How much are you willing to risk losing your money in

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How much are you willing to risk losing your money? In normal commercial practice, goods are insured with the following considerations: Cost/invoice value of the cargo; Incidental cost that add up to the cost of transporting the cargo (packaging/ inland transport / freighting / warehousing, etc.) Margin of 10 to 20 % of the final amount to take care of all administrative costs, any increases of raw material cost and also a small margin to the company.
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How Much To Insure? (cont.) Premium is the amount the insured agrees to pay the insurer for the services of insurance protection. Premiums are calculated based on the following factors: (a)The types of goods: (i) The cargo with higher possibilities of pilferage shall fetch higher insurance premium. This is true in the case of foodstuff, medicines, cigarettes, gold, auto-parts, etc. In other words, these are highly disposable items which are in demand. (ii) Premiums for fragile cargoes are more expensive than normal cargoes. (b) The mode of transportation: Premium for air freight cargo is more competitive than sea freight cargo. (c) The type of vessel: Older vessels or aircrafts shall fetch higher premiums.
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How Much To Insure? (cont.) (d) The journey to the destination (i) Cargoes going toward risky or war-bound countries shall fetch higher premium. There are also cases where the insurer will not insure the cargoes going to war-bound countries like Iran and Iraq. (ii) Premium is more expensive for cargoes bound to countries with long journey, difficult access, etc. (e) The risks to be covered: Premiums vary depending on the risks that are covered. For instance a fire insurance is cheaper than an all risk insurance.
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Words Of Wisdom A note to all insurers. You should always take care of the cargo as though the cargo is not insured. You should ensure all insurable items are insured. You should read and understand the terms in your insurance policy. You should notify immediately in writing if any insurable claim happens. The cost of insurance is only a small cost of transportation. Hence, it is not advisable to save it and face the risk of total lost.
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  • Spring '17
  • Dr Haslinda

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