A. Ocean Marine Insurance
...
Ocean Marine
is the oldest type of insurance
Adventure
a Trip or voyage
Assured
the insured
Average
Means loss
Constructive Total Loss Coverage
the expense to repair or recover exceeding the value or policy limit
Demurrage
is the delay of vessel beyond the normal tie to on-load or off-load or charge for the delay
Laid up
in port or at anchor
Loss of species
the subject matter ceases to be a thing of the kind insured
Misfortune
an accident or occurence
Particular
Partical
Touching
applying to
The 4 major types of ocean marine polices are
1. Hull
2. Cargo
3. Freight
4: Protection and indemnity
(P&I)
hull coverage (ocean marine insurance)
- Physical damage or loss of the ship itself
- the ship while it is in transit
cargo coverage (ocean marine insurance)
what the ship is hauling
freight coverage (ocean marine insurance)
loss of revenue if the ship owner cannot deliver the cargo
Protection and indemnity (P&I) insurance
for liability
American institute Hull clauses(AIHC)
created to establish wording to be used in marine policies int order to suppress confusions. Written on a 1year term.
Assured
If payment is made to anyone other than the owner of the vessel. It will be made to the extent that the owner would have collected
- It contains waiver of subornation to related entities of the assured
Loss Payee
the party to be paid by the insurer in the event of loss.
The loss payee could be a mortgagee or lean holder
Vessel
covered for physical Damage or loss by hull policy.
- Equipment owned by others and installed on the ship will be covered.
- No coverage for cargo containers
Duration of Risk
hull polices could be specified period of time for a voyage
Agreed value
Most hull policies written.
Insurer and insured agree upon the value of ship AT THE TIME the contract is made. If total loss this amount is paid
Amount insured hereunder
the limit of the insurance
Deductibles (deductible average clause)
any deductible will be expressed as a dollar amount in the policy.
Deductible does not apply to total losses
Premium
stated in the policy and is fully earned in the event of a total loss
Return of Premium
- applied on a pro rata basis upon a change of ownership of vessel.
- will be returned on a pro rata basis for each 30 day period laid up in port or not under repair, not being used for storage or lighting
- If insurer cancels policy, pro rata refund is d
Nonpayment of premium
after 30 days in-force policy can be cancelled by the underwriter within 10day' notice to assured or broker.
- If a total loss occurs prior to the cancellation, the full annual premium will be earned
Adventure clause
when a vessel is covered or not.
It will be covered during period of the policy WHILE AT SEA, IN DOCKS, WHILE TOWING OTHER VESSELS IN DISTRESS, TRIAL TRIPS, AND SAID WITH OR WITHOUT PILOTS
In accordance with AIHC, a pro rata return of premium will be given for all following reasons EXCEPT
A) In the event of termination under the change of ownership
B) if policy us cancelled by the underwriters
C) If the policy is cancelled by the insured
D)
C
Claims General provisions
-The underwriters have the right to appoint their own survey or to determine the extent of the damage
-The underwriters have the right to decide where the vessel will proceed for repairs and have the RIGHT TO VETO any repair firm proposed
- If the underwr
Sue and Labor Clause
-The master and crew is required to Sue and labor to prevent further loss and keep losses as small as possible.
-The insurance will pay reasonable expenses in doing so.
-If mastering crew do not Sue and labor to prevent further lost the insurer could refu
In Ocean Marine insurance, who pays all reasonable expenses if suing labor is required to lessen a loss
A)The Insurer
BThe master
CThe crew
D The assured
A
What type of ocean marine insurance provides physical damage coverage for the ship while it is in transit?
A cargo
B freight
C protection and indemnity(P&I)
D Hull
D
The a I HC for the return of premium will reply if a vessel has been laid up in Port not under repair, and not use for storage. The premium will be returned four
AEach 10 day.
B each 30 day.
C The first 10 day only
D the first 30 day only
B
In marine policy which of the following is referred to as the "amount insured hereunder?"
