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FIL 350 - Chapter 8

Inland Marine & Ocean Cargo

QuestionAnswer
Brief history of inland marine - Insurers were historically separated into Life & health, fire, casualty (liability, misc prop), marine (often open perils) - New coverage demanded in early 20th century - Fire insurers demanded legal definition of "marine insurance"
Covered loss exposures inland marine - Imports, exports - Domestic shipments - Instruments of transportation & comm (bridges, tunnels, piers, tv towers, etc.) - Various types of prop (jewelry, furs, instruments, coins) - Various biz prop (mobil equip, builders risk, exhibitions, EDP, etc
Common types of marine coverage - Transportation (annual transit, open cargo, mail insurance, motor truck cargo) - Instruments of transportation & comm - Equipment floaters (contractors equip, computer equipment) - Builders & installation risks)
Hull insurance Covers physical dmg to the ship or vessel - A collision liability clause (running down clause) covers owner's legal liability if the ship collides w/ another vessel
P&I insurance - Protection & indemnity - Provides comprehensive liability coverage - Property dmg to piers and docks - Bodily injury damages to others, including illness to passengers/crew
Open Cargo Insurance - Ocean marine equivalent to annual transit insurance - Covers frequent shipments overseas by boat or plane - Often no expiration date
"Assured" Marine terminology for named insured
"Average" Marine terminology for a partial loss
3 parties involved in transportation exposures 1. Shipper is seller of goods 2. Consignee is buyer of goods 3. Carrier is org responsible for transportation (delivery people) - Common carrier is transportation company available to public - Contract carriers work for shippers w/ contracts
Annual transit insurance - Most common "transportation ins" - Covers all shipments during policy period (1 yr usually) - Must list types of trans covered, may leave out international exposures - Typically open peril - Excludes jewelry, furs, $, etc. - May cover common/contra
Trip transit insurance - Sometimes called "voyage policy" for ocean - Covers cargo for a specific trip on a scheduled basis
Mail insurance - Through USPS or private insurers (for very valuable items) - Parcel post policy is for loss due to non-delivery
Contractors equipment floater - Covers mobile equipment that travels - cranes, tractors, bulldozers, etc. - Common insureds: construction contractors, mining, gov't prop. - Scheduled prop for smaller companies, blanket for larger insureds
Computer equipment floater - May cover electrical/mech breakdown or prop in transit - Can cover equip, data, & media
Builders risk coverage - Covers buildings under construction and can cover prop owners and/or builders - Covers mats & supplies at or away from site, collapse - Specialized policies for instrumentalities of transportation & comm
Dealers policies - Jewelers, musical instruments, art, etc.
Free on board - FOB Point of origin: ownership passes to buyer when goods accepted by carrier. - FOB destination: ownership passes to buyer when delivered
Bill of lading - Limits liability - straight = unlimited - released value = limit liability per pound
General average a share of loss among a ship and cargo owners if cargo must be jettisoned
Warranties Ocean marine equivalent of "exclusions" - Usually only warranty is piracy
Nationwide Marine Definition State of the types of property that may be insured on inland marine and ocean marine insurance forms
Nonfiled classes (uncontrolled classes) The classes of inland marine business for which neither policy forms nor rates must be filed with the state insurance department
Filed classes (controlled classes) The classes of inland marine business for which policy forms and/or rates must be filed with the state insurance department.
Floater A policy designed to cover property that floats, or moves, from location to location
Invoice value A valuation basis that values covered property at its invoice value, including freight
Agreed value method A method of valuing property in which the insurer and the insured agree, at the time the policy is written, on the maximum amount that will be paid in the event of a total loss
Shipper The person or organization shipped goods, often the seller of the goods
Cosignee The person or organization that receives property being transported by a carrier
Common carriers Airlines, railroads, or trucking companies that furnish transportation to any members of the public seeking their offered services
Contract carriers Carriers that furnish transportation services to shippers with whom they have contracts
Act of God A natural and unavoidable catastrophe that interrupts the expected course of events
Inherent vice A quality of or condition within a particular type of property that tends to make the property destroy itself
Bill of lading A document acknowledging receipt of goods from the shipper, given by the carrier which includes the terms of the contract of carriage for the goods
Charter A travel contract in which the transportation is temporarily hired for a specific trip
Annual transit policy Policy that covers all shipments made or received by the insured throughout a 1 year period
Open cargo policy Policy that covers all goods shipped or received by the insured during the policy's term; comparable to an inland marine annual trip transit policy, but without a set policy expiration date
Assured In the ocean marine policies, the party named as the insured
General Average Partial loss that must, according to maritime law, be shared by all parties to a voyage
Created by: FIL350