SAMS - Society of Accredited Marine Surveyors Certified Damage and Valuation Surveys Questions and Answers 1 — Questions and Answers
Question 1: A vessel has an agreed insured value of $200,000. Following a grounding incident, the cost to salvage and tow the vessel to a repair yard is estimated at $30,000, and the quoted cost for repairs is $180,000. Based on these figures, how should the surveyor classify the loss?
- The vessel is an Actual Total Loss (ATL).
- The vessel is a candidate for repair, as the repair cost is less than the insured value.
- The vessel is a Constructive Total Loss (CTL). (Correct answer)
- The loss is a Particular Average claim.
Correct answer: The vessel is a Constructive Total Loss (CTL).
A vessel is considered a Constructive Total Loss (CTL) when the cost of recovery (salvage) plus the cost of repair equals or exceeds the insured value. In this case, $30,000 (salvage) + $180,000 (repairs) = $210,000, which is greater than the $200,000 insured value. Therefore, it is a CTL.
Question 2: When conducting a damage survey, determining the 'proximate cause' of the loss is a critical task for the surveyor. Which of the following best defines this term?
- The first event in the sequence that led to the damage.
- The most recent event that occurred immediately before the damage was discovered.
- Any factor that contributed, however slightly, to the overall loss.
- The dominant, operative, and efficient cause that set in motion the chain of events leading to the loss. (Correct answer)
Correct answer: The dominant, operative, and efficient cause that set in motion the chain of events leading to the loss.
Proximate cause is a key legal and insurance concept. It is not necessarily the first or last event but the primary, dominant cause that produced the loss, without which the loss would not have occurred. Identifying this correctly is essential for determining coverage under an insurance policy.
Question 3: A surveyor is hired by an insurance company to assess damage to a vessel's hull from an allision with a dock. This type of partial loss, where the expense falls solely on the vessel's owner (and their underwriter), is referred to as what?
- A General Average loss
- A Particular Average loss (Correct answer)
- A Salvage loss
- A Constructive Total Loss
Correct answer: A Particular Average loss
A Particular Average is a partial loss to the subject matter insured, caused by a peril insured against, and which is not a General Average loss. The key distinction is that the loss is borne only by the owner of the damaged property, unlike a General Average loss, which is shared among all parties to a sea venture.
Question 4: In a damage repair valuation, the principle of 'betterment' must be considered, often resulting in a deduction for depreciation. On which of the following items would a surveyor most likely recommend applying depreciation?
- A recently replaced section of damaged steel hull plating.
- Labor costs associated with the fiberglass repair.
- A 10-year-old canvas bimini top that was destroyed and requires replacement. (Correct answer)
- The cost of hauling the vessel for repair.
Correct answer: A 10-year-old canvas bimini top that was destroyed and requires replacement.
Depreciation is applied to prevent 'betterment,' which is making the owner better off than they were before the loss. It is typically applied to items with a finite lifespan that experience wear and tear, such as sails, canvas, running rigging, and sometimes machinery. Replacing an old, worn-out bimini with a brand new one would be considered betterment, so a deduction for depreciation on the old item's value is appropriate. Hull structure and labor costs are generally not depreciated.
Question 5: You are the first surveyor on scene after a significant vessel fire has been extinguished. After ensuring the scene is safe to enter, which of the following is the most critical initial step in your damage assessment process?
- Begin taking photographs of the most heavily damaged areas for the report.
- Interview the captain and crew to get their immediate account of the events.
- Identify and secure all portable evidence, such as logs, damaged equipment, or remnants of the fire's origin. (Correct answer)
- Immediately authorize a clean-up crew to remove soot and debris.
Correct answer: Identify and secure all portable evidence, such as logs, damaged equipment, or remnants of the fire's origin.
While all steps are part of the process, the most critical initial action is to preserve the scene and secure evidence. This is crucial for determining the cause and origin of the fire. Interviewing crew and taking photos are done concurrently, but failing to secure portable evidence before it can be moved, lost, or altered can compromise the entire investigation.
Question 6: Which of the following elements is ESSENTIAL to include in a formal damage survey report prepared for an insurance underwriter?
- The vessel's complete maintenance history for the past five years.
- A detailed market valuation of comparable sister-ships.
- The surveyor's opinion on the proximate cause of the loss and a detailed estimate for repairs. (Correct answer)
- A transcript of the interview with the vessel's owner.
Correct answer: The surveyor's opinion on the proximate cause of the loss and a detailed estimate for repairs.
A damage survey report's primary purpose is to inform the underwriter about the incident. This requires, at a minimum, identifying the vessel, the date and nature of the loss, the scope of damage, the surveyor's expert opinion on the proximate cause, and a detailed scope of recommended repairs with cost estimates. While other elements might be useful, the cause and cost are fundamental.
SAMS - Society of Accredited Marine Surveyors Certified Damage and Valuation Surveys Questions and Answers 1
A vessel has an agreed insured value of $200,000.
Following a grounding incident, the cost to salvage and tow the vessel to a repair yard is estimated at $30,000, and the quoted cost for repairs is $180,000.
Based on these figures, how should the surveyor classify the loss?