A Detectable
BThat agreed value
CThe duration of risk
DThe limit of insurance
D
Most American Institute hull policies are written with a coverage term of
ASix months
BOne year
CTwo years
D For the time period of the voyage
B
Change of ownership the coverage Automatically terminates unless:
1. At the time the is ship is at see with cargo, the coverage terminates UPON arrival to the final port
2. In the event of involuntary temporary transfer by requisition or otherwise, without prior written consent of the ASSURED. The automatic termination
An ocean marine adventure is
A) A measure of indemnity
B) A pleasure cruise
C) Loss or damage
D) Any voyage
D
Which of the following is NOT true if ownership changes voluntary or otherwise?
A) The ocean marine policy shall terminate at the time of ownership change
B) If the vessel already has sailed from her loading port, automatic termination may be deferred unt
D
If a pillage and towing firm is responsible for damage done to a vessel while the vessel is under its control, who is liable for the damage?
A) The insurer of the vessel
B) The vessel's owner or managers
C) The insurer of the pilotage and towing firm
D) T
C
Taylor Hull Form
A hull form widely used to insure towboats, barges, and other vessels that operate on the inland and coastal waters of the U.S.
Coastwise and inland Hulls Clause (CIHC)
Covers ships on the high seas, coastwise vessels and vessels on inland water ways
Increased value and excess liability clauses (IVEL)
Works as an umbrella policy.
They re excess or the same losses covered by an underling policy. The underlining must pay up to the limits before the IVEL will pay.
The IVEL Clause provides excess coverage for
P&I
Collision
Tower liability
General average and salvage
sue & labor
Ship repairers liability, charterers liability
Wharfingers/ safe berth liability
other as specified
What is the purpose of increased value and excess liability (IVEL)?
A) To provide extra coverage for the same losses coved by an underling policy
B) To protect an assured from errors and omissions of his or her insurance agent
C) To protect the insurer fr
A
Cargo Insurance
Covers loss or damage to the cargo.
The owner of the cargo certifies the cargo is suitable for shipment.
Amount of premium is partly determined by 1) Packing method used, 2) partly the type of ship providing transformation
Methods of packing Cargo
Bulk commodities
Break-bulk cargo
Containerzation
Roll on or off
Bulk carriers are used to transport?
coal, grain, phosphates, and other loss cargo.
The ship itself is the container for the cargo. Tankers are sued to carry liquid cargo such as oil
General-cargo ships are used to transport
break-bulk cargo
Things like steel, rolls of wire, boxed goods.
Loading and off loading is SLOW because each piece is moved individually.
Break bulk cargo is not protected well resulting in?
Higher premiums
Containerization
Carry packed cargo in 20 to 40ft containers that can be moved by trucks, railcars.
This is the more efficient in cargo handling resulting in Shorter port times.
Containerization cargo is better protected resulting in?
A lower premium
RO-RO Ship (Roll on roll off)
used to carry motor vehicles, which roll on and off the ship via stern ramp
Bulk carriers are used to transport
A) Containerized cargo
B) Loose cargo
C) Break-bulk cargo
D) Motor vehicles
B
All of these are excluded losses under ocean marine policies EXCEPT
A) Demurrage
B) War & strikes
C) Intentional acts of assured
D)Jettison
D
Actual Total Loss
A total loss of a vessel or cargo that occurs when the property undergoes physical destruction, loss of specie, or irretrievable deprivement.
Constructive Total Loss
In Ocean Marine insurance, a loss that occurs when property is not completely destroyed but the cost to salvage or repair the property would exceed its value
Sue and Labor Expenses
Policy will pay the labor cost of crew to protect cargo from further loss
Partial loss - particular vs general average
Partial loss could be a particular average in which those involved in the loss are affected
General average in which all those involved in the voyage share in the loss
Cargo policies may be written on a trip or voyage basis. For a frequent shipper an open cargo basis.
Open policy would cover all the insured cargo a a specified amount of time or a special number of shipments
The American institute of Marine Underwriters (AIMU) Contain the following clauses
1)Warehouse to warehouse or transit clause
2)craft clause
3)change of voyage clause
4) constructive total loss
5) general average
6) seaworthiness admitted
7) bailee clause
8) not to insure clause
9) theft, pilferage and non delivery
10) malicious damage
Warehouse to warehouse or transit clause
Names the points of the voyage. Insurance coverage applies form the time the goods leave a warehouse until:
1) Goods delved to final warehouse or place of storage named on declaration
2) Goods delivered to another warehouse or storage which the assured ch
The craft clause provides
coverage for the cargo while being transported to or from the vessel in another craft, raft, or lighter.
