Chapter 8 - Exploring Marine and Aviation Coverage

(1) What does hull insurance provide coverage for? (6) (2) When does hull insurance apply?

(1) physical damage to... - the boat itself - furniture, supplies, equipment - machinery - things attached to the boat (i.e. lifeboat) - fuel - salvage costs (2) when boat is put out into shipping

What are the 5 exclusions to inland marine liability coverage for common carriers engaging in the domestic transit of goods?

(1) "acts of god" (2) acts of public enemies (3) acts of public authority (4) neglect of the shipper (5) inherent vice in the cargo

Burt is a common carrier and a boat owner. A large bag of oranges sitting on a dock in New Orleans are meant to be loaded on to Burt's ship to go to San Francisco. The oranges do not get loaded and soon go bad. (1) Which type of trade liability would this situation fall under? Identify the act that governs this type of trade as well. (2) Would Burt be liable? (Why or why not?)

(1) Domestic trade. governed by the Harter Act. (2) yes (Burt became liable as soon as the cargo became in his possession. The oranges left on the dock were under Burt's possession regardless of the fact that they were not yet on his boat.)

drones are regulated by what 3 forms of law?

(1) FAA (federal law) (2) state laws (3) local laws

(1) What is domestic trade typically governed by? (2) When is cargo liability imposed under domestic trade? (3) when does the carrier become liable for the cargo? (common carriers: types of trade)

(1) Harter Act (2) if the carrier failed to make the vessel seaworthy when the voyage began (3) as soon as the cargo is in your possession/CCC

What could cause a marine loss exposure? (5)

(1) Liability for injury (Injury/death of crew members, others on the vessel, and injury to those not on board the vessel) (2) Liability for property damage (damage to other vessels and their cargos, damage to cargos of others on the vessel, damage to other structures) (3) Liability for pollution (i.e. negligently colliding with a tanker, spillage of a vessel's own fuel supply, discharge of cargo such as dry chemicals that could pollute the environment) (4) "Perils of the sea" (5) Lost revenue (vessel damage causes commercial/work-oriented vessels to lose freight, passage money, or revenue)

(1) What Act was enacted following the Exxon Valdez spill in 1989? (2) Is the Act more or less strict than the international standard/rules regarding liability for pollution?

(1) Oil Pollution Act of 1990 (3) less (explanation: this act is the domestic rule/law that governs how liability for pollution is to be handled)

(1) What is foreign trade governed by? (2) When is cargo liability imposed under foreign trade? (3) What amount is coverage limited to per package/customary freight unit? (4) Where are cases regarding foreign trade liability usually tried? (common carriers: types of trade)

(1) U.S. COGSA (Carriage of Goods by Sea Act) (2) if losses result from the carrier's failure to make the vessel seaworthy when the voyage began (3) $500 (4) international courts

What 2 coverages does Passenger Voluntary Settlement Coverage (aka "admitted liability coverage") provide?

(1) a specific $ amount of coverage ("schedule of benefits") if a passenger suffers death, dismemberment or loss of sight (2) medical expense coverages

how would one determine the value of a plane? (2)

(1) agreed value (2) actual cash value

what are the 3 types of aircraft hull coverage that you can buy?

(1) all risks - ground and flight coverage (2) all risks - not in motion coverage (3) all risks - not in flight coverage

Boat Dealers Policies (1) who can obtain it? (2) what sorts of environments does coverage apply to? (2) (3) what does it cover? (specialized marine policies)

(1) boat dealers (2) showrooms or marinas (3) both property and liability loss

What are the 3 types of coverage that one could purchase if they are worried about someone getting injured on their owned aircraft?

(1) bodily injury excluding passenger liability (2) passenger bodily injury liability coverage (3) property damage liability coverage

marine builders risk policies (1) who can obtain it? (2) what does it cover? (specialized marine policies)

(1) builder and/or owner of vessel (2) physical loss or damage to the vessel and related property during the entire time it is being constructed

What 2 coverages do marine builders risk policies provide for test driving the vessel?

(1) collision liability and (2) P&I

What are the 3 types of carrier classifications?

(1) common carriers (2) contract carriers (3) private carriers

(1) what is a contract carrier? (2) what type of shipping are contract carriers typically used for? (3) what is their liability defined by?

(1) contract with shippers to provide services (transports the property of others to earn $$ ("freight")) (2) bulk cargo shipping (i.e. oil and/or grains) (3) the contract

What are the two main non-filed classes for inland marine insurance?

(1) contractors equipment floater (2) builders risk

What waterborne exposures are most commonly covered by ocean marine insurance? (3)

(1) damage to vessels (2) damage to their cargoes (3) legal liability arising out of the operation of vessels

Offshore Oil and Gas Facilities (1) who can obtain coverage? (2) what does it cover? (specialized marine policies)

(1) facilities in the ocean used for extracting & processing oil and gas (from beneath the seabed) (2) property used in the exploration, development and production of oil/natural gas offshore (aka, the property used in their operations)

What unique coverages does Protection and Indemnity Coverage provide? (6)

(1) fines and penalties (2) costs of resisting mutiny or misconduct (3) quarantine expenses (4) putting-in expenses (5) cargo's proportion of General Average (6) Other Costs

Liability of common carriers depends on the type of trade they are engaged in. There are 2 types of trade, what are they?

(1) foreign trade (2) domestic trade

Brandy is the owner of a boat used for international commercial shipping done on a predetermined route and specific schedule. She has 4 refrigerators for storing frozen food from a U.S. company that she has to ship to China. 2 of the refrigerators are not functioning correctly, however, Brandy isn't aware of this until she docks in China and is unloading the food to see that the food stored in the defective fridges has gone bad. (1) Which type of trade liability would this situation fall under? identify the act that governs the type of trade as well. (2) Would Brandy be liable? (why or why not?)

