Marine Insurance in International Trade
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Questions and Answers

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?

  • 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?

  • 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?

    <p>Additional coverage for risks such as water damage or contamination</p> Signup and view all the answers

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

    <p>The level of coverage provided</p> Signup and view all the answers

    Why are practices and policies more standardized in marine insurance?

    <p>Because it is a more established and traditional branch of insurance</p> Signup and view all the answers

    What is a key benefit of purchasing an all-risks policy?

    <p>It provides broader coverage than a perils-only policy</p> Signup and view all the answers

    What is a general average sacrifice?

    <p>A voluntary sacrifice of part of the cargo to save the rest</p> Signup and view all the answers

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

    <p>On the cargo owner to prove the loss was due to an enumerated peril</p> Signup and view all the answers

    Why are aviation and inland carriage insurance policies often based on marine insurance principles?

    <p>Because marine insurance is a more established and traditional branch of insurance</p> Signup and view all the answers

    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.

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