PGI Marine Insurance 2

Question 1

Under the Institute Hull Clauses, what is the meaning of 'Total Loss Only' (TLO) cover?

Accepted Answer

The policy pays only in the event of actual or constructive total loss of the vessel

Answer

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.

Question 2

What does 'constructive total loss' (CTL) mean in marine hull insurance?

Accepted Answer

The cost of recovering or repairing the vessel would exceed its insured value

Answer

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.

Question 3

What is the purpose of the 'deductible' (franchise) in a marine cargo insurance policy?

Accepted Answer

To limit the insurer's liability to large losses only, with the insured bearing small losses

Answer

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.

Question 4

Institute Cargo Clauses (C) provides the NARROWEST cargo cover. Which of the following perils is covered under Clauses (C)?

Accepted Answer

Loss due to washing overboard

Answer

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.

Question 5

In Singapore, the Maritime and Port Authority (MPA) primarily regulates which aspect relevant to marine insurance?

Accepted Answer

The registration, safety, and seaworthiness standards of vessels

Answer

MPA regulates vessel registration, port safety, and seaworthiness standards in Singapore, which directly affect insurability and underwriting of marine risks.

PGI Insurance Practice Test

PGI Insurance Practice Test

PGI Marine Insurance 2