(1) foreign trade. governed by the 'U.S. Carriage of Goods by Sea Act' (COGSA) (2) yes (because Brandy failed to make the vessel seaworthy when the voyage began)

What are the 5 inland marine exposures? (aka, the items subject to loss)

(1) goods in domestic transit (transporting cargo or people) (2) property in possession of bailees (somebody keeping something for you, if something happens to it - who's liable?) (3) movable equipment (equipment not stored at a fixed location) and unusual property (i.e. fine art, statues, movie cameras, etc) (4) property of certain dealers (i.e. Jewlers Block coverage) (5) instrumentalities of transportation and communication (i.e. cellphone towers, bridges, etc)

3 types of liability for injury under Marine Loss Exposures

(1) injury to crew (2) injury to others on the vessel (3) damage to cargo of others on the vessel

drone insurance coverages fall into what 2 categories? & who are they each for?

(1) liability coverage and physical damage coverage for drone owners/operators (2) products liability coverage for drone manufacturers and service providers

What bodily injury coverages does Protection and Indemnity Coverage provide? (2) (ocean marine insurance)

(1) loss of life, injury or illness (2) repatriation expenses

marina operators' liability policy (1) who can obtain it? (2) what does it cover? (specialized marine policies)

(1) marina operators (2) liability for damage to boats of customers while in the CCC of the marina operator (aka. coverage for if running a marina)

What 3 legal routes apply to operator/owner's liability for injury to crewmembers?

(1) merchant marine act (2) death on the high seas act (3) general maritime law

if someone gets injured on an owned aircraft, who is automatically covered? (2)

(1) named insured (owner) and (2) person using the aircraft with the named insured's permission

builders risk insurance (1) what class does it fall under? (2) what does it cover?

(1) non-filed classes (2) covers building in the course of construction (Including building materials and supplies while on or away from the building site)

contractors equipment floater insurance (1) what class does it fall under (2) what does it cover

(1) non-filed classes (2) covers damage or theft to the tools and mobile equipment your business uses while anywhere in the coverage territory

Hull insurance exclusions (5)

(1) nuclear reaction, radiation, contamination (2) war/riot (3) strikes/other labor disputes (4) piracy or hindering the vessel (5) additional perils clause

What obligations does an operator/owner of a vessel have to abide by in regards to liability for injury to their crew? (2)

(1) obligation to provide maintenance and cure (medical care, lodging, etc) (2) warranty of seaworthiness (promise that vessel is seaworthy)

what basic perils are covered by hull insurance? (6)

(1) perils of the seas (2) fire, lightening, earthquake (3) pirates (4) jettison (5) barratry (/misconduct by crew) (6) all other specifically listed perils

How is most aviation insurance in the U.S. handled (2) (Talking about commercial airlines, not passenger airplanes)

(1) pools (a group of organizations that band together to insure each other's losses (2) Lloyds of London (High risk insurance organization)

(1) what is a common carrier? (2) common carriers are required by law to enter into what type of contract with parties that use its services? (3) what does the liability of common carriers depend on?

(1) provide transportation services to the public (people or other people's stuff) (2) contract of carriage (3) the type of trade the carrier is engaged in (foreign or domestic)

ship repairers' liability policy (1) who can obtain it? (2) what does it cover? (specialized marine policies)

(1) ship repairers/shipyards (2) damage to customer's vessel while in the ship repairers'/shipyard CCC (think of it as "ship garage-keepers")

What are the 3 hull insurance clauses?

(1) sue and labor (2) general average and salvage (3) collision liability

What is Inland Marine Insurance designed to cover? (3 broad categories)

(1) transportation big enough to transport people or cargo (i.e. planes/boats) (2) things that facilitate transportation (i.e. bridges) (3) floater policies (i.e. fine art, statutes)

What are the 2 types of cargo insurance?

(1) voyage (trip transist) policy (2) open cargo policy

protection and indemnity insurance (P&I) exclusions (4)

(1) war (2) towage of any other vessel (3) contractual liability (4) pollution liability

What are the 4 criteria for exposure evaluation regarding aviation coverage?

(1) what the plane is used for (2) aircraft type (3) pilots (4) geography (#4 i.e. -> "where are they going to fly?")

what is the Merchant Marine Act? (injury to crew; marine loss exposures)

(aka the Jones act) allows a crew member to sue an employer for negligence

What is the difference between a voyage charter and a time charter? (contract carriers)

(voyage charter is a) vessel chartered for a particular purpose (time charter is a) vessel chartered for a particular time

What are the 3 key aspects of aviation loss exposures

- potential for catastrophic loss - limited spread of risk (# of airplanes exposed to loss is small) - legal foundations of aircraft liability (typically determined by state law)

What is the international rule of law that governs how liability for pollution is handled internationally?

Convention on Civil Liability for Oil Pollution Damage (the U.S. isn't signed on to this)

What legal remedy would apply?: Air Niugini (a flight service) was flying from Pohnpei, Federal States of Micronesia to Port Moresby, Papua New Guinea. While trying to land on the runway at Chuuk International Airport in Weno, the landing fatally fell short and the plane instead landed in Chuuk Lagoon (international waters). A passenger named Marcus Leggolli died during the incident.

Death on the High Seas Act (Marcus' family members could file for damages under this act against the negligent owner of the vessel on behalf of Marcus)

What legal remedy would apply?: Marvin works on the Freedom Cruise Line cruise ship. While out at sea (beyond three miles from any territorial limit), Marvin notices that the ship needs some maintenance on its left side. To do the maintenance work safely, Marvin needs his PPE (personal protective equipment) but notices his employer (the owner of the ship) has not provided it for him today. He went to his employer about the issue who told him it would be fine and if he wanted to keep his job he would need to find a way to figure it out. Living paycheck to paycheck, Marvin had no choice but to "figure it out". While performing maintenance work on the side of the boat a couple of hours later, Marvin falls off of the side of the ship and dies.

Death on the High Seas Act (Marvin's family members could file for damages under this act against the negligent owner of the vessel on behalf of Marvin who was killed while on the job and out at sea)

What does F.O.B. stand for & what is its purpose?

Free on Board. Identifies the point where ownership and responsibility transfer.

