Chapter 4 Flashcards
What documents are examined to help determine insurable interest on ocean marine policies?
Terms of sale/contract of carriage
Incoterms
Method of payment
Bills of lading
EX WORKS
Must arrange insurance from the works to final destination
FOB
Buyer takes responsibility for goods once on board
Seller is responsible for carriage and loading costs and any damage until goods are loaded on board
FAS
Buyer takes responsibility for goods as soon as they are alongside
Seller is responsible until the goods are alongside the vessel.
FOR
Free on Rail
FOT
Free on trailer
For reliable customers, sellers may be willing to arrange payment for goods at regular agreed Upton intervals, typically monthly or quarterly. This is an example of ….
Open account
Where the carrier declares there are no problems with the cargo at the time of acceptance of cargo
Clean bill of Lading
Where the carrier is instructed to deliver the property to the order of the named consignee
Order bill of lading
Where no specific value is declared from the shipper to the carrier
Released Bill of Lading
This gives the carrier the right to stow cargo wherever it sees fit
Optional Stowage Bill of Lading
This confirms the receipt of goods, indicates the cargo has in fact been loaded
Onboard Bill of Lading
Carriers of property are responsible for the safe carriage of goods, however there are times they are relived of responsibility.
Fire of all kinds
Carriers are not responsible by law for:
Fire
Perils of the sea - dangers and accidents of the sea
Act of God, war, public enemy
Strikes, riots,civil communications
Identify 5 characteristics of open policies
No expiry date
Sums insured are not stated - works a reporting period
May insure any type of good shipped anywhere in the world
Coverage is automatic
Premium rates are shown on the policy
Open policies often included a Valuation Clause in order to provide a method of determining value of shipment for insurance purposes. What are the areas addressed by this Clause?
Value of cargo
Shipping costs or freight
Other expenses like packing, incidental inland Shipping and additional insurance
Duties and taxes
Plus 10% to cover Flux values of goods and some profit
Discharging shipment at ports not covered may cause insureds to incur additional expenses. What endorsement is available to cover these additional expenses? What are 2 types of expenses insured by this clause?
Forwarding Charges Clause
Covers
unloading expenses
Storing expenses
Expenses to forward goods to destination to which insurance applies
Explain 3 types of total losses found in cargo policies
Actual total loss- no value left
Constructive total loss- where the cost of savage is too high relative to the value saved
Total loss to a part- total loss is to one shippers cargo, but not to other shipments
What is the purpose of the aviation Lay Up endorsement? When must this be added to the policy?
Allows for partial refund of premium when the aircraft is not used for long periods of time
Lay ups must be reported within 90 days of policy expiry
Must be added at the inception of the policy
Coverage Available for Aircraft
HULL COVERAGE A - ALL RISKS
HULL COVERAGE B - GROUND AND TAXIING RISKS
HULL COVERAGE C - GROUND RISKS ONLY
motion is considered while aircraft is:
In flight
Moving under it’s own power or momentum from it’s power
Propellers rotating due to engine power
Coverage is only provided when certain people are in control of the aircraft.
Approved pilots
Pilots employed by transport Canada who are testing the aircraft
Pilots providing Approved Pilots with upgrading training
Person competent and qualified to start and operate while not in flight
