UNIT 12 Insurance I. Introduction Classifications of Insurance Concerning means of transportation, there are four kinds of basic insurance: Marine insurance Land transportation insurance Air transportation insurance Mail/Parcel transportation insurance Marine insurance was applied to losses at sea and the other three kinds of insurance just developed on its basis. II. Risks of Marine Transportation and Marine Losses 1. Kinds of Risks Risk of Marine transportation can be divided into two kinds: (1) Perils of the Sea (海上风险，“海 难”) (2) Extraneous Risks（外来风险） (1) Perils of the Sea Perils of the Sea refer to “Natural Calamities” (自然灾害) and “Accidents” (意外事故). Natural Calamities refer to the calamities caused by the forces of Nature, such as heavy weather, lightning, tsunami, earthquake, and flood. Accidents refer to the events happened unexpectedly, such as the carrying conveyance being grounded, stranded, sunk or in collision with floating ice or other objects as well as fire or explosion. (2) Extraneous Risks Extraneous Risks include General Extraneous Risks ( 一般外来风险) and Special Extraneous Risks （特殊外来风 险）. General Extraneous Risks refer to the risks arising from the general extraneous causes such as theft, rain, shortage, stain, leakage, breakage, rusting, hook damage. Special Extraneous Risks refer to the risks arising from the special extraneous causes such as war, strike, and government prohibition. Natural Calamities Perils of the Sea Risks of Accidents Marine Transportation General Extraneous Risks Extraneous Risks Special Extraneous Risks 2. Kinds of Marine Losses Definition: Marine Losses (海上损失)refer to the damage and loss of the insured goods, caused by Perils of the Sea in the course of transit. ①According to the degree of the loss, Marine Losses can be divided into two kinds: Total Loss (全部损失) Partial Loss (部分损失) Total loss means the entire loss of the whole consignment, which is composed of actual total loss and constructive total loss. Actual Total Loss Total Loss (实际全损) Constructive Total Loss (推定全损) Actual total loss refers to the total loss of an entire shipment when the property is completely lost or destroyed and of no commercial value. Constructive total loss means the loss where an actual total loss appears to be unavoidable or the cost to be incurred in recovering or reconditioning the goods together with the forwarding cost to the destination named in the Policy would exceed their value on arrival. Partial loss refers to the losses that are not covered in actual total loss and constructive total loss. ②According to the nature of the loss, Marine Losses can be divided into two kinds: General Average (GA) (共同海损) Particular Average (PA) (单独海损) General Average is a contribution made, by all parties concerned in a sea adventure, toward a loss occasioned by the voluntary sacrifice of the property of some of the parties in interest for the benefit of all. It is called general average, because it falls upon the gross amount of ship, cargo, and freight at risk and saved by the sacrifice. General Average requires four elements: (1) The danger is common in which vessel, cargo and crew all participate. (2) The danger is imminent and apparently inevitable, except by voluntarily incurring the loss of a portion of the whole to save the remainder. (3) There must be a voluntary jettison, or casting away, of some portion of the joint concern for the purpose of avoiding this imminent peril. In other words, it is a transfer of the peril from the whole to a particular portion of the whole. (4) The attempt to avoid the imminent common peril must be successful. Particular Average signifies the damages or partial losses happening to the ship, or cargo, or freight, in consequence of some fortuitous or unavoidable accidents; and it is borne by the individual owner of the articles damaged, or by their insurers. III. China‟s Marine Cargo Insurance Clause and Insurance Coverage PICC: The People‟s Insurance Company of China (中国人民保险公司) CIC: China Insurance Clause ( 中国保险条 款) 1. Contents of Ocean Marine Cargo Clause P201 2. Type of Insurance Coverage There are mainly two types of insurance coverage: basic coverage (基本险) additional coverage (附加险) Basic coverage mainly includes: FPA (平安险) WA/WPA ( 水渍险) All Risks ( 一切险) Additional coverage mainly includes: General additional coverage Special additional coverage General Additional Coverage refers to the loss caused by general extraneous