Insurance Knowledge for Ocean Freight Transportation Logistics Shipment

In international merchandise trade, insurance is an indispensable condition and link. Among the insurance knowledge for ocean freight logistics, the largest in terms of business volume and the broadest in scope is ocean cargo transportation insurance.

The insurance clauses for cargo transported by sea are divided into two categories: basic insurance clauses and additional insurance clauses.

1. Basic insurance coverage includes Free from Particular Average (F.P.A), With Average or With Particular Average (W.A or W.P.A), and All Risk (A.R.).

(1) The scope of liability for平安险：

①In the event of total loss or constructive total loss of the insured goods due to natural disasters during transportation, the goods loaded onto each barge, when transported by barge or away from a steamship, shall be deemed as one consignment.

② Due to an unexpected accident involving the transportation vehicle, there has been a total or partial loss of goods.

Under the circumstances of an unexpected accident involving the transportation vehicle, the goods suffered total loss due to natural disasters at sea, causing them to fall into the ocean before and after the incident.

④ Total or partial loss due to cargo falling into the sea during loading, unloading, or transshipment.

The insured is entitled to reasonable expenses incurred for the salvage, prevention, or mitigation of loss of goods covered under the policy, but not exceeding the insurance amount of the salvaged goods.

⑥ Losses caused by unloading at refuge ports following the stranding of the transportation vehicle, as well as special expenses incurred at intermediate ports and refuge ports for unloading, warehousing, and transportation of goods.

⑦ Burden, apportionment, and assistance costs for joint seamen.

The transportation contract includes a "Collision Liability Clause," according to which the cargo owner is responsible for reimbursing the shipowner for their losses.

(2) Water Damage Insurance Coverage: In addition to the responsibilities of the All Risks coverage, it also covers partial losses of insured goods caused by natural disasters.

(3) Coverage Scope of All Risks: In addition to the liabilities of平安险 and 水渍险, it also covers total or partial losses of the insured goods caused by general external reasons during transportation.

2. Additional insurances are an expansion and supplement to the basic insurance coverage and cannot be insured separately. They are categorized into general additional risks and special additional risks. General additional risks include 11 types, such as: Theft, Pilferage and Nondelivery (T.P.N.D.), Fresh Water and/or Rain Damage, Risk of Shortage in Weight, Risk of Leakage, Risk of Intermixture and Contamination, Risk of Breakage and Breakage, Risk of Odour, Sweating and Heating Risk, Hook Damage Risk, Breakage of Packing Risk, and Risk of Rust. Special additional risks include: Failure to Deliver Risk and Import Duty Risk.Port Duty Risk, On Deck Risk, Rejection Risk, Aflatoxin Risk, Sellers Contingent Risk, Fire Risk Extension Clause for Storage of Cargo of Destination Hong Kong Including Kowloon, or Macao, Ocean Marine Cargo War Risk, etc.

Section 3: Insurance Liability Period. In accordance with international insurance industry practices, the basic insurance policy employs the "Warehouse to Warehouse Clause" (WW Clause), which means the insurance liability commences from the warehouse or storage location from where the insured goods are dispatched, as stated on the insurance policy, and covers the normal transportation process, including marine, land, inland river, and barge transportation, until the goods reach the warehouse of the consignee as specified in the insurance policy. However, the liability does not exceed 60 days after the goods are discharged from the sea vessel. General additional risks are generally included in the coverage of all risks, and those who have insured all risks do not need to purchase any additional general risks. It should be noted that all risks do not cover all types of losses caused by various risks. The coverage of the marine war risk, a special additional risk, includes losses caused by war, acts of war,敌对行为, armed conflict, or piracy, as well as losses resulting from seizure, detention, confiscation, prohibition, or arrest. It also includes losses caused by conventional weapons (including mines, torpedoes, bombs), and losses arising from general average sacrifice, contribution, and salvage expenses due to the aforementioned reasons. However, it does not cover losses caused by atomic bombs, hydrogen bombs, or other thermal nuclear weapons. The insurance liability period for war risk is limited to waterborne risks, starting from the time the goods are loaded onto the sea vessel or barge at the port of departure and ending at the destination when the goods are unloaded. If the goods are not unloaded from the sea vessel or barge, the insurance liability terminates automatically on the midnight of the 15th day after the sea vessel arrives at the port of destination. The insurance terms also stipulate that under the condition of insuring against war risk, additional insurance for strike risk is not charged separately.

Section 4: Exclusions of Basic Insurance Risks. Exclusions refer to losses or expenses for which the insurance does not cover, typically including non-accidental, non-casual, or risks that require special coverage. To clarify the scope of liability covered by the insurer, the "Ocean Cargo Insurance Clauses" of the People's Insurance Company of China outline the following five exclusions for basic marine insurance risks: 1. Losses caused by the intentional acts or negligence of the insured; 2. Losses resulting from the responsibilities of the shipper; 3. Losses caused by inherent quality defects or quantity shortages of the insured goods prior to the start of the insurance coverage; 4. Losses and expenses resulting from natural deterioration, inherent defects, characteristics, market depreciation, and transportation delays of the insured goods; 5. Liabilities and exclusions as specified in the war risk and strike risk clauses. The exclusions for ocean freight logistics shipping, air, land, and postal insurance are essentially the same as those for the exclusions of basic marine insurance risks.