5.6.2-LOGISTICS AND INSURANCE-TYPES OF COVER
Types of cover
If you have regular needs for insurance, it is advisable to enter into a contract that is valid for a period of time - usually one year. Within the principal contract all necessary stipulations are discussed and agreed once, and they apply for the entire period. This means that within its period of validity the cover is always available when needed. Compared to insuring on a case-by-case basis this provides additional safety, better rates and a better relationship with underwriters.
Maximum exposure or limit of liability
With an open cover the insurance contract will stipulate the limit of the underwriters' liability to compensate the insured for a single occurrence. The amount of liability may vary depending on each stage of transport or storage. On a case-by-case basis (insurance per certificate) the amount stated in the insurance certificate is the limit of liability. The considerable increase in green coffee prices, especially arabica, in 2010 once again highlights the need to regularly review all insured limits to make certain the value covered remains adequate.
Extent of insurance - all risks
In reality the phrase
'all risks' certainly does not mean that all possible risks are covered.
Normal storage and transport insurance principally covers only losses due to physical damage to goods that occurs suddenly and originates from external sources or events. For example, underwriters will never cover the risk of goods becoming unfit for use as a consequence of excessive moisture content or improper preparation, and they will firmly reject all such claims.
'All risks' normally covers all the physical risks mentioned earlier. The contract may however also include a list of perils, particularly for storage insurance. Be very careful with such lists. Only the items (perils) they mention are covered by the insurance - nothing else. If the list states only fire, lightning and flooding, then risks such as contamination, infestation, wetting or theft are not covered.
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