Vichers:Good afternoon,Mr.Bai.I was to come at 4 o’clock.Wasn’t I?

Bai:Yes,Mr.Vichers.We have been expecting you.(Bai introduces Mr.Guo to Mr.Vichers).Mr.Vichers,this is Mr.Guo of the People’s Insurance Company of China.He has come to explain the unfortunate affair about the insurance.

V:Thank you for coming.Mr.Bai,as you may recall,the February consignment arrived at Manila seriously damaged.The loss incurred on breakage was over 30% of the consignment.We’ve presented a claim to the underwriters through your firm,but the insurance company refused to admit liability,as they said there was no insurance on breakage.We naturally were not satisfied with such a reply.

B:I should like to hear what Mr.Guo has to say about it.You know of course that we,the sellers,are merely acting as mediators in this matter.The Insurance Company is responsible for the claim,as far as it is within the scope of coverage.

G:That’s just the point,gentlemen.The loss in question was beyond the coverage granted by us.According to your instructions,we made out an insurance certificate covering W.P.A.and the risk of breakage wasn’t mentioned in it.We phoned the Ceramics Section of the Light Industrial Products Import & Export Corporation,but were told that their customer had not asked for coverage in case of breakage.

B:In your letter of credit only coverage for “all marine risks” was requested.I should like to point out that our prices were calculated without covering insurance for any special risk.So we applied for the usual W.P.A.coverage and let our customers deal with the matter of breakage.Since the validity of the letter of credit was to expire in two days,there was no time to write for more detailed instructions.If the letter of credit had been valid for a longer period,we should have had time to make the matter thoroughly clear.

V:Mr.Bai,our import license only ran up to the middle of February,consequently we were not able to extend the validity of the letter of credit.But we presume that the wording of our L/C implies covering the risk of breakage.Besides,when I take W.P.A.insurance,that is,with particular average,I should think the risk of breakage is a particular average,isn’t it?

G:Not every breakage is a particular average.It is a particular average when the breakage results from natural calamities or maritime accidents,such as stranding and sinking of the carrying vessel,or is attributable to fire,explosion or collision.If none of these conditions occur,breakage is often considered as an ordinary loss and represents what we call “inherent vice or nature of the subject matter insured”,which is outside the scope of the coverage.

V:But the risk of breakage is covered by marine insurance,isn’t it?

G:Certainly,but it is the usual practice to make specific mention in the insurance policy or certificate that the risk of breakage is included.The inclusion of this special risk will be subject to an additional premium which will be normally higher than the basic insurance for the ordinary marine risks.The rate for such risk will vary according to the kind of commodity,or,as in ceramics,according to the fragility of the goods.I think you must know all about that.

V:Well,I have heard something about it but I can’t say that it is very clear to me.I must admit I’m a layman as far as insurance is concerned.

G:Then let me explain this insurance.

B:Mr.Vichers,would you care for a cup of tea or a cup of coffee?

V:A cup of tea would be nice,thank you.And now,let me hear more about the problem of insurance.