Susan owns a boat that ships valuable goods (such as jewelry) from one place to another. On her upcoming shipment trip, she is delivering $1million worth of jewelry to a business in Africa. Susan is worried that something could happen to the jewelry during the voyage. What kind of coverage would you suggest to Susan and why (considering Susan's specific worry)?

Inland Marine because it covers floater policies (explanation: Floater insurance covers personal property that is easily movable and provides additional coverage over what normal insurance policies do not)

what coverage would you recommend to Olivia? Under what class type would this fall under?: Olivia owns a jewelry merchandising business. She often ships her merchandise to customers abroad via boat. In her brick and mortar business, she has a lot of valuable furniture, fixtures, and property of others that has been placed in her CCC.

Jewler's Block filed classes

what coverage form is associated with starting inland marine insurance? (from in class lecture)

Jewlers block coverage

Jim, Leo, and Nancy all have their cargo stored in different compartments of the sailboat. Jim has $2m, Leo has $1m, and Nancy has $1m worth of cargo stored. The boat floods and 200k worth of Jim's cargo is damaged. Due to General Average, how much do Jim, Leo, and Nancy each need to contribute?

Jim: $100k Leo: $50k Nancy: $50k (explanation: This is broken up in contribution by limits style (NOT contribution by equal shares). Jim has an investment of $2m which is 2/4ths of the total investment made by all the stored cargo combined [$4m]. Therefore, Jim pays $100k (200k * 2/4 = $100k). Leo and Nancy each have investments of $1m which is 1/4th of the total investment made by all the stored cargo combined [$4m]. Therefore, Leo and Nancy each pay $50k (200k * 1/4 = $50k))

What legal remedy would apply?: Mr. Rayborn sustained injuries to his left eye when a hose burst near where he was working on an oil rig for Diamond Offshore. The burst hose sprayed hydraulic fluid into his eye. Although there was no medical problem diagnosed with Mr. Rayborn's left eye, he continued to experience blurred vision and light sensitivity in his left eye. It was ultimately determined that this physical problem with the vision in his left eye was due to the severe emotional stress that he suffered during the accident.

Merchant Maritime Marine Act (Jones Act) (employer had an obligation to provide maintenance and cure but failed to do so. Therefore, Rayborn can sue the employer for negligence.)

What legal remedy would apply?: Larry (a maritime worker) suffered injuries while providing maintenance to the vessel due to the crane he was using being broken.

Merchant Maritime Marine Act (Jones Act) (employer was negligent in repairing/replacing the broken equipment that lead to Larry's injury. Larry can sue his employer for negligence.)

Can a vessel owner/operator with basic Marine Insurance receive coverage in the following scenario?: A tugboat (insured) crashes into another boat.

No. Would require having P&I insurance. (P&I provides coverage for damage to other vessel [by collision and not by collision])

What is the domestic rule/law that governs how liability for pollution is handled domestically? (domestically as in within the U.S.)

Oil Pollution Act of 1990

what are 2 types of insurance that vessel owners need?

P&I hull insurance

what are the main differences between P&I insurance and Hull insurance? (2)

P&I covers property damage to the vessels of others & includes damage to cargo coverage (not your own stuff!!) Hull covers physical damage to your own vessel & does not include damage to cargo coverage

What sort of insurance would provide coverage in the following scenario?: Burt (insured) owns a cruise ship. During a venture, water starts leaking into the cargo compartments of the ship where passengers keep their baggage.

P&I insurance (P&I provides coverage for damage to other vessel's cargo or other property on board)

What sort of insurance would provide coverage in the following scenario?: Hanson's fishing vessel (insured) struck Barger's moored vessel causing Barger's vessel to lose a significant amount of freight.

P&I insurance (P&I provides coverage for loss of the other vessel's freight)

What sort of insurance would provide coverage in the following scenario?: Tom Jones (insured) runs into another boat with his yacht. The collision causes the other boat to lose power, making it unusable.

P&I insurance (P&I provides coverage for loss of the other vessel's use)

What sort of insurance would provide coverage in the following scenario?: Bill (insured) wrecked his chemical tanker in the Atlantic Ocean. By law, he has to remove the wreckage. It will cost a fortune to try and remove the wreckage by himself.

P&I insurance (P&I provides coverage for wreck-removal expenses)

What are the amounts payable for partial losses under a hull insurance policy?

Reasonable costs to repair using new materials

What are the amounts payable for total losses under a hull insurance policy?

The agreed value when issued (aka, the amount the insurer and insured agreed on regarding the value of the boat)

what is "agreed value" (Valuing a plane)

agreement between insurer and insured as to the value of each insured aircraft

What does the general aviation sector include?

all civil aviation that does not involve passenger airlines (i.e. corporate flying for executives, air taxi and charter flights, aerial application and observation, law enforcement, flight training, business and pleasure flying, drones)

What does an open cargo policy cover? (types of cargo insurance)

all goods shipped or received during a policy period (aka, as many trips as occur during that policy period)

what type of airline hull coverage would apply to this situation?: while warming up in preparation for takeoff, the insured helicopter was struck by an airplane. the helicopter's rotors were rotating when the collision occurred.

all risks - ground and flight (explanation: not in flight and not in motion wouldn't apply because policy defines "in flight" and "in motion" to include situations in which the rotors are rotating)

what type of airline hull coverage would apply to this situation?: Tom's (the insured) aircraft collided with another aircraft during takeoff while still on the runway

all risks - ground and flight (taking off is within the definition of "in flight")

What type of airline hull coverage(s) would apply to this situation?: Tim's (the insured) aircraft collided with another aircraft while taxiing under its own power.

all risks - ground and flight or all risks - not in flight (all risks - not in motion coverage would not apply in this scenario because the aircraft was taxiing)

what type of airline hull coverage would apply to this situation?: Carly's (the insured) aircraft, while being towed by a tractor, was struck by a service vehicle

all risks - not in flight (explanation: definition of "in motion" limits that term to situations in which the aircraft is moving under its own power. here, the aircraft was being towed and was therefore not "in motion")

what type of airline hull coverage should be bought for the following situation?: Billie is planning to store their plane for at least the next year because they have decided to take a break from flying. Billie's storage spot is very messy and the plane has a chance of possibly getting damaged while in storage.

