Marine Insurance
Overview
Marine insurance is the grandparent of the whole industry. Long before anyone thought to insure a house against fire or a life against death, merchants were pooling the risk of ships that might never return. Today it quietly underpins almost everything Nigeria buys and sells abroad: the fuel, the machinery, the rice and the cars that cross the ocean to reach Lagos and Onne all travel under a marine policy.
In this lesson you will learn what marine insurance actually covers: the perils of the sea and the excepted perils it leaves out, the four interests it protects (hull, cargo, freight and liability), and the ways a policy can be timed by voyage or by period. You will settle a general average claim step by step, discover why a marine policyholder need own the goods only at the moment of loss, and see why no cargo leaves a port without this cover.
Objectives
- Identify the marine perils and distinguish them from excepted perils
- Describe hull, cargo and freight cover and state what each protects
- Explain the operation of a marine policy in relation to a voyage and to a period of time
- Explain the importance of marine insurance to international trade
Mind map
This topic is mapped out so you can see how the ideas connect.
Flashcards
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Marine Insurance. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which of the following is NOT one of the interests protected by marine insurance? A. Hull B. Cargo C. Freight D. Goodwill Answer: D
- A marine policy that covers a ship for a stated period, usually one year, wherever it sails, is called a: A. Voyage policy B. Time policy C. Floating policy D. Valued policy Answer: B
- The deliberate throwing of cargo overboard to save a ship in danger is known as: A. Barratry B. Jettison C. Salvage D. Abandonment Answer: B
- To save a sinking vessel, cargo worth 5,000,000 naira is jettisoned. The owner's interest is one-tenth of the total value in the venture. How much of the sacrifice does the owner ultimately bear? A. 5,000,000 naira B. 4,500,000 naira C. 500,000 naira D. Nothing Answer: C
- Which of the following is an excepted peril in marine insurance? A. Storm B. Collision C. Inherent vice D. Stranding Answer: C
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Revision Questions
Wondering what past questions for this topic looks like? Here are a number of questions about Marine Insurance from previous years
Question 1 Report
Explain the following terms under marine insurance:
(a) hull policy
(b) cargo policy
(c) freight policy
(d) marine perils
(e) average
Answer Details
Meaning of the terms under marine insurance:
- Hull policy: This is the marine policy that covers loss of or damage to the ship or vessel itself, together with its machinery, equipment and fittings, against marine perils such as sinking, collision, stranding and fire.
- Cargo policy: This is the policy that covers loss of or damage to the goods or merchandise carried on board the vessel during the voyage, protecting the cargo owner against perils such as water damage, jettison, theft and total loss.
- Freight policy: This is the policy that covers the shipowner against the loss of freight, that is the money payable to him for carrying the cargo, which he would forfeit if the cargo or ship were lost before the freight was earned.
- Marine perils: These are the dangers or fortuitous events peculiar to a sea voyage against which marine insurance provides cover, for example storms, collision, stranding, fire, jettison, piracy and barratry.
- Average: In marine insurance average means a partial loss. It is of two kinds: particular average, a partial loss falling on one interest alone, and general average, a loss deliberately and reasonably incurred for the common safety of the whole adventure, which is shared rateably by all the interests saved.
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