Maritime Law Marine Insurance Law 1 — Questions and Answers
Question 1: The principle of 'uberrimae fidei' (utmost good faith) in marine insurance requires the insured to:
- Disclose all material facts known to them before the policy is issued (Correct answer)
- Submit to independent survey before coverage attaches
- Accept the insurer's valuation of the vessel without dispute
- Maintain classification society certification throughout the policy term
Correct answer: Disclose all material facts known to them before the policy is issued
Utmost good faith obligates the insured to voluntarily disclose all material information that might affect the insurer's decision to underwrite or the premium charged.
Question 2: A 'valued policy' in marine insurance means:
- The insured value of the vessel is agreed at inception and is conclusive in the event of total loss (Correct answer)
- The policy automatically increases in value each year
- The insurer retains the right to revalue the vessel at each renewal
- The policy covers only the vessel's actual market value
Correct answer: The insured value of the vessel is agreed at inception and is conclusive in the event of total loss
Under a valued policy, the agreed insured value is conclusive for total loss purposes, regardless of the vessel's actual market value at the time of loss.
Question 3: In marine insurance, 'average' refers to:
- A partial loss or damage, as distinguished from a total loss (Correct answer)
- The mean value of similar vessels for underwriting purposes
- Pro-rated premium for mid-term policy cancellation
- The insurer's claims settlement formula
Correct answer: A partial loss or damage, as distinguished from a total loss
In marine insurance terminology, 'average' means a partial loss — either particular average (affecting only specific interests) or general average (shared by all voyage interests).
Question 4: Which type of marine insurance policy covers cargo owners for loss or damage to goods during transit?
- Cargo (marine cargo insurance) (Correct answer)
- Hull and Machinery (H&M) policy
- Protection and Indemnity (P&I) Club coverage
- Freight insurance
Correct answer: Cargo (marine cargo insurance)
Marine cargo insurance protects the cargo owner against physical loss or damage to goods while in transit by sea, air, or land.
Question 5: A 'Protection and Indemnity' (P&I) Club primarily provides shipowners with coverage for:
- Third-party liabilities including crew injury, cargo damage, and collision liability (Correct answer)
- Hull physical damage and machinery breakdown
- War risks and piracy
- Loss of freight income
Correct answer: Third-party liabilities including crew injury, cargo damage, and collision liability
P&I Clubs are mutual insurance associations that cover shipowners' third-party liabilities such as personal injury, cargo damage, pollution, and wreck removal.
Question 6: The 'running down clause' (RDC) in a hull policy covers:
- The insured vessel's liability to another vessel in a collision (Correct answer)
- Hull damage from grounding on a submerged object
- Damage caused by the vessel's anchor to underwater cables
- Loss of life among crew in a collision
Correct answer: The insured vessel's liability to another vessel in a collision
The Running Down Clause (also called the Collision Liability Clause) covers the shipowner's liability to the other vessel and its cargo for damage caused in a collision.
Maritime Law Marine Insurance Law 1
The principle of 'uberrimae fidei' (utmost good faith) in marine insurance requires the insured to: