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77 Cards in this Set

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  • Back
Ocean Marine Insurance
What is simply called "marine insurance" internationally.
Cargo Insurance
Marine cargo insurance covers loss of or damage to property shipped primarily by water or, if in foreign trade, by air.
Hull Insurance
Hull Insurance covers partial or total loss of vessels caused by a covered peril.
Protection and Indemnity
P&I protects the policyholder against(1)liability for BI and PD arising out of specified types of accidents and(2)certain unexpected vessel-related expenditures arising out of the ownership or operation of the vessel.
Admiralty Law
A specialized branch of federal law pertaining to claims for occurrences that take place on navigable waters and are connected with maritime activity.
Voyage Policy
An insurance policy that covers for the duration of a particular voyage specified in the policy.
Time Policy
An insurance policy that covers for the duration of a particular period of time, usually one year.
Open Cargo Policy
A cargo insurance policy that continues in effect until either the insurer or the insured cancels it.
Contract of Utmost Good Faith
An insurance policy based on the assumption that the insured has voluntarily revealed to the insurer all information pertinent to the risk being insured.
A false statement made by the insured that is material to the risk.
A failure of the insured to divulge information material to the risk.
Exceptive Warranty
A policy provision that excluded certain types of loss or certain causes of loss.
Promissory Warranty
A policy provision in which the assured guarantees or negates the existence of a fact or state of facts at policy inception or promises that something will be done, or will not be done, during the policy period.
Implied Warranty
A warranty that is understood to apply even though it does not appear in the policy.
Implied Warranty of Seaworthiness
An implied warranty requiring that the vessel be seaworthy: the captain and crew are competent, the stores are adequate, and the vessel is in condition to make the voyage.
Implied Warranty of No Deviation
Implied Warranty, applicable in voyage policies only, that the vessel will not deviate from its proper course except for permitted reasons.
Implied Warranty of Legality
Implied Warranty that the venture in which the vessel is engaged is legal.
"All-Risks" Policy
An insurance policy that covers any risk of physical loss unless the policy excludes it.
Total Loss
A loss for which the assured is entitled to collect the full amount of insurance under a marine insurance policy: may be either an actual total loss or a constructive total loss.
Actual Total Loss
A total loss of a vessel or cargo that occurs when the property undergoes physical destruction, loss of specie, or irretrievable deprivement.
Constructive Total Loss
A total loss that occurs when the cost of recovering and repairing the insured vessel would exceed its agree value, or when the insured cargo is reasonably abandoned in expectation of its becoming an actual loss or because the property cannot be saved from actual total loss without expending more than the value of the property.
Agreed Value
The value of insured property (such as a vessel) agreed to by the insured and the insurer before policy inception.
A partial loss of vessel or cargo.
Particular Average
A partial loss that is to be borne by only a particular interest (such as the vessel owner or a single cargo owner).
General Average
A partial loss that must be borne proportionally by all interests in a maritime venture (such as the vessel owners of cargo aboard the vessel).
Total Loss Only (TLO) Policy
A marine insurance policy that excludes particular average.
York-Antwerp Rules
International provisions that govern the adjustment of general average.
General Average Sacrifice
The deliberate and reasonable sacrifice of part of a vessel or cargo for the purpose of achieving safety when the voyage is imperiled.
Cite four reasons for the trend described in 1., above. (pp 1.9-1.10)
(1)The tort liability explosion, which increased liability premiums significantly, but not ocean marine; (2)the liberalization of workers compensation laws, which increased WC premiums significantly but not ocean marine; (3)substantial increases in nonmarine exposure units, such as autos, houses, commercial buildings, and workers; (4) the reduction in export markets for American products.
Describe the trend in ocean marine insurance premiums in the US since 1960. (p.1.9)
Ocean Marine premiums, although they have increased, have become a smaller percentage of total property-casualty premiums written.
General Average Expenditure
Expense incurred, usually by the shipowner, for the joint benefit of the vessel.
Port of Refuge Expenses
General average expenditures that result from the vessel's entering a port of refuge.
Identify the three main types of ocean marine insurance. (pp 1.10-1.11)
(1)Cargo, (2) Hull and (3) Protection and Indemnity
Substituted Expenses
Expenses that are incurred instead of general average expenditures and are therefore allowable in general average settlements up to the amount of the general average expenditure avoided.
Contributory Value
The value of the vessel and of each cargo interest that is used in apportioning the general average amount the various parties to a maritime venture.
Identify three types of marine liability insurance other than collision liability insurance and P&I (pp1.11)
(1) Charterer' liability policies, (2) ship repairers' liability policies, and (3) marina operators' legal liability policies.
Sue and Labor Charges
Costs or expenses incurred by the insured in complying with the sue and labor clause of a marine insurance policy, which requires the insured to take reasonable measures to protect the insured property from impending of further loss by an insured peril.
Identify four types of claims that are subject to admirality law. (pp 1.11-1.12)
Claims for (1) any damage caused by a vessel, (2) injury to the crew members of a vessel, (3) general average and salvage, and (4) wrongful death actions for accidents occurring on navigable waters.
