Chapter 4

Question 1

What documents are examined to help determine insurable interest on ocean marine policies?

Answer 1

Terms of sale/contract of carriage
Incoterms
Method of payment

Bills of lading

Question 2

EX WORKS

Answer 2

Must arrange insurance from the works to final destination

Question 3

FOB

Answer 3

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

Question 4

FAS

Answer 4

Buyer takes responsibility for goods as soon as they are alongside
Seller is responsible until the goods are alongside the vessel.

Question 5

FOR

Answer 5

Free on Rail

Question 6

FOT

Answer 6

Free on trailer

Question 7

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 ….

Answer 7

Open account

Question 8

Where the carrier declares there are no problems with the cargo at the time of acceptance of cargo

Answer 8

Clean bill of Lading

Question 9

Where the carrier is instructed to deliver the property to the order of the named consignee

Answer 9

Order bill of lading

Question 10

Where no specific value is declared from the shipper to the carrier

Answer 10

Released Bill of Lading

Question 11

This gives the carrier the right to stow cargo wherever it sees fit

Answer 11

Optional Stowage Bill of Lading

Question 12

This confirms the receipt of goods, indicates the cargo has in fact been loaded

Answer 12

Onboard Bill of Lading

Question 13

Carriers of property are responsible for the safe carriage of goods, however there are times they are relived of responsibility.

Answer 13

Fire of all kinds

Question 14

Carriers are not responsible by law for:

Answer 14

Fire

Perils of the sea - dangers and accidents of the sea

Act of God, war, public enemy

Strikes, riots,civil communications

Question 15

Identify 5 characteristics of open policies

Answer 15

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

Question 16

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?

Answer 16

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

Question 17

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?

Answer 17

Forwarding Charges Clause
Covers
unloading expenses
Storing expenses
Expenses to forward goods to destination to which insurance applies

Question 18

Explain 3 types of total losses found in cargo policies

Answer 18

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

Question 19

What is the purpose of the aviation Lay Up endorsement? When must this be added to the policy?

Answer 19

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

Question 20

Coverage Available for Aircraft

Answer 20

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

Question 21

Coverage is only provided when certain people are in control of the aircraft.

Answer 21

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