PP Chapter14.ppt - FUNDAMENTALS OF OPERATIONAL LOGISTICS...

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FUNDAMENTALS OF OPERATIONAL LOGISTICS PART 2: Fundamental Knowledge of Operational Logistics Chapter 5, 6, 7, 8, 9, 10, 11, 12, 13 & 14
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FUNDAMENTALS OF OPERATIONAL LOGISTICS Chapter 14 Cargo Insurance
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Learning Outcomes Evaluate various types of insurance premium Correctly choose the correct insurance coverage when doing international trade Identify risky businesses that need insurance coverage
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What is Insurance? Insurance is about spreading the financial loss of the policy holders over the whole of the insuring public by compensating the unfortunate few from the pool formed by the contribution of the policy holders that may occur or be discovered during a specific period. Insurance is a form of risk management which is primarily used to hedge or protect against the risk of a material loss; in exchange for some sum paid called premium.
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What is Insurance? (cont.) We can classify insurance as a contract between two parties, the insured and the insurer: (a)The insured – agrees to pay the premium to secure any kind of financial assistance for the risks specified in the contract. (b)The insurer – agrees to meet the financial consequences of certain events which are specified in the contract. Payment would be made to the insured after investigations, clarification and following many other processes.
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Principles of Insurance (a) Insurable Interest: This principle applies to anyone who has interests. The recognition of the insurable interest for marine insurance occurs at the time of loss but for all other general insurance at the time of taking the insurance. (b) Indemnity: The insurance is to preserve the capital. The insured has to be as near as possible to the previous financial position before the happening of the insurable event.
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Principles of Insurance (cont.) (c ) Subrogation: This is the legal transfer of rights of the insured to the insurer (who has indemnified the insured for any losses).
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  • Spring '17
  • Dr Haslinda

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