other coverages and options (property)

AMERICAN INSTITUTE HULL CLAUSES (AIHC)

American institute hull clauses were created to establish wording to be used in marine policies in order to suppress confusion. although hull policies could be written for a specific period of time, for a voyage, or for a voyage plus a stated amount of time in port after the voyage, most AIHC policies are issued for a term of 1 year.

INLAND MARINE

Inland marine coverage can be written on almost any type of property that is portable, and is transit over land or in the air

HULL INSURANCE

a hull policy is type of ocean marine insurance that provides physical damage coverage for the ship while it is in transit. according to the provisions of a hull policy, the underwriter has the authority to veto a repair facility. the underwriters have the right to decide where the vessel will proceed for repairs as well. if the ownership of an insured vessel changes, the hull policy terminates *at the time of ownership change *if at sea, upon arrival at the final port *if the termination is involuntary, 15 days after the ownership transfer general average is defined as an ocean marine loss that occurs through the voluntary sacrifice of any part of the vessel or cargo to safeguard the vessel or cargo from a common peril, and all interests at risk contributing to it based on their respective saved values. simply put, general average is a clause found in ocean marine policies requiring that when there is a sacrifice of property to save the ship,crew, and other cargo, everyone who benefitted from this sacrifice must share in the payment for the sacrificed property. according to the conditions of a hull policy after a loss, wages and maintenance will be paid for the master, officers, and crew when removing the vessel from one port to another for repairs, or on a trial trip to test repairs. the insurer will not pay maintenance and wages for the master and crew while the ship is laid up for repairs. the insurer can pick the port of repair and can veto any proposed repair facility. the hull policy pays for sighting the bottom after stranding whether or not damage is found. the hull policy never pays for scraping and painting the bottom of the ship.

AIRCRAFT LIABILITY

aircraft liability insurance covers bodily injury or death, and property damage caused by ownership, maintenance, or operation of the aircraft. aircraft liability usually does not cover the crew a medical coverage option, which would pay regardless of fault, with no deductible, may be available. the medical coverage option pays for aircraft occupants' medical and funeral expenses up to the applicable limit. this may include crew members. definitions: *smooth limit is a limit of liability offered as a combined single limit of coverage for all bodily injury to passengers and nonpassengers, and property damage. *sublimit is a reduced or limited amount of coverages, other than the combined single limit, that is available to pay claims resulting from passenger bodily injury.

ASSESSABLE INSURERS

all assessable insurers will participate in assessments of the FAIR plan and coastal plan in proportion to their premiums during the preceding calendar year. all persons with one or more subject lines of business from an assessable insurer are subject to emergency assessment by the corporation

LIMITS OF LIABILITY

although most ocean marine insurance is written on an all-risk basis, its intent is to cover the perils of the sea. losses due to war, strikers, riot, civil commotion, decay, deterioration, and inherent vice are not covered.

TOTAL LOSS - ACTUAL TOTAL LOSS VERSUS CONSTRUCTIVE TOTAL LOSS

an ocean marine total loss may occur by actual total loss or constructive total loss. actual total loss is damage to the entire property. constructive total loss is when the cost to repair or recover exceeds the policy limit and the insurer pays the policy's agreed value. an actual loss may occur when all property has been destroyed, when there is a loss of specie, or if an insured is irretrievable deprived of all property, even if it is not totally destroyed. a loss of specie is when all property is damaged as to cease to be a thing of the kind insured. a loss of specie is payable as to total loss.

DEDUCTIBLE (OR DEDUCTIBLE AVERAGE CLAUSE)

any deductibles applying will be expressed as a dollar amount in the policy

ELIGIBILITY

anyone with an insurable interest is entitled to apply to the corporation. if the corporation confirms that the property is insurable, it will appropriately insure that property for a term not exceeding 1 year. any policy issued will be renewed annually, upon payment of premium due, so long as the property meets the definition of "insurable property." if the corporation for any reason denies an application, the applicant may appeal to the LA insurance rating commission and that commission may direct the corporation to issue an appropriate insurance policy to the applicant.

