Cargo Insurance

1. What do we insure?

- general cargo only, for the duration of carriage (general cargo means goods that have solid packaging protecting them from external influences)
- transport and freight charges connected with the carriage
- expected profit from the sale of the goods at the place of destination

2. Form of the contract

The parties sign an Open Cargo Insurance Contract with a cover period of 1 year, under which all of the Policyholder's shipments are deemed to be insured automatically. Our Policyholders (clients) are the direct cargo owners themselves, both consignees and consignors. The main advantages of working under an Open Contract are:

- guaranteed cover on pre-agreed terms and premium rates;
- a universal contract that meets the widest variety of clients' needs;
- the insurance cover takes effect as soon as the goods (cargo) come to be at the Policyholder's risk;
- cover for losses applies even when information on a particular shipment has not yet been provided to the Insurer;
- the price of insurance is usually somewhat lower under an Open Contract than when insuring under separate one-off insurance contracts;
- there is no need to arrange a separate insurance contract for each particular shipment;
- exporters can build their own insurance costs into the price of the goods when concluding the sales contract;
- the method of paying the insurance premium can vary depending on the client's needs: once a year with a recalculation at the end of the insurance period; on a quarterly basis; or monthly on the basis of the Policyholder's reports (declarations);

3. Territory of insurance and types of transport

The Open Contract covers carriage by any mode of transport (sea, air, road, rail) anywhere in the world, including within Kazakhstan and urban deliveries. Any shipments to/from/within a country that are subject to UN or US Government sanctions are not covered by the insurance. The Open Contract can provide insurance cover for the entire period of transportation "from warehouse to warehouse", including transshipments, reloading and intermediate storage.

4. Scope of insurance cover

Insurance covering loss and/or damage during the transportation of cargo from one port/country to another. Transportation may be by sea, by air or by land. The policy is created to meet the Policyholder's individual needs. The cover may include all risks or only specified ones.

We have extensive experience in cargo insurance and work on the basis of conditions generally accepted on the international market. The cargo insurance conditions have been developed taking into account established international practice in cargo insurance and correspond to the standard conditions set by the Institute of London Underwriters.

In accordance with the rules of transport cargo insurance, our company offers the Policyholder four types of insurance cover:

"All risks"
When insured on these terms, "AIG Kazakhstan Insurance Company" undertakes to compensate losses caused by practically any perils and accidents of transportation.

"With particular average"
When cargo is insured on these terms, compensation is paid for losses from damage to or total loss of all or part of the cargo caused by the forces of nature, the wreck of or collision between vessels, aircraft and other means of transport, and losses resulting from the disappearance of a vessel or aircraft without trace. Losses caused by the loss of or damage to cargo during loading, stowing and unloading are also compensated.

"Free of particular average, except in case of wreck"
When insured on these terms, the Policyholder is guaranteed payment of insurance indemnity in the event of total loss of all or part of the cargo caused by the forces of nature, the disappearance of a vessel or aircraft without trace, or accidents during loading and unloading, as well as for damage to the cargo if it is caused by the wreck of or collision with a vessel, fire, explosion, etc.

"Storage risks"
Under a contract concluded on these terms, compensation is paid for losses from the destruction, loss of or damage to all or part of the cargo resulting from unlawful acts of third parties (theft, robbery, intentional destruction of or damage to the cargo by means of arson, blasting, damage to the warehouse's utility networks, etc.), fire, explosion, ground subsidence or flooding by groundwater, as well as from an accident (malfunction) of the water supply, heating or sewerage system, and natural disasters.

In addition to the main conditions listed, in our practice we widely apply various kinds of clauses that extend the scope of insurance cover. For example, the terms "Free of particular average, except in case of wreck" can be extended by the clause "including losses resulting from theft and non-delivery of entire packages". It is also possible to additionally insure so-called war or strike risks, i.e. damage resulting from hostilities or strikes will be compensated. War risks are covered only in respect of carriage by sea. Cover for strike risks is provided only for land transportation where the cargo follows a pre-planned route.

5. Standard exclusions from cover

The Insurer is released from paying insurance indemnity if the loss resulted from:

- intent or gross negligence of the Policyholder
- insufficient or unsuitable outer packaging of the cargo
- the effects of a nuclear explosion, radiation or radioactive contamination, etc.
- terrorist acts and unlawful acts committed for political motives
- shortage of cargo where the seals, both customs and the consignor's, are intact
- delay in delivery of the cargo, even if it was caused by an event the risk of which is insured
- seizure, confiscation, requisition, arrest or destruction of the insured cargo by order of state authorities

6. Cargo for which cover is not provided

- cash, precious metals;
- financial documents, banknotes, coins, securities, shares, cheques, etc.;
- bulk cargo;
- works of art and antiques;
- containers as cargo;

The insurance premium rates (the price of insurance) depend on the choice of insured risks, the nomenclature and packaging of the cargo, the distance of carriage, the period and method of transporting the cargo, intermediate storage or warehousing, the presence of security and escort for the cargo, and other factors reflected in the questions asked during risk assessment. As the volume of shipments grows, the premium rate can be reduced significantly. Our insurance rates are at an international level.