all risks - not in flight coverage (explanation: covers craft while not flying)

What type of airline hull coverage should be bought for the following situation?: Liam is towing their airplane with a tractor to Vermont. While towing it, it gets damaged.

all risks - not in motion coverage (explanation: covers damage caused while the aircraft is not in motion, but not taxiing under its own power)

What type of airline hull coverage should be bought for the following situation?: While Tim is pushing the aircraft into the hangar it gets damaged.

all risks - not in motion coverage (explanation: covers damage caused while the aircraft is not in motion, but not taxiing under its own power)

what is the Death on the High Seas Act? (injury to crew; marine loss exposures)

allows a crew member to sue an employer for negligence if the crew member ends up dying on the high seas

What does the Merchant Maritime Marine Act (Jones Act) allow?

allows a crew member to sue employers for negligence

Describe what is meant by the marine loss exposure "perils of the sea"?

any mishap that can happen at sea that is unintentional (i.e. heavy weather such as strong winds/waves, running aground, or collision with another vessel or object)

according to the Warehouse to Warehouse clause, when is coverage typically provided? (ocean/inland marine insurance)

as soon as delivered (point of shipment) until at final destination (explanation: because of F.O.B.)

What is tramp shipping?

boats that DON'T operate on a fixed schedule

Which non-filed class type of insurance would cover?: you are working on constructing a home. you get to the worksite one morning to find it completely vandalized.

builders risk insurance (coverage for construction materials)

What does a voyage (trip transit) policy cover? (types of cargo insurance)

cargo for a (one time) single trip

What is generally stated by the F.O.B. (free on board)?

carrier isn't liable for goods in transit until goods become in their CCC (this is usually when the goods are loaded on vessel)

What type of carrier is the following an example of?: DHL (provides courier, package delivery and express mail service)

contract carrier (explanation: DHL performs shipping duties for specific clients under contract)

Which non-filed class type of insurance would cover?: you are a contractor, and someone steals your bulldozer that you have been using for a construction project in Canada.

contractors equipment floater insurance

Which non-filed class type of insurance would cover?: you are a contractor, and someone steals your forklift that you have been using for a construction project in Canada.

contractors equipment floater insurance

Which non-filed class type of insurance would cover?: you are a contractor, and someone steals your mowers equipment that you have been using for a construction project in the united states.

contractors equipment floater insurance

what does drone insurance liability coverage and physical damage coverage for drone owners/operators provide for?

damage to others and the drone

As it applies to aviation, an insurer will only pay actual cash value (ACV) for what?

damaged or lost property for that particular aircraft (aka, will only pay for certain amounts of damages)

Under p&i insurance, how are legal fees factored into your aggregate?

deducted (from your aggregate limit)

what does the collision liability clause provide?

excess insurance to pay for collisions with more expensive vessels

t/f: federal law says it's fine to fly your drone over people

false

t/f: federal law says it's fine to operate your drone from a moving vehicle

false

t/f: Cargo liability is imposed for domestic trade if losses result from the carrier's failure to make the vessel seaworthy when the voyage began. However, if the cargo loss was not caused by the unseaworthy condition cargo liability would not be imposed. (common carriers: types of trade)

false (explanation: if the cargo loss was not caused by the unseaworthy condition, cargo liability would still be imposed under domestic trade.)

Injuries happening on international water generally fall under ________ law.

federal

Under what class & coverage form of inland marine insurance would the following situation be covered under? Linda is a camera dealer and would like coverage for her camera inventory.

filed classes camera and musical instrument dealers coverage form

Under what class & coverage form of inland marine insurance would the following situation be covered under? Linda is a musical instrument dealer and would like coverage for her musical instrument inventory.

filed classes camera and musical instrument dealers coverage form

What class & coverage form of inland marine insurance would the following situation be covered under? Linda has musical instruments she would like coverage for. She uses the musical instruments commercially as she is a professional musician.

filed classes commercial articles coverage form

What class & coverage form of inland marine insurance would the following situation be covered under? Linda has photographic instruments she would like coverage for. She uses the photographic instruments commercially as she is a photographer.

filed classes commercial articles coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda is a construction equipment/inventory dealer.

filed classes equipment dealers coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda is an agricultural equipment dealer.

filed classes equipment dealers coverage form

Under what class of inland marine insurance would the following situation be covered under? Lisa has valuable videotapes she would like covered.

filed classes film coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda has securities that she is sending to her friend by first-class & express mail.

filed classes mail coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda is a dentist. Linda would like coverage for her office equipment and for making improvements to her office.

filed classes physicians and surgeons equipment coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda is a physician. She would like coverage for her supplies and books.

filed classes physicians and surgeons equipment coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda is a surgeon. She would like coverage for her supplies and books.

filed classes physicians and surgeons equipment coverage form

Under what class of inland marine insurance would the following situation be covered under? Derik wants coverage for the sign he has outside his doctor's office

filed classes signs coverage form

Under what class of inland marine insurance would the following situation be covered under? Linda is a stage designer. She has a lot of valuable stage scenery she has created that she would like covered.

filed classes theatrical property coverage form

Under what class of inland marine insurance would the following situation be covered under? Lisa is a costume designer.

filed classes theatrical property coverage form

Under what class of inland marine insurance would the following situation be covered under? Billie would like coverage for her prescription drug records.

filed classes valuable papers and records coverage form

Under what class of inland marine insurance would the following situation be covered under? Eloise is an engineer and has just come up with super valuable blueprints for a new type of architecture model. she would like coverage for the blueprints in case something happens to them.

filed classes valuable papers and records coverage form

In what scenario do marine builders risk policies include collision liability and P&I coverage? (specialized marine policies)

for test driving the vessel

what is a private carrier?

