Kinds of insurance

                                                   Insurance

     Insurance – a practice of sharing among many persons , risks to life or property that would otherwise be suffered by only a few.

 Risks in international trade

     The export trade is subject to many risks. Ships may sink or collide; consignment may be lost or damaged. While the goods are in a warehouse, there are risks of fire & burglary. While the goods are in transit they may be stolen, totally destroyed or damaged through a lot of reasons, for example vibration, an accident, poor handling, change of temperature, etc. 

     To protect themselves against such risks, exporters always ensure their consignments. Without an insurance cover, a company could even be put out of business by the loss of a large consignment. With an insurance policy, the insurance company will pay compensation for the loss and the exporting company will be able to stay in business. So, the general idea of insurance is to gain indemnity in the case of any happening that may cause loss of money. The insurance has become more & more significant as commerce developed.

  Kinds of insurance

        There are many kinds of insurance contracts but all of them fall within one or other of the 4 main classes:      

Accident insurance includes a wild variety of policies, dealing with a loss of property.  theft/burglary insurance - this covers loss or damage due to the activities of thieves;  bad debts insurance - this protects the company against the risks that its customers will not pay;

goods/cash in transit insurance - this cover goods or cash being transported from one place to another.  employees liability insurance – if an employee has an accident at work, he may claim compensation from the company where he injuries. It provides cover against this possibility.  public liability insurance – if a member of the public has an accident on the companies premises, he may claim compensation from a company on his injuries.  fidelity bond insurance – this protects the company against acts of dishonesty. motor/vehicle insurance – this must cover all risks associated with the case of vehicle.  Fire insurance includes a number of risks connected with fire, explosion, flood, flaming & etc.  Life Insurance or Life Assurance includes all insurance connected with life threat.  Marine insurance is the oldest one. It deals with a variety of policies giving cover to owners of ships their cargo against loss caused by pilferage, leakage, damage by water etc. Marine losses fall into two main classes:

1. Total Loss:

actual total loss – mean that vessel or cargo are totally lost; constructive total loss - in case where the ship or the goods have been abandoned, because the cost of salvage (saving) or recovery would have been out of proportion to the value. 

2. Partial Loss:

- particular average – if a particular cargo is damaged in any cause & the loss must borned by the owner of this individual consignment;  general average – it applies to a loss internationally in curds in the interest of the ship owners & the owners of the various cargoes. This loss is borned by all concerned in proportion. 

Documents used in insurance

       The principal document used in insurance is an insurance policy, which act as a contract. When insurance is taken out, a proposal form is completed. It gives details of what are insured, for how long and the nature of the risk. Underwriters, who work for the insurance company, then assess the risk and calculate the premium - the price of insurance. The client receives the policy, which is the contract between the insured and the insurer, giving full details of cover and compensation. 

        The policy may be known as a floating policy, when it covers a large quantity of goods for a long period, usually a year, or it covers goods up to a large sum of money. For each shipment of goods another document is issued, which is called the insurance certificate.  A cover note is a small document issued by the insurance agents to their customers, to tell them that their goods are insured, & to give proof of this until the policy is ready.