Lesson 12: Ocean and Inland Marine Insurance - Protecting What We Move Flashcards
(42 cards)
Ocean Marine Insurance, by legal definition
cargo, hull, freight plus protection, and indemnity
Cargo insurance
is a policy that protects the policyholder from the loss of goods during shipment.
Cargo insurance protects…
the owner or consignor of goods for possible physical loss or damage from external causes during shipping. The insurer would reimburse the policyholder for the value of the goods; if they incur damage or perish while in the hands of the shipper.
Cargo can be written on a
named peril or an all-risk basis.
Hull insurance
is insurance protecting owners against loss caused by damage or destruction of waterborne craft. Hull covers a variety of vessels, providing a broad range of coverage on physical damage to a vessel and any of its operating machinery and equipment.
Protection and indemnity (marine)
broad form of marine legal liability insurance covers loss or damage of ships, cargo, or terminals. Protection & Indemnity is liability coverage for watercraft, protecting the insured from liability, bodily injury, and property damage arising from use or ownership of declared vessels. It covers loss of life, injury, and sickness of the crew, passengers and third parties, including liabilities under statutory compensation acts such as Workers’ Compensation, damage to cargo on board the vessel, wreck removal, collisions, and damages to docks and piers.
For example, under protection and indemnity, if a ship runs into a bridge while a train is crossing, the seaman, the train, and its passengers are all covered under liability.
Freight Insurance
pays the cost of shipping charges For example, a $20 Million shipment of cargo and $2 Million of shipping cost is lost when a ship sank. Cargo insurance covers the direct loss of the $20 Million, while the indirect loss of $2 Million is covered by Freight Insurance.
Implied warranties and ocean marine insurance coverages
Implied Warranties apply to ocean marine insurance coverages and must be strictly observed. They are not actual policies nor written into the contract, but carry the same weight as a written warranty. If a warranty is not adhered to, the insurance policy is void.
Implied Warranty: Seaworthiness
In a marine insurance voyage policy, the implied warranty is that the vessel is seaworthy. Seaworthiness is a warranty in which the owner of the ship or insured agrees to provide a seaworthy vessel that is not overloaded and has a competent captain and crew.
Implied Warranty: Condition of Cargo
Condition of Cargo the cargo owner is obligated to guarantee that the cargo is sound and properly packed for voyage.
Implied Warranty: Legality of Voyage
The Legality of Voyage warrants the voyage is legal and no illegal activity will occur.
Implied Warranty: Deviation in Voyage
No Deviation in Voyage warrants the ship will not detour while on the journey but follow an agreed upon route with no unnecessary delays.
Perils ON the sea
forces of nature an insured may encounter in the course of an expedition such as sinking, collision of ships, stranding, high winds, heavy waves. It can happen on the sea or elsewhere (such as a fire)
Perils of the sea (coverage)
includes the cause of losses occurring on board ships during the voyage
Jettison (is a coverage)
intentionally throwing overboard cargo or portions of a ship attempting to save the vessel from sinking
Barratry (a coverage)
fraud or wrongful acts committed intentionally by the master or crew without the shipowners knowledge
Inchmaree clause
a clause in a marine insurance policy that covers damage or loss caused by the negligence of a vessel’s captain or crew or by any defect in the ship’s hull or machinery such as a boiler explosion.
Categories of Marine Coverage (nationwide definitions)
There are six categories of eligible marine coverage: 1) imports, 2) exports, 3) domestic shipments, 4) instrumentalities of transportation and communication, 5) personal property floater risk, and 6) commercial property floater risk.
General Average Loss
Average in marine terms means loss. General
average means a partial loss (as opposed to a total
loss of ship and cargo) which has resulted from a
voluntary and deliberate sacrifice made for the
benefit of all concerned. For example, if a ship is in
danger of sinking in a storm and a deck load of
heavy cargo is jettisoned in order to save the ship
and remaining cargo, all interests involved in the
voyage would share in the loss.
Particular average
Particular average means a partial loss where there is not a requirement to share the loss, and where the loss will be borne
only by the party having an interest in the lost or
damaged property.
Constructive total loss
a partial loss situation involving damage so extensive that repair costs would equal or exceed the value of the property
Actual total loss
occurs when the damages or costs of repair clearly equal or exceed the value of the property
Inland Marine insurance
indemnifies loss to movable or specialized types of property. Inland Marine insurance (all-risk basis/open perils) cover goods transported over land and offered for Commercial or Personal property. The inland marine insurance definition has evolved to cover a wide range of property and materials considered Property in Transit.
Types of diverse risks
1) communications and transportation risks; 2) domestic transportation risks; 3) commercial property floaters; 4) personal property floaters