haul their own goods

What type of insurance would be needed in this scenario?: A river barge transporting cargo collides with another barge. While the crew and passengers are fine, there is significant damage to the hull of the boat.

hull insuruance (covers physical damage to vessels including their machinery but not their cargo)

Sue and Labor clause

in the event of a loss, insured will take reasonable measures to protect the vessel from further damage. (i.e. if there's a big hole in their boat...insured will put a tarp over it/do what they need to & can do to fix/address it)

The sue and labor clause states that, in the event of a loss, the insured will take reasonable action to protect the vessel from further damage. Who will pay for the expenses incurred by the insured taking that reasonable action?

insurer

General Average and Salvage Clause

insurer will pay insured's general average to pay for salvage expenses

What are filed classes?

large number of potential insureds and are fairly similar ("fairly homogeneous loss exposures")

What is similar between common and contract carriers?

liability issues

Are drone owners/operators required by U.S. regulators to carry insurance? (yes/no)

no

Would Protection and Indemnity cover?: Bill (insured) signs a contract to assume liability for Laura as she makes an overseas delivery. During Laura's delivery, her ship is damaged. She asks Bill to pay her for the damages.

no (excludes contractual liability)

Would hull insurance cover?: Larry's crane ship is used for offshore construction. One day at a worksite, a nuclear reaction occurs that causes one of the cranes on the ship to completely fall off of the ship.

no (excludes loss due to nuclear reaction, radiation, contamination)

Would Protection and Indemnity cover?: Laura's boat gets stuck in a bunch of ocean pollution sludge while trying to deliver a shipment. The sludge costs them 3 days on their originally planned route.

no (excludes pollution coverage...however, can be purchased for a premium)

Would hull insurance cover?: Kenya's crane ship is used for offshore construction. During wartime, a fighter boat blows off one of the ship's cranes.

no (excludes war/riot)

Would inland marine insurance cover?: Billy is supposed to ship cargo from Massachusetts to Vermont on Thursday. Billy forgets and the cargo does not get shipped.

no (explanation: Billy would be considered a common carrier with goods in domestic transit [transporting cargo domestically]. Billy's [the shipper, in this scenario] neglect is what lead to the cargo not getting shipped. Neglect of the shipper is a coverage exclusion)

Would inland marine insurance cover? A TEU container ship is sailing through the Houston Ship Canal and ends up wedged across the waterway due to strong winds. As a result, all traffic is blocked until it can be freed (which takes a very, very long time). Houston, Texas seizes (/"impounds") the boat as a sort of "repayment" for all the shipping to/from their ports the city had lost due to the blockage.

no (explanation: Houston seizing the boat would be considered an "act of public authority" is a coverage exclusion for common carriers with goods in domestic transit)

Would inland marine insurance cover?: While conducting a cruise ship from Vermont to California, the ship gets overtaken by pirates. The pirates steal all of the passenger's cargo.

no (explanation: The cruise ship owner/operator would be considered a common carrier with goods in domestic transit [transporting passengers domestically]. Being overtaken by pirates would be considered an "act of public enemies" which is a coverage exclusion)

Would inland marine insurance cover?: While conducting a cruise from North Carolina to New York, there is a major unexpected hurricane. As a result, many of the cruise passengers are injured.

no (explanation: The cruise ship owner/operator would be considered a common carrier with goods in domestic transit [transporting passengers domestically]. the hurricane would be considered an "act of god" which is not covered)

Would inland marine insurance cover?: While shipping cargo from Maine to South Carolina, the cargo becomes infested with mice.

no (explanation: mice infestation would be considered an "inherent vice in the cargo" which is a coverage exclusion for common carriers with goods in domestic transit)

Kim's Cruises cruise ship (named insured) was sailing through a very narrow part of the ocean and accidently damaged a nearby pier. Kim's Cruises was being as careful as it possibly could, but the winds were very strong that day causing the minor damage to the pier to be practically inevitable. Can Kim's Cruises operator/owner be held liable?

no (explanation: negligence by the owner's, operator's, and crew did not contribute to the damage done to the pier)

would hull insurance cover?: In an emergency situation, Lia (owner/operator of insured vessel) had to give orders to jettison the cargo on her ship. The cargo is damaged as a result.

no (hull insurance does not cover damage to cargo)

Would hull insurance cover?: Bertha has a ship that runs on mineral oils. She is taking an international trip to ship some goods elsewhere so she decides to pack extra mineral oils so her ship doesn't run out of fuel on her trip. 3 days into the trip, her boat is overtaken by pirates who hold her boat for ransom and damage one of the containers holding the mineral oil fuel.

no (piracy or hindering the vessel is excluded)

Would Protection and Indemnity cover?: Ship A is towing a smaller ship (the smaller ship wasn't in any danger/distress). As they are towing the smaller ship, it gets damaged.

no (towage of any other vessel is excluded unless the purpose is to assist a vessel in distress)

the pilot of an overloaded corporate aircraft carrying 7 passengers and their luggage aborted the aircraft's takeoff. however, the plane knocked down the perimeter fence, struck a car being driven on an adjacent road, and crashed into an office building. the pilot (an employee of the aircraft owner) and 3 passengers (family members of employees) died in the accident, and the other 4 passengers (employees of the aircraft owner) were seriously injured. the driver of the car was killed, and 3 occupants of the office building were injured. Several claims resulted from the accident. the pilot's spouse sued the aircraft owner for the pilot's death. Would the following claim be covered under a typical aircraft insurance policy? why/why not? (textbook p8.27)

no because aircraft policy's liability coverage excludes bodily injury to employees of the insured. (Appropriate recovery would be worker's comp)

would hull insurance cover?: Brenda has a steam powered ship with 2 boilers to produce high temperature, high pressure steam used to run her ship's machinery and services. During a strike by the ship's workers, one of the boilers is damaged.

no (excludes strikes/other labor disputes)

Would Protection and Indemnity cover?: During wartime, Ship A (insured) runs into Ship B and causes significant damage to Ship B.

no (war is excluded...this/any type of seizure or detention situation can be added by endorsement)

would hull insurance cover?: Due to a fire onboard Macy's container ship, garments sent have burned either completely or are severely damaged.

no. hull insurance does not cover physical damage to the cargo of vessels.