Change of Voyage Clause
continuous coverage in case of change of voyage or of an omission or error in description of vessel, subject to payment of ADDITIONAL premium
General Average Clause
give rules to be followed to settle Bernal average claims and salvage charges
Seaworthiness admitted clause
the assured and underwater agree that the vessel is seaworthy. In the event of a loss, the Assured an still collect even thought the loss may have been caused by a wrongful act or misconduct of the ship owner or crew
bailee clause
the sassier to file a claim against a third party who may be liable for the loss
not to insure clause
prohibits the Assured from assigning any right of recovery in the policy to the carrier or any other bailee
Theft, Pilferage and Non-delivery
covers these types of losses even if the crew is responsible
malicious damage clause
deliberate damage to or destruction of property Insured because of the wrongful act of any person
Dangerous Drug clause
No claim will be paid in respect to drugs to which various international conventions relating to opium and the dangerous drugs apply unless the drugs are expressly declared in the policy. The importing/exporting countries are state and the route by which
According to the principle of ocean marine insurance, an actual total loss may occur in all of the following situations EXCEPT
A) When all property has been destroyed
B) with loss of species
C) when insured is irretrievable deprived of all property, even
D
cargo is used to describe the physical good that are being shipped form one place to the other
freight is used to describe the sarges made to the ship cargo form place to place
The term used to describe the cost and charges associated with the transfer of goods from one location to another is?
A) Cargo
B) shipping
C) Freight
D) transfer
C
Freight Insurance
The indirect loss that an insured would suffer if insured cargo is lost or damaged. Losses include: income generated or charges paid to transport such cargo.
Freight charges are PREPAID, in which case coverage would be attached to the cargo policy purchas
Protection and Indemnity
a form of Liability insurance that protects the owner of the ship from consequences of his or her negligent acts of the negligent acts of his agents.
If the owner should be liable from a third party the P&I will protect against financial losses by paying
Protection and Indemnity (P&I) insures the ship owner against liability:
1) to seaman for injuries resulting from unseaworthiness of the vessel and other negligent acts;
2) to stevedores (laborers who load and unload vessels in a port), longshoreman, and harbor workers
3) for cargo lost or damaged by negligence
4) for damage t
As you leave the dock in your yacht, you carelessly cut in front of another yacht, causing its crew to change course. They run into a buoy damaging their boat. What coverage takes care of the damages?
A) The coliiosn clause of your hull policy
B) The othe
C
4 implied warranties of the voyage:
1) legal conduct- it is warranted that the venture is not illegal (all activities must be lawful and not involve contraband, smuggling, or any other illegal activity)
2) seaworthy vessel- it is warranted that the vessel is seaworthy and capable of making
The implied warranties that apply to Ocean Marina policies
A) Apply to the insured's representations made on the application
B) Guarantee insurability in the event of a change in destination
C) Are not actually written in the contract
D) Only apply to the
C
Nationwide Marine Definition
Statement of the types of property that may be insured on inland marine and ocean marine insurance forms. Inland Marine should be differentiated fro Ocean Marine, which covers property being transported over water. Inland Marine exposures pertain to prope
Filed coverages
have standardized coverage forms; form may require an insurer to file for rate and form approval
Unfiled coverages
present a unique exposure to loss and in which standardized forms have not been developed; may not require an approved filing to the insurance department in that state.
Nationwide Marine Definition defines 4 general classes of risks that may be the subject of Inland Marine coverage. These risks are:
1) Domestic shipments and transportation risks
2) Bridges, tunnels, and other instrumentalities of transportation and communication
3) Commercial property floater risks
4) Personal property floater risks
What is no a consideration when pay an inland marina claim?
