Perils of the Sea
From Supply Chain Management Encyclopedia
General
Perils of the Sea could be defined as fortuitous accidents or casualties, peculiar to transportation on a navigable water, such as stranding, sinking, collision of the vessel, striking a submerged object or encountering heavy weather or other unusual forces of nature. A shipment by ocean is subject to a large number of risks, most of which are only vaguely familiar to a land-based exporter accustomed to shipping by truck or rail to its domestic customers.Most losses covered by a marine insurance policy come within the comprehensive expression "perils of the sea," which refers to damage caused by heavy weather, strandings, strikings on rocks or on bottom, collision with other vessels, contacts with floating objects, etc. The Table 1. below gives a summary of main and acceptable for an insurancs coverage perils of the sea.
==The Vernacular of Insurance Industry==[1]
The insurance industry, and in particular the marine insurance industry, speaks an obscure language. Nevertheless, it may be useful to discuss perils in the vernacular. A peril is the nature or kind of loss. It is that which causes a loss, that is, fire, collision, pirate attacks, war, or the like. Firms insure against perils. The word “average,” in insurance terms, refers to the extent of coverage. A “particular average” loss is one that affects specific interests only. A “general average” is one that affects all interests in a voyage including that of the vessel itself. Ancient convention has established that all parties to a voyage, shippers and owners alike, share in the benefits of the voyage and should therefore also share in the perils thereto. Thus, should a vessel sink, all interests (that is, persons having an interest) share in that loss. Both “general” and “particular” average insurance cover against total loss resulting from perils of the sea (that is, the action of the wind and sea). “FPA” coverage (that is, free of particular average) covers only for total (general) loss or partial losses resulting from certain named perils (for example, stranding or fire). That is to say, in the event of a partial loss due to these perils, only a partial amount is recoverable. The “with average” or “WA” insurance covers the full amount of the loss. FPA is a more restrictive and narrower insurance than WA coverage. Basically, FPA will cover only in the event of a total loss while WA will allow for recoveries on partial losses.The so-called “all risk” coverage is most commonly used by traders of general commodities. All risk insurance does not, as the name implies, cover against all risks. Certain risks are specifically excluded, such as those arising from war and losses attributable to delays in transit.
==Table 1. Summary on Perils of the Sea==[2]
| KIND OF PERILS | DEFINITION/EXPLICATION/JUDGEMENT | COMMENTS |
| FIRE | Fire is a fairly significant peril of shipping by ocean cargo containers. | All dangerous cargo can only legally travel internationally by ocean—and not by air — such cargo is often present on board; fireworks, explosives, compressed gases, ammunition, and chemicals of all sorts are crowded on deck. If these items happen to be poorly stowed, or are damaged in a storm, they can leak and mix with one another, resulting in fires or explosions. |
| Butter | 1.00 | bbb |
| Butter | 1.00 | bbb |
