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61 Cards in this Set

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  • Back

In addition to transportation over the ocean four other incidental methods of transportation covered under a marine cargo insurance policy

air, land, rail, and on vessels operating on inland waterways

what 4 parties have an insurable interest in cargo being shipped?

Sellers, buyers,carriers,financial institutions

what 2 documents determine the insurable interst of the parties that have an insurable interest

Terms of sale/contract and bills of lading

the incoterm under which goods are being shipped and the method of payment for the goods

identify the two items the broker will normally focus on identifying under the terms of sale

the point in transit at which the seller has fulfilled its obligations, which of the buyer or seller is responsible for carriage from one point to another, and which of the buyer or seller is responsible for insurance

what 3 questions address the issue of insurable interest under the incoterms?

buyer - pays for the invoice cost of goods and must arrange insurance frm the works to final destination. seller- sells at the invoice cost

ex works -buyer and seller

buyer -takes responsibility for goods once they are on board the vessel. Insurance is the responsibility of the buyer from the moment until final delivery. Seller - responsible for carriage and loading costs and any damage until goods are loaded on board. Insurance is responsiblity of the seller from works until on board

f.o.b. (Free on board) buyer and seller

Buyer - takes responsibility for goods as soon as they are alongside the vessel or on the quay. Insurance is responsiblity of the buyer from this moment until final delivery. seller - is responsible for carriage and unloading costs until goods are alongside vessel or on the quay. Insurance is responsibilty of the seller from works up to this point

f.a.s. (Free along side) buyer and seller

buyer - not responsible for insurance as this is included in the contract price. Increased value cover at the ultimate destination may be required. Seller - responsible for providing insurance but usually follows the buyer's instructions

c.i.f. (Cost, insurance, and freight buyer and seller

this method of payment is used when the buyer is not well know to the seller and the order involves custom manufacture of special types of goods without a ready market

cash in advance method of payment

this method is the opposite of cash in advance and is essentially a charge account where the buyer arranges to pay the seller at regular intervals, usually monthly or quarterly.

open account method of payment

this method requires the buyer to pay the seller on presentation (sight) of the invoice, or at some specified future date (time)

Draft method of payment

this is the most common payment method used for exports

Letter of credit method of payment

Issued by the carrier responsible for transporting or forwarding the goods

who issues the bill of lading?

As a contract of carriage between the ship owner and the shipper, as a receipt for the goods, as a document of title to the goods

what are the three functions served by bills of lading?

description of persons to whom goods are to be delivered, description of how goods are valued while being transported by the owner, and other conditions

identify three other items included in bills of lading in addition to indicating the route the shipment is to follow and party responsible for freight charges


identify who is entitled to receive goods under straight bill of lading

Others may take delivery of the goods on consignee's behalf

identify who is entitled to receive goods under order bill of lading

No specific value will have been declared by the shipper to the carrier

identify how the goods are valued under released bill of lading

Indicates the value of the goods as declared by the shipper

identify how the goods are valued under valued bill of lading

confirms to the shipper that the cargo has been stowed on deck and is at the shippers risk

explain - on deck bill of lading

Gives the carrier the right to stow cargo wherever it see's fit especially with respect to the stowage of containers on deck

explain optional stowage bill of lading

also called a dock receipt, this form is issued by the carrier or its representative as evidence that the goods were received by the carrier for shipment

explain received for shipment bill of lading

carrier declares there are no indications of problems with the condition of the cargo at the time of acceptance for carriage

explain clean bill of lading

Shows the actual number of units being shipped

explain count bill of lading

confirms the receipt of goods and the fact that they were loaded on board the vessel

explain on board bill of lading

fire, unless caused by the actual fault or privity(private knowledge) of the carrier, perils, damages and accidents of the sea or other navigable water and act of god,war or public enemies

Provide three losses for which carriers are not responsible at law to the shipper?

individual policy or certificate, and open policy

identify two types of cargo insurance that may be purchased by either shippers or consignees

1. sums insured are not stated 2. Can be extended to insure goods of every description shipped anywhere in the world. 3. Can be issued with no expiry date. 4.premium rate stated on the policy. 5. The use of the open policy creates a business relationship that may exist over a long period of time

identify five characteristics that are common to open policies that may be purchased by either shippers or consignees who have large volumes of overseas shipments

Value of the cargo, shipping costs or freight, other expenses, duties and taxes, plus ten percent

insurers insert a valuation clause in the policy. Indicate the five values typically associated with cargo insured on an open policy

If the damage is estimated to be 40% of what the value of the property would have been without damage, 40% of the insured amount is paid for the loss. The face of the policy is always paid in the event of a total loss.

explain the term percentage of insured value loss basis of loss settlement

the insured usually has a limited ability to create a deliberate loss, especially as a reaction to changing market conditions

