Introduction to cargo insurance

Transcription

1 Introduction to cargo insurance A plain English guide to cargo insurance for UK brokers

2 Contents Introduction What is cargo insurance? Who is responsible for cover? Cargo insurance in practice Policy variations, options and extensions Sum insured calculating the value of the cargo How are premiums charged and calculated? How are policies rated by underwriters? Different types of cargo the spectrum of risk International Insurance Programmes Additional policy types Claims Insurance Premium Tax Obtaining a premium quotation what information is needed? Glossary Allianz Global Corporate & Specialty specialists in cargo insurance Index Allianz Global Corporate & Specialty: Introduction to cargo insurance

3 Introduction This insurance shall remain in force (subject to termination as provided for above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers under the contract of affreightment. Clause 8.3 of the Institute Cargo Clauses is a classic example of why many brokers feel that cargo insurance is not worth the hassle. Forced discharge, adventure, affreightment what on earth are they talking about? How can a non-specialist possibly be expected to understand this jargon? Based on this, you could be forgiven for leaving cargo well alone. But we at Allianz Global Corporate & Specialty disagree. We think that cargo insurance should be made accessible and comprehensible to non-specialists and that those brokers, who may have overlooked cargo in the past because it seems unnecessarily complex, have been missing a great opportunity. So we are committed to making cargo insurance understandable and available to UK brokers. We have completely re-designed our service and cargo product to achieve this, so that with a few clicks online, you can obtain detailed quotations and place business instantly on your clients behalf in a jargon-free and easy to use process. We haven t compromised the product in fact we have enhanced it so that in a few minutes, you can be up and running and looking after your clients cargo insurance interests. This guide is designed to support you by explaining cargo insurance in a comprehensive yet clear manner. We want to make it easy for you to look after your clients needs and this Introduction to cargo insurance is all you need to help you do so. Allianz Global Corporate & Specialty The Allianz specialists for cargo insurance

4 Allianz Global Corporate & Specialty: Introduction to cargo insurance Cargo covers a huge range of goods everything from chemicals and raw materials to components and finished goods such as household appliances, clothing or pharmaceuticals. 4 Allianz Global Corporate & Specialty: Introduction to cargo insurance

5 What is cargo insurance? Cargo insurance provides cover to goods for physical loss and damage during the ordinary course of transit. In other words, any client of yours who is either buying or selling goods which are being moved domestically or internationally, by road, rail, sea or air, is a potential cargo insurance buyer. Cargo insurance is classified (for largely historical reasons when cargo was mainly transported by sea) as a Marine risk but don t let this confuse you. Marine is just jargon in this respect cargo can be transported by any means of transport, including ships, but often by other means as well. Who needs it? In practice cargo covers a huge range of goods everything from chemicals and raw materials to components and finished goods such as household appliances, clothing or pharmaceuticals. The list is endless. This means that any business from sole traders to FTSE 100 companies which buys or sells goods, should require cargo insurance during their transportation. In virtually every town in the UK, there will be companies who should buy this cover and although the goods may vary widely, the basic cargo cover will be the same. It is possible to provide a comprehensive cargo policy to almost all clients in the UK which, with only a few specific variations, can be tailored to their needs. Typically, clients will need cover for one or more of the following activities: Import Export Inland transit UK & overseas exhibitions Buyer s Contingency and Seller s Contingency (explained below) 5

6 Why do these clients need cargo insurance? In many cases, there is no legal obligation on your clients to protect their goods in transit. However, when considering the potential risks along the logistics chain, it makes good commercial sense for all cargo to be insured. Loss of a cargo during transit is a financial risk for your client. They will need to replace the cargo if they want to maintain a good commercial relationship with their customer. Furthermore, by its very nature, the movement of goods will take them away from your clients care and custody, leaving this to freight forwarders, shipping companies and haulage companies who form the main links in the logistical movement of cargo and over whom your client sometimes has little control. Other parties often have interests that need protecting as well for example, if a bank is involved in financing the transaction, they will almost certainly insist on insurance cover to protect their interests. When considering the potential risks along the logistics chain, it makes good commercial sense for all cargo to be insured. 6 Allianz Global Corporate & Specialty: Introduction to cargo insurance

7 Legal obligations Some clients also make the understandable mistake of overlooking cargo insurance because they assume that their goods are automatically protected by the carrier or shipping company when in transit. In fact, although a third party may be responsible for the actual transportation or storage of the goods en route, their liability for any damage or loss is strictly limited in accordance with their trading conditions or by statute. Examples of legal obligation to prove liability Trading conditions/ convention Road Haulage Association (RHA) British International Freight Association (BIFA) Max. compensation value per tonne 1,300 2,000 SDR Time limits for written notification Within 7 days after termination of transit and/or date of loss 14 days after termination of transit and/or date of loss This compensation limit varies depending on the nature of the transportation: for example, the Road Haulage Association in the UK offers a maximum of 1,300 per tonne a figure which is easily exceeded by many cargoes. United Kingdom Warehousekeepers Association (UKWA) Convention Governing International Transportation of goods by Road (CMR) 100 8,330 SDR 21 days from customer s knowledge of loss or from transit termination 7 days after termination of transit and/or date of loss If the carrier or freight company is based overseas, the compensation limit which they will pay if it is found that they are responsible for damaging your client s cargo during transit may be even less and the loss may be governed by overseas jurisdiction. In addition, the client will have to seek compensation directly with third parties in a foreign country with no support or representation. A further concern is the timing of a claim: many cases become time barred only 3 days after delivery meaning that unless the client acts on immediate information, the opportunity to claim is lost for good. Warsaw Convention Carriage of goods by Air 1 SDR = 0.82 as at Jan SDRs (approx. 13,400) But perhaps the primary reason for arranging cover is that the client will be in control of their own insurance arrangements and will benefit from a policy which is specifically produced with this client s needs in mind they will not have to take a chance on a policy which was arranged to suit other, perhaps very general, requirements. 7 days from transit termination 7

8 Who is responsible for cover? When cargo is moved from A to B, a number of parties come into contact with it, each with their own responsibilities. As explained above, the actual carrier may (or may not!) take some responsibility, but it is important to understand the parts that others play in a variety of situations. Incoterms Premise or Named Place Loading Inland Freight Carrier not unloaded Customs Clearance (export) Alongside ship On-board vessel Port of Loading Port of Loading EXW Ex Works FCA Free Carrier FAS Free Alongside Ship FOB Free On Board CFR Cost and Freight CIF Cost, Insurance and Freight CPT Carriage Paid to CIP Carriage and Insurance Paid to DAF Delivered at Frontier DES Delivered Ex Ship DEQ Delivered Ex Quay DDU Delivered Duty Unpaid DDP Delivered Duty Paid 8 Allianz Global Corporate & Specialty: Introduction to cargo insurance

