Marine Insurance Flashcards
7 cards from real PGI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Marine Insurance flashcards as text
Under the Institute Hull Clauses, what is the meaning of 'Total Loss Only' (TLO) cover?
Answer: The policy pays only in the event of actual or constructive total loss of the vessel
TLO cover responds only when there is an actual total loss (vessel physically destroyed) or a constructive total loss (cost of repair exceeds the insured value), excluding partial losses.
What does 'constructive total loss' (CTL) mean in marine hull insurance?
Answer: The cost of recovering or repairing the vessel would exceed its insured value
A constructive total loss occurs when the vessel is not physically destroyed but repair or recovery costs would exceed the insured value, making it economically unviable to repair.
What is the purpose of the 'deductible' (franchise) in a marine cargo insurance policy?
Answer: To limit the insurer's liability to large losses only, with the insured bearing small losses
A deductible (or franchise) means the insured bears losses up to a specified amount, filtering out small claims and encouraging the insured to take care of cargo.
Institute Cargo Clauses (C) provides the NARROWEST cargo cover. Which of the following perils is covered under Clauses (C)?
Answer: Loss due to washing overboard
ICC (C) covers named perils including washing overboard, stranding, sinking, collision, fire, explosion, and discharge of cargo at a port of distress, but excludes theft and many other risks.
In Singapore, the Maritime and Port Authority (MPA) primarily regulates which aspect relevant to marine insurance?
Answer: The registration, safety, and seaworthiness standards of vessels
MPA regulates vessel registration, port safety, and seaworthiness standards in Singapore, which directly affect insurability and underwriting of marine risks.
What is 'freight insurance' in the context of marine insurance?
Answer: Insurance protecting the shipowner's or charterer's expected income from carrying cargo
Freight insurance protects the shipowner or charterer against loss of freight (earnings) that would result if the cargo is lost or the voyage cannot be completed.
What is a 'war risk' exclusion in standard marine cargo policies, and how is it typically addressed?
Answer: War risks are excluded from standard cargo clauses but can be reinstated by purchasing a separate war risk extension
Standard Institute Cargo Clauses exclude war risks, but insureds can purchase separate coverage under the Institute War Clauses (Cargo) for an additional premium.