GENERAL AND PARTICULAR AVERAGE

average in ocean marine language means loss or damage. a general average is some sort of loss that all associated with the voyage help pay for. a particular average is loss or damage that only the particular people involved in the loss help pay for. simply put, general average is a clause found in ocean marine policies requiring that when there is a sacrifice of property to save the ship, crew, and other cargo, everyone who benefited from this sacrifice must share in the payment for the sacrificed property. in the event of a total loss, the agreed value will be paid. total loss could occur in 2 ways: 1. actual total loss in which all property is destroyed or the insured is deprived of all property even though not destroyed 2. constructive total loss in which the cost to repair/replace exceeds the policy limit if a total loss is paid, the insured unconditionally abandons his or her interest to the insurer. the insurer has the rights to salvage

BULK COMMODITIES

bulk carriers are used to carry coal, grain, phosphates, and other loose cargo. the ship itself is the container for the cargo. tankers are used to carry liquid cargo such as oil.

CARGO INSURANCE

cargo policies are written to cover loss or damage to the cargo. the owner of the cargo certifies that the cargo is suitable for shipment. the amount of premium will be partly determined by the packing method used and party by the type of ship providing the transportation

DESIGNED FOR FREQUENT SHIPPER

cargo policies may be written on a trip or voyage basis, or for a frequent shipper, such as an importer or exporter, or an open cargo basis. the open cargo policy would cover all the insured cargo for a specified amount of time or for a specified number of shipments.

CONTAINERIZATION

container ships carry cargo packed in 20- and 40- foot containers that also can be moved by trucks or railcars. this method is the more efficient in cargo handling than break-bulk, resulting in shorter port times. containers provide better protection for the cargo, resulting in lower premiums than break-bulk.

DIFFERENCE IN CONDITIONS

difference in conditions (DIC) is a property insurance policy written to supplement a named perils property policy. there is no standard DIC policy, and the policies are usually manuscripted and tailored to the specific needs of the insured. not only do DIC policies differ from a company to company, but the policies offered by individual insurers often differ from one insured to another. some common characteristics of a DIC policy are the following: *provides all-risk coverage *excludes the named perils provided by the policy it supplements *contains no coinsurance clause or pro rata sharing provision *is written with a high deductible ($10,000 or more) these policies are often written to provide flood and earthquake coverage

"WRITE YOUR OWN" VERSUS GOVERNMENT

flood is defined as general and temporary condition of partial or complete inundation of normally dry land areas from overflow of inland or tidal waters, or from the unusual and rapid accumulation or runoff of surface waters from any source. the following losses would be excluded from coverage under flood insurance: landslides, backup of sewers, windblown rain, snow, or sleet. flooding that is within the insured's control will not be covered. most property insurance excludes the peril of flood; that type of coverage would only be available in designated areas. floods cause more property damage in the united states than any other type of natural disaster. the national flood insurance program (NFIP) was created by the federal government to fill the gap left by the private insurance industry and is administered by the Federal Insurance Administration (FIA) after a community applies to the program, it receives a flood hazard boundary map. the community is required to adopt limited floodplain management standards to control future use of its floodplains. at this point, the community is considered to be in the emergency program, and the amounts of insurance are limited. after the land use requirements are met and flood maps are available, the community will be placed in the regular program. national flood insurance is sold and serviced directly through the NFIP or through a write your own (WYO) insurance company. the private insurers that participate in a WYO program write and service polices on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. they retain part of the flood insurance premium to pay for commissions and administrative costs. the remaining premiums, plus investment, are used to cover losses. if the premium is insufficient to cover losses, the insurers will be reimbursed for the excess costs by the NFIP. coverage purchased through the NFIP and through WYO insurance plan is identical. any licensed property and casualty producer may place business with the NFIP.

FREIGHT INSURANCE

freight and cargo, although seemingly synonymous, are 2 separate things. the term cargo is used to describe the physical goods that are being shipped from one place to another. the term freight is used to describe the charges made to ship cargo from place to place the term freight insurance is used to describe the indirect loss that an insured would suffer if insured cargo is lost of damaged. such losses include the income that would be generated, or the charges paid to transport such cargo. freight charges can be prepaid, in which case coverage would be attached to the cargo policy purchased by the cargo owner. freight charges also can be paid on delivery, in which case the ship owner could purchase coverage to be attached to the hull policy.