A) Cost to replace the property
B) Actual cash value on date of loss
C) Cost to repair or restore the property
D) Market value when the portent was first purchased
D
The difference between Inland and Ocean Marina -
Inland Marina - Exposures pertaining to property located on LAND
Ocean Marina - Property being transported over WATER
According to the nationwide marine Definitions, risk that may be the subject of inland marine insurance include all of the following EXCEPT
A) Shipments made by freight train
B) Cargo transported by truck
C) large pleasure boats
D) Property while stored a
C
Commercial floater
refers to an inland marine policy designed to cover movable commercial property, wherever it may be located (worldwide coverage)
Commercial Inland Marine Coverage
can be written as:
1) monoline policy
2)commercial package policy (CPP)
Filed Forms - a form require an insurer to file for rate and form approval
1) Accounts Receivable
2) Camera & Musical Instruments Dealers
3) Equipment Dealers
4) Film
5) Floor Plans
6) Fine Arts
7) Jeweler's Block
8) Mail Coverage
9) Physicians and Surgeons Equipment
10) Signs
11) Theatrical Property
12) Valuable Papers and Reco
Unfiled Forms - may not require an approved filing to the insurance department in that state
1) Annual Transit
2) Trip Transit
3) Air Transit
4) Parcel Post
5) Motor Truck Cargo
6) Air Cargo
7) Bridges and Tunnels
8) Radios and TV Towers
9) Laundries and Dry Cleaners
10) Furriers Block
11) Cold Storage Locker
12) Processors Legal Liability
13) Co
Which inland marine coverage condition states that payment of any claim will not reduce the limits of liability, except in case of a total loss on a scheduled item?
A) Privilege to adjust with the owner
B) Trainer fo rights of recovery
C) Reinstatement of
C
Accounts Receivable
- most important and popular of the inland marine coverage filed forms
- coverage is provided for property that is at a fixed location, rather than mobile property
- provides protection for losses of accounts due from customers that become uncollectible b
Bailee's Customers
- covers losses to customers' property in the care, custody, or control of the insured.
- unfiled form
- Ex: dry cleaners, when you (bailor) drop your clothes off at the dry cleaners (bailee)
A unique feature in a bailee form is that it covers
A) The building occupied by the insured whether it is owned or leased
B) Customer's property whether or not the insured has been negligent
C) Fire and theft loss to the insured's stock held for sale with
B
Commercial Articles
- filed form that covers the interest of the owners, as opposed to the dealers, of commercial cameras, musical instruments, and similar property, including similar property of others in the insured's car, custody, or control.
- additional acquired propert
Contractors Equipment Floater
- unfiled form that generates more premium industry
-wide than other other commercial inland marine coverage
- insures mobile equipment and contractor's equipent owned, rented, or borrowed by contractors
- coverage can be written on name or open peril
- N
An individual's construction company leave mobile equipment and construction machinery on the job sit until the project is completed. What could this individual use to insure it?
A) General property form
B) Contractors equipment floater
C) Bailee's custom
B
Electronic Data Processing
- coverage for businesses that own, lease, or rent data processing equipment
- unfiled forms covering computers, processing media, extra expense, business interruption
Equipment Dealers
stock of mobile equipment and construction equipment dealers
- filed form
- Coverage is on All-Risk basis
- Automobiles, motor trucks, motorcycles
- Aircraft and water craft
- Accounts, bills, currency, deeds, money, and notes
- Property during manufactur
Additional exclusions in Equipment dealers coverage form
- Water, flood, surface water
- Unexplained disappearance
- Damage cause by processing or work done on the property
- Artificially generated electrical current
Extensions included are:
- Debris removal
- Pollution cleanup and removal
- Theft damage to bui
Additional conditions for the equipment dealer form
- Valuation
- Coinsurance
- Records and inventory
-Protective safeguards
Valuation
Replaces the standard inland marine valuation clause and states: " Value of unsold property will be determined based on the LESSER of the ACV of the property, the cost to reasonable restore the property or the cost replacing damaged property with substant
Coinsurance in equipment dealer
Property must be 80% of its replacement cost
Records and inventory
accurate records and inventory must be maintained by the insured for 3 YEARS after the end of the policy.
These include - detailed inventory of all stock trade, purchases and sales and porter of others.
