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Caib 3 > Chapter 4 Ocean Marine & Aviation > Flashcards

Chapter 4 Ocean Marine & Aviation Flashcards

1
Q

4 other methods covered under Marine Cargo Insurance Policy

A

Air
Land
Rail
Vessels operated on inland waterways and lakes

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2
Q

Who has insurable interest in cargo shipped

A

Sellers
Buyers
Carriers
Financial Institutions

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3
Q

Which documents are to be reviewed that relate to the shipment for proper determination of existence of insurable interest

A

Terms of sale
Bills of Lading

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4
Q

Buyers and sellers may have ownership interest what does the broker need to focus on identifying when reviewing terms of sale

A

INCOTERMS - under which goods are being shipped
Method of payment

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5
Q

What does INCOTERMS address

A

Point in transit at which seller has fulfilled obligation
Which of buyer or seller is responsible for carriage from one point to another
Which buyer or seller is responsible for the insurance

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6
Q

Where will method of payment be addressed

A

Terms of sale

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7
Q

Who has insurable interest when goods purchased by loans or credit

A

Financial Institutions
Sellers

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8
Q

Cash in advance

A

when buyer is not well know to seller or the order involves custom manufacture of special type of goods

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9
Q

Open account

A

Charge account where buyer arranges settlement at regular intervals
Usually made when customers are reliable

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10
Q

Draft

A

payment on presentation (sight draft) or at a specified future
date (time draft)

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11
Q

Letter of credit

A

Most common
Seller agrees to provide buyer with goods pending receipt of letter credit

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12
Q

Bill of Lading

A

Document issued by carrier responsible for transporting or forwarding the goods

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13
Q

Who issues the Bill of Lading

A

The carrier

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14
Q

Bill of Lading serves 3 functions

A

As a contract of carriage between ship-owner and shipper
As a receipt of goods
As a document title to the goods
includes description of person to who goods are being delivered

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15
Q

Straight Bill of Lading

A

Carrier instructed to deliver goods to named consignee only

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16
Q

Order Bill of Lading

A

Carrier instructed to deliver the property to the order of named consignee

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17
Q

Released Bill of Lading

A

No specific value has been declared

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18
Q

Valued Bill of Lading

A

Indicates the value of goods declared by shipper

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19
Q

On Deck Bill of Lading

A

Shipper request goods to be on deck to save premium
Stowed at shippers risk, carrier not liable for damage

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20
Q

Optional Stowage Bill of Lading

A

Carrier can store cargo wherever they see fit

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21
Q

Received Shipment Bill of Lading ( Dock Receipt)

A

Proof of evidence the goods were received by the carrier

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22
Q

Clean Bill of Lading

A

Declares no indications of problems with condition of cargo when accepted for carriage

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23
Q

On Board Bill of Lading

A

Confirms goods were loaded on board the vessel

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24
Q

Causes of loss that carriers are not responsible for

A

Fire - unless caused by the carrier
Perils, danger, accidents of the sea
Acts of God
Acts of war
Acts of public enemies
Strikes, riots and civil commotions

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25
Q

Cargo Insurance can be purchased 2 ways

A

Individual Policy - used for single shipments
Open policy - used large volumes of shipments over seas

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26
Q

Characteristics of an Open Policy

A

Sums insured are not stated
Limits are established for any one location
Stowed under deck may have separate limit
Can insure goods of every description
Can be issued with no expiry date
Generally no expiry date
Premium rate stated on policy

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27
Q

What indemnity is used to Ocean Marine Cargo policy

A

Agreed value on cargo

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28
Q

Types of losses can be insured under ocean marine policy

A

Value of cargo
Shipping costs or freight / inland freight
Other expenses
Export packing
Insurance premiums
Duties and taxes
Levied at point of entry
plus 10%

29
Q

Why is there not much concern for settlements to exceed the value of property in marine insurance

A

Insured usually has a limited ability to create deliberate loss
Valuation clause helps to avoid unrealistic values

30
Q

What advantage is there using percentage insured valued method for a cargo marine claim

A

When total loss, amount paid is amount of insurance purchased
On partial loss, only immediate market value needs to be known
Percentage loss in the market and amount of insurance determine the amount of insured claim

31
Q

What 3 clauses is cargo risk coverage available

A

Institute Cargo Clauses A - All risks
Institute Cargo Clauses B - Named Perils
Institute Cargo Clauses C- Named Perils

32
Q

Transit Clause

A

Coverage for cargo from the time it leaves the warehouse until the time it reaches its destination

33
Q

Termination of Contact or Carrier Clause

A

Termination when there are circumstances beyond the control of the insured
Terminated at port or place other then the destination named on policy

34
Q

Forwarding Charges Clause

A

Any extra charges properly and reasonably incurred in unloading and storing.

