Question No. 2 - IBO - 04 - Export Import Procedure and Documentation - Master of Commerce (M.Com)

Solutions to Assignments 

IBO - 04 - Export Import Procedure and Documentation

Master of Commerce (M.Com) - 1st Year

Question No. 2  Distinguish between: 

(a) Insurance policy and Insurance Certificate. 

Insurance Certificate 

A certificate of insurance (COI) is issued by an insurance company or broker. The COI verifies the existence of an insurance policy and summarizes the key aspects and conditions of the policy. For example, a standard COI lists the policyholder's name, policy effective date, the type of coverage, policy limits, and other important details of the policy.

Without a COI, a company or contractor will have difficulty securing clients; most hirers will not want to assume the risk of any costs that might be caused by the contractor or provider.

Certificates of Insurance is used in situations where liability and significant losses are of concern and require one, which is most business contexts. What is a certificate of insurance used for? Small-business owners and contractors often have a COI granting protection against liability for workplace accidents or injuries. The purchase of liability insurance will usually trigger the issuance of an insurance certificate.

Without a COI, a business owner or contractor may have difficulty winning contracts. Because many companies and individuals hire contractors, the client needs to know that a business owner or contractor has liability insurance so that they will not assume any risk if the contractor is responsible for damage, injury, or substandard work.

Typically, a client will request a certificate directly from the insurance company rather than the business owner or contractor. The client should confirm that the name of the insured on the certificate is an exact match of the company or contractor they are considering.

Also, the client should check the policy coverage dates to ensure that the effective date of the policy is current. The client should secure a new certificate if the policy is set to expire before the contracted work is complete.

Certificates of insurance contain separate sections for different types of liability coverage listed as general, auto, umbrella, and workers' compensation. “Insured” refers to the policyholder, the person, or company who appears on the certificate as being covered by the insurance.

In addition to coverage levels, the certificate includes the policyholder's name, mailing address, and describes the operations the insured performs. The address of the issuing insurance company is listed, along with contact information for the insurance agent or the insurance agency’s contact person. If several insurance companies are involved, all names and contact information are listed.

When a client requests a COI, they become a certificate holder. The client's name and contact information appear in the bottom left-hand corner along with statements showing the insurer's obligation to notify the client of policy cancellations.

The certificate briefly describes the insured’s policies and limits provided for each type of coverage. For example, the general liability section summarizes the six limits the policy offers by category and indicates whether coverage applies on a per claim or per occurrence basis. Because state laws determine the benefits provided to injured workers, the worker’s compensation coverage will show no limit. However, an employer’s liability coverage limits should be listed.

Insurance policy

Import Export Insurance is a type of insurance cover that relates to goods that are transported to and from countries. If your company is an exporter or importer – or both – then having the relevant insurance cover in place is essential to ensure the continuing success of your company in the future.

The coverage is generally defined by reference to clauses known as Institute Cargo  Clauses. The ICC (C), ICC (B) and ICC (A) Clauses define different levels of coverage against marine risks and the cargo may be covered subject to any one of these clauses.

It is a primary obligation under every international sale of goods contracts that either the seller or the buyer will have to arrange adequate insurance for the goods in accordance with the agreed shipment terms (INCOTERMS).

Cargo may be exposed to risks specific to the mode of transport and the route taken, as well as perils beyond the reasonable control of all parties to the contract, for instance:

Fire

Explosion

Armed Robbery

Storm, flood and other weather hazards

Washing overboard in the heavy sea

Leakage

General Average Claims

(b) Liner and Tramp Shipping Services. 

How can you ship goods from one international destination to another? Yes, it’s via air or ocean transport through which freight forwarders or shippers transport the consignment to the final delivery point.  Unlike air freight, sea freight has some options, a shipper can choose between Liner and Tramp Services. In this article let’s understand both these terms and their differences.

The Liners

The name liners have been derived from the word ‘Line Voyages’ that means a voyage or trip that follows a set schedule and route.  The ships that move shipments across the routes are called liners, following strict routes, schedules and delivering on time under all circumstances unless there is a delay caused by natural events.

These liner ships not only carry shipment through containers, but provide other services also from RORO services, bulk cargo service to break bulk service.

Do you how many types of liner service are available:

Independent service

Conference service

Consortia service

Alliance service 

Tramp Service

A tramp service, also called a tramper is a service that is even available at a short notice, so it does not follow any strict schedule or routes. With tramp service, goods can be on and off loaded at any port. Trampers are also used to carry bulk cargo, apart from usual cargoes.

1. Liner service follows a fixed route and schedule as well as the destination. Tramp service does not have a fixed schedule or route, and is even available at a short notice. It is less expensive and even has the capability to fit in ships with lesser speed.
2. The liner owners follow pre-defined rules, terms and conditions related to the carriage and delivery of the cargo. There are no such conditions for tramp services.
3. The liners have modern equipment through which loading and unloading can be faster. Trampers generally do not take a huge load, they prefer to transport one or two shippers consignment and limit their loading and loading to a lesser number of ports.
4. The liner ship is huge enough with many facilities to carry even refrigerated items. They can carry a variety of goods. As the liner has many cabins and compartments, it has the capability to contain consignment from multiple shippers and can place them accordingly. Tramps are a little smaller and can carry only simple and uniform cargo in larger quantities. It can carry only one kind of specific goods at a time.