القدس الفني للتأمين Standard Cargo Insurance ---Three Basic Policies (in the Old Cargo Clauses)

Standard Cargo Insurance ---
Three Basic Policies (in the Old Cargo Clauses)

The term All Risks is misleading as not all the risks are covered. The All Risks (A.R.) is the broadest form of coverage commonly encountered in exporting. It covers all risks of physical loss or damage from any external causes irrespective of percentage.

If the assured wishes to be covered against the risks of war, strikes, riots, and civil commotions, the insurer deletes the exclusions in the Institute Cargo Clauses and endorses the special clauses, that is, the Institute War Clauses and Institute Strike Clauses, on the insurance policy and the assured pays an additional premium.

Institute Cargo Clauses (With Average)

The With Average (W.A.) is sometimes called the With Particular Average. In insurance parlance, the word "particular" means partial, and the word "average" means loss. As such, the words "with average" and "with particular average" mean including partial loss.

The With Average (W.A.) is a less inclusive form of coverage than the All Risks. It covers against total loss and partial loss caused by the perils of the sea (i.e., the vessel has been stranded, sunk, burnt or been in a collision with other vessels or external substances other than water, such as ice), jettison of cargo, barratry (i.e., negligence, fraud or wrongful acts of the ship's master and/or crew resulting in injury or loss to the ship's owner), and other like perils.

The partial loss, however, is subject to a franchise being written into the policy. The percentage of franchise can be 3% (or other percentage as specified) of the value of the shipment as agreed between the insurer and the assured. If the loss is less than the indicated franchise of 3% (or other percentage as specified) the assured cannot claim the loss. However, if the loss is equal to or more than the indicated franchise, the assured can claim the loss in full amount without any deduction from the insurer.

Instead of a franchise the insurer and the assured may agree on an excess (deductible). The percentage of excess can be 3-10%. If the loss is equal to or less than the indicated excess, the assured bears the loss, that is, cannot claim the loss. However, if the loss is more than the indicated excess, the assured can claim the loss minus the deduction of the percentage of excess specified. In other words, the assured will always shoulder a percentage of the loss regardless of the amount of the loss.

Institute Cargo Clauses (Free of Particular Average)

In insurance parlance, the words "free of" mean the insurer (the insurance company) is not liable for whatever follows the words "free of". The words "particular average" mean partial loss. As such, the words "free of particular average" mean excluding partial loss.

The Free of Particular Average (F.P.A.) is the narrowest form of coverage. It covers against total loss. When partial loss is specifically covered in the policy, it is recoverable from the insurer only if the loss is the result of the carrying vessel being stranded, sunk or burnt, on fire, or in collision.