What are the two major categories into which transportation regulation can be divided? (p13)
1.Safety Regulation - To establish standards and rules for construction, maintenance, and operation in all its modes.
2.Economic Regulation - To stabilize practices for entering and exciting the trades, maintaining services, and setting rates and fares.
How does the International Maritime Organization attempt to improve maritime safety? (p14)
The IMO provides a forum to establish standards for maritime safety, navigation, and pollution. The IMO member states discuss and establish minimum standards, codify IMO's conventions and protocols into their laws, and enforce the laws under their separate legal systems.
Identify five topics that have been the subjects of IMO convention and protocols. (p14)
1. Safety of Life at Sea
2. International Regulations for Prevention of Collision at Sea
3. Standards of Training, Certification and Watchkeeping for Seafarers.
4. Prevention of Pollution from Ships
5. Oil Pollution Preparedness, Response and Cooperation
Identify four specific issues that are current subjects of maritime regulation around the world. (pp15-16)
1.Pollution of water and air - 2. Protection of a domestic water transportation fleet - National flag vessels for domestic trade (cabotage laws)3. Protection of domestic fishing industries and offshore mineral concerns - 4. Competition for international shipping -
Describe the responsibilities of the US Coast Guard (p17)
USCG - inspecting US & foreign ships for safety; drug interdiction;maintenance of navigation aids; enforcement of laws effecting fishing & the exclusive economic zone; Coast Guard VTS service; port safety & security regulations; marine environmental response; search & rescue operations; marine casualty investigation; & documentation & licensing of US Mariners.
Describe the responsibilities of the American Bureau of Shipping (p18)
ABS - Responsibilities include establishing construction and equipment standards for ships and issuing Hull Certificates and Machinery Certificates as evidence of ABS compliance.
Describe the responsibilities of the Federal Marine Commission (p18)
FMC - Responsibilities include ensuring fair and equitable international water transportation for the US and receiving filings of common carrier tariffs, conference tariffs and activities, terminal tariffs and service contracts. The FMC investigates filed complaints; renders binding decisions; and may subpoena witnesses, impose monetary fines, or revoke tariffs.
Describe the responsibilities of the Maritime Administration (p18)
MARAD - overseeing US subsidies, approving mortgage guarantee applications, monitoring capital construction funds, maintaining statistics, and managing the federal maritime academy. Also oversees training ships and training programs, conducts research and development for ship design and cargo handling equipment, promotes the use of US flag ships, and manages reserve fleets.
Describe the responsibilities of the National Cargo Bureau (p19)
NCB - Responsibilities include applying standards for loading, stowage, securing, and unloading cargo; recommending safety regulations and safety training on stability and hazardous materials; maintaining the central source of cargo handling data; and inspecting cargo and cargo gear, issuing cargo gear certificates, and conducting cargo surveys.
What is the purpose of tramp ships? (p22)
Tramp ships provide convenient, timely, and economical transportation for the variety of goods needed in a complex industrialized society.
What types of cargoes are commonly moved by tramp shipping? (p23)
Tramp shipping moves basic products of agricultural (grain), forestry, and mining as well as manufactured raw materials (cement, petroleum, steel, and fertilizers).
Describe the small general purpose dry bulk carriers currently used in tramp shipping.
Small tram vessels with 20,000 to 25,000 tons deadweight or 25,000 to 40,000 tons deadweight have a shallow draft and can enter most commercial ports. Small tramp vessels transport cargoes in small lots and cargoes that cannot be packed in containers.
Describe the specialized medium -sized carriers currently used in tramp shipping.
Specialized Medium-sized tramp vessels with 50,000 to 60,000 tons deadweight are used for hauling grain and coal.
Describe the specialized large-sized carriers currently used in tramp shipping.
Specialized large-sized carriers - Large sized tramp vessels with a capacity of 100,000 to 125,000 tons of cargo are used exclusively for transporting iron ore between deep-draft commercial ports. Large-sized tramp vessels and containerships are gradually squeezing the small multi-purpose tramps out of the shipping business.
Why is it important for owners of tramp ships under voyage charters to be very selective in making commitments? (p.30)
When making commitments for voyage charters, owners must be very selective in order to arrange a series of commitments that follow one another closely in time and leave little idle time during which the ship earns no revenue.
Whom do owners of tramp ships rely on to find cargoes for them to carry? (p31)
Owners of tramp ships rely on ship brokers to find cargos for them to carry. Ship brokers understand the movement of goods in international trade, prevailing conditions where ships are in greater demand, and opportunities that may rise.
In what situation might the owner of a tramp ship require the charter to pay a "ballast bonus"?
The charter might be required to pay a "ballast bonus" when there is a shortage of ships at the loading port or when the voyage starts a great distance from the regular sea routes.
Why might an economist characterize owners of tram ships as "price takers"?
The owner of a tramp ship might be characterized as a "price taker" because charters usually dictate the maximum amount for ocean freights.
Who drafted most of the standardized charter parties in common use today? (p.48-49)
The Baltic and International Maritime Council drafted most of the standardized charter parties in use today.
