Chapter Three Flashcards
Types of Insurance
What is the significance of ‘particular average’ in marine insurance?
Particular average refers to a special term used for physical damage to the insureds property in marine insurance.
What is the difference between cargo insurance and goods in transit insurance?
Cargo insurance covers physical damage to the items being transported, while goods in transit insurance primarily covers the liabilities of the carrier.
What types of risks does political risks insurance (PRI) cover?
PRI covers arising from hostile governmental actions such as confiscation, exportation and non-payment.
What is the purpose oof reinsurance?
Reinsurance is used by the insurers to transfer some of their risks to other insurers, thereby managing their exposure.
What are ‘honour policies’ in marine insurance?
Honour policies are insurance policies where the insurable interest is not entirely clear and are not enforceable in court.
How does business interruption insurance function?
Business interruption insurance replaces lost income after a waiting period due to physical loss or damage to the insured property.
What does loss of earnings insurance cover for ship owners?
Loss of earnings insurance covers the financial impact on ship owners when their vessel cannot be used to generate income due to damage.
What is meant by ‘insurable interest’ in marine insurance?
It refers to the requirement that the purchaser must have a clear financial stake in the insured item for the policy to be valid.