risks, which includes T.P.N.D. ( Theft, Pilferage and Non- Delivery偷窃、提货不着险)，F.W.R.D. (Fresh Water and Rain Damage 淡水雨淋险)Shortage ( 短量险) ，Intermixure and Contamination (混杂、玷污险) ，Leakage（渗漏险）， Clashing and Breakage ( 碰损、破碎险)，Taint of Odor ( 串味险)，Sweating and Heating ( 受 潮受热险)，Hook Damage (钩损险)，Loss and/or Damage Caused by Breakage of Packing (包装破裂险)，Rusting（锈损险）. These additional risks cannot be covered independently and should go with FPA or WPA and are included in All Risks Coverage. Special Additional Coverage refers to the loss caused by special extraneous risks, which includes War Risk ( 战争险)， Strikes Risk ( 罢工险) ，Failure to Delivery Risk (交货不到险) ，Import Duty Risk（进口关税险），On Deck Risk ( 舱面险)，Rejection Risk ( 拒收险)， etc., among which War Risk and Strikes Risk are more common. These additional risks are usually taken act together with FPA, WPA and All Risks. 3. Calculation of Insurance Amount According to the practices of international insurance market, the insurance amount is generally calculated based on the formula: C.I.F. + 10% value, that is to say, cost of goods + insurance premium + amount of freight + a percentage of the total sum to represent a reasonable profit on sale of the goods and incidental costs like processing the claim, survey costs, possible inflation costs of replacements. It is done this way to cover the costs of transport in the policy. Especially important if the damage occurs at the final delivery point. Sometimes, buyers may request insurances to cover more than 110%. In such circumstances, the extra premium will be for buyer‟s account. 4. Insurance Documents In international business, insurance documents are generally divided into two kinds: Insurance Policy and Insurance Certificate. 4.1 Insurance Policy Insurance Policy is a formal insurance contract defining the insurance plan, its coverage, exclusions, eligibility requirements, and all benefits and conditions that apply to individuals insured under the plan. In C.I.F, it is a necessary document that the seller should provide for the buyer. Contents of the Insurance Policy 1. Title 2. Policy No. 3. The name of the insured 4. Particulars (1) insurance amount (2) description of goods (3) port of shipment and port of destination (4) name of carrying vessel (5) Date of shipment (6) Kinds of coverage 5. Name of Survey Co. and the place of claims payable 6. The place and the date of the policy issued 7. Signature 4.2 Insurance Certificate Insurance Certificate is a simplified insurance contract, certifying that an insurance policy has been bought and showing an abstract of the most important provisions of the insurance contract. But it is not a substitute for the actual policy, and is normally a non- negotiable document, that is to say, it cannot be assigned to a third party, and is unacceptable under the terms of a letter of credit and in making a claim. Letter 1 Asking the Buyer to Cover Insurance Language Points: (1) insure v. insure the goods +: with an insurance company for the sum of US$ 100,000 at the rate of 0.5% against all risks insurance n. • insurance agent 保险代理人 • insurance policy 保险单 • insurance certificate 保险凭证 • insurance commission 保险佣金 • insurance market 保险市场 • insurance amount 保险金额 • insurance company 保险公司 • the insured 投保人；被保险人 • insurer 承保人 (2) the policy the insurance policy 保险单 (3) charge the amount of money 费用 (4) regarding with reference to 有关，至于 (5) shipment In sentence “…we have insured your shipment of 5,000 sets of „Butterfly‟ Sewing Machines …”, shipment means “goods shipped”. Notes: When we cover insurance, we must take the following into consideration: – What kind of goods you want to cover insurance on, easily break or not, easily decay or not, etc. – What kind of insurance you want to cover, F.P.A., W.A. or A.R. or other additional risks. – What kind of insurance company you want to choose, national or international, or an agent. – What kind of premium you want to pay for what kind of coverage. 4. Writing Skills: When we write such letters, we should ask the buyer to cover the insurance for us, often including the following contents: •giving a reply as a answer to the last letter •expressing the requirement on the specific goods and give some suggestions on insurance •expressing expectations or greetings. Letter 2 Asking the Seller to Arrange Insurance on Buyer’s Behalf Language Points: refer you to our Order No. 320 for 200 metric tons of wood: 请你们参看我方涉及200公吨 木材的第320号订单 refer sb. to sth.: turn to, go to, for information 请…参看，参照 this order was placed on C.F.R. basis: 我们的订 单是按成本加运费订购的 at your end: in your place在你处 insure the same on our behalf against All Risks at invoice value plus 10%, i.e. $ 5,000: 将上述货物按发票金额外加 百分之十，即五千美元代我方投保综合险。 