International Trade Insurance
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Questions and Answers

What is the primary reason why marine insurance is considered the most traditional and highly developed branch of insurance?

  • Because it is the most profitable form of insurance
  • Because it is the oldest form of insurance
  • Because it has been the predominant form of transport for large cargo (correct)
  • Because it is the most complex form of insurance

    • What is the primary difference between a perils-only policy and an all-risks policy?

  • The duration of the voyage
  • The premium cost of the policy
  • The level of coverage provided (correct)
  • The type of cargo being insured

    • What is the burden of proof in a perils-only policy?

  • The burden is on the insurance company to prove the loss was due to an external factor
  • The burden is on the cargo owner to show that the loss was due to one of the listed perils (correct)
  • The burden is on the underwriter to prove the loss was due to an enumerated peril
  • The burden is on the ship owner to prove the loss was due to poor navigation

    • What is not typically covered in a standard perils-only policy?

    <p>Damage due to seaworthiness of vessel</p> Signup and view all the answers

    What is the purpose of an all-risks policy?

    <p>To provide the broadest level of coverage except for those expressly excluded in the policy</p> Signup and view all the answers

    Why do export-import companies have the option of purchasing additional coverage?

    <p>To cover risks that are not included in the standard perils-only policy</p> Signup and view all the answers

    What is the advantage of having a standardized policy across countries?

    <p>It makes it easier to compare policies across different countries</p> Signup and view all the answers

    What is the primary difference between marine insurance and other types of insurance?

    <p>The principles on which the policy is based</p> Signup and view all the answers

    What is the significance of the general average sacrifice in a perils-only policy?

    <p>It is one of the enumerated perils that is covered by the policy</p> Signup and view all the answers

    Why is marine insurance considered the most developed branch of insurance?

    <p>Because it has been the predominant form of transport for large cargo</p> Signup and view all the answers

    Study Notes

    Risks in Foreign Trade

    • Transportation risks are inherent in foreign trade due to natural forces and human error affecting safe goods movement.
    • Insurance plays a vital role in commerce, particularly in mitigating financial losses during the transit of goods over long distances.
    • Extended marine insurance is standard in export trade, covering ocean voyages and subsequent transport methods to reach overseas buyers.

    Types of Risks Faced in Export-Import Businesses

    • Political Risk: Includes government actions like confiscation, war, terrorism, and strikes impacting international business operations.
    • Foreign Credit Risk: Relates to potential nonpayment or delayed payments for imported goods, affecting cash flow.
    • Transportation Risk: Involves loss (partial or total) or damage to goods during transit, jeopardizing shipments.
    • Foreign Exchange/Transfer Risk: Concerns currency depreciation of the buyer’s country relative to the exporter’s currency, affecting payment efficacy.

    Marine Insurance

    • Marine insurance is essential in international trade, protecting against various shipment risks.
    • All-risks policies require underwriters to prove loss is due to an excluded clause, placing the onus on them for claims.
    • Additional coverage options are available through endorsements or separate war-risks policies, enhancing protection.

    Ensuring Quality in Import-Export

    • Quality assurance is crucial for building consumer trust and driving sales in the global marketplace.
    • Manufacturers must adhere to varying standards (national, regional, or international) to remain competitive.
    • While most industrial standards are voluntary, some mandatory regulations exist, especially in health, safety, and environmental sectors.
    • In Europe, consumers often demand certification proof, and EU directives mandate compliance with specific product certification standards.
    • Establishing quality standards for imports helps both suppliers create adequate products and buyers ensure safety and quality assurance.

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    Description

    This quiz assesses knowledge on insurance in the context of foreign trade, including its role in reducing financial losses and stimulating early commerce. It covers the importance of insurance in export trade and its relationship with the movement of goods over long distances.

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