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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
Cargo Insurance can be purchased 2 ways
Individual Policy - used for single shipments Open policy - used large volumes of shipments over seas
26
Characteristics of an Open Policy
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
27
What indemnity is used to Ocean Marine Cargo policy
Agreed value on cargo
28
Types of losses can be insured under ocean marine policy
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
Why is there not much concern for settlements to exceed the value of property in marine insurance
Insured usually has a limited ability to create deliberate loss Valuation clause helps to avoid unrealistic values
30
What advantage is there using percentage insured valued method for a cargo marine claim
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
What 3 clauses is cargo risk coverage available
Institute Cargo Clauses A - All risks Institute Cargo Clauses B - Named Perils Institute Cargo Clauses C- Named Perils
32
Transit Clause
Coverage for cargo from the time it leaves the warehouse until the time it reaches its destination
33
Termination of Contact or Carrier Clause
Termination when there are circumstances beyond the control of the insured Terminated at port or place other then the destination named on policy
34
Forwarding Charges Clause
Any extra charges properly and reasonably incurred in unloading and storing.
35
Change of Voyage Clause
Insurer agrees to continue coverage as long as prompt notice was given to insurer and an additional premium may be required
36
Insurable Interest Clause
Only parties that have an insurable interest in the goods at time of loss will be entitled to payment
37
Lost or not lost basis
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
Coverage for Ocean Marine Policy can be limited by
Policy exclusions Warranties that are either written in contract or acknowledged in law as being implied
39
Exclusions found in all Institute Cargo Clause
Unseaworthiness and unfitness exclusion clause Must be properly crewed and fueled Strikes, lockouts, labour disputes War risks Discharged over side at final port
40
2 types of warranties available under Ocean Marine Cargo Insurance
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
Implied warranties include
Legality- implied venture is legal No delay No deviation
42
2 statutory statutory exceptions for breach of warranty
Owing to change in circumstance, warranty is no longer applicable When compliance would be unlawful
43
3 types of total loss under marine policy
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
2 types of partial losses
Particular Average- partial loss to specific shipment other then the general average General Average- losses voluntarily incurred for safety of entire venture
45
Insured can elect coverage based on following cargo losses
Total losses only Total losses with provision to cover partial losses Percentage of loss All partial losses
46
7 factors considered by underwriters for cargo insurance in determining whether to insure particular exposure or terms and conditions
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
Issues relating to susceptibility of cargo
Damage through breakage, leakage, sweating, combustion Theft and pilferage Special trade conditions
48
When is hull insurance required
When clients who own, operate or charter any kind of marine hull
49
Running down clause
Provides collision loss to other vessels
50
Policy which covers third party liability for injury or damage
Protection and indemnity clause (P and I )
51
Ship Repairer's Legal Liability
Covers shipyards for repair to vessels while in their care, custody and control
52
Stevedore's Legal Liability
Covers land based operations for loading and unloading vessels
53
3 air craft hull categories
Privately owned aircraft, not used for reward or hire Commercial aircraft (excluding instruction and rental) Commercial aircraft ( including instruction and rental)
54
The ministry of transport (M.O.T.) is often called
The police in the air
55
Aircraft (Hull) coverages available on what basis
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
Aircraft is in motion when
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
3 different deductible amounts under Aviation (Hull) Policy
In motion deductible Not in motion deductible Moored deductible
58
Insurer requires how many days of its receipt of proof of loss under an aviation policy
30 days
59
Lay-up Endorsement eligibility for refund
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
Detached Undercarriage Endorsement
Coverage for wheels, skis or floats when detached from the air craft when not in use
61
liability limit for private business/pleasure aircrafts based on
Maximum permissible take of weight if weight exceeds 50000 Lbs minimum of $300 000 per passenger seat must be purchased
62
Liability Coverage F- Bodily Injury and property damage (excluding passengers)
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
Exclusions for Aviation ( Hull ) policy
War, seizure, high-jacking Unapproved pilot
64
Exclusions not applied for Aviation ( Hull) policy
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
Pilots Record and REoirt
Class of license and endorsements Total hours as pilot in command Record of all accidents in the previous 5 years
66
Similarities between Marine and Cargo Insurance
Liability of carrier limited by law Valuation Coverages Exclusions Rating
67
Non-owned Liability
Businesses that don't own the aircraft but whose employees may fly while engaged in business
68
Contingent Liability
Liability for a business that does not own the aircraft but rent charter or borrow for company business
69

Caib 3 (6 decks)

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