Marine cargo insurance is a vital aspect of international trade, which covers the loss or damage of goods during transportation by sea. It is important to understand the terms and abbreviations used in marine cargo insurance to ensure proper coverage and protection of goods.
Basic Terminology
Marine Insurance
Marine insurance is a type of insurance policy that covers the loss or damage of cargo, ships, terminals, and any transport-related property. It provides protection against risks associated with shipping, including theft, natural disasters, piracy, and accidents.
Insured
The insured is the party who purchases the marine insurance policy to obtain coverage for the goods or property being transported.
Insurer
The insurer is the party who provides the insurance coverage and assumes the risks associated with the transportation of the goods.
Premium
The premium is the amount of money paid by the insured to the insurer for the coverage provided by the insurance policy.
Deductible
A deductible is the amount of money the insured must pay before the insurer begins to cover the loss or damage of the goods.
Common Abbreviations
ICC
ICC stands for Institute Cargo Clauses, which are standard clauses used in marine cargo insurance policies. There are three types of ICC clauses, namely A, B, and C, each providing different levels of coverage and protection for the goods being transported.
FPA
FPA stands for Free of Particular Average, which means that the insurance policy only covers the goods if they sustain damage or loss due to a named peril, such as lightning, sinking, collision, and piracy.
WPA
WPA stands for With Particular Average, which means that the insurance policy covers the goods if they sustain damage or loss due to a named peril, in addition to any other accidental damage or loss.
AOA
AOA stands for All-Risk On Approved Terms, which means that the insurance policy covers all risks associated with the transportation of the goods, except for any exclusions listed in the policy.
LMA
LMA stands for Lloyd’s Market Association, which is a trade association that represents the interests of the Lloyd’s market and provides guidelines and regulations for marine cargo insurance policies.
Conclusion
In conclusion, understanding the basic terminology and common abbreviations used in marine cargo insurance policies is crucial for ensuring proper coverage and protection of goods during transportation by sea. Therefore, it is important to carefully read and understand the terms and conditions of the insurance policy before purchasing it.