9 Terms of Sale The level of risk to which your client is exposed depends on the Terms of Sale of the goods: these are internationally recognised contractual agreements between seller and buyer which determine who is responsible for what during the sale/purchase (i.e. when ownership and hence responsibility for bearing the risk transfers from one party to the other.) There are established commercial terms of sale and definitions for these, which are known as Incoterms. When goods are sold or purchased, they are subject to one of these Terms of Sale and, as a broker, you need to be familiar with them to ensure that your client has the appropriate level of cover. The first thing to identify is your client s role in the transaction: is the client the Buyer or the Seller? You then need to identify the Terms of Trade under which they buy or sell goods as this will allow you to identify their insurance requirements. These terms of sale will usually be shown on your client s invoice. On-board vessel Port of Destination On-board vessel Port of Destination Customs Clearance (import) Inland Freight Named Destination What are Incoterms? Incoterms stands for the International Chamber of Commerce Terms of Sale. INCLUDING INSURANCE The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms for foreign trade. By having generally accepted international standards, disputes and uncertainty are reduced and there is little risk of interpretation slippage. First published in 1936, the most recent edition was in 2000 and is often referred to as Incoterms INCLUDING INSURANCE Risk and responsibility of the seller Risk and responsibility of the buyer Transportation costs of the seller Transportation costs of the buyer 9

10 The most commonly used terms of sale are described below: Ex Works In this situation, the seller only has to make the goods available at their premises for collection by the buyer. The buyer is responsible for everything even the loading of the goods on to the transport. In these circumstances many sellers do not concern themselves with cover beyond the factory gates. It is generally assumed that the buyer bears the risk and should arrange insurance cover for the shipment. However, unless payment has been received from the buyer and has been processed through the bank, legally the ownership has not transferred and the seller remains responsible for the goods until the buyer has paid for the cargo purchased. Furthermore, a buyer could reject the goods because, for example, they are the wrong type, in which case title or ownership is transferred back to the seller who will need insurance protection. This cover is called Seller s Contingency. Free on Board Generally abbreviated to FOB, this relates to goods being exported and means that the transfer of responsibility takes place when the goods are loaded into the transporting vehicle (for example a ship or aircraft.) The transfer from seller to buyer occurs when the goods pass the ship s rail or are loaded into the hold of the aircraft. Cost & Freight Often referred to as CFR, in this case, the seller pays for the transportation of the goods to the destination as requested by the buyer. Transfer of ownership takes place as soon as the goods pass the ship s rail in the port of shipment (as under FOB), when the seller s risk ends and the goods are at the risk of the buyer. The seller still retains the responsibility to deliver the goods but not the risk associated with the rest of the voyage beyond the ship s rail. The buyer will arrange insurance. From a UK importer s perspective this allows retention of control of the insurance arrangements. Cost, Insurance and Freight CIF is the most complete retention of risk by the seller because they retain control of the risk throughout the voyage. In this case, the seller has not only to arrange transportation of the goods but also insurance of them until they arrive at the buyer s premises. However, transfer of ownership takes place when the seller assigns the insurable interest in the goods to the buyer from the ship s rail onwards, so that in the event of a loss or damage, recoveries can be made under the one policy. This is the most favourable method for the seller to conduct the sale of goods as it enables them to control their insurance requirements. Carriage and Insurance Paid To Abbreviated to CIP, this means that the seller pays for both carriage and insurance against the buyer s risk of loss or damage, to a named place of destination. However, the seller is only required to buy insurance on a minimum coverage basis. The key difference between CIP and CIF is that the risk transfers from seller to buyer when goods are delivered into the custody of the first carrier, even though the seller will have had to arrange minimum insurance to cover the entire transit. This can be used for any mode of transportation. 10 Allianz Global Corporate & Specialty: Introduction to cargo insurance

11 The five Terms of Sale mentioned above are by far the most common for UK Cargo insurance. Others which you may come across occasionally are: FCA Free Carrier (named place) Here, the seller is responsible to deliver the goods to the carrier. Risk transfers when the seller hands over the goods into the charge of the carrier named by the buyer at the named location or point. The seller is not responsible for cargo insurance. The seller would want to insure for their own account the inland transit from factory to custody of the carrier for example, from loading on truck provided by the buyer at the seller s premises to delivery to container terminal or buyer s freight forwarders. (This is not used for transport by sea and inland waters.) FAS Free Alongside Ship (named port of shipment) The risk transfers upon delivery of goods alongside the vessel at port and date stipulated by the buyer. The seller should insure for their own account the inland transit from factory to alongside the vessel. (This is only used for transport by sea and inland waters.) CPT Carriage Paid To (named place of destination) Here, the risk transfers when the goods are delivered into the custody of the first carrier. This is similar to CIP except that seller has only to insure for own account inland transit to the first carrier s custody and can be used for any mode of transportation. this is normally used for carriage by rail or road but can be used for any mode of transportation. DES Delivered Ex Ship (named port of destination) The risk transfers when the goods are at the disposal of the buyer on board the vessel at a named port of destination. The seller should insure ocean transits for their own account and this is only used for sea or inland waterway transport. DEQ Delivered Ex Quay (or Wharf) (named port of destination) The risk transfers when the goods are at disposal of the buyer on the Quay or Wharf at a named port of destination on an agreed date. Only used for sea and inland waterway transport, here the seller should insure ocean transits for their own account. DDU Delivered Duty Unpaid (named place of destination) The transfer of risk occurs when the goods are made available to the buyer at a named place in the country of import. Used for any mode of transport, the seller should insure ocean transits for their own account. DDP Delivered Duty Paid (to named place of destination) Here, the risk transfers are the same as DDU (above) and the seller should insure ocean transits for their own account. This can be used for any mode of transport. DAF Delivered At Frontier (frontier being a specific named place, which could mean a location in the country of export) The risk transfers when the goods are placed at the disposal of the buyer at a named place of delivery at the frontier on the named date. Here, the seller should insure ocean and/or inland transits for their own account and 11