What type of aircraft is Passenger Voluntary Settlement Coverage (aka "admitted liability coverage") for?

noncommercial

What is the type of insurance that is the oldest and most traditional?

ocean marine insurance (originating in the middle ages)

Generally, how does liability for pollution under inland marine insurance work?

owner/operator is liable for any pollution that seeps out of their boat BUT this primarily depends on jurisdiction

what does drone insurance products liability coverage for drone manufacturers provide for?

protect the insured if product is alleged to have caused or contributed to the accident

What is protection and indemnity insurance (P&I)? (who is provided coverage & what are they covered against)

reimbursement coverage for shipowners for liability risks associated with the operation of a vessel

What are non-filed classes?

small number of potential insureds with diverse loss exposures

What is "actual cash value" (ACV) as it applies to aviation?

states a cash limit on value of each insured aircraft.

What does aircraft hull coverage apply to?

the actual airplane itself

Define salvage (in the context of ocean marine insurance)

the cost others incur to help a ship in distress

What are General Average claims?

the partial loss of cargo to be shared by all parties to a voyage (shared by the cargo owners and the vessel owner)

What does the liability for goods in domestic transit depend on?

the type of carrier involved (specifically, the sorts of activities they are engaged in)

Under General Average claims, what is the basis for a party's contribution?

the value of their investment* in the voyage (*investment = the $ value of the cargo they had stored on the vessel)

What does "Jettison" mean?

throwing stuff off the side of the boat/plane/etc...

What is the purpose of General Average claims?

to avoid complete losses

What is the central purpose of Passenger Voluntary Settlement Coverage (aka, "admitted liability coverage")?

to avoid injured party suing you (/taking you to court)

What is Inland Marine Insurance?

transportation insurance

t/f: Inland Marine Insurance covers floater policies

true

t/f: Protection and indemnity insurance is sold as a separate policy from Hull insurance

true

t/f: coverage for Offshore Oil and Gas Facilities includes P&I and other liability coverages. (specialized marine policies)

true

t/f: hull insurance includes coverage for physical damage to a vessels machinery and fuel.

true

t/f: if a peril is specifically listed as a coverage included in a hull insurance policy, it is included.

true (basic perils covered [slide 20] includes "all other specifically listed perils")

t/f: passenger bodily injury liability coverage does not apply to aviation crew members.

true (because they would be covered under a workers compensation policy!)

t/f: liability coverage for owned aircraft can be extended for non-owned/borrowed aircrafts.

true (but this coverage extension does not happen automatically)

t/f: P&I insurance doesn't cover liability risks associated with the operation of a vessel that are covered under the workers compensation policy.

true (or that's covered under another type of policy other than workers comp)

who faces marine loss exposure?

vessel owners and operators

What does the Death on the High Seas Act allow?

when death of an individual (i.e. an employee) on the high seas is caused by neglect/wrongful act of employer, the family of that deceased employee can sue the employer (owner/operator of the vessel)

what are putting-in expenses under Protection and Indemnity insurance?

when have to deviate from the standard route to deliver a crew member to get medical attention

Would marine insurance provide coverage?: John is a harbor pilot. One day, he was boarding the container ship Maersk Kensington (insured) and attempted to climb the Jacob's Ladder from the pilot ship onto the container ship. Both ships were in a channel of water located between Brooklyn and Staten Island. As the pilot climbed the Jacob's Ladder, something happened causing him to fall backward onto the deck of the pilot ship. He was taken to the hospital and died a short time later. Maersk Kensington is found to be liable for John's injury as their Jacob's Ladder was oily and they failed to warn John of that before the incident.

yes (A harbor pilot is considered an invitee. Vessel owner who invites a passenger on board has duty to exercise extreme care for the passenger's safety)

would inland marine cover?: Lisa takes her shirt to the dry cleaners (insured). the shirt gets damaged while at the drycleaners.

yes (Includes property in possession of bailees. in this scenario, the drycleaners is a bailee as it has temporary custody of the property Lisa owns)

would hull insurance cover?: Billie's incurs $40,000 after helping another ship stranded at sea get to shore.

yes (Includes salvage costs -> the cost others incur to help a ship in distress)

Would marine insurance provide coverage?: A 52-year-old visitor on a Lake Arrowhead tour boat fell into an open hatch and fractured her ankle, requiring ankle surgery.

yes (Vessel owner who invites a passenger on board has duty to exercise extreme care for the passenger's safety)

would hull insurance cover?: Pirates overtake Liam's ship and damage the boat's furniture, lifeboats, and the exterior of the boat in the process.

yes (covers "assailing thieves" that are not the passengers or crew...so, basically means pirates)

Would Protection and Indemnity cover?: Lisa gets very sick while working on a cruise ship. The operator knows they have a duty to get Lisa to the proper medical care facilities in light of her illness but it will cost a lot of money for them to reroute to do this.

yes (covers illness; as well as loss of life and injury & offers putting-in expenses as a unique coverage. in this situation, P&I would reimburse the operator for the costs associated with rerouting to get Lisa the medical care she needs)

Do contract carriers typically engage in tramp shipping?

yes (explanation: contract carriers are boats you would contact on a needs basis. tramp shipping refers to boats that do not operate on a fixed schedule.)