BREAK-BULK CARGO

general cargo ships carry break-bulk cargo. things such as steel, rolls of wire, and boxed goods are hauled in general cargo ships. loading and offloading is slow because each piece of cargo must be individually handled. the cargo is not as well protected using this method, resulting in higher premium

BOATOWNERS POLICY

homeowners policies limit the amount of property and liability coverage available for watercraft. only $1,500 of coverage is provided in the homeowners policy for damage to watercraft, accessories, equipment, and trailers. liability coverage is afforded to the insured arising out of owning or using inboard powered boats up to 50 horsepower, outboard powered boats up to 25 horsepower, or sailing vessels up to 26 feet in length. additional protection is available either by endorsement or through the purchase of a boatowners policy. the coverage provides that the watercraft must be used solely for private, pleasure use and that coverage is excluded if the boat is hired out, chartered, used in an official speed or race contest, or used to transport people or property for a fee. the policy consists of 2 sections: *section I contains the physical damage coverages, which includes the perils insured section, exclusions, and conditions applicable to section I only. *section II contains the insuring agreements for watercraft liability, medical payments, and uninsured boaters. there is a set of section II conditions, as well as a set of general conditions applicable to both section I and section II. Section I - physical damage coverage on the boat is designated coverage a in the boat owners policy. it includes coverage for the actual cash value of *the motor(s) described in the declarations, including remote controls and batteries *the boat described in the declarations, including its permanently attached equipment *the trailer described in the declarations if specifically designed for the transportation of the boat *equipment and accessories manufactured for marine use as indicated by the last item, the physical damage coverage usually extends to cover equipment pertaining to the use of the vessel, subject to a dollar limit. Perils insured against - the boat owners policy insuring agreement is usually of the open peril type, providing that the insurer will pay for direct and accidental loss to the property insured. in addition to the exclusion for loss by war and nuclear hazard, policies usually exclude coverage for the following types of damages: *due and confined to wear and tear, gradual deterioration, inherent vice, latent defect, mechanical breakdown, faulty manufacture, damage caused by any repairing or restoration process, and service or maintenance operation, unless fire results and then for loss caused by the resulting fire *while carrying persons or property for a fee, or while the covered property is rented to others *while the covered property, except sailboats, is being operated in any official race or speed test additional coverages for physical damage are the following: *reasonable repairs - coverage applies for the expenses necessary to repair or to protect the covered property from further damage from an insured peril. payment for loss under the reasonable repairs provision does not increase the policy limit. *recovery - coverage applies for the reasonable cost incurred by the insured to recover the insured property in the event of stranding or sinking. this coverage is derived from an ocean marine provision entitled salvage. however, unlike the ocean marine salvage charges, which are payable in addition to the limits of coverage on the hull, the recovery coverage of the boat owners policy does not increase the limits of liability under the policy *automatic coverage - automatic coverage is provided on replacement for the boat, motor, or trailer listed in the declarations, provided the insured notifies the insurer within 45 days of acquisition and pays any additional premium required. Section II - the liability coverages of the boatowners policy parallel the coverages of the personal auto policy. they include the following: *watercraft liability *medical payments *uninsured boaters watercraft liability coverage provides protection up to the specified limits for claims or suits against a covered person for damages because of bodily injury or property damage caused by a watercraft occurrence. in addition to the promise to pay judgments arising out of such suits, the insurer also agrees to defend the insured, but reserves to the insurer the right to make settlement if it deems it expedient. as in the case of other liability policies, coverage for the cost of defense is payable in addition to the policy's limits. exclusions under the boatowners policy include bodily injury or property damage that is expected or intended by the insured, and the liability of any person using a watercraft without permission. other exclusions are bodily injury to persons eligible for workers compensation, damage to owned or rented property in the care, custody, or control of the insured, and liability of a person engaged in the business of selling, repairing, storing, or moving watercraft. the policy also excludes liability arising out of racing, speed tests, war and nuclear hazards. claim-related expenses are paid as additional coverage, similar to the personal auto policy. medical payments coverage pays for accidents occurring while the injured party is in, upon getting into or out of the insured boat. some policies include medical payments coverage for persons who are injured while water-skiing. uninsured boaters coverage usually provides a stipulated amount of coverage (e.g. $10,000) that can apply for accidents with uninsured watercraft. increased limits are available for additional premium. navigation and territorial definitions - this is an important part of the contract that an insured should be made aware of. the broadest policies cover the watercraft while being operated on any inland body of water within continental United States, Canada, and coastal waters in the same area up to a limit of 10 to 25 miles (depending on the insurer). the most restrictive polices provide coverage only on a specific body of water and within a narrow parameter around that particular area. many policies provide no coverage for offshore waters, such as the Gulf of Mexico.