12 For each of the above Terms of Sale, as a broker you will need to look at both sides of the deal to see where your client s responsibilities lie ( Is your client a buyer or a seller? ), make the client aware of their insurance options and advise accordingly. The chart below outlines the key points in the most common 5 scenarios: Examples of legal obligation to prove liability Terms of Sale or Purchase Transfer of Risk Insurance requirements & considerations Insurance responsibility? Buyer Seller Ex Works (EXW) When goods are placed at the buyer s disposal (e.g. factory gate). Buyer, from the seller s collection point. Seller, no requirement to insure. Should purchase warehouse to warehouse insurance from their insurer. Can purchase seller s interest contingency insurance from their insurer if no previous dealings with buyer. Free on Board (FOB) When goods pass the ship s rail at the port of loading. Buyer, from the ships rail. Seller up to the ship s rail. Should purchase cover from ship s rail to nominated delivery warehouse. If seller sells FOB they need to insure the goods from their warehouse up to ship s rail. Seller can also consider a seller s interest contingency insurance. Cost & Freight (CFR) As FOB, at the ship s rail, BUT the seller still has to pay freight costs to the end destination. Buyer, from the ships rail. Seller up to the ship s rail. Should purchase cover from ship s rail to nominated delivery warehouse. If seller sells CFR they need to insure the goods from their warehouse up to ship s rail. Seller can also consider a seller s interest contingency insurance. Cost, Insurance & Freight (CIF) When goods are delivered to the buyer s final nominated delivery warehouse. Seller from their warehouse to the buyer s final nominated delivery warehouse. responsibility to insure however could consider purchasing a buyer s interest contingency insurance if no previous dealings with the seller. Responsible for insuring the goods from their warehouse through to the buyer s final nominated delivery warehouse. Carriage and Insurance Paid (CIP) When goods are delivered to the buyer s final named place of delivery (e.g. buyer s warehouse). Seller, from their warehouse to the buyer s final named place of delivery. responsibility to insure however could consider purchasing a buyer s interest contingency insurance if no previous dealings with the seller. Responsible for insuring the goods from their warehouse through to the buyer s final named place of delivery. 12 Allianz Global Corporate & Specialty: Introduction to cargo insurance

13 The key issue for your client is to try to retain control of the insurance arrangements in so far as possible. By relinquishing control, your client will be giving up certain rights and this can compromise the client s position in the event of loss or damage. 13

14 Cargo insurance covers cargo (including storage) during the ordinary course of transit. Cargo insurance in practice What is covered? Cargo insurance covers cargo (including storage) during the ordinary course of transit. The coverage provided in a typical cargo policy is defined by the technical wordings known as the Institute Cargo Clauses ( ICC ): these Clauses are standard definitions of coverage which are accepted internationally by more than 140 countries. The Institute in question is the Institute of London Underwriters which is now merged with the IUA (International Underwriters Association), an industry body representing around 100 international insurance companies. Originating from the British Marine Insurance Act of 1906, over time, governments have agreed to accept these as standard terms so that even if a cargo shipment crosses several borders, the basic rules which apply to its insurance remain consistent minimising delays or problems in the event of a claim. Almost all cargo insurance sold in the UK will use one of the three Institute Cargo Clauses as the core of cover. Additional features may be added, using either official ICC extensions, or using bespoke wordings. The three main Institute Cargo Clauses are: Institute Cargo Clauses (A) These cover loss or damage on an All Risks basis and are the widest of the three in terms of coverage. 14 Allianz Global Corporate & Specialty: Introduction to cargo insurance

15 Institute Cargo Clauses (B) These are more restricted and cover loss or damage caused by named perils, which are: Institute Cargo Clauses (C) The most restricted clauses, these named perils are: a) Fire or explosion b) Stranding, grounding, sinking or capsizing of the ship c) Overturning or derailment of the land conveyance (truck or train for example) d) Collision involving the carrying conveyance e) Discharge of cargo at a port of distress (for example, if a ship has to put in to a port en route in an emergency) f) Earthquake, lightning and volcanic eruption g) Entry of sea, lake or river water into the vessel or place of storage h) Packages totally lost during loading or unloading i) Jettison (the actual discharging overboard of the cargo usually at sea and in an emergency to, perhaps, save the ship from sinking) a) Fire or explosion b) Stranding, grounding, sinking or capsizing of the ship c) Overturning or derailment of the land conveyance d) Collision e) Discharge of cargo at port of distress f) Jettison There is also a specific set of clauses for Air Cargo Institute Cargo Clauses (Air) which refers to the transport of cargo by such means this broadly equates to the All Risks coverage provided under Clauses (A) and is normally included in most UK Cargo policies. Institute Cargo Clauses (A) are sometimes referred to as Full Cover, while Institute Cargo Clauses (B) and (C) are sometimes referred to as Named Perils. 15

16 Summary of cover Risk or cause of loss Institute Cargo Clauses A B C Allianz Global Corporate & Specialty Accidental damage Fire or explosion Stranding, grounding, sinking or capsizing Overturning or derailment of land conveyance Collision or contact of vessel, craft or conveyance with external objects (excluding water 1 ) 1Impact with ice is regarded as a valid Discharge of cargo at port of distress cause for a claim. Earthquake, volcanic eruption or lightning Malicious damage theft/pilferage General Average Sacrifice Jettison Washing overboard (deck cargo) War risks (except piracy) Sea, river or lake water entering ship, craft, hold, conveyance container lift van or place of storage Loss overboard during loading/discharge (total loss only) Cover for goods to, from and whilst at exhibitions Optional Stock cover for goods in store outside the normal course of transit. Optional Tools & samples (of goods) Optional Cover for ISM & ISPS forwarding charges Branded goods clause Fumigation expenses Allianz Global Corporate & Specialty s UK Cargo policy is based on the Institute Cargo Clauses (A) with a number of specific additions to extend cover. For most UK Cargo clients, this is the recommended minimum in motor terms, it equates to a Comprehensive cover with Institute Cargo Clauses (C) being more like a Third Party Only cover. 16 Allianz Global Corporate & Specialty: Introduction to cargo insurance

17 General Average General Average is a term used in cargo insurance which often causes confusion but is in fact very simple. It is a historic legal concept which goes back to the days when many cargoes were carried on one vessel and the owners of the cargo took collective responsibility for losses which occurred en route. General Average occurs when one of the interests involved in the voyage (for example the cargo or the vessel itself) is sacrificed for the common good of the rest of the interests. When an act of this nature occurs, the ship s Captain will usually declare a General Average. The costs or loss arising out of this event are shared collectively by all those interested in the voyage. An example could be the additional costs incurred by the vessel owners should damage arise to the ship which requires the Captain to find a port of refuge, thus preventing a total loss of the ship and of the cargo. Any additional costs associated with such a general average act would be borne by the interests involved in the voyage, but only in proportion to the value of their cargo on board, and shared collectively across all interests. Fortunately under all three Institute Cargo Clauses, General Average claims are covered. What is excluded? There are certain exclusions which are common to all three sets of Institute Cargo Clauses: Wilful misconduct of the assured (for example, if the insured deliberately sets out to damage the cargo). Ordinary leakage or loss in weight or volume, and ordinary wear and tear. Insufficiency of packing. (The policy requires that the cargo is suitably packed for the voyage and type of goods). Inherent vice. (This means damage which happens due to the nature of the subject matter insured and is inherent in the goods and is not as the result of some external cause which causes damage during the voyage). Delay. Insolvency of shipowners or charterers (referred to as JC93 ) Nuclear or radioactive weapons. Unseaworthiness of vessels or containers. War and strikes risks. Institute Cargo Clauses (B) & (C) also contain a further exclusion in respect of malicious damage for example, in the case of vandalism. Allianz Global Corporate & Specialty s UK Cargo policy is based on the ICC (A) with a number of specific additions, which broadly include: Air freight replacement Packing clause extending cover to allow for insufficiency of packing Brands clause (for branded merchandise) Extension to protect for insolvency of shipowners or charterers. Concealed damage clause Fumigation cover Additional discharge expenses Destruction by governmental authorities 17

