HOW TO INSURE GOODS IN COLD STORAGE

Except for ice cream, we Pilipinos have never had a liking for frozen food, particularly meat, poultry or fish. To us, frozen means not fresh. A housewife prefers to go to the palengke every day to buy meat from livestock slaughtered earlier in the morning. If possible, she wants to see blood dripping off a side of beef. Also, our cuisine is not designed for frozen meat. Try making sinigang out of aged imported T-bone steak.

But, I suspect, our taste is changing, however slowly, giving way to modern methods. While the palengke remains the bastion for unrefrigerated food, the rest of the food supply system is operating at freezing temperatures. Meat packers maintain a bank of blast freezers. Supermarkets, hotels, restaurants, clubs, wholesalers and, now, exporters particularly of prawns and shrimps, have their own walk-in cold storage facilities. Cold storage business is no longer a sideline of the neighborhood ice plant. I am sure that the refrigerating capacity of the country is rising steadily year after year.

There are two ways to insure inventory in cold storage. These methods do not exclude, but rather complement, each other.

The first method is to use the standard fire insurance policy. But, when covering stock in cold storage, the policy, at normal premium rates, excludes damage to, or deterioration of, the stock caused by a rise in temperature resulting from the burning down of the refrigerating plant. In other words, the policy will pay only if the refrigerating room itself burns down which is unlikely due to the heavy insulation. This restricts the coverage severely. But, for an extra premium, this limitation can be deleted.

The fire policy can be expanded to include other perils like earthquake, flood, typhoon, and so forth.

The second method is by insuring against deterioration resulting from the accidental breakdown of the refrigerating machinery. This policy has been recently introduced in the market precisely to answer to the growing need for this type of coverage.

This policy starts where the fire policy leaves off. Basically, accidental machinery breakdown means exactly what it says: the unforeseen breakdown of the refrigerating machinery not due to ordinary wear and tear. For instance, a runaway truck ramming into the cooling tower. Also, overheating of the compressor because of a faulty temperature gauge, or because the attending technician was asleep at the switch.

When the refrigerating machinery is damaged, there may be time, as much as 48 hours, to move the frozen stock before it thaws, assuming there is another cold storage it can be moved to.

But, when the refrigerating coils are ruptured and ammonia gas escapes into the cold storage vault, there can be a real problem.  Ammonia gas is heavier than air. It stays down at floor level. Also, its high toxicity will keep anyone without the proper equipment from entering the room to move out the stock.

This is what happened to a client of mine sometime ago. He was in the business of exporting frozen shrimps. He was renting a cold storage facility. One day, the building next door burned down and, along with it, the refrigerating machinery which my client was renting. The refrigerating coils ruptured and all the ammonia gas leaked into the cold storage room. No one, not even the firemen, could enter the room for days. My client collected on a total loss claim.

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HAVE INSURANCE, WILL TRAVEL

I am planning to take my vacation abroad this summer. What insurance arrangements should I make before I travel?

Anybody who is planning to travel abroad, whether for business or pleasure, would call a travel agent. The agent would then make all the arrangements on passport and visas, schedules and hotel reservations, tickets and taxes. The traveler would then go to the bank for his travel dollars, and off he goes.

An important part of your travel papers should be insurance.

After calling your travel agent, call your insurance broker about your plans. Ask him what you have to do, if any, to make sure that your policies – life, fire, motor car, whatever – will be in force while you are away.

Then ask him to buy you a travel accident policy. This covers you world-wide, round-the-clock, for the entire period of your trip. The policy should include not only death and permanent disability benefits, but also medical expenses. This policy is quite inexpensive. If you forget to do this, you can buy the policy at the airport. If you do, don’t bring the policy with you. Leave it to the person who is seeing you off, or mail it to your home or office. The sales counter usually can help you with this.

You should insure your luggage. The policy can sometimes be extended to include loss of cash by robbery or theft. This insurance is not widely available but your insurance broker should be able to you an All Risks policy. The premium is quite reasonable.

If you are bringing some personal jewelry, your insurance broker will also be able to arrange an All Risks policy for you. This is rather expensive and also not available widely.

Medical and hospital policies are widely available but it will pay you the peso equivalent of your dollar expenses. No insurance company here will reimburse you in foreign currency. One possible option is to buy the policy while you are abroad, but servicing your policy, especially if you happen to have a claim, may be a problem. Besides, who wants to buy a policy while enjoying a vacation abroad?

Actually, you cannot get a visa unless you can show the foreign embassy that you have the insurance policy as required. Each embassy has its own rules.

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REQUIEM TO AN INSURANCE POLICY

The marine insurance industry has long been known as one of the main catalysts of trade and development. Banks, financiers, exporters and importers sleep soundly every night knowing that the international movement of goods is covered by marine insurance.

Because of its international nature, marine insurance, more than any other line of insurance, has a language all its own. This language stems primarily from a policy devised over two hundred years ago by that venerable insurance institution, Lloyds of London. The policy became known as the SG (Ship and Goods) form and was used by companies all over the world. Its eighteenth century wordings remained unchanged, even as the English language itself changed.

Get a load of this clause which sets out the perils the goods are insured against: Touching the Adventure and Perils which the said insurance company are contented to bear and take upon them in this voyage; they are, of the Seas, Men-of-War, Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letter of Mart and Counter Mart, Surprisals, Taking at Sea, Arrests, Restraints, and Detainments, al all Kings, Princes and Peoples, of what Nation, Condition, of Quality soever, Barratry of the Master and Mariners, and of all other Perils, Losses, and Misfortunes that have or shall come to the Hurt, Detriment, or Damage of the said Goods or Merchandise, or any  part thereof.

The static nature of the policy provided a thread of continuity and uniformity over time and space and the basis for innumerable precedent-setting practices. As courts all over the world, but especially in England, interpreted the wordings, there was a continually-mounting opposition to change. To cast off the wordings would be to cast off as well all the jurisprudence.

The SG form was probably the one commercial document with the longest and widest history.

Eventually, the elegant and time-honored wordings of the SG form came under attack. With the tremendous evolution of the English language, the archaic form began to be looked at as a barrier to effective business communications. Many felt that insurance contracts should be readily understood by the buying public and that it should not be necessary to go to a law library to look up what policy terms and conditions mean.

Finally, in 1982, the Institute of London Underwriters and Lloyds Underwriters Association, prodded by the UNCTAD (United Nations Conference on Trade and Development), introduced a new policy form and cargo clauses.

Experts agree that the new wordings are more easily understood while the scope of coverage remains substantially the same. Easily understandable, yes, but, at the same time, deadly dull. The clause now reads: This insurance covers all risks of loss of or damage to the subject matter insured except as provided in Clauses 4, 5, 6 and 7 below . . . general average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law or practice, incurred to avoid or in connection with the avoidance of loss from any cause – need we go on?

Tabbed as the companies’ Marine Policies (MAR), the forms were quickly accepted worldwide. In the Philippines, the Insurance Commission readily approved the new wordings and are now used by all companies.

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