PERILS

hull policies cover losses caused by the perils of fire, lighting, earthquake, assailing thieves, jettison, barratry of the master and mariners. they also cover all other like perils that may come to hurt, detriment, or damage the vessel. additional perils are also covered, provided such loss or damage has not resulted from want of due diligence by the assured, the owners, or managers of the vessel. this is commonly called the Inchmaree Clause and covers the following perils: *accidents in loading, discharging or handling cargo, or in bunkering *accidents in going on or off, while on dry docks, graving docks, ways, gridirons or pontoons *explosions on shipboard or elsewhere *breakdown of motor generators or other electrical machinery, bursting of boilers, breaking of shafts, or any latent defect in the machinery or hull *breakdown of or accidents to nuclear installations or reactors not on board the vessel insured *contact with aircraft, rockets or similar missiles, or with any land conveyance *negligence of charterers and/or repairers *negligence of masters, officers, crew, or pilots covered under the hull policy is deliberate damage to property caused by government authorities who are acting on behalf of the public to mitigate or prevent a pollution hazard. the occurrence that created the situation causing the governmental interaction must have resulted in a recoverable claim if the deliberate damage had not occurred.

SALVAGE CHARGES AND AWARDS

if the cargo is damaged short of the destination port, an agent of the insurer at an intermediate port may agree to sell it at the best price. settlement will be based on the difference between insured value and the net proceeds of the sale. this is called a salvage loss.

TAYLOR HULL FORM

in addition to the AIHC, there are other commonly used hull clauses, such as the Taylor Hull form, that are very similar to the AIHC. these other forms use the same terms, and the coverage works the same.

AIRCRAFT HULL

in aviation, hull refers to fuselage, wings, tail, rudders, and other major structural features of an aircraft. the insurance policy that indemnifies the insured for damage to or loss of the hull is called aviation hull insurance. an aviation hull insurance policy provides physical damage coverage on the aircraft itself, and is the equivalent of the comprehensive and collision coverage of an automobile insurance policy. there are 2 basic forms of hull coverage: 1. all risk on ground and in flight - this is the broadest form of hull coverage and provides all risk coverage on the aircraft both while it is on the ground and while it is in flight. deductibles may be purchased applying either the same or different amounts while on the ground or while in flight or taxiing. 2. all-risk on the ground and limited in flight - this form provides all-risk coverage on the aircraft while on the ground, but no coverage while the aircraft is in flight is limited to the perils of fire, lightning, and explosion, but not fire or explosion following a crash or collision. the major perils not covered in flight are crash or collision. the coverage is usually written with a deductible that applies to all losses except fire, lightning, explosion, vandalism and malicious mischief, transportation, or theft. the deductible applies while the aircraft is not in motion, or when the aircraft is taxiing. although there are no standard aviation policies, the most common types of coverage sold to cover the operation or use of aircraft are the following: *bodily injury liability - this coverage can be written to include or exclude bodily injury to passengers. typical exclusions include contractual liability and injury to employees who are covered by workers compensation laws. in addition, similar to ocean marine coverage, there are usually exclusions if the plane is used for a purpose not described in the declarations., if operated by a different pilot than that is named in the policy, if the plane is no longer considered airworthy, or if the plane is used for flying lessons. *property damage liability - this coverage covers damage to property of others. as with other property damage coverages, there is no coverage for property owned by the insured or property in the insured's care, custody, or control. *medical payments - this coverage coves necessary medical or surgical expenses for passengers incurred within 1 year of a covered accident. *hull coverage - this is physical damage to coverage that covers loss or damage to the described aircraft. coverage usually can be written on a named peril or an all-risk basis. additional types of aviation insurance include the following: *airport liability - this coverage is similar to commercial general liability coverage that protects the owners and operators of airports for premises and operations hazards, contractual liability, and product liabilty *hangarkeepers liability - this coverage is similar to the garagekeepers coverage discussed in the garage liability section. it provides legal liability coverage for aircraft in the care, custody, or control of a hangarkeeper. *nonowned aircraft liability - this coverage, similar to nonowned autoliability, provides coverage for insureds who lease, but do not own, aircraft *air meet liability - this coverage is intended to protect insureds that operate air shows.