18 From time to time conflict arises in various territories of the world and these territories are then considered as potentially high risk zones requiring individual consideration. Policy variations, options and extensions As a broker you will, of course, wish to advise your client as to the cover they require. The basic cover will be provided by the choice of one of the three Institute Cargo Clauses but it is also important to review any extras that are offered by the insurer, either as options or included as part of the standard policy. War & strikes A cargo policy can be extended to include the risks of war and strikes by adding the relevant Institute War and Strikes Clauses. It is usual that the cost of this cover is included in the premium ( inclusive of war and strikes rates ). From time to time conflict arises in various territories of the world and these territories are then considered as potentially high risk zones requiring individual consideration. At the time of writing (February 2006) the following countries were typically considered potentially high risk zones (although please note that not all insurance companies will offer war cover): Afghanistan Colombia Democratic Republic of Congo Georgia (Abkhazia, South Ossetia) Iraq Ivory Coast Liberia Pakistan Somalia Sudan Allianz Global Corporate & Specialty can offer cargo cover with war and strikes extensions for most areas, subject to customers requirements. 18 Allianz Global Corporate & Specialty: Introduction to cargo insurance

19 Exhibitions Your client may need cover for goods whilst at exhibitions. This extension offers coverage to include the merchandise while it is on exhibit (usually at a trade show or fair) and transit to and from the exhibition site (unless the merchandise is sold). For quotation purposes, you will need to identify the value of the goods in question, the maximum value per exhibition and the number of exhibitions in the UK and overseas. Tools & samples Your client may need cover for tools and samples in representatives or engineers vehicles. For quotation purposes, you will need to identify the limit per vehicle and the number of vehicles. Cover on goods whilst in store Storage cover is often needed by clients who require cover for goods outside the normal course of transit for example, when in storage in the UK by the importer pending distribution and onward sale. Where a client regularly imports goods and maintains a storage facility or requires short term cover at packers or transit warehouses beyond the normal marine voyage, they will require longer term storage cover. Usually the addition of stock cover can change a Marine cargo policy into a stock throughput cover. This not only adds storage cover but also onward transit in the UK to final destination. Cover is therefore seamless from the time that the insured s interest commences in the goods until they finally relinquish that interest. Storage cover at the warehouse will normally be subject to a premises survey. Additional information required for this extension will include the usual questionnaire that a client would complete for a property storage non-marine cover. ISPS/ISM forwarding charges The International Ship and Port Facilities Security (ISPS) code and the International Safety Management (ISM) code are international conventions which regulate maritime activity and ship management. If a ship conveying your client s cargo is unable to complete its voyage due to noncompliance with ISPS/ISM regulations, the costs involved in re-forwarding the cargo to its intended destination are covered. 19

20 Concealed damage There are times when damage to cargo is not always immediately visible. Reasonable time is therefore provided to cover this type of circumstance so that the client is not penalised because they cannot check their cargo before expiry of the cover under the policy. Concealed damage may be found up to 60 days after arrival and the client s claim will not be prejudiced by this. Excess or deductible All insurers will apply a reasonable deductible to each and every claim. Typically 100 for transits and 250 for stock are the normal excess figures in the UK. Many clients when exporting goods worldwide will require cargo insurance certificates, which are issued by the insurer to confirm the existence of cover for a specific shipment. 20 Allianz Global Corporate & Specialty: Introduction to cargo insurance

21 Certificates Many clients when exporting goods worldwide will require cargo insurance certificates, which are issued by the insurer to confirm the existence of cover for a specific shipment. These certificates are needed to ensure compliance with the terms of Letters of Credit (LOCs) which are arrangements whereby payment for exports and imports is effected through the international banking system. Most commonly used where trading partners do not have long established relationships, these LOCs are issued by banks on the instructions of the buyer to ensure payment to the seller, subject to certain terms being met. In practice, the importer (credit applicant) instructs his bank to make funds available to the exporter (beneficiary) in the exporter s country, either directly, or by using a bank in the exporter s country as an intermediary. The instruction to release payment to the exporter is conditional on the presentation by the exporter of specified documents, one of which will be a certificate of cargo insurance, providing evidence of shipment of the specified goods, within a given time limit. Almost all LOCs issued are irrevocable, so that once issued, the terms of the credit cannot be amended or cancelled without the agreement of the exporter. The use of revocable Letters of Credit is not recommended as these can be amended or cancelled by the issuing bank without the exporter s agreement. Fumigation cover Fumigation is a process whereby a cargo, damaged by infestation (usually insects or bugs), is cleansed by the application of a substance to cleanse the cargo of the infestation without damaging the cargo itself. Where infestation is apparent and cover is provided by the insurance policy then the additional costs (up to 5,000 as per Allianz Global Corporate & Specialty s standard policy wording) of the cleansing process are covered under the policy. Branded goods clause Cargo may consist of branded goods, bearing a manufacturer s trade mark or logo, and which have an inherent premium value because of the brand s reputation: for example, watches, electronics or luxury goods. In the case of damage to such cargo, the owner will want to protect those goods from being sold as salvage at reduced prices which will devalue the brand name or reputation. In these circumstances the owner retains the right to destroy the goods, return them to the manufacturing process or recondition them and recover the costs involved in the agreed circumstances. A branded goods clause is designed to provide cover for such costs. This cover is included as standard under Allianz Global Corporate & Specialty s cargo policy. Allianz Global Corporate & Specialty offers your customers online certificates via reducing paperwork and improving control. 21

22 Sum insured calculating the value of the cargo When obtaining a quotation for your client on a single shipment you will need to identify the value of the cargo in monetary terms. If your client requires an annual policy to cover all shipments (or sendings) you will need to identify the value of shipments (on an annual basis) and the basis of valuation needs to be defined. This establishes how the value of the cargo is calculated and allows effective compensation to be agreed by loss adjusters in the event of a claim. For inland transit within the UK, this is normally calculated on invoice value simply the price paid for the goods as shown on the seller s invoice (VAT is excluded). For overseas transit, import and export, this is replaced by Cost, Insurance & Freight value ( CIF as defined on page 10) plus a special loading or uplift of 10% or more. This loading is added to compensate the policyholder for the administration, interruption and a reasonable profit in the case of a loss. The uplift can be increased to around 50% although there comes a point at which most underwriters will consider the moral hazard too great as this uplift could encourage poor risk management by customers. Any uplift increases the value of the cargo and consequently increases the sum insured, as well as increasing the premium charged for the policy. What period is covered? Other than for a single shipment which covers the goods during the time the insured retains an interest and is usually on a warehouse-to-warehouse basis, most clients will require an annual policy which covers a certain volume of shipments to/from the geographical zones that the client has requested. In addition, some insurers will offer open policies these are permanent policies which are not for a defined period but have an inbuilt anniversary date which allows both client and insurer to review the cover. These covers are usually subject to declaration meaning that the client will declare shipments usually monthly or quarterly to insurers for shipments insured under the cover. These are increasingly rare because of the greater cost incurred due to the more intensive administration involved by all parties. When does cover begin and end? Under the standard Institute Cargo Clauses (A), (B) and (C), the transit commences when the goods leave the place of storage (e.g. the warehouse). The cover then continues for the ordinary course of transit the word ordinary being important. This could involve goods being sent to packers or consolidators provided the voyage or transit is not broken by the 30 day limit at any stage of the transit. Generally cover will end on delivery to the final destination (e.g. the storage depot or warehouse). It also terminates if the cargo is delivered to any warehouse or storage facility and is stored there for reasons outside the ordinary course of transit, such as for distribution. Cover also ends 60 days after the cargo is discharged from the vessel or craft which transported it overseas (this reduces to 30 days for air shipments) if the consignment has not been delivered to the final destination warehouse. 22 Allianz Global Corporate & Specialty: Introduction to cargo insurance

