Motor-vehicle insurance is one of the kinds of transport insurance whose objects are mechanised and other means of transport. This kind of insurance is voluntary.
Motor-vehicle insurance under which the underwriter repays the losses suffered by the insurer when the vehicle itself was damaged or destroyed is called casco insurance.
In practice however motor-vehicle insurance is a combined insurance under which not only the motor-vehicle but auto-owner responsibility are insured as well as luggage and additional equipment. While insuring luggage insurance coverage is not applied to antique objects, precious metals and stones, objects of religious cults, collections, paintings, manuscripts, banknotes, securities, documents and photos as well as to objects which neither belong to the insurer or family members nor sale due to entrepreneur activities.
In practice there are different variants of vehicle insurance.
- 1) complete casco: loss repayment against all insurance accidents.
- 2) partial casco: loss repayment against all insurance accidents except glass damage.
- 3) insurance against theft: damage suffered due to theft or car stealing.
- 4) transit insurance: repayment of loss suffered due to breakdown, stealing while the vehicle is transported by the insurer from the place of purchase to the place of destination.
Losses being occurred due to military actions, civil war, popular uprising or radioactive pollution are not repaid whatever variant of insurance is exercised.
Cars and other vehicles can be insured within the limits of their actual cost. According to the insurers’ wish additional equipment and luggage can be insured together with the vehicle or separately. While insuring the car the driver and passengers can also be insured against the accident. According to the conditions of insurance agreement these persons are insured against long or constant disability or death.
The insurance of the driver and passengers can be exercised according to the “system of places” or to the “lumpsum system”. It is stipulated that the insurance sum is established for each place in the car. The total number of insured places are determined according to the motor-vehicle’s technical passport data. Under “lumpsum” system the total insurance sum is established for all passengers and the driver. Each of them is considered to be an insured person having a definite share from the total insurance sum.
As a rule an insurance agreement is concluded for the period of one year or from one to eleven months.
When concluding an agreement, the insurer is obliged to present information about the motor-vehicle, the model, the year of car output, power and volume of the engine, colour, registration member and so on. If the insurer doesn’t present full and authentic information, which affects the determination of risk or the amount of insurance premium, the underwriter has the right to consider the insurance agreement to be invalid.
As a rule, documents which are regarded to be the basis for the determination of the amount of insurance premium for locally produced motor-vehicles are the data from corresponding price-lists. As to foreign – made motor-vehicles the corresponding documents are the invoice of manufacturing works of the official dealer as well as home and foreign catalogues.
The amount of insurance premium is calculated according to the rates being set up depending on the model of motor-vehicle or variant of insurance.
The insurance agreement under which the insurance reimbursement is paid remains valid until the period of insurance expires. The underwriter’s liabilities for insurance repayment are established as difference between insurance sum and repaid insurance reimbursement.
Insurance reimbursement for destroyed, damaged or stolen automobile or another motor vehicle, additional equipment or luggage is repaid in the size of suffered damage but not more than the corresponding insurance sum.
When the motor-vehicle is destroyed the damage is determined in size of its cost at actual retail prices after deducting the depreciation sum and the cost of remainders with due regard for their depreciation as a result of the given insurance case. The complete loss is acknowledged if the cost of restoring repair of the motor-vehicle (including the cost of transportation to the place of repairing) makes up 75% of the insurance sum or the actual cost of the motor-vehicle for the moment of concluding the agreement.
In case of damage of the motor-vehicle the size of damage equals to the cost of repair at actual tariffs. The sum of damage includes expenses for the replacement of damaged spares during the repairing works; the cost of remainders suitable for further using (with due regard for their depreciation) is deducted. Besides the sum of damage includes expenses for rescuing, repairing, transportation of damaged motor-vehicle to the nearest car servicing or parking.
When the insurance case happens the insurer is obliged:
- take all possible measures to rescue the automobile, passengers;
- immediately inform the competent bodies about it (the road police);
- to inform in written form the insurance company which concluded the insurance agreement about the accident;
- to show the insurance company the damaged automobile or its remainders before the repair.
- The underwriter is obliged:
- to examine the automobile on the day of receiving the notification;
- to effect the payment of insurance reimbursement within the stipulated period of time.