PILOTAGE AND TOWING

in certain areas of the world, there exist narrow waters (ports, straits, etc.). in these areas, so as to complete the voyage in a timely and safe manner, pilotage and towing services must be used. the insurance coverage remains in effect while the vessel is under tow or the control of the specially qualified pilot in areas where pilotage and towage are the common practice. if the pilotage or towing firm is responsible for the damage, the firm would be liable for paying for it.

ADVENTURE

in ocean marine terms, an adventure is a trip or voyage

CHANGE OF OWNERSHIP

in the event of a change or ownership, the coverage automatically terminates at that time, or if the ship is at sea, it terminates upon arrival at the final port. in the event of an involuntary temporary transfer, the automatic termination will be 15 days after such transfer.

SUE AND LABOR

in the event of a loss or misfortune, the master and crew is required to sue and labor to prevent further loss and keep the loss as small as possible. the insurer will pay reasonable expenses in doing so. if the master and crew do not sue and labor to prevent further loss, the insurer could refuse to pay the claim.

SUE AND LABOR EXPENSES

in the event of a loss, the master and crew are required to sue and labor to protect the insured property from further loss. the policy will pay the cost of doing so. if the crew does not sue and labor to keep losses as small as possible, the insurer could refuse to pay for the loss.

CLAIMS (GENERAL PROVISIONS)

in the event of any accident or occurrence that could lead to a claim, prompt notice must be given to the underwriters. the underwriters have the right to appoint their own surveyor to determine the extent of the damage. the underwriters have the right to decide where the vessel will proceed for repairs and have the right to veto any repair firm proposed. if the underwriters direct the vessel to proceed to a particular port for repair, the insurer will pay the expenses of doing so, including wages and maintenance for the master officers, and crew. maintenance and wages will also be paid for the master, officers, and crew during any trip to test the repairs. maintenance and wages will only be paid while the vessel is underway. the expenses of sighting the bottom after stranding will be paid new for old without deduction even if no damage is found. in no case does the policy pay for scraping or painting the bottom. the insurer also will pay for loss or damage to equipment not owned by the assured but installed for use on board the vessel and for which the assured has assumed responsibility.

INCREASED VALUE AND EXCESS LIABILITY (IVEL) CLAUSES

increased value and excess liability (IVEL) clauses work like umbrella policies. they provide excess coverage for the same losses covered by an underlining policy they are written to go with. the underlining policy must pay up to its limit before the IVEL pays anything. the IVEL clause can provide excess coverage for protection and indemnity, collision, towers liability, general average and salvage, sue and labor, ship repairers liability, characters liability, wharfingers/or safe berth liability, and others as specified.

AGREE VALUE

most hull policies are written on an agreed value basis. the insured and insurer agree upon the value of the ship at the time the contract is made. in the event of a total loss, this amount if paid.

ELIGIBILITY

national flood insurance may be written only in participating, flood-prone areas. besides providing flood insurance, the NFIP imposes 3 requirements: 1. community land management and flood control programs are required to reduce future flood losses 2. flood insurance is required in certain flood-prone areas as a condition for receiving loans through, or backed by, the federal government 3. property owners who fail to purchase flood insurance within 1 year after it becomes available will not be eligible for full disaster relief funding. the amount of disaster relief will be reduced by the amount of insurance that could have been purchased.

