The 3rd chapter of our Insurance learning course is Marine Insurance. In this post, we’ll go over 30 important questions and answers about marine insurance. It will help you quickly understand key marine insurance terms and their definitions.
If you missed the 1st & 2nd chapter of the insurance learning course, you can read them here.
- 30 Important Introduction to Insurance Questions and Answers [Notes with PDF]
- 30 Important Life Insurance Questions and Answers [Notes with PDF]
By reading this post, you may quickly prepare for any competitive tests such as school and college exams, visas, job interviews, and so on.
So let’s get started.
Marine Insurance Questions and Answers:
The 30 important marine insurance questions and answers are as follows:
Question 01: What is Marine Insurance?
Answer: Marine insurance is the insurance that is taken out financially to cover the risk of shipping, the goods in the ship, its charges, and related liabilities.
Marine insurance is an agreement between an insurer and an insured in which the insurer agrees to identify the insured in a manner and to the extent agreed upon in order to protect the insured against marine losses incurred during a marine adventure.
Question 02: What are the Features of Marine Insurance?
Answer: The main features of marine insurance are as follows:
- Marine insurance is a compensation agreement.
- The insurer covers the loss whether it is partial or complete.
- This includes ships, onboard goods, and freight.
- Such insurance can also be taken for the risk of transportation, warehousing, and ancillary matters related to the loading and unloading of such goods.
- The insurer only compensates for the loss of the factors directly related to the risk mentioned in the policy.
Question 03: What is the Significance of Marine Insurance?
Answer: The significance of marine insurance is as follows:
- Provide financial security
- Reduce risk
- Expand international trade
- Improve business efficiency
- Increase invisible exports
- Expand employment opportunities
Question 04: What is the Essential Element of Marine Insurance?
Answer: The essential element of marine insurance is as follows:
Legal Elements:
- A marine insurance contract involves at least two parties.
- The purpose of marine insurance is to ensure that it is valid.
- A maritime insurance contract, like any other contract, requires both parties to be eligible to perform the contract.
- The marine insurance’s content must be specified.
- The contract for marine insurance must be in writing.
Other Elements:
- The insured must also have insurable interests in the marine insurance contract. Such interest refers to the financial interest of the insured.
- The “principle of absolute faith” is also followed in maritime insurance contracts.
- A marine insurance contract is an indemnity contract.
- The insurer is liable for the loss arising out of the direct cause of the accident, which is mentioned in the insurance contract as an accident risk.
- In a marine insurance contract, the insured can insure the same property with more than one insurer.
- In case of complete loss of ship or cargo and the insurer pays full compensation, the insured or insurer is the owner of the remainder of the insured property.
- There are some express and unspoken conditions involved in the marine insurance contract.
Question 05: What are the Warranties of the Contract of Marine Insurance?
Answer: The warranties of the contract of marine insurance is as follows:
Expressed Warranties:
- Date of Voyage
- Destination and date of arrival
- The legality of insured goods
- Declaration of the marine route & nationality of the vessel.
- Manage sea caravans
Implied Warranties:
- Seaworthiness of the ship
- The legality of the voyage
- Voyage in just time
- No change in the voyage route
Question 06: Why Marine Insurance is called the Contract of Indemnity?
Answer: Marine insurance is a contract of insurance that promises to compensate for the loss and damage caused by the insured risk of ships and cargo in return for a fixed premium.
The insurance company compensates if the ship and the cargo and its contents are completely or partially damaged for any of the reasons mentioned in the policy.
It is called a contract of indemnity as the insurer covers only the amount of the loss.
Question 07: Why Marine Insurance is Important in Foreign Trade?
Answer: The majority of foreign trade goods are transported by sea. Accidents occur as a result of a variety of natural and man-made hazards.
All of these dangers affect shipowners, cargo owners, and carriers. As a result of maritime insurance, traders can reduce that risk and conduct business safely.
It also increases the number of indirect exports. For this reason, marine insurance is important in foreign or international trade.
Question 08: What is Subrogation in Marine Insurance?
Answer: In the case of full compensation of the property insured in marine insurance, if any part of the property remains or has any right in this regard, it is owned by the insurance company.
This is called a subrogation policy in marine insurance.
Question 09: What is Proportionate Contribution in Marine Insurance?
Answer: If the same property is insured with more than one insurance company and a partial loss arises and the single insurance company compensates him, then he gets a proportional share from another insurance company.
This is called the proportionate contribution in Marine Insurance.
Question 10: What is the Classification of Marine Insurance?
Answer: There are four types of marine insurance which are as follows:
- Hull insurance
- Cargo insurance
- Freight insurance
- Marine Liability insurance
Question 11: What is Hull Insurance?
Answer: There may be partial or total damage to the vessel during navigation. The insurance that is taken out to cover the complete or partial loss of a hull due to a maritime disaster is called hull insurance.
This type of insurance is usually for a year.
Question 12: What is Cargo Insurance?
Answer: When shipping goods from one country to another by sea, cargo can be lost due to maritime hazards.
Cargo insurance is the insurance that is taken out to cover the complete or partial loss of cargo due to maritime hazards. This type of insurance is only for specific voyages, i.e. until the goods arrive.
Question 13: What is Freight Insurance?
Answer: If the cargo is destroyed, the carrier cannot collect the fare from the owner. This causes financial loss to the transport company or the shipping company.
The insurance policy that is in place to financially protect the shipping company from such losses is called freight insurance. In this insurance system, if the product is damaged, the freight fee along with the product is also collected as compensation.
Question 14: What is Marine Liability Insurance?