In case the automobile was returned to the insurer after the insurance reimbursement had been paid, the insurer is obliged to return the corresponding amount of received reimbursement after deducting the cost of stolen spares and repair of the motor-vehicle.
Different conditions and terms of insurance coverage uniting a definite group of risks are applied in practice of vessel insurance:
Responsibility for loss of or damage to the vessel. It means that losses as a result of damage or wreck of the vessel due to calamities, collision, Master’s error as well as expenses for vessel’s rescuing are subject to reimbursement.
Responsibility for complete loss of the vessel only stipulates the reimbursement of losses against complete destruction, its missing, as well as expenses for vessel’s rescuing.
The above conditions of vessels insurance are basis ones for the contract. They can be expanded by including other risks in them when parties agreed to it.
While insuring vessels there may be applied premium rates individually for each vessel. They depend on the model of the vessel, conditions of insurance, the place of moving, season, type of cargo, etc.
Vessels as subject to tough examination once per 12 years and once per 4 year they are subject to usual examination with the purpose of determining whether the vessel is a source of high danger. The main characteristics of the vessel is its seaworthiness. If the insurer knew about possible unseaworthiness of the vessel when it was in the port or when it was leaving it, the underwriter can terminate the contract of insurance, lessen the sum of insurance reimbursement or decline its payment at all.
Insurance coverage exceptions:
- evil intent or tough carelessness of the insurer and beneficiary;
- vessel’s unseaworthiness known to the insurer or the beneficiary before the vessel leaves the port;
- depreciation and corrosion of the vessel, its spares, machines and equipment;
- running of the vessel under the conditions which were not stipulated by its ice type (except cases when the vessel changed its route for rescuing people’s lives);
- direct or indirect influence of radiation;
- losses and expenses associated with damage caused to the environment, health of passengers and the crew;
- any indirect losses of the insurer.
The insurance contract is concluded for the time or for the voyage.
In the first case the insurer should inform about the place of movement and about the required period of policy operation. In the second case the insurer informs about the places of departure and destination, the length of route, the places of entering any other ports.
Insurer’s liabilities when the vessel is damaged:
- to notify urgently the underwriter about the insurance case;
- to give the underwriter the possibility to examine the damaged vessel;
- to agree with the underwriter the choice of the dock for the repairing.
When the vessel is completely crashed the insurance sum is paid provided:
- it is sink, completely lost for the insurer or destroyed;
- it disappeared (in case of the lack of information about it within 3 months);
- it was completely ruined.
The insurance reimbursement is determined taking into account the actual cost of the vessel but not higher than the stipulated insurance sum.
Marine freight insurance
Agreement of Marine Freight Insurance is concluded on the basis of the written statement of the insurer, where the following clauses should be stated: exact naming of cargo, kind of packing, number of places, weight of cargo, the number and the date of the bill of lading or of some other transport documents; naming the year of shipbuilding, flag and tonnage of the vessel; method of placing; the place of sailing, transfer of cargo and its destination; the date of the vessel’s sailing, insurance amount of cargo, insurance conditions.
These requirements in this or that modification correspond to the Standard Conditions of London Institute Underwriters – the most authoritative International Insurance Organisation in the sphere of Marine Insurance.
The responsibilities for all risks are the widest, though they don’t cover all the risks. Some risks are excluded: damage to and loss of cargo due to any military, pirate actions, confiscation, arrest or distraction of cargo on the authorities’ demand (these risks can be insured additionally); radiation, infringement of the rules of cargo transportation and storage, lack of cargo while packing is not damaged, etc.
The responsibilities for private accident, in contrast to the first variant, are a definite list of risks under which the underwriter bears the responsibility, but the volume of underwriter’s responsibility is less here.
The responsibility for loss or damage only in case of a shipwreck coincides, on the whole, with the responsibility for the private accident. The difference is that in the latter case the underwriter bears the responsibility only for the complete loss of cargo, as to the damage to the cargo the underwriter is responsible for it only in case of the shipwreck.
In all above cases the underwriter compensates losses and expenses associated with the wreck and all necessary charges for cargo rescuing and of loss lessening.