COASTWISE AND INLAND HULL CLAUSE (CIHC)

not only do ocean marine hull policies cover ships on the high seas, but they also cover coastwise vessels and vessels on inland waterways. again, all the same terms, conditions, and provisions apply.

OCEAN MARINE INSURANCE

ocean marine is the oldest type of insurance in the world. Edward Lloyd opened a coffeehouse in London in 1689, and it became a meeting place for people buying and selling insurance. today's Lloyd's of London grew from these beginnings. Lloyds list provides the name, position, destination, and other important data of every merchant ship in the free world. most ocean marine policy forms were adopted by Lloyd's around 1780 with little changes since. the forms are full of archaic terms but have proved reliable in courts, and Lloyd's is reluctant to make changes. the forms are brought up to date by adding printed institute clauses to it. ocean marine terms: *adventure means a trip or voyage *assured is the insured *average means loss *constructive total loss means expense to repair or recover exceeding the value or policy limit *demurrage is delay of vessel beyond the normal time to on-load or off-load or a charge for the delay *laid up means in port or at anchor *loss of specie means the subject matter ceases to be a thing of the kind insured *misfortune is an accident of occurrence *particular means partial *touching means applying to ocean marine policies have several implied warranties - not actually written but with the same weight. the most important are the following: *seaworthiness - the ship must be fit for the voyage and not overloaded; the master and crew must be competent; and the cargo must be sound and property packed *legality - everything must be lawful and not involve contraband, smuggling, or any other illegal activity *no deviation in voyage - the voyage must follow an agreed route without unnecessary delays. prudent changes to avoid loss and humanitarian deviations will not affect the coverage *condition of cargo - the cargo owner must guarantee that the cargo is in good condition upon delivery to the vessel and that it is properly packed to endure the journey the 4 major types of ocean marine polices are: 1. hull: for physical damage or loss of the ship itself 2. cargo: for what the ship is hauling 3. freight: for loss of revenue if the ship owner cannot deliver the cargo 4. protection and indemnity (P&I): for liability

ADDITIONAL INSURANCES

other insurance is not allowed, except to cover perils excluded by the policy or to cover the difference between the amount insured hereunder and the agreed value.

PARTIAL LOSS - PARTICULAR VERSUS GENERAL AVERAGE

partial loss could be either a particular average, in which only those involved in the loss are affected, or general average, in which all those involved in the voyage share in the loss.

PERSONAL FLOATERS

personal floaters refers to an inland marine policy designed to cover movable personal property, wherever it may be located. personal floaters may be written on an all risk, open peril or named peril form. the personal property floater provides coverage to personal property on an all-risk basis anywhere in the world, as long as the property is not specifically excluded by the policy. property is usually written on an unscheduled basis. certain categories of property are subject to special limits. the personal articles floater is used to insure certain types of personal property on a scheduled basis. the types of property that may be covered are usually pre-printed on the form including jewelry, furs, cameras, musical instruments, fine arts, etc. other types of property may also be added to the coverage form. the personal effects floater is used to insure personal effects carried or worn by travelers anywhere in the world, but not while the property is at home. coverage is usually limited to $100 for jewelry, watches and furs, and there is no coverage for vehicles, bicycles, currency or travel tickets.

PREMIUM, RETURNS OR PREMIUM AND NONPAYMENT OF PREMIUM

premium will be returned on a pro rata basis upon a change of ownership of the vessel. premium also will be returned on a pro rata basis for each 30 consecutive day period laid up in port not under repair and not being used for storage or lighting. if the insurer cancels the policy, a pro rata refund is due. if cancelled by the assured, a short rate refund is due.

PARTICULAR AVERAGE CLAUSES

principal average clauses define how partial losses are covered. the insured will select one of the 5 principal average clauses below to determine the method of calculating the claim payment.

PROTECTION AND INDEMNITY

protection and indemnity coverage under ocean marine contracts is essentially liability insurance that protects the owner of the ship from the consequences of his or her negligent acts or the negligent acts of his or her agents. if the owner should be help legally liable for damages to a third party, the P&I coverage would provide protection against financial losses by paying those sums that the insured became legally liable to pay as damages. the P&I coverage may be written with other marine coverages or as a stand-alone policy.