insure the same: insure the same goods on our behalf (in our behalf): in the interest of, on account of us e.g. Ken is not present, so I shall accept the prize on his behalf. On behalf of my colleagues and myself, I thank you. Another examples: Please insure (cover) the goods for 110% (120%, 150%) of the invoice value. Please insure for 10% (20%, 50%) above invoice value. refund sth. to sb.: pay back, reimburse退还，偿付 e.g. refund the deposit to you将保证金退还给你 debit note: 借记通知单。将某笔款项借记到某人的 账户(即从某人的账上提出)后给其发出的通知 draw on us at sight: 开具即期汇票向我方收款 meet with your approval: 得到你方同意 meet with: experience受到，遇到 e.g. meet with hostility/ criticism/ kindness Letter 3 Reply to the Above Letter Language Points: We acknowledge receipt of your letter…, requesting us to effect insurance on the captioned shipment for your account: 我们收到你方 要求我们对标题货物代办保险的信函，费用由你方负担。 acknowledge: v. report that one has received sth. 告知收到(某物) effect insurance: take out insurance投保 e.g. We will effect insurance for the car once we receive the money. The new ruling gives effect to the recommendations of the special committee. for your account: bear the charge by you记在你方帐下，你方付费，由 你方负担 e.g. We shall cover the goods against All Risks, and the extra premium involved will be for buyer‟s account. The policy is being prepared accordingly: 保险单正相 应办理 policy: written statement of the terms of a contract of insurance保险单 accordingly: as the stated circumstances suggest按此， 相应 for your information: the information is simply being shared and no immediate action is required or expected顺便告知 Letter 4 Asking for Excessive Insurance Language Points: We wish to refer you to our Order No. 320 for 200 metric tons of wood which is placed on C.I.F. basis. 请参阅我方据C.I.F. 条款订购200公吨木 材的第320号订单。 in accordance with: in agreement or conformity with 按照 Letter 5 Reply to the Above Letter Language Points: Broader coverage, if desired, can also be arranged on condition that the extra premium involved is for buyer‟s account. 如果你方愿意，我们也可受理更广 的保险范围，条件是额外的保险费由买房负担。 without any delay/ without delay/ without the least possible delay毫不迟延 e.g. We will send you the goods without any delay. The L/C in your favor will be established without any delay. Letter 6 Insurance Claim Language Points: local insurance surveyor: 本地一家保险验货行 surveyor: official inspector检验员，鉴定人 in the presence of the shipping company‟s agents: 在船运公司代 理人的监察下 in the presence of sb.: sb. is present in a place有某人在场 e.g. He made the accusation in the presence of witnesses. The case was invoiced as containing 100 toys. 按发票所列明， 该箱装有100个玩具。 invoice: n. (make a) list of good sold with the prices charged e.g. invoice the orders/ invoice the goods enclose the surveyor‟s report and the shipping agent‟s statement 附有保险验货行的报告书和船公司代理人的报告书 take the matter up for us with the insurers: 就此事与保险公司接 洽 take sth. up with sb.: speak or write to sb. about sth.; raise sth with sb. 向某人谈及某事，向某人提出某事 e.g. I‟m thinking of taking the matter up with my Member of Parliament. charge to our account: charge by us记在我们帐下 in connection with the insurance claim: 与保险索赔有关，涉及 保险索赔 in connection with: with reference to与…有关，涉及… e.g. I am writing to you in connection with your job application. Answer of Exercises: 1. Complete the following sentences by translating the part in Chinese into English. (1) Generally we cover insurance W.P.A & War Risk in the absence of definite instructions from our clients (在没有得 到我方顾客明确指示的情况下）。 (2) In such circumstances, the extra premium will be for buyer‟s account (由买方负担)。 (3) We hope the above information will meet your purpose (满 足你方要求）。 (4) Insurance claim (保险索赔) must be made within nine months after the goods are unloaded at the final port of loading. (5) Since the clause of the damage is within the coverage of the insurance policy (属于保险单的保险范围之内), you should claim compensation from the insurance company concerned. 