23 How are premiums charged and calculated? Premiums are charged and invoiced on a different basis, depending on the type of policy chosen. Annual policies For larger annual policies (typically those with a premium of 10,000 per annum or more and annual sendings of 10 million plus) the normal approach is to charge an upfront minimum and deposit premium, and a final additional premium at the end of the policy once the annual turnover is known and declared. This minimum and deposit premium is based on the maximum estimated value of sendings as specified by the client at the beginning of the policy period. At the end of the policy, the insured declares the actual value of shipments made during the period and an additional premium (an adjustment ) is paid which is calculated on a rate agreed at inception. If however, the actual premium is calculated to be less than the minimum deposit premium, no refund is available. However for the great majority of SME businesses in the UK, this is unnecessarily complicated and a flat non-adjustable premium is charged up front at inception, providing cover for 12 months. This has the benefit of not requiring adjustment at expiry, saving all parties including the broker the work involved in recalculating premiums based on shipments. Single shipment policies For these facultative policies, a one-off premium is charged covering the shipment from start to finish. Open policies The premium for these is calculated on a month by month basis, based on the value of consignments usually declared each month or quarter. Each and every shipment must be declared and a premium (a declaration premium ) charged based on the agreed rate. The policy continues to run until either party gives 30 days notice to amend terms or cancel the policy. These policies are usually subject to annual reviews at the behest of the insurer. Minimum premiums do also apply for all types of policies. Through our Duet online service, Allianz Global Corporate & Specialty offers a minimum premium of 450 to our customers as this is the most appropriate minimum for smaller UK businesses. 23

24 How are policies rated by underwriters? There is a great deal of unnecessary ambiguity about the calculation of premiums for cargo. Although some may claim that this process is a mysterious art, in fact 99% of policies for UK based customers are charged a premium based on a % rate, which is applied to the value of the customer s shipments. This premium varies for particular activities (import/export, UK transit etc), for specific locations and for types of cargo. Other considerations may also be taken into account such as method of transit, method of packing, and the specific voyage and route used and naturally claims record is also important. Premium calculation an example For a basic example, let us consider HK Exports plc manufacturers of luggage and bags which imports from the Far East to the UK, and which distributes and exports finished goods to Western Europe and rth America. The company imports shipments to the value of 3,000,000 from the Far East; has UK inland transits of 2,000,000 and exports finished goods to Western Europe ( 3,000,000) and to rth America ( 1,000,000). Type of cargo: luggage & bags import/export Activity Import/export Inland transit Import/export Import/export Total Location Far East UK Western Europe rth America Value of sending 3,000,000 2,000,000 3,000,000 1,000,000 NB: these % rates are only provided to show the calculation and do not reflect actual values. This base figure derived from a combination of cargo type, geographical area of voyage and value of goods acts as a foundation which is then fine tuned to allow for specific details or additional factors as dictated by the client s requirements, such as: Maximum limit per shipment? Buyer s/seller s interest contingency? Storage outside the ordinary course of transit? Exhibition cover? Tools & samples cover? Claims record % rate 0.08% 0.008% 0.04% 0.06% Premium 2, , , Allianz Global Corporate & Specialty: Introduction to cargo insurance

25 Different types of cargo the spectrum of cargo risk As you would expect, some cargoes are generally considered low risk whilst others are very high risk, either through their attraction to thieves or through their exposure to damage and inherent fragility. Low risk At the lowest end of the risk scale are General Approved (or Standard Risk) cargoes: this definition applies to those goods which attract no special risk in transit, storage or handling, and which are not generally susceptible to loss or damage (for example through leakage, denting or deterioration). Examples: n-cast iron or non-fragile machinery n perishable commodities Basic component parts Paper products, books, magazines Intermediate risk Typically this category includes those cargoes which in the normal course of transit are not especially vulnerable to loss or damage, unless they encounter particular hazards during the voyage, but which experience shows have higher claim rates than other goods. Examples: Furniture Foodstuffs Domestic appliances & white goods Higher risk Also referred to as Fragile and Theft Attractive cargo, this category is largely self explanatory and naturally attracts a higher premium loading. Examples: Wine, beer & spirits Glassware Pharmaceuticals Mobile phones and high tech equipment Footwear & leather goods Excluded goods All insurers will normally exclude certain goods these will either be declined as risks or may be subject to special terms and conditions, and will naturally attract a higher premium. In addition, insurers may insist on active risk management by appointing a surveyor to report on the risk. Examples: Perishable or temperature controlled cargo Bonds, share certificates Target goods such as mobile telephones, computer processors Valuables jewellery, fine art, gold and silver, diamonds etc. Livestock Antiques 25

26 Allianz Global Corporate & Specialty can work with our clients and brokers to offer risk surveys and loss prevention advice, either through our in-house Risk Services team or via a network of external specialist companies. How can clients reduce premiums? Naturally it is in the interests of all parties to reduce the risk of loss or damage to cargoes. Your clients will benefit from adopting a proactive approach to risk management and loss prevention, working with insurers and specialist risk managers to ensure safe delivery of goods, thereby protecting their customer relationships as well as their cashflows. This is a highly specialist area and it is increasingly common for larger clients to appoint in-house specialist risk managers to address loss prevention and overall cargo security. Other clients may choose to seek professional advice from one of the specialist firms in this area who will work alongside all parties in the logistics chain to identify areas of vulnerability and to recommend improvements. In general terms, the following can mitigate or reduce the likelihood of a loss occurring: Good risk control through proactive identification of key risks and remedial action. Utilising well established freight forwarders and carriers who retain control of the risk throughout the transit. High quality packing to protect the cargo throughout the transit thus reducing the incidence of claims. Buying goods on a CFR/Ex Works or selling on a CIF basis thus retaining control of the insurance risk. Risk management of the transit and storage elements that are susceptible to losses. 26 Allianz Global Corporate & Specialty: Introduction to cargo insurance

