1.       OCEAN MARINE CARGO CLAUSE OF CIC

Ocean Marine Cargo Clause of the People’s Insurance Company of China was constituted in 1972 and revised in 1976 and 1981. According to the Chinese practice, scope of insurance coverage mainly has two types: basic coverage and additional coverage.

 

1.1 Basic Marine Insurance Coverage

The risks under basic coverage indicate that the risks can be covered independently but not attached to any other particular coverage. Basic coverage can be classified into three categories: FPA, WPA and All risks.

 

FPA (Free from Particular Average) refers to non-liability of indemnification to particular average. This coverage is the most limited form of cargo insurance cover under which partial loss or damage resulted from natural calamities is not recoverable from or indemnified by the insurer unless these natural calamities occur before or after the fortuitous accidents. It provides coverage for total losses and general average. (General average is defined as a partial and deliberate sacrifice of the ship, freight, cargo, or the additional expense paid to another party, undertaken for the common safety of the adventure in time of peril and/or extraordinary expenditure with the like object.)

 

WPA (With Particular Average) means that in addition to the liability scope of FPA, it also covers the partial loss that is not covered by FPA. In other words, WPA provides a more extensive cover against all loss or damage due to marine perils throughout the duration of the policy, including partial loss or damage attributed to the natural calamities themselves such as bad weather, thunderbolt, bore, earthquake or flood.

 

All risks is the most comprehensive of the three basic coverages. Even though the name of this coverage implies all risks, this coverage shall not cover against all risks or loss or damage. The coverage of all risks, however, covers wider scope which means that the insurer shall undertake, in addition to the liabilities under FPA and WPA, the liabilities to indemnify the insured the total or partial loss on the cargo insured either arising from perils of the sea or general extraneous risks during the course of transit.

 

Most cargo insurance policies adopt all risks term. According to marine cargo insurance clauses, this insurance is against all risks of loss of or damage to the subject matter insured but shall in no case be deemed to extend to cover loss, damage or expense caused by delay or inherent vice or nature of the subject matter insured, or special extraneous risks of war, strike, etc.

 

1.2 Additional insurance coverage

For example, risk of clash and breakage. Under this coverage is the risk of breakage of the fragile goods by vibration, clash or pressing.

 

 

2.       INSTITUTE CARGO CLAUSES (ICC)

As Chinese firms usually adopt CIC, insurance companies in other countries may also have their own insurance clauses to guide their insurance practice. Among them, the most important one is London Institute Cargo Clauses (ICC) which was initially published in 1912. The latest version was made in 1982 and came into force on April 1, 1983. This is widely accepted in world cargo insurance practice. It consists of six insurance clauses, namely:

1)       Institute Cargo Clauses A, or ICC (A)

2)       Institute Cargo Clauses B, or ICC (B)

3)       Institute Cargo Clauses C, or ICC (C)

4)       Institute War Clauses – Cargo

5)       Institute Strike Clauses – Cargo

6)       Malicious Damage Clauses.

 

The scope of Institute Cargo Clauses A, or ICC (A) is similar to that of All Risks under CIC. It represents the most extensive form of protection and provides all-risks cover against physical losses of and damages to the subject matter insured, including both total and partial loss. The exclusions are exclusions of general average, of unseaworthiness and unfitness, of war and of strike.

 

The scope of Institute Cargo Clauses B, or ICC (B) is similar to that of WPA under CIC.

 

The scope of risks covered by Institute Cargo Clauses C, or ICC (C) afford the minimum protection available and are really only suitable for goods which are customarily insured against major casualties only or which shipped in bulk, or where the condition of the goods is not known by the insurer.

 

Duration of Insurance

Duration of insurance is the period throughout which the insurance company undertakes and insurance liability. There are different stipulations over this clause in the world. Nearly all the cargo insurance business now includes what is called the Warehouse to Warehouse Clause (W/W Clause). CIC also adopts warehouse to warehouse clause in its insurance practice.