How, basically, do time charter parties differ from voyage charter parties? (p.47-49)
Time charter parties provide more complete data than voyage charter parties do concerning the ship, the geographical limits of the vessel's employment, and the time and place of delivery and redelivery of the vessel. Moreover, in a time charter party, the compensation is usually expressed as a lump sum payable for each day the vessel is under contract, whereas a voyage charter party expresses the compensation as an agreed amount per ton of cargo carried.
In accordance with the implied warranty of seaworthiness that underlies the terms of any charter party, at what points(s) must the chartered vessel be seaworthy in the following? Voyage Charter
Voyage Charter - the ship must be seaworthy at the time the first ton of cargo is loaded and when the anchor breaks ground or the last line is let go.
In accordance with the implied warranty of seaworthiness that underlies the terms of any charter party, at what points(s) must the chartered vessel be seaworthy in the following? Time Charter
Time Charter - The ship must be seaworthy at the beginning of every voyage during the contract period.
In accordance with the implied warranty of seaworthiness that underlies the terms of any charter party, at what points(s) must the chartered vessel be seaworthy in the following? Bareboat Charter
Bareboat Charter - The ship must be seaworthy at the time the shipowner presents the ship to the charterer.
How does the "net form" of voyage charter differ from the "gross form" of voyage charter? (p.53)
The "net form" of voyage charter places responsibility on the charterer for proper loading, stowage, and discharge of cargo (while preserving the master's authority to supervise cargo operations). In contrast the "gross form" of voyage charter obligates the charterer only to provide the cargo at the loading port and to accept it at the port of destination.
Under a time charter, what are the shipowner's responsibilities for expenses resulting from operating the vessel? (p.59)
A time charter assigns responsibility to the shipowner for the seaworthiness of the ship during the life of the charter party. The shipowner must maintain the ship, make the repairs as needed, pay for insurance on the hull and machinery, supply engine room spares, and furnish food for the ship's personnel. Almost all other operating expenses must be paid by the charterer.
In what situation do voyage charter parties stipulate a "lump sum" payment?(p.55)
Voyage charter parties typically specify a "lump sum" payment when the exact stowage characteristics of the proposed cargo have not been determined at the time negations are concluded.
What cargo restrictions may apply under a voyage or time charter? (p.61-62)
A voyage or time charter may prohibit the carriage of livestock and injurious, inflammable, or dangerous goods (such as acids, explosives, calcium carbide, ferro silicon, naphtha, motor spirit, tar, or any of their products).
Identify three parties, other than an owner, that may have an insurable interest in a vessel. (pp1.12 - 1.13)
(1) Mortgagee; (2) Bareboat Charterer; (3) Bailee, such as a ship repairer.
Under US law, does a misrepresentation by the insured always void an ocean marine policy? (pp1.13-1.14)
No, The effect of an insured's misrepresentation may (depending on the circumstances) be determined by the state law, which can vary.
Explain how English law and American law differ with regard to the effect of an insured's breach of a promissory warranty under a marine insurance policy. (pp 1.14-1.15)
Under English law, the insured must comply exactly with a promissory warranty, or else the insurer can avoid liability for loss occurring after the breach occurs. Under American law, the issue is subject to applicable state law. State law may (as in the "Wilburn Boat Case") not allow the insurer to use breach of warranty as a defense unless the breach contributed to the loss.
Name the three implied warranties in ocean marine policies. (pp 1.15 - 1.16)
(1) Seaworthiness, (2) no deviation, and (3) legality.
To what extent are time hull policies subject to the implied warranty of seaworthiness under US law? (p 1.15)
The implied warranty of seaworthniess applies only at the time insurance attaches, if the vessel is in port. If does not apply if the vessel is at sea when the insurance attaches.
How is constructive total loss defined in American hull policies? (pp 1.17 - 1.18)
The cost of recovering and repairing the vessel would exceed the vessel's agreed value.
What types of expenditures does a hull insurer pay for a particular average? (p. 1.18)
The reasonable cost of repairs, which includes the cost of labor and parts and other necessary expenditures, such as the costs of entering a port for repairs, drydocking charges, and the cost of moving the vessel from one port to another port that has the facilities required for making repairs.
What are three of the requirements that must be met in order for a sacrifice of vessel or cargo to be considered general average? (p. 1.20)
(1) The property must be imperiled, (2) the sacrifice must be a deliberate act and (3) the purpose of the sacrifice must be the achievement of safety.
Give two examples of general average sacrifice. (p. 1.20)
Two examples of general average sacrifice are (1) voluntary stranding of the vessel and (2) jettison of cargo.
Give two examples of general average expenditure. (p. 1.21)
Two examples of general average expenditure are (1) the cost of entering a port of refuge and (2) wages and maintenance of the crew in a port of refuge.
Give one example of substituted expenses. (p. 1.21)
An example of substituted expenses is the cost of forwarding cargo to its destination instead of warehousing it at the port of refuge while the vessel is being repaired.
What is the purpose of an average bond? (p. 1.22)
To obtain a guarantee (before leasing the cargo) that the cargo owners will pay their share of the general average.