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Ocean Marine

Practice questions on ocean marine for the property exam, each with an answer and explanation.

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Study questions and answers

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1. Ocean marine coverage on the ship itself is called:

  1. Cargo insurance
  2. Freight insurance
  3. Protection and indemnity
  4. Hull insurance
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D. Hull insurance
Hull insurance covers physical damage to the vessel, its machinery and equipment. Cargo insurance covers the goods being carried.

2. Which ocean marine coverage protects a shipowner against liability for injury to crew members and damage to piers or other property?

  1. Protection and indemnity
  2. Hull
  3. Freight
  4. General average
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A. Protection and indemnity
Protection and indemnity (P&I) is the shipowner's broad liability coverage, including injury to crew and passengers and damage to fixed objects.

3. During a storm the captain throws some cargo overboard to save the ship. All parties with an interest in the voyage share the cost. This is called:

  1. Particular average
  2. Sue and labor
  3. General average
  4. Free of particular average
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C. General average
General average is a loss voluntarily made to save the voyage, shared proportionally by the ship and all cargo owners.

4. A partial loss that falls only on the owner of the damaged property, rather than being shared, is known as:

  1. General average loss
  2. Particular average
  3. Jettison
  4. Barratry
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B. Particular average
Particular average is a partial loss borne by the owner of the damaged property alone. It is not shared with other interests in the voyage.

5. Which of the following is an implied warranty in ocean marine insurance?

  1. The ship will carry passengers
  2. The cargo will be insured for its full value
  3. The voyage will be completed within 30 days
  4. The ship is seaworthy
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D. The ship is seaworthy
Ocean marine policies carry implied warranties that the vessel is seaworthy, that it will not deviate from its course, and that the voyage is legal.

6. Ocean marine coverage that protects the shipowner against loss of the shipping charges it would have earned is called:

  1. Freight insurance
  2. Hull insurance
  3. Cargo insurance
  4. Builders risk insurance
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A. Freight insurance
Freight insurance covers the income the carrier earns for transporting cargo, which can be lost if the voyage is not completed.

7. The Inchmaree clause in a marine hull policy extends coverage to loss caused by:

  1. War and other political risks that affect the ship
  2. Hidden machinery defects or crew negligence
  3. Normal wear and tear on the hull and machinery
  4. The owner's failure to maintain the vessel properly
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B. Hidden machinery defects or crew negligence
The Inchmaree clause broadens hull coverage beyond the named perils to hidden machinery defects, boiler bursts and crew negligence. It does not pick up wear and tear or war risks.

8. A cargo policy is written free of particular average (FPA). A partial loss is generally covered only if:

  1. The cargo was damaged by ordinary handling
  2. The vessel stranded, sank, burned or collided
  3. The shipper declared the goods at full value
  4. The voyage was completed on schedule
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B. The vessel stranded, sank, burned or collided
FPA keeps smaller partial losses off the insurer; it pays total losses and partial losses only when a major casualty such as stranding, sinking, fire or collision occurs. General average is still shared.

9. After a covered ship accident, the owner spends money on reasonable steps to save the cargo from further loss. Which marine clause requires this effort and reimburses the cost?

  1. Warranty of legality
  2. Jettison clause
  3. Sue and labor clause
  4. Warranty of seaworthiness
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C. Sue and labor clause
The sue and labor clause obliges the insured to take reasonable steps to protect or recover the property, and the insurer contributes to the expense. It parallels the duty to protect property after a loss in other forms.

10. In ocean marine insurance, the term perils of the sea refers to:

  1. Fortuitous accidents of the sea, such as stranding or collision
  2. The ordinary action of wind and waves on the vessel
  3. Any loss that happens while the cargo is at sea
  4. Damage caused by willful misconduct of the crew
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A. Fortuitous accidents of the sea, such as stranding or collision
Perils of the sea are fortuitous accidents or casualties of the sea, and the term does not include the ordinary action of winds and waves. Fortuitous is the key word.

11. A captain willfully scuttles the ship to harm the owner. This kind of wrongful act by the master or crew against the owner is called:

  1. General average
  2. Barratry
  3. Jettison
  4. Particular average
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B. Barratry
Barratry is any wrongful act willfully committed by the master or crew to the prejudice of the owner, and hull policies commonly cover it. Jettison and general average involve sacrifice to save the voyage, not to harm the owner.
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