2. Read the following sentences and try to find out the mistakes and make corrections. There is one mistake in each sentence. (1) We couldn‟t agree to them on the question of insurance. to → with (2) As requested, we have insured the shipment through the PICC against all risks for $56,000. through → with (3) Coverage is to be covered by the buyers. Coverage → Insurance (4) Referring with your enquiry for peanuts, we very much regret that the goods are out of stock now. with → to (5) Since the premium varies with extent of insurance, extra premium is for buyer‟s account, as additional risks are covered. insurance → coverage 3. Translate the following sentences. Part I Translate the following sentences into English. (1) 应你方要求，我方已按发票金额的110%对你方520号 订单作了投保，保险终止地为 目的港。 As your request, we have insured your Order No. 520 for the invoice value plus 10% up to the port of destination. (2) 从科沃目前的形势看，我方可以做到投保战争险，但 要交额外保险费，因为我方CIF报价没有包括这种险别。 Judging from the recent situation in Kosovo, We can cover War Risk, but it is subject to an additional premium, because our CIF quotation doesn‟t include this risk. (3) 我方希望知道你方能否为葡萄酒承保全损险，包括破 损险和偷窃险。 We shall be glad to know whether you can undertake insurance of wine against All Risks, including Breakage and Pilferage. (4) 为货物上适当的保险，可使你的货物在海运过程中遭 到丢失、盗窃和损坏时得到赔偿。 Obtaining proper insurance for your consignment will indemnify you against loss, theft, and damage to your shipment at sea. (5) 如果你方有任何关于保险方面的问题，请立即写信给 我方，我方将不遗余力地为你方服务。 If you have any questions concerning insurance, please do not hesitate to write us and we will do our utmost to serve you. Part II Translate the following sentences into Chinese. (1) We will follow our contract and adhere to our usual practice and sincerely hope that this will not affect our future business relations. 我方将依照合同，坚持惯例，并诚挚地希望这不会影响 到我们双方未来的商业关系。 (2) The franchise for the additional Risk of Breakage on such fragile articles is 5%. In other words, if the breakage is surveyed to be less than 5%, no claims for damage will be entertained. 对于这种易碎物品的破损险的免赔率为5%。换句话说， 如果调查证实货物破损率不足5%，保险公司不接受索 赔。 (3) In order to protect the goods against possible loss in case of such risks, the buyer or seller before the transportation of the goods usually applies to an insurance company for insurance covering the goods in transit. 为保护货物免遭这类风险可能造成的损失，买方或卖 方常常在运输前向保险公司提出申请为运输途中的货 物保险。 (4) You should study not only the benefits but also the terms and limitations of an insurance agreement that appears best suited to your needs. 你不仅要研究各种保险合同所标明的给予保险人的赔 偿费用，还要研究它的条件与限制，然后选出最适合 你需要的一种。 (5) The premium charged for the insurance policy is calculated according to the risks involved. 按保险单金额收取的保险费是根据风险大小计算的。 4. Translate the following letters into English: Dear sirs, We wish to refer you to our Order No. 220 for 100 “Phoenix” brand bicycles, from which you will see that this order was placed on a CFR basis. As we now desire to have the shipment insured at your end, we shall be much pleased if you will kindly arrange to insure the same on our behalf against All Risks for 110% of the invoice value. We shall of course refund the premium to you upon receipt of your debit note or, if you like, you may draw on us at sight for the same. Yours faithfully, Dear Sirs， Your shipment was received on September 20. Upon examination, we found that 8 packages are missing. We are sure that this was caused by a mistake in your shipping department. Please send the missing packages immediately. Additional shipping costs should not be charged to us. Yours faithfully, 5. Writing: Fill in the contract form in English with the particulars given in the following letter: Sales ConfirmationSales Confirmation No. 95C137 Qingdao, July 17, 2007 Sellers: Shandong Native Produce and Animal By- Products Import & Export Corporation Buyers: Smith & Trading Co., Ltd. This Contract is made by and between the Buyers and the Sellers, whereby the Buyers agree to buy and the Sellers agree to sell the under-mentioned commodity according to the terms and conditions stipulated below: Commodity: Sweet Potato Slices Specifications: As per Sample No. sp-03 with moisture not exceeding 16% (Moisture: Max. 16%) Quantity: 1000 metric tons, 5% more or less allowed Unit Price: At USD185 per m/t CIFC5% Rotterdam Total Value: USD185,000 (SAY US DOLLARS ONE HUNDRED AND EIGHTY-FIVE THOUSAND ONLY), 5% more or less allowed Packing: In bulk Insurance: To be covered by the Sellers for 110% of the invoice value against All Risks and War Risk as per CIC dated 1st Jan. 1981 (of PICC) Time of Shipment: During October 11, 2007 Port of Shipment: China port Port of Destination: Rotterdam Shipping Mark: At Sellers‟ option Terms of Payment: By confirmed, irrevocable L/C available by draft at sight to reach the sellers one month prior to the time of shipment.