8. We provide

- recommendations on reducing risks (security for cargo, the use of special devices to hinder access to the cargo, etc.).
- the most effective and widely represented network of average adjusters and partner survey firms in the world.
- special loss control programmes developed by our European unit "Marine Loss Control and Engineering", opened in Rotterdam in February 1998 (by that time the AIG group companies already had similar reliable units in Latin America, the USA and Asia).

9. Special Loss Control and Loss Prevention Programme (MLCE)

The technical department for loss control and loss prevention was established in the early 1990s to provide additional services to customers of marine transport. What distinguishes AIG from its competitors is that it offers more than simply appointing a cargo surveyor to prevent damage. The AIG Marine unit has created a technical department for loss prevention in marine transport (MLCE). To provide professional loss prevention services to both underwriters and AIG clients, qualified marine engineers and ship captains have been invited to join. Today the engineers of the technical loss prevention department work in Hong Kong, Singapore, Frankfurt, London, Buenos Aires, Sao Paulo, Mexico City and New York.

What are loss control and loss prevention services?

MLCE provides clients with assistance and support during the transportation and storage of cargo, in order to ensure timely and high-quality delivery of their goods to customers in the proper quantity. This requires organising measures to ensure the safety and security of the cargo. To assist the client, we carry out a logistics analysis, including transit control and a security check, packaging inspection, supervision of loading and storage, recommendations on securing cargo during carriage by road, rail, air or sea, and monitoring "critical aspects" for delay in start-up (DSU) insurance cover. The main goal is to develop effective recommendations that can easily be implemented in the client's logistics structure.

These services are provided to our clients by a professional loss prevention team, whose strategic location makes it possible to ensure the high efficiency and quality of the services provided. All services are coordinated by our New York office and delivered by an international team of specialists. This approach ensures that high-quality services are provided by professional surveyors under our direct supervision and control.

Given the scale and geographic reach of our operations, we also use a wide network of qualified independent marine surveyors around the world who have experience in various areas of marine transport. Our own loss prevention specialists coordinate the efforts of these experts across a number of areas, to ensure control over the quality of the services provided to our clients

The specialists of the loss control and loss prevention team work in many countries of the world. They have more than 200 years of combined experience in various areas related to the marine transport industry. All of our specialists have spoken at industry events and forums, and most have publications in specialist journals. Working closely with our clients' staff, we succeed by getting to know how their operations are organised and where the problem areas lie, and by finding solutions aimed at preventing losses.

This approach not only protects your interests during the carriage of cargo but also helps strengthen relationships with the customers you serve.

The AIG cargo loss control and loss prevention unit builds its work on the confidence that our shared knowledge, resources and experience give us a leading position in cargo transportation risk management services. Readiness to provide effective, high-quality services is our main distinguishing feature.

Measures to prevent cargo damage will certainly pay off. We have noticed that about 80% of claims for cargo damage could have been avoided had loss prevention measures been taken. We therefore pay particular attention to measures for preventing cargo damage and to risk management during transportation.

Planning for clients' risk is an essential part of risk management. If there are problem areas, we can find and propose alternative solutions and provide advisory services. During the most important stages, such as loading and unloading, more careful follow-up control or inspection may be needed. Our knowledge and experience can be especially useful for transportation under special conditions. In addition to our own resources, we offer a global network of agents and surveyors. A link to the international Seaways system provides valuable risk-assessment information on the vessels the customer intends to use. For storage in the course of transportation, we have developed the Navigator warehouse risk survey programme. Our advisory and training services make it possible to assist clients with all aspects of preventive measures to prevent cargo damage. These services are provided to our clients by a professional loss prevention team, whose strategic location makes it possible to ensure the high efficiency and quality of the services provided. All services are coordinated by our New York office and delivered by an international team of specialists. This approach ensures that high-quality services are provided by professional surveyors under our direct supervision and control.

10. Loss: what to do?

- take all possible measures to save and preserve the damaged cargo;
- notify the Insurer of the event immediately;
- secure the right of recourse against the party at fault; When claiming insurance indemnity, the Policyholder must prove with documents: - its interest in the insured property;
- the fact that an insured event occurred;
- the amount of its claim for the loss; Indemnity is paid on the basis of the actual (real) value of the insured cargo, and the insurance premium is also calculated on the basis of the same valuation.

11. Claim documents (These are the documents the Insurer needs in order to pay a claim)

- documents of title to the cargo;
- invoice;
- consignment note (waybill);
- cargo inspection report, commercial report;
- surveyor's report, in the case of damage to cargo;
- documents confirming additional expenses incurred;
- certificates from state authorities, where the investigation of the insured event falls within their competence;
- a formal claim to the Insurer;
- documents securing the right of recourse against the party at fault (the carrier, the charterer);