question:

What is insurable interest? Whether the insurable interest in this case is


transferred with the assignment of the policy in favour of consignee?

Question:

What is recovery right? Why recovery rights are not protected in this
case?

Question:

Should the claims have been lodged by the Consignor on the insurer
instead of Consignee. What went wrong, where the open assessment
survey should have been conducted to remove the doubts in this case?

56

References

1.

J. Franklin, The Science of Conjecture: Evidence and Probability Before Pascal (Baltimore: Johns
Hopkins University Press, 2001), 273-278.

2.

Palmer, Sarah (October 2007). "Lloyd, Edward (c.16481713)". Oxford Dictionary of National
Biography. Oxford University Press. Retrieved 16 February 2011.

3.

Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. ("The Good Luck") [1991]
2 WLR 1279 and at 1294-5

Bibliography

Birds, J. Birds' Modern Insurance Law. Sweet & Maxwell, 2004. (ISBN 0-421-87800-2)
Donaldson, Ellis, Wilson (Editor), Cooke (Editor), Lowndes and Rudolf: Law of General
Average and the York-Antwerp Rules. Sweet & Maxwell, 1990. (ISBN 0-420-46930-3)
John, A. H. "The London Assurance Company and the Marine Insurance Market of the
Eighteenth Century," Economica New Series, Vol. 25, No. 98 (May, 1958)
Roover, Florence Edler de. "Early Examples of Marine Insurance," Journal of Economic
History Vol. 5, No. 2 (Nov., 1945),
Wilson, DJ, Donaldson (1997). Lowndes and Rudolf: General Average and the YorkAntwerp Rules. British Shipping Law Library: Sweet & Maxwell.

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