Ocean Sea Freight Marine Cargo Insurance and Risk Management

Question 1

What does Institute Cargo Clauses (ICC) A (All Risk) primarily cover?

Accepted Answer

All physical loss or damage from any external cause except named exclusions

Answer

Only theft and piracy losses

Answer

Only damage caused by fire and sinking

Answer

Only total loss of the shipment

Question 2

What is 'general average' in maritime shipping?

Accepted Answer

A voluntary sacrifice or expenditure made to save the voyage, shared proportionally by all cargo interests and the shipowner

Answer

The average freight rate across all major shipping lanes

Answer

The total weight average of all cargo aboard a vessel

Answer

A standard method for calculating marine insurance premiums

Question 3

Under the CIF Incoterm, who is responsible for obtaining marine cargo insurance?

Accepted Answer

The seller at origin

Answer

The buyer at destination

Answer

The freight forwarder

Answer

The port authority

Question 4

What does 'Free of Particular Average' (FPA) mean in a marine insurance policy?

Accepted Answer

The insurer only pays for total losses and partial losses caused by specific major casualties such as stranding or sinking

Answer

The insurer covers all partial losses regardless of cause

Answer

The cargo owner bears no financial risk during transit

Answer

Freight charges are excluded from any insurance claim

Question 5

What is 'subrogation' in the context of marine cargo insurance?

Accepted Answer

The insurer's right to pursue a third party responsible for a loss after paying the insured's claim

Answer

The transfer of cargo ownership from seller to buyer upon delivery

Answer

A cargo loading method used for heavy freight

Answer

The substitution of one vessel for another mid-voyage

Question 6

What is the primary purpose of a marine survey conducted after cargo damage?

Accepted Answer

To assess and document the extent and cause of loss or damage to support an insurance claim

Answer

To determine the optimal shipping route for future voyages

Answer

To calculate the freight rate for the next shipment

Answer

To verify cargo weight for customs clearance purposes

Question 7

What does the 'insurable interest' requirement mean in marine cargo insurance?

Accepted Answer

The policyholder must have a financial stake in the cargo and stand to suffer a loss if it is damaged or lost

Answer

The cargo must be worth more than $10,000 to qualify for coverage

Answer

Only the vessel owner may take out cargo insurance

Answer

Insurance must be arranged before the cargo is loaded onto the vessel