Answer: If there is any loss of goods due to any dishonesty or negligence on the part of the ship’s captain or crew while transporting the goods, then the responsibility for the loss of that goods rests with the transport company or the shipowner.
If liability is incurred by a shipping and transport company due to a maritime hazard, the insurance that is provided to cover that liability is called marine liability insurance.
Question 15: What is the Classification of Marine Insurance Policies?
Answer: The classification of marine insurance policies is as follows:
- Voyage policy
- Time policy
- Mixed policy
- Valued policy
- Unvalued policy
- Composite policy
- Port risk policy
- Floating or Blanket policy
- Open covers policy
Question 16: What is Voyage Policy?
Answer: An insurance policy that specifies a specific voyage and guarantees compensation in the event of damage to the vessel or in cargo during the specified voyage is called a voyage policy.
Question 17: What is Time Policy?
Answer: A time policy that insures a ship, goods, or freights for a particular period of time. Usually, such insurance is not taken for more than 12 months.
If there is any loss to the insured during this period, the insurer will pay compensation. It is time policy.
Question 18: What is Valued Insurance Policy?
Answer: An insurance policy that determines the value of the insured item and that amount is referred to as the insured value is called a valued insurance policy. In case of loss of insured content, the insurer is obliged to compensate the insured up to the maximum fixed amount.
Question 19: What is Floating Policy?
Answer: If multiple ships of the same owner or organization are insured under the same policy for a certain period of time, it is called a floating policy.
In this case, the average price is determined by considering the position, value, and price of different ships, and thus the sum insured is determined.
The main disadvantage of this policy is that determining the amount of advance premium is quite complicated.
Question 20: What is an Open Cover Policy?
Answer: For those who are always importing and exporting large sums of money, it is difficult to open an insurance policy every time. In order to avoid this problem, they have open insurance for one year. This is called the open cover policy.
There are two types of open cover policies: Open cover notes, and Open policy. Insurance companies offer these special insurance benefits to very loyal traders.
Question 21: What is Lloyd’s Insurance?
Answer: The insurance policy issued by Lloyds Corporation, the largest maritime insurance company in the world, is called Lloyds insurance policy.
Question 22: What are Marine Perils?
Answer: Natural and unnatural hazards encountered while navigating a ship in the sea are called marine perils.
Perils of the seas, fire, enemies, pirates, rovers, thieves, captures, seizures, restraints, and detention of princes and peoples jettisons, barratry, and other perils of the like-kind or which may be designated by the policy are all examples of marine perils.
Question 23: What are the Characteristics of Marine Perils?
Answer: The characteristics of marine perils are as follows:
- Marine perils are an uncertain and previously unimaginable danger.
- This includes a variety of natural and unnatural hazards occurring on waterways.
- Such hazards can cause damage to ships, cargo, and freight
Question 24: What are the Examples of Marine Perils?
Answer: The examples of marine perils are as follows:
Natural Perils:
- Sudden ocean storms or hurricanes.
- Collision with a submerged mountain on the ocean floor.
- Collision with a floating iceberg.
Un-Natural Perils:
- Thieves or Rovers
- Pirates
- Enemies
- Warship
- Capture or Seizure
- Betrayal
- Jettison
- Strike and riots
- Fire and Exploration
Question 25: What are Marine Losses?
Answer: Marine losses are the losses caused by natural or unnatural hazards when a ship or vessel carries cargo by sea.
This includes not only the loss of ships, cargo, or freight but also the cost of protecting them from such damage.
Question 26: What are the Characteristics of Marine Losses?
Answer: The characteristics of marine losses are as follows:
- These losses are caused by marine or naval hazards.
- They can occur for any natural or unnatural reason.
- As a result, the ship, its cargo, its toll, the lives of the people involved, and so on are usually lost.
- There are a variety of costs associated with the loss of property and life.
- With the help of marine insurance, it is possible to deal with such losses financially, and
- The insurance company is obligated to compensate whether the loss is partial or complete.
Question 27: What is the Classification of Marine Losses?
Answer: The classification of marine losses is as follows:
Total Loss:
- Actual total loss
- Constructive total loss
Partial Loss:
- Particular partial loss
- General partial loss
Question 28: What is an Actual Total Loss?
Answer: When the content of the insurance is completely destroyed or destroyed in such a way that it can no longer be considered insured or recovered, it is called an “actual gross loss.”
For example, Shipwreck or complete destruction, the ship sinking under the sea due to a collision, etc.
Question 29: What is Constructive Total Loss?
Answer: When the contents of the insurance are not actually completely destroyed but are considered to be completely destroyed in the eyes of the law and for practical reasons, it is called a “constructive total loss.”
Although it is possible to recover a ship or product or part of it in case of such damage, the cost of rescue is more than the value of the property to be recovered, and due to this, the rescue thought is abandoned.
Question 30: What is Jettison?
Answer: When an item of a ship’s cargo is thrown into the sea to protect the products and ship from great dangerous circumstances, it is called a jettison.
Jettisoning refers to the act of tossing cargo from a ship into the sea in order to make the ship lighter. Jettison occurs in partial marine hazards.
I hope that by the end of this post, you have a good understanding of the “Marine Insurance” chapter.
You will gain a better understanding of the “Marine Insurance” chapter if you read these 30 important marine insurance questions and answers on a regular basis.
If you have any doubts or questions, don’t hesitate to contact us or leave a comment so that we can respond soon.
You can also read:
- 25 Important Fire Insurance Questions and Answers [With PDF]
- 25 Important miscellaneous Insurance Questions and Answers [With PDF]
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