27 International Insurance Programmes For multinational companies that invest and trade on a global basis, specialist bespoke International Insurance Programmes (IIPs) are normally needed. These offer clients the opportunity to adapt policies designed for specific territories into one centralised Master Programme, which insures global exposures by combining local policies on a centralised and co-ordinated basis. For example, the client may have operations in many different locations around the world each with local insurance policies. One centrally coordinated IIP is then created to provide harmonised global coverage, over and above that provided locally. and operational efficiencies, through consistency across the programme, as well as centralised access to the support of a worldwide network. IIPs can only be offered by global insurers with a worldwide network of representation and are always designed on a bespoke basis. Most UK businesses will not need the protection of such a programme but if your client has extensive worldwide exposure, combined with local policies, you will need to work with a specialist provider to put together a bespoke solution. See for more information and contact details. The International Insurance Programme in practice PARENT POLICY (Master cover) Difference in limits Difference in conditions The IIP therefore comprises a central master policy providing global coverage but coordinated with locally issued primary policies. This master programme provides Difference in Conditions/Difference in Limits (DIC/DIL) coverage as required. It therefore offers harmonised cover for multiple risks in multiple locations, but negotiated and managed centrally. The benefits of the IIP approach Policy limits and conditions Allianz Mexico Global Corporate & Specialty Poland Indonesia Thailand USA Allianz Global Corporate & Specialty Parent Policy Standard local policies per country IIPs allow the risk manager to insure risks consistently and with relevant terms and conditions which are recognised across the global market. As a result IIPs support a uniform risk management philosophy and aggregate buying power at a corporate level. Customers benefit from economies of scale A Controlled Master Programme combines the advantages of both admitted and non-admitted programmes. It involves the combination of Allianz Group s global capabilities with our locally admitted operations. This means that uniformity of cover can be achieved, and central control put in place, but without facing local restrictions and regulations. 27

28 Allianz Global Corporate & Specialty has extensive experience of working with other Allianz companies to provide comprehensive package policies for clients combining cargo insurance with non-marine policies for property, motor and other risks. Additional policy types Carriers & freight forwarders liability This is a type of insurance which is taken out by carriers & freight forwarders to cover them for loss or physical damage to goods whilst in their care. Carriers are usually haulage companies, shipping lines or airlines. When they accept cargo to be shipped they have a common law duty to take care of the goods whilst in their care, custody or control. If they are found liable for goods damaged during this time they will be liable for the loss or damage. Freight forwarders pack, store and arrange transportation for cargo. They also have a similar liability whilst the cargo is in their care, custody or control. Package policies Package policies offer the client a seamless and comprehensive solution for a policyholder s total insurance interests. A true package policy will embrace property, liability, motor fleet, marine and storage plus goods in transit. 28 Allianz Global Corporate & Specialty: Introduction to cargo insurance

29 Claims What do you do in the event of a claim? As a broker you will need to be able to advise your client in the event of a claim, so that the impact on the client s business is minimised and the claim is settled fully and fairly as a matter of urgency. When clients receive goods in a damaged state, you should advise them to follow a simple procedure: 1. Avoid giving a clean receipt to the carrier. 2. Where the client receives goods delivered by container, please ensure that the container seals are examined by a responsible official. 3. Signs of damaged, broken or missing seals should be claused (noted) on the delivery documentation. 4. The damaged or irregular seals should be retained for subsequent identification. 5. If possible, insist on an immediate inspection or survey by the carriers or their representatives. 6. Advise your broker to notify the claim to the insurer immediately but most certainly within 3 days of delivery. 7. Various documents are normally required to process a cargo claim. Advise your client to provide the following documents to accompany the claim: Packing list Invoice Original transit contract such as a bill of lading Delivery receipt Evidence of the claim against the carrier Freight invoice Repair estimate if applicable The ability to manage and settle international claims worldwide in a prompt and efficient manner is the acid test of a cargo insurer. This requires an international network of claims agents who can be relied upon to respond without delay: Allianz Global Corporate & Specialty works with a network of over 300 selected agents in 120 companies making sure that our clients have access to local services on a worldwide basis. Overseas claims The above procedure applies, although the insurer is likely to retain the services of an overseas claims settling agent. If losses occur in the country of destination then the consignee (buyer) will advise the overseas claims settling agent and the same procedure will be followed as above. The claim will be referred back to insurers for approval and subsequent payment. The name and address of the overseas claims settling agent will appear on the certificate of insurance or can be obtained from the insurer. 29

30 Insurance Premium Tax Insurance Premium Tax (IPT) is imposed on certain insurance premiums. It is administered by H.M. Customs and Excise, and is payable at a rate of 5% of gross taxable premiums, including commissions payable to brokers. Example 1. Goods insured whilst in transit within the UK (excluding Isle of Man, Channel Islands) 2. Goods insured whilst in transit within the UK under an FOB, or CFR, or similar sales contract Exempt X Taxable X De minimis limits 3. Seller s Interest and Buyer s Interest in respect of goods in transit between the UK and any other country X If the premium relating to a contract is 500,000 or less and the taxable element of the premium is less than 10% of the whole then the contract is deemed to be exempt from IPT. 4. Goods insured whilst in transit between the UK and any other country 5. Storage of goods whilst in the normal course of transit as covered by the Institute Cargo Clauses Duration Clause X X Exempt risks Certain classes of insurance are exempt from IPT. Among the exemptions is insurance on goods in international transit. The table to the right summarises the situation: 6. Storage of goods not covered by the Duration Clause of the Institute Cargo Clauses 7. Storage of goods when insured under a stock throughput policy where the storage period is limited to 60 days average (International movements) 8. Goods insured whilst being distributed within the UK and covered under a stock throughput policy (International movements) X X X 9. Household Goods and Personal Effects belonging to a person who habitually resides within the UK and insured whilst in transit domestic or international X 10. Household Goods and Personal Effects belonging to a person who does not habitually reside within the UK insured whilst in transit domestic or international X 11. Demonstration or exhibition equipment being sent overseas for a period of time and then being returned to UK X 12. Company tools, representatives samples and equipment, employees tools and equipment insured whilst in transit, domestic or international: a. Principle office address within UK b. Principle office address outside UK X X 13. Any contract of reinsurance X 30 Allianz Global Corporate & Specialty: Introduction to cargo insurance