Would Inland Marine cover?: Ian's boat collides with another boat.

yes (explanation: damage to other vessels/structures is a marine loss exposure)

Kim's Cruises cruise ship (named insured) was sailing through a very narrow part of the ocean. The operator of the ship had done this route a thousand times before, so he decided to take a nap while they were passing through. The operator failed to notice that the wind was unusually strong that day which caused the boat to run a little off its course and cause minor damage to a nearby pier. Can Kim's Cruises owner/operator be held liable?

yes (explanation: damage to pier resulted from negligence of operator)

Would Protection and Indemnity cover?: Derik docks his boat in China. An inspector walks on and finds that it does not meet China's laws for this type of vessel. Derik is given a hefty fine.

yes (explanation: fines and penalties are considered a unique coverage under p&i insurance)

Would Inland Marine Insurance cover?: Earl is a longshore employee doing work on a boat. While doing work but not on the boat, Earl gets injured.

yes (explanation: injury to others NOT on the vessel is a marine loss exposure)

Would Inland Marine Insurance cover?: Bill is a boat inspector. While inspecting a Kim's Cruises cruise ship, Bill gets hurt.

yes (explanation: injury to others on the vessel is a marine loss exposure)

Would Inland Marine Insurance cover?: Emily is a passenger on the Kim's Cruises cruise ship. While going down the boat's waterslide, Emily gets hurt.

yes (explanation: injury to others on the vessel is a marine loss exposure)

Would Inland Marine Insurance cover?: Hunter is a longshore worker who is loading cargo from a ship that has just docked. While unloading the cargo, he drops it on his foot.

yes (explanation: injury to others on the vessel is a marine loss exposure)

Would protection and indemnity cover?: Delia owns a commercial ship. One of her crew members is very sick and needs medical attention. To get to the nearest hospital, Delia must sail through multiple ports and deviate from the ship's specified route.

yes (explanation: putting-in expenses are considered a unique coverage under p&i insurance)

Would Protection and Indemnity cover?: Bill is docked in China after making a shipment from the U.S. While Bill is docked, a local inspector boards his ship and finds a number of issues with Bill's ship that go against China's regulations for commercial ships in their territory. Bill is met with a hefty fine and penalties as a result.

yes (has the unique coverage of fines and penalties)

would hull insurance cover?: Overnight while McKenzie's ship is docked, a huge earthquake happens & her boat is significantly damaged.

yes (hull insurance covers fire, lightning, and earthquake causes of loss while the ship is docked.)

would hull insurance cover?: While Kenzie's ship is docked lightning strikes it which then sparks a drastic fire on the ship. As a result, there is significant damage to the ship.

yes (hull insurance covers fire, lightning, and earthquake causes of loss while the ship is docked.)

would hull insurance cover?: Pete is captaining their container ship when the waves start to become abnormally heavy and chaotic causing significant damages to the ship.

yes (hull insurance covers perils of the sea causes of loss. heavy wave action falls under perils of the sea)

Would hull insurance cover?: Liam owns a ship. The master of Liam's ship crew deliberately sunk the ship because she was mad at Liam.

yes (hull insurance covers serious misconduct by master or crew that is contrary to the owner's interest ["barratry"])

Would hull insurance cover?: Brenda has a steam powered ship with 2 boilers to produce high temperature, high pressure steam used to run her ship's machinery and services. During a minor capsizing incident, one of the boilers is damaged.

yes (includes coverage for boilers)

would Offshore Oil and Gas Facilities policy cover?: while under construction, the oil and gas facility becomes damaged. (specialized marine policies)

yes (includes coverage for builders risk)

would Offshore Oil and Gas Facilities policy cover?: A fire occurs at an offshore oil and gas facility resulting in a lot of business income being lost. (specialized marine policies)

yes (includes coverage for business interruption)

would Offshore Oil and Gas Facilities policy cover?: Deep Water Horizon drilling rig was drilling a deep exploratory well when high pressure methane gas from the well expanded into the marine riser and rose into the drilling rig, where it ignited and exploded, engulfing the platform. The measures for attempting to control the blowout prove to be very costly. (specialized marine policies)

yes (includes coverage for costs of controlling well blowouts)

Would hull insurance cover?: Bertha has a ship that runs on mineral oils. She is taking an international trip to ship some goods elsewhere so she decides to pack extra mineral oils so her ship doesn't run out of fuel on her trip. 3 days into the trip, one of the containers holding the mineral oils is damaged.

yes (includes coverage for fuel supplies)

Would hull insurance cover?: Larry's crane ship is used for offshore construction. One day at a worksite, one of the cranes on the ship smashes into a rock as the boat was going through a narrow pass.

yes (includes coverage for machinery)

would Offshore Oil and Gas Facilities policy cover?: While transporting oil to shore, an oil and gas facility tanker wrecks. By law, the wreckage must be removed. (specialized marine policies)

yes (includes coverage for physical damage/wreck removal coverage)

would Offshore Oil and Gas Facilities policy cover?: A large oil slick that began spreading was discovered at a former Deep Water Horizon drilling rig site (which had just endured a well blowout a couple of days prior). The spill directly affected 70,000 sq miles of ocean. In a matter of months, oil from the leakage was washing up on some American shores as well. (specialized marine policies)

yes (includes coverage for seepage, pollution, and contamination)

Would hull insurance cover?: Larry's cruise ship just endured a fire. As a result, all of Larry's lifeboats are damaged.

yes (includes coverage for things attached to the boat...such as lifeboats!)

would inland marine cover?: A boat crashes into the wall of a tunnel causing damage to the tunnel and the boat.

yes (instrumentalities of transportation and communication is included)

would inland marine cover?: a plane crashes into a cable tower causing the tower to be damaged as well as the plane.

yes (instrumentalities of transportation and communication is included)

would hull insurance cover?: In an emergency situation, Rachel (owner/operator of insured vessel) had to give orders to jettison the fuel of her plane and make an emergency landing.

yes (jettison-ing part of an insured vessel [such as the fuel] is covered)

would hull insurance cover?: In an emergency situation, Roxanna (owner/operator of insured vessel) had to give orders to jettison the lifeboats off of her boat.

yes (jettison-ing part of an insured vessel [such as the lifeboats] is covered)

Would marine insurance provide coverage?: Kim's Cruises cruise ship (named insured) collides with Tim's ferry boat. Passengers on Tim's ferry boat are injured.

yes (maritime insurance provides coverage for injury to others not on the vessel)

Would marine insurance provide coverage?: Kim's Cruises cruise ship (named insured) experiences some navigation issues and collides with a bridge. People who were walking and driving on the bridge at the time of the collision are injured.

