Podcast
Questions and Answers
What is the primary reason why marine insurance is the most traditional and highly developed branch of insurance?
What is the primary reason why marine insurance is the most traditional and highly developed branch of insurance?
- It is a mandatory requirement for international trade
- It is more lucrative than other types of insurance
- It is easier to manage risks at sea than on land or air
- Ocean shipping is the predominant form of transport for large cargo (correct)
What is a key feature of perils-only marine cargo insurance policies?
What is a key feature of perils-only marine cargo insurance policies?
- They are only available for high-value cargo
- They only cover losses due to enumerated perils (correct)
- They are mandatory for all international shipments
- They cover all risks except those excluded in the policy
What is not typically covered by a standard perils-only policy?
What is not typically covered by a standard perils-only policy?
- Loss due to fire or explosion
- Damage due to seaworthiness of vessel (correct)
- Pilferage or theft
- Loss due to stranding or sinking
What can export-import companies purchase to cover additional risks not covered by a perils-only policy?
What can export-import companies purchase to cover additional risks not covered by a perils-only policy?
What is the key difference between a perils-only policy and an all-risks policy?
What is the key difference between a perils-only policy and an all-risks policy?
Why are practices and policies more standardized in marine insurance?
Why are practices and policies more standardized in marine insurance?
What is a key benefit of purchasing an all-risks policy?
What is a key benefit of purchasing an all-risks policy?
What is a general average sacrifice?
What is a general average sacrifice?
What is the burden of proof in a perils-only policy?
What is the burden of proof in a perils-only policy?
Why are aviation and inland carriage insurance policies often based on marine insurance principles?
Why are aviation and inland carriage insurance policies often based on marine insurance principles?
Study Notes
Risks in Transportation and Foreign Trade
- Risks in transportation are inherent to foreign trade due to natural forces and human failure.
- Insurance plays a crucial role in reducing the financial burden of losses during the movement of goods over long distances.
Risks in Export-Import Trade
- Political risk: government actions, war, revolution, terrorism, and strikes that impede international business.
- Foreign credit risk: nonpayment or delays in payment for imports.
- Transportation risk: loss or damage to shipment during transit.
- Foreign exchange/transfer risk: depreciation of overseas customer’s currency or non-availability of foreign currency for payment.
Marine Insurance
- Marine policy is the most important type of insurance in international trade.
- All-risks policy provides the broadest level of coverage, except for those expressly excluded in the policy.
- Burden to prove that the loss was due to an excluded clause rests with the underwriter.
- Additional coverage can be provided through an endorsement or a separate war-risks policy.
Quality Assurance in Import-Export
- Ensuring quality is essential to win consumer confidence and sales.
- Manufacturing firms must meet new and different standards criteria to compete globally.
- Government-imposed standards exist in health, safety, food, drugs, and the environment.
- Quality standards provide a basis for assessing product quality and serve as a guide for suppliers and buyers.
Types of Marine Cargo Insurance Policies
- Perils-only policy: covers extraordinary and unusual perils, but not damage due to seaworthiness of vessel or pilferage.
- All-risks policy: provides broader coverage, except for those expressly excluded in the policy.
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Description
This quiz covers the importance of insurance in foreign trade, particularly in reducing financial losses during the transportation of goods over long distances.
