PGI Marine Insurance 1 — Questions and Answers
Question 1: Which legislation governs marine insurance contracts in Singapore?
- Insurance Act (Cap. 142)
- Marine Insurance Act (Cap. 387) (Correct answer)
- Maritime and Port Authority Act
- Merchant Shipping Act (Cap. 179)
Correct answer: Marine Insurance Act (Cap. 387)
The Marine Insurance Act (Cap. 387) is the primary statute governing marine insurance contracts in Singapore, based on the UK Marine Insurance Act 1906.
Question 2: What does the principle of 'utmost good faith' (uberrimae fidei) require of a proposer in marine insurance?
- To pay premiums on time without delay
- To disclose all material facts that would influence an insurer's decision (Correct answer)
- To accept any policy terms offered by the insurer
- To use only approved surveyors for vessel inspection
Correct answer: To disclose all material facts that would influence an insurer's decision
Utmost good faith requires the proposer to voluntarily disclose all material facts that a prudent insurer would want to know when assessing the risk, even if not asked.
Question 3: In marine insurance, what is an 'insurable interest'?
- The premium amount the insured pays for coverage
- A legal or equitable relationship between the insured and the subject matter at risk (Correct answer)
- The geographic area covered by the marine policy
- The minimum vessel tonnage eligible for insurance
Correct answer: A legal or equitable relationship between the insured and the subject matter at risk
Insurable interest means the insured must have a legal or equitable relationship with the subject matter such that they benefit from its safety or suffer from its loss.
Question 4: What is a 'voyage policy' in marine insurance?
- A policy covering a vessel for a fixed calendar period of 12 months
- A policy covering a specific voyage from one place to another (Correct answer)
- A policy covering the vessel only while in port
- A policy covering multiple annual voyages under one premium
Correct answer: A policy covering a specific voyage from one place to another
A voyage policy covers the subject matter for a specific voyage, attaching at the commencement of the voyage and ceasing when the destination is reached.
Question 5: Under the Institute Cargo Clauses (A), which of the following risks is EXCLUDED?
- Theft during transit
- Rough handling causing damage
- Loss due to inherent vice of the cargo (Correct answer)
- Accidental damage from vessel collision
Correct answer: Loss due to inherent vice of the cargo
Inherent vice — deterioration or damage arising from the nature of the goods themselves — is excluded under all Institute Cargo Clauses, including the broadest (A) cover.
Question 6: What is the 'sue and labour' clause in a marine policy?
- A clause requiring the insured to hire maritime lawyers for claims
- A clause obligating the insured to take reasonable steps to minimise loss, with costs recoverable (Correct answer)
- A clause permitting the insurer to sue third parties on behalf of the insured
- A clause covering legal costs arising from cargo disputes
Correct answer: A clause obligating the insured to take reasonable steps to minimise loss, with costs recoverable
The sue and labour clause requires the insured to take reasonable steps to avert or minimise a loss, and allows recovery of the reasonable costs incurred in doing so from the insurer.
Question 7: Which of the following best describes 'general average' in marine insurance?
- The average annual claims cost across all marine policies
- A voluntary sacrifice or extraordinary expenditure made to save the common maritime adventure, shared proportionally by all parties (Correct answer)
- The standard deductible applied to all marine cargo claims
- The average premium rate applied to vessels of average age
Correct answer: A voluntary sacrifice or extraordinary expenditure made to save the common maritime adventure, shared proportionally by all parties
General average is a principle where losses voluntarily incurred to save the ship, cargo, or freight from a common peril are shared proportionally by all parties to the maritime adventure.
PGI Marine Insurance 1
Which legislation governs marine insurance contracts in Singapore?