yes (maritime insurance provides coverage for injury to those not on the vessel)

Would Protection and Indemnity cover?: Liam is from Australia and is working for an American cruise line, "Billie's Cruises". Liam dies while working in the high seas. Billie is the owner/operator of the ship and is working out the expenses to bring Liam's body back to his home in Australia.

yes (p&i would reimburse Billie for the expenses related to the repatriation)

Would Protection and Indemnity cover?: Bill is an officer of a cargo ship, as well as the owner of the ship. There is a revolt constituted against him and the other officers by the sailors of the ship. The revolt causes Bill to suffer high costs that he had to incur to resist the mutiny.

yes (p&i would reimburse bill for the costs of resisting mutiny or misconduct. this is a unique coverage)

Would Protection and Indemnity cover?: Bill owns a cruise ship that is cruise shipping when news breaks about the Covid-19 pandemic and all of the ship's current passengers have to quarantine on the ship and Bill isn't allowed to dock anywhere. This situation racks up high costs for Bill.

yes (p&i would reimburse bill for the quarantine expenses. this is a unique coverage)

Would marine insurance provide coverage?: Kendrick, a longshore worker employed by Deep South Airboats to load its vessel, was injured while working in the ship's hold when he was struck by cargo that fell from a pallet being held in suspension by a winch that was part of the ship's gear. The cargo fell due to the braking mechanism slipping while the pallet was suspended. The winch's braking mechanism had been malfunctioning for 2 days preceding the day of the accident.

yes (the policy states that a vessel owner/operator & crew has an obligation to exercise reasonable care to provide a safe work environment and warn longshore workers of hazards. In this scenario, the shipowner had a duty which was not met to have the ship and its equipment in such condition that the longshoreman may carry on their cargo operations with reasonable safety)

Would Protection and Indemnity cover?: Bill is towing Lisa's boat to the nearest shore because Lisa's boat was in distress. By helping Lisa, Bill suffers the costs associated with leaving his planned route.

yes (towing other boats that were in distress is an exception to the exclusion of towing boats)

the pilot of an overloaded corporate aircraft carrying 7 passengers and their luggage aborted the aircraft's takeoff. however, the plane knocked down the perimeter fence, struck a car being driven on an adjacent road, and crashed into an office building. the pilot (an employee of the aircraft owner) and 3 passengers (family members of employees) died in the accident, and the other 4 passengers (employees of the aircraft owner) were seriously injured. the driver of the car was killed, and 3 occupants of the office building were injured. Several claims resulted from the accident. Would the following claim be covered under a typical aircraft insurance policy? why/why not?: the persons injured in the building (employees of the building owner) sued the aircraft owner for their injuries (textbook p8.27)

yes would cover (if they sued) under the bodily injury excluding passengers coverage (explanation: would be entitled to worker's comp benefits from their employer, and would also have a right to sue the aircraft owner for damages)

the pilot of an overloaded corporate aircraft carrying 7 passengers and their luggage aborted the aircraft's takeoff. however, the plane knocked down the perimeter fence, struck a car being driven on an adjacent road, and crashed into an office building. the pilot (an employee of the aircraft owner) and 3 passengers (family members of employees) died in the accident, and the other 4 passengers (employees of the aircraft owner) were seriously injured. the driver of the car was killed, and 3 occupants of the office building were injured. Several claims resulted from the accident. (textbook p8.27) Would the following claim be covered under a typical aircraft insurance policy? why/why not?: the aircraft owner made a claim with its aircraft insurer for the destruction of its aircraft

yes assuming policy had physical damage coverage on terms of all risks-ground and flight

the pilot of an overloaded corporate aircraft carrying 7 passengers and their luggage aborted the aircraft's takeoff. however, the plane knocked down the perimeter fence, struck a car being driven on an adjacent road, and crashed into an office building. the pilot (an employee of the aircraft owner) and 3 passengers (family members of employees) died in the accident, and the other 4 passengers (employees of the aircraft owner) were seriously injured. the driver of the car was killed, and 3 occupants of the office building were injured. Several claims resulted from the accident. the deceased motorist's parents sued the owner of the plane for the death of their teenage child and the destruction of their car. Would the following claim be covered under a typical aircraft insurance policy? why/why not? (textbook p8.27)

yes. damages for child's death would be payable under bodily injury excluding passengers coverage and damages for the loss of their car would be covered under the property damage liability coverage.

the pilot of an overloaded corporate aircraft carrying 7 passengers and their luggage aborted the aircraft's takeoff. however, the plane knocked down the perimeter fence, struck a car being driven on an adjacent road, and crashed into an office building. the pilot (an employee of the aircraft owner) and 3 passengers (family members of employees) died in the accident, and the other 4 passengers (employees of the aircraft owner) were seriously injured. the driver of the car was killed, and 3 occupants of the office building were injured. Several claims resulted from the accident. the owner of the office building sued the aircraft owner for damage to the building and resulting loss of business income Would the claim made be covered under a typical aircraft insurance policy? why/why not?: (textbook p8.27)

yes. under property damage liability coverage (which insures injury to or destruction of property and resulting loss of use - in this case, resulting loss of business income)

the pilot of an overloaded corporate aircraft carrying 7 passengers and their luggage aborted the aircraft's takeoff. however, the plane knocked down the perimeter fence, struck a car being driven on an adjacent road, and crashed into an office building. the pilot (an employee of the aircraft owner) and 3 passengers (family members of employees) died in the accident, and the other 4 passengers (employees of the aircraft owner) were seriously injured. the driver of the car was killed, and 3 occupants of the office building were injured. Several claims resulted from the accident. (textbook p8.27) Would the following claim be covered under a typical aircraft insurance policy? why/why not?: survivors of the deceased passengers sued the aircraft owner for their deaths.

yes. would be covered under the policy's passenger bodily injury liability coverage.

Is the purpose of hull insurance to protect your own vessel(s) or other vessels

your own vessel(s)