RESIDUAL MARKETS

residual markets are insurance markets or facilities designed to assume risks that are generally unacceptable to the normal insurance market. assigned risk plans would be considered a pair of the residual market facilities. most states have residual markets and require all admitted insurers to participate in the state's assigned risk plan for auto liability policies, workers compensation, or FAIR plans.

ROLL ON-ROLL OFF

roll on/roll off ships (ro/ro ships) are used to carry motor vehicles, which roll on and roll off the ship via a stern ramp.

DEDUCTIBLES

single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program. all other buildings and all contents are insured on an ACV basis. standard deductible amounts apply separately to building and contents losses, with higher deductibles available. many of the exclusions found in homeowners or dwelling policies for certain types of property, such as accounts, bills, lawns, trees, aircraft, motor vehicles, fences, retaining walls, etc., are also excluded from the flood insurance policy. in addition, other property that is particularly prone to flood damage is also excluded. these include underground structure's, and equipment, newly prone to flood damage also is excluded. these include underground structures and equipment, newly constructed buildings in, on, or over water, and structures that are primarily considered containers. there is a 30 day waiting period after the application has been accepted before coverage is effective except in the following conditions: *during the first 30 days after a community enters the emergency or normal programs. then coverage begins at 12:01 a.m. the day after the application and premium payment have been mailed. *when an existing policy is assigned to a property purchaser *at 12:01 am on the 5th day after an endorsement request and premium has been mailed for an existing policy no binders are issued during the waiting period

LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION

the Louisiana citizens property insurance corporation was established to provide an adequate market for fire insurance with extended coverage and vandalism insurance and homeowners coverage necessary to the economic welfare of the state, including the coastal areas of Louisiana. every insurer licensed to write these coverage's on a direct daily basis must accept a part of this market based upon their share of the statewide market.

ASSURED

the assured in ocean marine language is the insured.

COLLISION LIABILITY

the collision clause of the hull policy is actually a type of liability coverage because it pays for damage to another's ship with which the assured's ship has collided. the assured must have been at fault for payment to apply. the sistership clause stipulates that in the event the assured collides with a ship also owned by the same assured, each vessel has the same rights as if the collision was with a ship owned by someone other than the assured. if there is a question of liability, an arbitrator will determine the outcome. when both vessels are at fault for a collision, the indemnity is calculated on the principle of cross liabilities, each vessel owner would pay the other vessel owner the proportionate of damage based on the percentage of fault, subject to its own limit of collision liability. the exception to this is if one of the vessel's ability to collect damages is limited by law.

REGULATIONS

the corporation may: *borrow funds *sue or be sued *negotiate and become a party to necessary contracts *retain any profits to be used to offset deficits incurred by the plan *develop a reinsurance program. *take all actions necessary to facilitate tax-free status *purchase adequate reinsurance on risks it insures *dissolve itself when less than 1,000 policies are written in a year (provided there are no bonds or outstanding financial obligations.) *establish qualifications for, and authorize qualified agents to have binding authority. the governing board of the corporation may seek and accept federal funds from the united states department of housing and urban development under the community development block grant program. the governing board of the corporation must report annually to the house committee on insurance and the senate committee on insurance on its usage of any funds received. the corporation will file in the office of the LA insurance rating commission, and in the office of property and casualty in the department of insurance, annual and quarterly statements required for unauthorized insurers. every agent licensed to sell property and casualty insurance may sell insurance policies which are issued by the LA citizens property insurance corporation thorough its LA insurance underwriting plan (coastal plan), as well as its Louisiana joint reinsurance plan (FAIR plan). the corporation must maintain separate accounts and records for the coastal plan and the FAIR plan for all policies, revenues, losses and expenses. each plan may lead money to the other without interest.

DURATION OF RISK

the duration of risk on hull policies could be for a specified period of time for a voyage (one place to another and usually for an additional 24 hours after moored at anchor safely at port of destination) or mixed (voyage plus a specified period of time in port after arrival). most AIHC policies are written with a coverage term of 1 year.

AMOUNT INSURED HEREUNDER

the limit of insurance is called the amount insured hereunder

LOSS PAYEE

the loss payee is the party to be paid by the insurer in the event of loss. the loss payee could be a mortgagee or lien holder.