A physical inventory of stock is required to be sent
Protective Safeguards
if required by insurer, this condition says the coverage will be suspended if the insured fails to keep them in working conditions or in operation while business is closed
Installation Floaters
- unfiled form that is often purchased by contractors and covers items such as heating an air-conditioning equipment intended to become a permanent part of the building
- property is covered during transportation to construction site, while unloading and
Jewelers block coverage form
-filed dealer's form that covers the insured's merchandise held for sale, and similar property of others in the insured's care, custody, control.
- once property leave premise no coverage applies
Jewelers block types of property not included
1) property sold under deferred sales arrangement after it leave insured premise
2) Property while it is at a public trade exhibitions
3) Property exhibited in showcases away from insured premises
4) Property while being worn by any insured employee, repr
Coverage forms offered options of transit coverage - shown on dec page
1) Carriers operation exclusively as a merchants parcel delivery
2) Armored car service
3) Passenger parcel or baggage service of railroads, passenger bus lines, Waterborne or airborne carriers
4) registered mail
Signs
limited coverage is provided in the commercial property coverage form for signs, usually limiting coverage to $2500 for attached outdoor signs
100% coinsurance is required
Valuable Papers and Records Coverage Form
Filed inland marine form. Defined as inscribed, printed, or written documents, manuscript or records, abstracts, books, deeds, drawings, films, maps and mortgages
Property covered on ALL- RISK and additional exclusions :
1) Errors or omissions by insured,
Transportation Coverages
Property in transit is the oldest form of inland marine coverage. This coverage is available to cover the exposure of the shipper, carrier, or consignee of goods.
3 types of Transportation Coverages
1) Common carriers: transport the property of anyone who hires them
2) Contract carriers: only transport property of others for which they have a written contract
3) Private carriers: transport their own property
Shipper
the person or company sending the goods
Consignee
the person or company that will receive the goods
Carrier
the company that is transporting the goods
Free on Board (FOB)
both the shipper and the consignee have an ownership interest in the property being shipped. Ex: If the contract is written F.O.B. - Shipper's Location, then the shipper owns the property only until it is transferred to the carrier. Once the carrier has p
Common Carrier Cargo Liability
covers the carrier's legal liability for damage or loss to property in the insured's care and custody for transportation.Instancs where there carrier will not be held responsible for damage or loss:
1) acts of god or nature
2) exercise of public notary
3)
Common Carriers Legal Liability
Offer their services to the public at large are legally liable for damage to property they are transporting with exceptions applying to loss caused by:
1) acts of God (earthquakes, floods, etc)
2) acts of public enemy (wars)
3) exercise of public authorit
Contract carriers Legal Liability
Agree to serve specific clients based upon a prearranged agreement are liable only for damage to cargo when they are negligent.
Bills of Lading
a contract for the transport of goods between the SHIPPER and the CARRIER. This document specifies the carrier's duties and responsibilities for the property. Common carriers are required to issue a uniform bill of lading to every person (shipper) that it
Motor Truck Cargo Policy- Carriers Form
used by common carriers that transport the goods of others for a fee. It is a legal liability coverage that protects the carrier only against liability for damage to goods. Property of others is covered on an open peril basis. Property is covered until de
Motor Truck Cargo Policy- Owners form
private carriers, or owners who ship their goods using their own trucks, are insured on this coverage form. Coverage is written for direct damage to the owner's property. Liability is not a factor in these forms as with with the motor truck cargo- carrier
Annual transit
policy used by those businesses that ship goods on a regular basis.
Trip Transit
policy form is a variation of the annual transit policy and is used to cover a specific trip or shipment. Policy period is for the time the goods leave the shipper until they reach their final destination.
Farm Coverage
insures not only the property and liability exposures of the business of a farm operation, but also may include the personal residential exposures of property and liability of a family living on the farm premises. As in any commercial package policy, farm
Farm coverage can be covered on:
Basic, broad, or special form
Coverage A- Dwellings
Antennas, towers, and satellite dishes attached to the dwelling are covered under coverage A, but have a special limit of insurance of $1000 in any one occurrence.