The international trade unifying terms of loss and types of trade contracts have been elaborated. Four basic types of trade deals (CIF, CAF, FOB and FAS) are most widely spread.
Under CIF terms (cost, insurance, freight) Sellers are obliged to deliver goods to the port, to load them on board the vessel, to pay freight, to ensure the cargo against marine risks in transit and to send buyers all necessary documents.
Under CAF terms (cost and freight) Sellers undertake to conclude and to pay the contract of marine transportation of goods to the place of destination and to deliver the goods on board the vessel. Buyers should ensure goods.
Under FOB terms (free on board) Sellers deliver and load goods on board the vessel which is hired by Buyers and the Buyers should ensure goods in transit.
Transactions on FAS terms (free alongside ship) are similar to those on FOB terms, the difference is that under FAS terms Sellers deliver goods to the quay and the risks pass on to correspondingly.
International practice shows that the most effective, from the point of view of cargo storage, is their transportation in special containers.
Containers’ insurance has its specific features. The objects of insurance are containers where the cargo is placed and in this capacity they are a part of the vessel. Their insurance is exercised under special insurance contracts usually concluded on standard English conditions. The volume of insurance coverage may be different at that.
Under the insurance of containers against all risks, the underwriter is responsible for all risks of their complete loss within the period of insurance.
The underwriter is not responsible for the depreciation or gradual worsening of containers’ quality as well as for their loss, damage and possible expenses caused by the delay in voyage. Losses because of containers damage are reimbursed in the sum which does not exceed the cost of restoration of damaged or lost parts after deducting their depreciation interest.
Under containers insurance against complete loss they reimburse losses against containers destruction as well as against containers’ share in the shipwreck as well as expenses incurred for the rescuing of containers and lessening the losses. Charges for containers repairing are not subject to reimbursement under given conditions.
The insurance agreement is concluded on the basis of the written statement of the insurer which must include the following information about the object of insurance: the type of the container, volume, cost, the naming of the vessel-carrier, the date of the vessel’s voyage, the place of departure, the place of destination, etc.
Aircraft insurance contract is an agreement about underwriter’s reimbursement of damage suffered by insured air-transport when an insurance case happens.
Aircraft may be insured on the conditions of “complete loss only” and “against all risks”.
Under insurance “only against complete loss” when the insurance case happens the insurer is paid the insurance reimbursement of total insurance sum (if the cost of its restoration and rescuing exceeds 75% of the agreed insurance sum).
Under aircraft insurance “against all risks” the insurer is paid the insurance reimbursement not only when the aircraft is crashed, but when it has been damaged due to any causes besides those specially agreed on as exceptions in the Policy.
In international practice Aircraft Insurance Policy against crash and damage is applied. It doesn’t contain a detailed enumeration of all risks covered by insurance. It gives a list of exceptions, addenda and special conditions after a statement about the insurance of aircraft “against all risks” and quite brief general provisions.
Damage is not covered if it has happened due to depreciation, corrosion, design defects, breakage of electrical equipment or mechanical breakage of some mechanisms, spares or parts. In this case if the aircraft is damaged as a result of it, the damage suffered by the object of insurance is reimbursed after deducting the cost of this spare part.
While insuring the aircraft the insurance sum can be calculated at the amount that doesn’t exceed its actual cost for the moment of concluding the insurance contract.
The Aircraft Insurance Policy can contain the following conditions:
- the losing of aircraft (if there is no information about it within 15 or more days);
- emergency landing and expenses associated with the rescuing of the aircraft (in case of its landing due to force major circumstances and impossibility to take off from the place of such landing, the expenses for providing this taking off or aircraft transportation are reimbursed);
- the cost of repair of damaged aircraft (if the insurance case is acknowledged, the terms and limits of the corresponding expenses reimbursement is agreed upon);
- the determination of complete loss of aircraft.
Under aviation insurance in contrast to other kinds of insurance, premiums are calculated individually taking into account the factors which determine the degree of the risk, type of aircraft, the year of its manufacture, technical conditions. Pilots’ skills, the intensity of aircraft operation, information about conditions of its maintenance, the character of transported cargoes and a number of other factors are taken into consideration.