COVERAGE/LIMITS

the maximum coverage available under the regular national flood insurance program (smaller emergency limits are available until a community has been approved by the NFIP) for homes, small businesses and other nonresidential properties is as follows: BUILDING: single family $250,000 other residential $250,000 small business $500,000 other nonresidential $500,000 CONTENTS: single family $100,000 other residential $100,000 small business $500,000 other nonresidential $500,000 the federal emergency flood insurance program goes into effect when a community applies for the program and ends when all NFIP criteria have been met and the regular program can begin. it provides a limited amount of coverage with subsidized rates. limits are as follows: BUILDING: single family $35,000 other residential $100,000 small business $100,000 other nonresidential $100,000 CONTENTS: single family $10,000 other residential $100,000 small business $100,000 other nonresidential $100,000

RATES

the plans made available by the LA citizens property insurance corporation are not intended to offer rates competitive with the voluntary market. these rates will exceed, by at least 10%, either the actuarially justified rate of the highest rates charged among assessable insurers that have a minimum of 2 percent of the total direct written premium in each respective parish for that line of business in the preceding year. for personal lines property insurance, excluding wind and hail policies, the rate will exceed by at least 10% the highest rates charged among assessable insurers in each respective parish which in the preceding year increased its number of personal lines property insurance policies by at least 25.

PROVISIONS

the transit clause names the points of the voyage. the termination of adventure clause allows the coverage to remain in effect is the adventure is terminated at other than the named destination provided prompt notice is given to the insurer and any required additional premium is paid. the craft clause provides coverage for the cargo while being transported to or from the vessel in another craft, raft, or lighter. the change of voyage clause provides continuous coverage in the case of change of voyage or of an omission or error in the description of the vessel, subject to payment of the additional premium. the constructive total loss clause gives the insurer the right to pay the assured for a total loss when goods are so damaged that the cost of recovering and reconditioning would exceed their original value. the general average clause gives the rules to be followed to settle general average claims and the salvage charges. the seaworthiness admitted clause says that the assured and the underwriters agree that the vessel is seaworthy. in the event of a loss, the assured can still collect even though the loss may have been caused by a wrongful act or misconduct of the ship owner or crew. the bailee clause obligates the assured to file a claim against third parties who may be liable for the loss the not to insure clause prohibits the assured form assigning any right of recovery in the policy to the carrier or any other bailee the theft, pilferage and nondelivery clause covers these types of losses even if the crew is responsible. the malicious damage clause covers deliberate damage to or destruction of the property insured because of the wrongful act of any person the dangerous drug clause provides no claim will be paid in respect to drugs to which various international conventions relating to opium and other dangerous drugs apply unless the drugs are expressly declared in the policy, the importing and exporting countries are stated, and the route by which the drugs are conveyed is usual and customary. proof of loss must be accompanied by a license, certificate, or authorization issued by the government of the importing or exporting country.

VESSEL

the vessel is the ship itself and is covered for physical damage or loss by the hull policy.

CARGO CLAUSES OR AMERICAN INSTITUTE OR MARINE UNDERWRITERS

there is no standardized open cargo policy form. the cargo clauses of the American institute of marine insurers attach to cargo policies for cargo moved on US ships. cargo policies are usually written on a warehouse-to-warehouse basis, covering the cargo from origin to destination even though parts of the trip may be over land. the coverage is in effect until the cargo reaches its destination, or 60 days after discharge at the destination port. the American institute warehouse-to-warehouse clause states the coverage expires 15 days after discharge at the destination port (30 days if the cargo's destination is outside the limits of the port).

"ALL-RISKS" CONDITIONS

this covers all physical loss or damage from any external cause except the losses that are excluded. the following are perils that are excluded: *delay *inherent vice *war, strikes, riots and civil commotion *willful misconduct of the insured *use of any atomic or nuclear weapon *ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear *insufficiency or unsuitability of packing *the assured's knowledge of the unseaworthiness of the vessel or container at time of loading *insolvency of financial default of the owners or operators of the vessel for additional premium, the policy may be endorsed to cover losses caused by war, strikes, riots, and civil commotion