The limits provide coverage for the dwelling including structures attached to the dwelling
Coverage B-Other Private Structures
Similar to homeowners coverage but this coverage excludes coverage for any detached structure used principally for farming purposes. It provides a special limitation of $1000 for loss to antennas or satellite dishes. Provides an automatic limit of 10% of
Coverage C-Household Personal Property
applies to personal property owned by an insured while the property is on the insured location. Special limits of insurance for coverage C:
$200 for gold, money, platinum, silver
$1500 for letters of credit, manuscripts, passwords, and securities
$1500 wa
Coverage D- Loss of Use
provides coverage for additional living expenses if the insured's principal living quarters become uninhabitable This coverage also includes the fair rental value in the event the dwelling at the described location that the owner rents to others becomes u
Coverage E - Scheduled Farm Personal Property
pays for direct physical loss of or damage to covered property.
Covered property included farm personal property insured on a scheduled basis and may include property such as:
-grain and grain in stacks
-hay, straw, fodder
-farm products, materials, suppl
Coverage F - Unscheduled Farm Personal Property
a single limit of liability applies to all farm personal property located on the insured premise, unless specifically excluded
.
-subject to 80% coinsurance clause
Coverage G- Other Farm Structures
provides insurance for described farm buildings and structures and their attached sheds and permanent fixtures.
-farm buildings and structures,
-silos,
- portable buildings and structures,
fences, corrals, pens, chutes, feed racks,
- outdoor radio, tv equ
Farm Liability Coverage Form
provides protection for bodily injury and property damage, personal and advertising injury, and medical payments in the form of coverages H, I, and J.
Coverage H- Bodily Injury and Property Damage Liability
provides protection for BI and PD claims from liability arising out of the farming business and personal acts of the insured. Although it covers the business of farming, it specifically excludes coverage for businesses other than farming and contains the
Coverage I- Personal & Advertising Injury Liability
Advertising injury is covered only if the offense is committed in the course of advertising the insured's farm-related goods, products, or services.
Exclusions: intentional acts, contractual liability, breach of contract, failure of goods to perform, and
Coverage J Med Payments:
agrees to pay reasonable med expenses caused by an accident, regardless of fault, if the expenses are incurred and reported to the insurer within 3 years of the accident date.
Coverage only applies to a person who is not an insured. This means farm employ
Livestock coverage form
-named peril coverage insuring losses resulting in death or necessary destruction of livestock by the basic causes of loss (except vehicles).
Can be extended to cover death or necessary destruction by accidental shooting, drowning, electrocution, attack b
Mobile Agriculture Machinery and Equipment Coverage Form
includes mobile devices used in the everyday farm operation, such as accessories (whether attached or not), and tools and spare parts specifically designed for use in the maintenance and operation of mobile devices.
It insures eligible equipment for open
Custom Farming
The performance of specific planting, cultivating, harvesting, or similar specific farming operations by an insured at a farm that is not insured location
Livestock
cattle, sheep, goats, horses, mules, and donkeys but NOT poultry
Basic form
causes of loss include collision coverage for coverages E & F in the event of a collision causing damage to machinery, death to livestock, and damage to other farm personal property
Broad form
causes of loss also adds the perils of electrocution of livestock, attacks on livestock by dogs or wild animals (except attacks to sheep or by dogs or wild animals owned by the insured), accidental shooting of livestock, drowning of livestock (except swin
Special form
includes the usual open peril exclusions, but adds exclusion for fire if caused by curing tobacco
Conditions
The conditions under the farm coverage part are the standard commercial conditions,
The following exception: if a building or structure is vacant or unoccupied for more than (4 months) 120 consecutive days, the limits of insurance applicable to the buildi
Exclusions regarding farm property coverage
ordinance of law, earth movement, governmental action, nuclear hazard, power failure off premises, war, water (flood and surface water)&
-use of any animal, with or without accessory vehicle, to provide rides for a fee or in connection with a fair, charit
Additional coverages in the farm coverages
-debris removal
-reasonable repairs
-grave markers
-water damage
-fire dept. service charges
-removal of trees
-credit card and transfer funds coverage up to $500
-cost of restoring farm records up to $2,000
-extra expense & collapse
-supplementary paymen