Lesson 12: Ocean and Inland Marine Insurance

Commercial Product Lines Include

- Accounts Receivable - Camera & Musical Instrument Dealers - Floor Plan Merchandise - Jewelry Dealers - Musical Instruments - Negative Film - Photographic Equipment - Physicians & Dentists Equipment

Exclusions of Commercial Product Lines

- Dishonest Act - War - Pollution Damage - Changes in temperature or humidity - Loss of documents - Strikes - Suspension of leases, contracts, or orders - Money and Securities - Programming errors except for malicious software - Stock in trade - Wear and tear - Mysterious disappearance - Inherent vice - Electrical or power supply disturbances - Property loaned, leased, or rented to others - Contraband

Ocean Marine insurance addresses loss exposure in the following areas.

1. Cargo Insurance 2. Hull Insurance 3. Freight Insurance 4. Protection and Indemnity

Type of Inland Marine Risks

Communication and Transportation Risks Domestic Transportation Risks Commercial property floaters Personal property floaters

Below are additional types of inland marine coverage:

Diverse properties in commercial lines Bailee Form Commercial property floaters Pays for losses to a customer's property regardless of fault.

Types of Ocean Marine Losses

General Average Loss Particular Average Constructive Total Loss Total Loss

A ship was damaged due to the crew's negligence. The insured's claim for damages was denied because the damage was not covered under the 'perils of the sea.' Which clause applies?

Inchmaree clause

Examples of Ocean Marine Coverages

Jettison Barratry Inchmaree Clause Perils on the Sea Perils of the Sea

A ship is in distress, and the crew throws off cargo to lighten the load as the vessel was experiencing an emergency. What is the name of this activity?

Jettisoning

Communications and Transportation Devices

Objects with fixed locations such as: Bridges Tunnels Docks Towers

Domestic Transportation Risks

Property in transit across domestic roads Owners Forms Owners of property using their vehicles for transportation

Seaworthiness

a warranty in which the owner of the ship or insured agrees to provide a seaworthy vessel that is not overloaded and has a competent captain and crew.

Implied Warranties:

apply to ocean marine insurance coverages and must be strictly observed. They are not actual policies nor written into the contract, but carry the same weight as a written warranty. If a warranty is not adhered to, the insurance policy is void.

Condition of Cargo

cargo owner is obligated to guarantee that the cargo is sound and properly packed for voyage.

Inchmaree Clause

clause in a marine insurance policy that covers damage or loss caused by the negligence of a vessel's captain or crew or by any defect in the ship's hull or machinery such as a boiler explosion.

The Commercial Inland Marine Program gives insurers a:

comprehensive collection of commercial inland marine products.

Protection and Indemnity

covers loss or damage of ships, cargo, or terminals. Protection & Indemnity is liability coverage for watercraft, protecting the insured from liability, bodily injury, and property damage arising from use or ownership of declared vessels. It covers loss of life, injury, and sickness of the crew, passengers and third parties, including liabilities under statutory compensation acts such as Workers' Compensation, damage to cargo on board the vessel, wreck removal, collisions, and damages to docks and piers.

Ocean marine protection and indemnity coverage usually insures the ship owner against liability for all of the following losses, except:

damage or loss of the insured ship

Barratry

fraud or wrongful acts committed intentionally by the master or crew without the shipowner's knowledge.

There are six categories of eligible marine:

imports, exports, domestic shipments, instrumentalities of transportation and communication, personal property floater risk, and commercial property floater risk.

Perils of the sea

include forces of nature an insured may encounter in the course of an expedition, such as sinking, the collision of ships, stranding, high winds, and heavy waves

Perils on the Sea

include perils that can happen on the sea or elsewhere such as a fire.

Property in Transit Across Domestic Roads(Regards a truckers policy)

includes 2 forms Legal Liability Form - Only pays if the trucking company is at fault Common Carriers transporting property belonging to customers

Inland Marine insurance

indemnifies loss to movable or specialized types of property. Inland Marine insurance (all-risk basis/open perils) cover goods transported over land and offered for Commercial or Personal property. The inland marine insurance definition has evolved to cover a wide range of property and materials considered Property in Transit.

Jettison

intentionally throwing overboard cargo or portions of a ship, attempting to save the vessel from sinking

Total Loss

occurs when damages or costs of repair equal or exceed value of property

General average loss

partial loss that has resulted from a voluntary and deliberate sacrifice made for the benefit of all concerned

Particular Average loss

partial loss where there is not a requirement to share the loss and where loss will be born only by the party having an interest in the lost or damaged property

Freight Insurance

pays the cost of shipping charges For example, a $20 Million shipment of cargo and $2 Million of shipping cost is lost when a ship sank. Cargo insurance covers the direct loss of the $20 Million, while the indirect loss of $2 Million is covered by Freight Insurance.

bailee

person or organization that has temporary possession of someone else's personal property (dry cleaner, jewelers, repairers, etc.)

Personal Property/Articles Floater

personal lines inland marine policy that is used to cover scheduled personal property on an all risks basis. The policy is particularly appropriate for a property that receives limited coverage under the homeowners' forms, such as furs, jewelry, fine arts, silverware, cameras, musical instruments, stamp and coin collections, and similar property.

Hull insurance

protecting owners against loss caused by damage or destruction of waterborne craft. Hull covers a variety of vessels, providing a broad range of coverage on physical damage to a vessel and any of its operating machinery and equipment.

Cargo insurance

protects the policyholder from the loss of goods during shipment. Cargo insurance protects the owner or consignor of goods for possible physical loss or damage from external causes during shipping Cargo can be written on a named peril or an all-risk basis.

Bailee Forms

provides coverage for the legal liability of damage or destruction of a customer property while under the care, custody and control of a bailee.

Constructive Total Loss

refers to a partial loss situation situation involving damage so extensive that repair costs would equal or exceed the value of the property

Ocean Marine Insurance

refers to insurance that has four types of coverage, which are cargo, hull, freight plus protection, and indemnity

In ocean marine, hull policies insure against damage to or loss of:

the ship itself

Trip Transit Coverage

type of policy that provides protection for property in transit against certain perils during a specific trip via a specified means of transport. It only covers that particular shipment or transport for such perils as fire, disappearance, or theft. A customer will purchase this coverage when hiring a transportation company. It pays for losses regardless of fault.

No Deviation in Voyage

warrants the ship will not detour while on the journey but follow an agreed upon route with no unnecessary delays.

The Legality of Voyage

warrants the voyage is legal and no illegal activity will occur.