31 The Duet online facility makes offering cargo insurance easy, simple and quick. 31

32 With answers to a few simple questions, using Allianz Global Corporate & Specialty s Duet service you can obtain and accept a quotation and download, or print policy documentation for your clients all within a few minutes. Obtaining a premium quotation what information is needed? For the great majority of cargo enquiries, underwriters will only need answers to a limited number of questions to provide a quotation. The key information which you the broker need to obtain from your client is as follows: Client name What is the name (including postcode) of the insured? Policy period Does the client require an annual policy or a policy for a single shipment? Cargo type What type of cargo is being transported? rmally the goods will fall into one of a number of standard categories such as Bulk Chemicals, Computer Software or Electrical White Goods. You may also be asked to specify this in a little more detail. Policy inception What is the policy start date? Value of sendings in s & geographical areas What is the total value of sendings (i.e. cargo shipments) covered by the policy for the period in question? Within the UK use invoice value Import/Export by world region (Western Europe, Eastern Europe, rth America, Far East, Middle East & Africa, Rest of World.) Use CIF as basis of valuation plus 10% (or additional uplift if required to allow for incidental costs in the event of a claim.) Buyer s or seller s contingency Does the client require Buyer s (or Seller s) Interest Contingency cover (in case goods are rejected by the other party in the sale.) See page 10 for more details. 32 Allianz Global Corporate & Specialty: Introduction to cargo insurance

33 If required, provide figures for the total value of sendings for which this is needed (for the policy period) and the maximum value per shipment. Limit per shipment What is the value per shipment, both for international shipments and for domestic shipments? For UK inland (domestic) transit, provide values for own vehicles and/or third party vehicles, if required. Stock cover Does the client need stock cover for storage outside the normal course of transit? If so: Will the goods be in store for more than 60 days? This is needed for IPT calculations. What is the address(es) of the storage premises? Are the storage premises protected by a NACOSS/NSI redcare alarm? Is the building of standard construction? (i.e. of brick/stone/concrete walls and tiled or slated roof) What value of stock cover will be required at each storage address? Exhibition cover Does the client require cover for goods and merchandise whilst en route and at exhibitions and trade fairs? If so: Will this cover be for more than 30 days per annum? How many exhibitions in the UK per annum? Rest of world per annum? For each of UK and Rest of World, what limit is needed (value of goods) per exhibition? Tools & samples cover Does the client need cover for his tools and samples whilst in transit in vehicles (e.g. for sales representatives)? If so: How many vehicles will be covered? What limit is needed for each vehicle? Claims history Has the client claimed for loss or damage to cargo in the last three years? If so: How many claims? What is the total value of these claims? 33

34 Glossary ALL OTHER PERILS & MISFORTUNES AVERAGE AVERAGE AGREEMENT AVERAGE CLAUSES AVERAGE IRRESPECTIVE OF PERCENTAGE BARRATRY Phrase in cargo policy meaning perils of the same nature as those described specifically in the Perils clause. Any partial loss or damage, due to insured perils. Document signed by cargo owners by terms of which they agree to pay any General Average contribution properly due so that cargo may be released after a General Average loss has occurred. Clauses in cargo policy that determine the amount of Particular Average loss recovery. The broadest with average clause. Losses by insured perils are paid regardless of percentage. Fraudulent, criminal, or wrongful act by ship's captain or crew which causes loss or damage to the ship or cargo. BILL OF LADING CARGO WAR RISK POLICY CERTIFICATE OF INSURANCE OR SPECIAL POLICY CONDITION PRECEDENT Contract of carriage between shipper and steamship company which is the ship owner s receipt for the goods and is the document of title to them. A separate cargo policy covering cargo while waterborne only (except at transhipping point, which may be on land or water). Insures against war risks. A document prepared by the insured, the producer, or the insurance company to provide evidence of insurance to the buyer or bank for an export/import shipment. The certificate contains an abstract of the more important conditions in the policy. A condition of the policy with which the insured must comply for any claim to be recoverable under the policy. If the insured fails to comply with a condition precedent they will not be able to recover that claim under the policy. BASIS OF VALUATION The method of establishing the Agreed Value of the Goods and upon which you should calculate declarations under the policy. CONSIGNEE Individual or company to whom cargo is shipped or consigned. 34 Allianz Global Corporate & Specialty: Introduction to cargo insurance

35 CONSIGNOR CONVEYANCE CONSTRUCTIVE TOTAL LOSS (CTL) DECLARATION DEDUCTIBLE DEVIATION ENDORSEMENT FACULTATIVE POLICY FPAAC (Free of Particular Average, American Conditions) FPAEC (Free of Particular Average, English Conditions) GENERAL AVERAGE The seller of the goods being consigned. The method of transport of the goods for which we insure you as shown in the policy. An instance in which the cost of recovering and/or repairing damaged goods would, when recovered or repaired, exceed the insured value. Form filled out by assured and sent to the insurance company when reporting individual shipments coming within the terms of an open policy. The amount noted on the schedule to be deducted from any claim settlement. A vessel going to some other point or taking some course other than that described in the Bill of Lading. A written alteration to the terms of the policy. A one-off policy produced for a single cargo shipment. Average clause that limits recovery of partial losses under the Perils clause to those losses directly resulting from fire, stranding, sinking, or collision of the vessel. Same as FPAAC except that partial losses under the Perils clause are fully recoverable if the vessel has been stranded, sunk, burned, been on fire, or in collision, without requiring that the damage actually be caused by one of these perils. Loss resulting from a voluntary sacrifice of any part of the vessel or cargo, or an expenditure to safeguard the vessel and the rest of the cargo. When such a loss occurs, it is paid on a pro rata basis by the ship owner and all cargo owners. GOODS GROSS PROCEEDS GROSS VALUE GROUPAGE INVOICE INSURED PERIL INSURED VALUE JETTISON LANDED VALUE The subject matter insured, being those types of goods described in the schedule for which we insure you and which are new, unused and of recent manufacture unless otherwise described. It does not include goods shipped on or above deck unless goods are in fully enclosed metal containers. The actual price obtained at a sale where all charges on sale are paid by the seller. The wholesale price or, if there is no such price, the estimated value with, in either case, freight, landing charges and duty paid beforehand. In the case of goods customarily sold in bond, the bonded price is deemed to be the Gross Value. Where goods belonging to more than one client are put into a single container for ease of shipment. Document which shows the terms of sale; contains full description of goods, sale price, charges, discounts, etc. Those risks which are a direct cause of loss of or damage to the goods for which we insure you subject to the warranties and other terms of the policy. Usually computed by adding the invoice cost, guaranteed freight, other costs, and insurance premium plus a percentage, commonly 10%. This usually represents landed value. Voluntary dumping either of cargo or of ship s material or stores overboard, to protect other property from a common danger. Wholesale market value at destination on final day of discharge. 35