Most types of property insurance do not allow for settlements exceeding the actual value of the property, why is it of less concern in marine insurance

When the loss is total, the amount paid is the amount of insurance purchased, and for partial losses, only the immediate market value(the present price in the market to which the goods are delivered) needs to be known.

identify two advantages of adjusting losses on percentage of insured value basis

A B and C cargo clauses

What institute cargo clauses covers collision of ship with another ship

cargo clause A B and C

what institute cargo clauses covers fire or explosions

Cargo clause A only

what institute cargo clause covers theft/ pilferage

Not covered under any cargo clause

what institute cargo clause covers war risk (except piracy)

Transit clause, termination of contract or carriage clause, change of voyage clause, and claims

identify four special sets of clauses which have been drawn up in consultation between underwriters and various trade associations

Provides coverage from the time the goods leave the shippers warehouse until they arrive at the point of destination indicated by the policy. " warehouse to warehouse "

explain the function of the following common coverage clauses: transit clause

When the contract of carriage is terminated before the goods reach their final destination coverage under the policy also is terminated

explain the function of the following common coverage clauses: termination of contract or carrier clause

If the destination of the cargo is changed by the insured the insurer agrees to continue coverage so long as prompt notice is provided to the insurer.

explain the function of the following common coverage clauses: change of voyage clause

Means that coverage applies even if the property has already been lost at the time the policy is negotiated

explain the term - cargo coverage on a lost or not lost basis

Insured did the know of the loss, and had no reason to suspect that there had been a loss

what two requirements are needed before a claim would be paid in a lost or not lost basis

Policy exclusions, and warranties that are either explicitity written in the contract or that are acknowledged in law as being implied

coverage provided under ocean marine cargo policy may be limited both by:

Unseaworthiness and unfitness exclusion clause, strikes exclusion clause, war exclusive clause

identify three exclusions found in all institute cargo clauses

Alarm warranty requires that the alarm system fitted to the vehicle be in working order at all times and is tested and set whenever the vehicle is left loaded and unattended

identify one type of express warranty that may be found in some marine cargo policy

Legality implied warranties that the venture is legal. No delay, that the voyage will start within a reasonable time and no deviation, there will be no deviation from the most direct or customary route for the voyage insured

identify and briefly explain three implied warranties that are tacitly understood by the parties in marine cargo insurance

the warranty is no longer applicable, and compliance would be unlawful owing to the enactment of a subsequent law

generally a warranty requires exact compliance or the under writer may avoid all liability. Identify two exceptions to this rule

one in which the property is totally lost or is so badly damaged that it has no value left.

identify and explain this type of total loss that is used in marine terminology - actual total loss

Occurs when the cost of salvaging the cargo is too high relative to the value saved

identify and explain this type of total loss that is used in marine terminology - constructive total loss

To one's shippers cargo without total loss to other shipments constitutes total loss of a part of the shipment

identify and explain this type of total loss that is used in marine terminology - total loss of a part

Involves a partial loss to a specific shipment, other than a general average

particular average definition

Deals with the payment of those losses voluntarily incurred for the safety of the entire venture

general average definition

total losses with provision to cover partial losses caused by perils of the sea when they exceed a certain percentage of the insured value

the application of franchise is

Carriers to be used in transporting the cargo, experience of the shipowners or shippers, the route over which the ship will operate and weather conditions at the time of the year if coverage is for a specific voyage, condition of the harbours into which calls will be made and the political situation in those areas, the type of cargo to be insured and any inherent hazards in such cargo, and the perils to be insured against including the amount if the insureds, participation and deductibles

identify factors that will be normally considered by underwriters in determining whether to insure a particular exposure

Growing number of sub-standard vessels, poor management practices, and flag of convenience vessels, confirmation of the air and registry of all ships

identify three pieces of information about specific carriers, to be used in transporting the cargo that would be important to an underwriter

damage through breakage, leakage, sweating, spontaneous combustion, rapid deterioration due to wetting, climate conditions and other sources, theft and pilferage, and special trade conditions

identify three concerns an under writer may have with respect to the susceptibility of cargo to any inherent hazards

theft, pilferage and non delivery

identify three recommendations that may be made to shippers concerning the methods of packing cargo

Collision losses to other vessels, their own hull policies will be used to pay for such damages. When the loss is greater than the amount of hull coverage carried by responsible party such additional sums will be paid under protection and indemnity insurance

running down clause - define

Loss of life and injury to third parties, pollution (practice differs from country to country), damage to fixed and floating objects ( such as wharves), removal of wreck

identify four losses covered by protection and indemnity polices

ship repairers legal liability, stevedores legal liability, and chartered legal liability

identify three other marine related liabilities that can also be purchased for specific businesses operating in the marine industry