35
Q

Change of Voyage Clause

A

Insurer agrees to continue coverage as long as prompt notice was given to insurer and an additional premium may be required

36
Q

Insurable Interest Clause

A

Only parties that have an insurable interest in the goods at time of loss will be entitled to payment

37
Q

Lost or not lost basis

A

Coverage applies even if the property already had been lost at time policy was negotiated provided that:
Insured did not know of loss
Insured had no reason to suspect a loss

38
Q

Coverage for Ocean Marine Policy can be limited by

A

Policy exclusions
Warranties that are either written in contract or acknowledged in law as being implied

39
Q

Exclusions found in all Institute Cargo Clause

A

Unseaworthiness and unfitness exclusion clause
Must be properly crewed and fueled
Strikes, lockouts, labour disputes
War risks
Discharged over side at final port

40
Q

2 types of warranties available under Ocean Marine Cargo Insurance

A

Express warranties - Agreement that all facts relating to risk are true or have/shall be done
Implied warranties- Don’t appear on policy wordings but understood by parties present are binding

41
Q

Implied warranties include

A

Legality- implied venture is legal
No delay
No deviation

42
Q

2 statutory statutory exceptions for breach of warranty

A

Owing to change in circumstance, warranty is no longer applicable
When compliance would be unlawful

43
Q

3 types of total loss under marine policy

A

Actual Total Loss - property totally lost or badly damaged there is no value left
Constructive Total Loss- cost of salvaging is too high relative to value saved
Total loss of a part- Total loss to one shippers cargo without total loss to the other shipments

44
Q

2 types of partial losses

A

Particular Average- partial loss to specific shipment other then the general average
General Average- losses voluntarily incurred for safety of entire venture

45
Q

Insured can elect coverage based on following cargo losses

A

Total losses only
Total losses with provision to cover partial losses
Percentage of loss
All partial losses

46
Q

7 factors considered by underwriters for cargo insurance in determining whether to insure particular exposure or terms and conditions

A

Carriers used in transporting cargo
Experience of ship owner - shipper
Route which ships will operate
Condition of harbors
Type of cargo insured
Perils to be insured against
Method of packing

47
Q

Issues relating to susceptibility of cargo

A

Damage through breakage, leakage, sweating, combustion
Theft and pilferage
Special trade conditions

48
Q

When is hull insurance required

A

When clients who own, operate or charter any kind of marine hull

49
Q

Running down clause

A

Provides collision loss to other vessels

50
Q

Policy which covers third party liability for injury or damage

A

Protection and indemnity clause (P and I )

51
Q

Ship Repairer’s Legal Liability

A

Covers shipyards for repair to vessels while in their care, custody and control

52
Q

Stevedore’s Legal Liability

A

Covers land based operations for loading and unloading vessels

53
Q

3 air craft hull categories

A

Privately owned aircraft, not used for reward or hire
Commercial aircraft (excluding instruction and rental)
Commercial aircraft ( including instruction and rental)

54
Q

The ministry of transport (M.O.T.) is often called

A

The police in the air

55
Q

Aircraft (Hull) coverages available on what basis

A

Hull coverage A - All risks
Hull coverage B- ground and taxiing Risks
loss only while on ground or in motion
Hull coverage C- Ground risk only
on ground and not in motion

56
Q

Aircraft is in motion when

A

It is in flight
It is moving under its own power
A propeller or a rotor on the aircraft is caused to be rotated by the engine power

57
Q

3 different deductible amounts under Aviation (Hull) Policy

A

In motion deductible
Not in motion deductible
Moored deductible

58
Q

Insurer requires how many days of its receipt of proof of loss under an aviation policy

A

30 days

59
Q

Lay-up Endorsement eligibility for refund

A

Endorsement must have been purchased at the inception date of policy
Reports of lay-ups must be provided to insurer within 90 days or expiry of policy
Usual lay-up clause is for 30 days and refund is withheld until policy expires

60
Q

Detached Undercarriage Endorsement

A

Coverage for wheels, skis or floats when detached from the air craft when not in use

61
Q

liability limit for private business/pleasure aircrafts based on

A

Maximum permissible take of weight
if weight exceeds 50000 Lbs minimum of $300 000 per passenger seat must be purchased

62
Q

Liability Coverage F- Bodily Injury and property damage (excluding passengers)

A

Coverage extends to hangers leased or occupied
Additional $25000 coverage per occurrence provided for labour and equipment required to deal with emergency situations
Foaming runway for emergency landing

63
Q

Exclusions for Aviation ( Hull ) policy

A

War, seizure, high-jacking
Unapproved pilot

64
Q

Exclusions not applied for Aviation ( Hull) policy

A

Operated by a pilot providing an approved pilot with upgrading flight instruction
Pilot employed by Transport Canada
When not in flight, aircraft started and operated by competent person

65
Q

Pilots Record and REoirt

A

Class of license and endorsements
Total hours as pilot in command
Record of all accidents in the previous 5 years

66
Q

Similarities between Marine and Cargo Insurance

A

Liability of carrier limited by law
Valuation
Coverages
Exclusions
Rating

67
Q

Non-owned Liability

A

Businesses that don’t own the aircraft but whose employees may fly while engaged in business

68
Q

Contingent Liability

A

Liability for a business that does not own the aircraft but rent charter or borrow for company business

69
Q
A

Caib 3 (6 decks)

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