36 LIMIT OF LIABILITY LOCATION MARINE EXTENSION CLAUSE MARINE SURVEYOR MEASURE OF INDEMNITY NAMED ASSURED PARTICULAR AVERAGE The maximum amount we pay to you for any one accident or loss arising out of the same event and is the maximum amount of Agreed Value of Goods that you can have on any one conveyance or at any one location at any one time or the maximum amount of Agreed Value of Goods as shown in the schedule. Any one place, building or area in which goods are consolidated (but does not include a conveyance) during the course of the voyage/transit. Cargo policy clause that continues coverage on goods during deviation, delay, re-shipment, and transhipment, or any other variation in normal transit beyond the policyholder s control. Specialist who determines the nature, extent and cause of loss and/or damage. The sum which you can recover in respect of loss occurring covered by the policy and is subject to the limit of liability. The commercial entity or company named in the schedule. Partial loss sustained by goods insured. TERMS OR METHODS OF PAYMENT (a) Collection by Draft (b) Open Account (c) Letter of Credit TRANSHIPMENT VALUATION CLAUSE If the insured is not paid for any reason, he/she must dispose of the goods and, therefore, still has an insurable interest. Following are the more common terms or methods of payment: The seller bears the risk until he/she is paid. If for some reason, the buyer does not accept the shipment, the seller has the problem of disposing of the goods. By arranging the insurance, the seller can minimize the risk of loss. When sales are made on an open account, the seller has financial risk similar to collecting by draft. Here again, the seller should attempt to arrange the insurance. In this procedure, the buyer establishes credit in U.S. money through his or her bank in favour of the seller. If the seller collects by this means, the letter of credit often stipulates that he/she arrange the insurance. Goods transferred from one vessel to another. Provides basis for determining insured value of a shipment under the Open Cargo policy. PERILS OF THE SEA PERIOD OF INSURANCE STANDARD DRAWING RIGHTS (SDR) Hazards from natural forces in or about navigable waters (windstorm, rough weather, etc., but not fire, explosion, etc., which are perils on the sea). The period set out in the schedule during which goods are insured on the terms of the policy. An international type of monetary reserve currency, created by the International Monetary Fund (IMF) in 1969, which operates as a supplement to the existing reserves of member countries. Created in response to concerns about the limitations of gold and dollars as the sole means of settling international accounts, SDRs are designed to augment international liquidity by supplementing the standard reserve currencies. (1 SDR = 0.82 as at January 2006). VOYAGE/TRANSIT WAR RISK WAREHOUSE TO WAREHOUSE The geographical movements for which goods are inured shown in the schedule or as defined in the policy, beginning and ending in accordance with the appropriate Institute Clause applicable to the voyage/transit and for the conveyance. Insurance against loss or damage to property as a result of war risks. An export/import policy clause that provides protection from the shipper s warehouse and during ordinary course of transit to the consignee s warehouse. 36 Allianz Global Corporate & Specialty: Introduction to cargo insurance

37 Allianz Global Corporate & Specialty specialists in cargo insurance Allianz Global Corporate & Specialty is the Allianz specialist for cargo and logistics insurance. We provide cover for both international and domestic clients through offices around the world with a network of specialist offices focused on serving UK Cargo customers. Allianz Global Corporate & Specialty is dedicated to working with selected cargo insurance brokers as our long-term business partners. We are confident that our cargo service represents the fastest, most responsive and best value package available to brokers in the UK market. We offer you a truly comprehensive service, which includes: Immediate underwriting response using our Duet service, you can obtain quotes, bind policies and print full documentation in seconds. Comprehensive policy wording with wide coverage your clients are getting a policy that is designed for UK businesses operating domestically and overseas, with a wide range of features that match their requirements. Network of local offices around the UK offering personal account management service for each broker. Close co-operation with other Allianz companies allowing package solutions, combining Marine with non-marine risks. Individual facultative underwriting and bespoke policies for special risks. Dedicated claims support with fast-track claims facility for minor claims with online claims notification and an international network of local loss adjusters in the event of a claim. Competitive commissions and terms of business. Broker training and continuing professional development support. The confidence that comes from dealing with Allianz a worldwide leader in financial services. UK Cargo offices: Birmingham Ipswich Leeds London Manchester Woking The Allianz Arena is home to football clubs FC Bayern Munich and TSV 1860 Munich. Contact us ukcargo@ma.allianz.com website: 37

38 Index A Adjustment, 23 Air cargo, 15 All risks, 14, 15 Annual policy, 22, 23 B Basis of valuation, 22 Branded goods clause, 21 British Marine Insurance Act, 14 Buyer s/seller s contingency, 10, 32 C Carriage and Insurance Paid To (CIP), 8, 10 Carriage Paid To (CPT), 8, 11 Carrier, 28 Certificates, 21 Claims, 29 Concealed damage, 20 Controlled Master Programme, 27 Cost & Freight (CFR), 8, 10 Cost, Insurance and Freight (CIF), 8, 10 D Declaration premium, 23 Deductible, 20 Delivered At Frontier (DAF), 8, 11 Delivered Duty Paid (DDP), 8, 11 Delivered Duty Unpaid (DDU), 8, 11 Delivered Ex Quay (DEQ), 8, 11 Delivered Ex Ship (DES), 8, 11 E Ex Works (EXW), 8, 10 Excess, 20 Exhibition cover, 33 Exhibitions, 19 F Free Alongside Ship (FAS), 8, 11 Free Carrier (FCA), 8, 11 Free on Board (FOB), 8, 10 Freight forwarder, 28 Fumigation cover, 21 G General Average, 17 I Incoterms, 9 Institute Cargo Clauses (ICC), 14 Insurance Premium Tax (IPT), 30 International Insurance Programme (IIP), 27 Invoice value, 22 ISPS/ISM forwarding charges, 19 L Legal obligations, 7 Letter of Credit (LOC), 21 Limit per shipment, 33 M Minimum and deposit, 23 Minimum premium, 23 O Open policy, 22, 23 Ordinary course of transit, 5, 22 P Package policy, 28 Policy inception, 32 Premium calculation, 24 R Risk management, 26 Road Haulage Association, 7 S Single shipment policy, 23 Stock cover, 33 Stock throughput, 19 Storage cover, 19 T Terms of Sale, 9 Time barred, 7 Tools & samples, 19 Tools & samples cover, 33 Types of cargo, 25 U Uplift, 22 W War & strikes, Allianz Global Corporate & Specialty: Introduction to cargo insurance

39 Disclaimer & Copyright Copyright 2006 Allianz Global Corporate & Specialty AG. All rights reserved. The material contained in this publication is designed to provide general information only. Please be aware that information relating to policy coverage, terms and conditions is provided for guidance purposes only and is not exhaustive and does not form an offer of coverage. Terms and conditions of policies vary for individual customers and jurisdictions: please refer to specific policies for definitive policy terms and conditions. Whilst every effort has been made to ensure that the information provided is accurate, this information is provided without any representation or warranty of any kind about its accuracy and Allianz Global Corporate & Specialty cannot be held responsible for any mistakes or omissions. Allianz Global Corporate & Specialty is the UK branch operation of Allianz Global Corporate & Specialty AG. UK registered Office: 27 Leadenhall Street London, EC3A 1AA United Kingdom Company. FC Branch. BR Authorised by Bundesanstalt für Finanzdienstleistungsaufsicht and regulated by the Financial Services Authority for the conduct of UK business (FSA registration number ). Allianz Global Corporate & Specialty AG Königinstraße München Germany Authorised by Bundesanstalt für Finanzdienstleistungsaufsicht. 39