CHAPTER 2 - C Flashcards
What are the main marine classes of business?
Physical damage, liability, and other
Offshore energy is included as a distinct category.
What types of objects can be insured for physical damage in marine insurance?
Ships, cargos, and oil rigs.
What is the coverage provided under the standard construction all risks policy for vessels?
- All risks of physical loss or damage
- Collision liabilities and marine liability
- War
- Strikes, terrorism, malicious acts, and political motives
What are the named perils covered under physical damage insurance for vessels?
- Perils of the seas
- Fire
- Explosion
- Violent theft from outside
- Jettison
- Piracy
- Breakdown or accident to nuclear reactors
- Contact with aircraft or objects
- Earthquake, volcano, or lightning
What are examples of claims that can arise under a construction or builder’s risks policy?
Fires in the shipyard during vessel construction.
What is ‘General Average’ in maritime law?
A principle where if someone incurs costs to save others, everyone contributes to pay them back.
What does ‘sue and labour’ refer to in marine insurance?
Insurers pay reasonable costs incurred to avert or minimize losses.
What exclusions are common in cargo insurance policies?
- Wilful misconduct of the insured
- Inherent vice
- Insufficiency of packing
- Delay
- Insolvency or financial default
- Use of atomic weapons
- Unseaworthiness of the vessel
- War
- Strikes/terrorism
- Radioactive contamination
What is the focus of offshore energy insurance?
Insurance for the exploration and extraction of natural resources like oil and gas.
What does ‘Control of Well’ (COW) coverage entail?
Covers costs to regain control of a well that is out of control.
What are the three main risks insured in offshore energy exploration?
- Blowout
- Costs of re-drilling
- Seepage, pollution, and contamination costs
What does re-drilling cover in offshore energy insurance?
Costs of creating a new well, generally to the point it was before the incident.
Fill in the blank: The hull insurer covers a ship’s share of any reward for __________.
salvage.
True or False: Cargo insurance provides liability cover for damage caused by cargo to the container or vehicle.
False.
What types of vessels can be insured under marine physical damage insurance?
Commercial and privately owned vessels powered by various engines or sails.
What is the difference between named perils and all risks hull insurance policies?
Named perils specify certain covered events, while all risks cover all unless excluded.
What is the significance of ensuring values at risk are kept up-to-date under a construction policy?
To avoid underinsurance during the construction period.
What are the exclusions within the standard market hull wording?
- War
- Strikes and terrorism
- Malicious damage
- Radioactive contamination
What does ‘seepage and contamination/pollution’ coverage address?
Covers costs for remedial measures and damages for bodily injury or property loss caused by pollution.
What does the term ‘barratry’ refer to in marine insurance?
When the master and crew turn against the owner and steal the ship or cargo.
What is required for additional coverage for underground control of well?
Covers scenarios where oil/gas escapes into the rock rather than bursting out of the well.
What does the term ‘spudding’ refer to in offshore energy exploration?
The process of starting the drilling of a well.
What does the insured need to do under a wreck removal requirement?
Remove the wreck and cover reasonable costs
This may be a contractual requirement.
What is covered under care, custody, and control?
Loss of rented equipment or equipment in the insured’s care
This coverage applies even if the equipment is not owned by the insured.
What is the purpose of insurance during the construction of a rig?
To cover the construction of the rig
This includes various elements similar to non-marine construction policies.
What are the key points to consider when building a rig?
Building time, builder, and location
Rigs are often built in various parts around the world.
What does Section 1 of the energy-related CAR policy cover?
Physical damage and removal of wreck
Items not covered include faulty welds and vessels.
What are some exclusions listed in Section 2 of the energy-related CAR policy?
Intentional law violations, injury to insured’s employees, directors’ and officers’ liability
Additional exclusions include loss of wells and costs related to COW.
What can be added as extensions to the construction policy?
Coverage for expediting expenses
This includes overtime or air freighting parts.
What is operational insurance equivalent to?
Ordinary property policy for business as usual
It covers risks after construction is completed.
What type of insurance addresses liabilities for shipowners?
Shipowners’ liability insurance
This includes coverage for bodily injury and property damage.
What are some risks covered by marine liability insurers?
Cargo claims, crew medical expenses, collision liabilities, pollution
Pollution coverage is limited to sudden and accidental incidents.
What is the role of Protection and Indemnity Clubs (P & I Clubs)?
To insure shipowners against liabilities
These clubs are mutual organizations where members insure each other.
What does maritime employers’ liability cover?
Employees working in the maritime world with potential seaman status
It protects employers from claims that trigger higher compensation regimes.
What does professional negligence insurance cover for maritime professionals?
Claims for professional negligence
This is provided by specialist insurers for professions like surveyors and ship brokers.
What type of insurance does a port typically have?
Property insurance and liability insurances
This includes public and employers’ liability.
What unique risk must ports consider in their liability insurance?
Liability to vessels and personnel using the water areas
This is specific to the responsibilities of the port authority.
What does loss of hire/loss of earnings insurance cover?
Pays out for ships that cannot work due to damage or seizure after a waiting period
Covers loss of earnings when the vessel is seized but not damaged, potentially triggering physical damage cover under a war policy.
What is specie/jewellers’ block insurance?
Covers physical damage and liability risks related to gems, precious metals, valuable documents, and jewellery
Includes security coverage during transport and storage, with exclusions for unattended vehicles and compliance with the Kimberly process.
What are the general exclusions in specie/jewellers’ block insurance?
- Unattended vehicles
- Theft
- Fire
- Goods found missing only during stocktaking
- Non-compliance with the Kimberly process
The Kimberly process aims to prevent the trade of conflict diamonds.
What does fine art insurance cover?
Covers artwork in collections, museums, and exhibitions, including repair costs and depreciation
It also considers security and knowledgeable handling during movement and storage.
What are some standard exclusions in fine art insurance?
- Inherent vice and vermin
- Items undergoing re-framing or repair
- Climate-related issues
- Unattended vehicles (unless criteria are met)
- War/terrorism/radioactive
- Cyber issues
- Consequential loss
These exclusions highlight the specific risks associated with art.
What is cash in transit insurance?
Covers money being moved between banks, ATMs, and customers
It focuses on security and excludes collusion or the use of a key or combination.
What is political risks insurance?
Covers various risks associated with dealing with businesses and political figures in foreign countries
It protects investments against risks like confiscation or expropriation.
What are the types of risks covered under confiscation, expropriation, or deprivation of assets insurance?
- Investment risk
- Fixed asset risks
- Mobile asset risks
- Trade-related risks
These risks pertain to assets being seized despite compliance with local regulations.
What does contract frustration or trade credit/credit risk insurance cover?
Covers losses from contract performance being frustrated or unilaterally canceled
It applies to both governmental and commercial contracts.
What is bond risks insurance?
Covers the risk of a bond being called outside the terms of the contract
It protects the insured from potential default on contractual obligations.
True or False: Fine art insurance includes coverage for items undergoing repair.
False
Items undergoing repair are specifically excluded from coverage.
Fill in the blank: Cash in transit insurance covers money being moved between banks, ATMs, and _______.
[customers]
What key element is critical in the underwriting of specie/jewellers’ block insurance?
Security
This is crucial due to the high value and risk associated with the goods being insured.
What does the Kimberly process seek to ensure?
That diamonds traded are not conflict or blood diamonds
This process aims to eliminate the trade of diamonds that fund violence.
What happens when a shipment that started as legal becomes illegal?
Political risks insurance can cover costs and expenses incurred
This highlights the dynamic nature of international trade regulations.
