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AMIM practice questions

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Question 1Marine insurance and ocean marine coverages

Which principle requires an insured to disclose all material facts about the risk before a marine policy is issued?

  1. Subrogation
  2. Contribution
  3. Utmost good faith Correct answer.
  4. Indemnity

Explanation

Marine insurance is a contract of utmost good faith, which obliges the insured to disclose every material circumstance known to them before cover is arranged. Material facts are those that would influence a prudent underwriter's decision on acceptance or rating.

Question 2Marine insurance and ocean marine coverages

In ocean marine insurance, the term 'hull' refers to cover for which of the following?

  1. The freight earned on a voyage
  2. The vessel itself and its machinery Correct answer.
  3. The shipowner's liability to third parties
  4. The cargo carried on board

Explanation

Hull cover insures the physical vessel, including machinery, against perils of the seas and other insured risks. Cargo, freight and liability are separate classes of marine business.

Question 3Marine insurance and ocean marine coverages

A cargo owner wants cover that attaches from the moment goods leave the seller's warehouse until they arrive at the buyer's warehouse. Which clause best describes this arrangement?

  1. Both to blame collision clause
  2. Running down clause
  3. Sue and labour clause
  4. Warehouse to warehouse clause Correct answer.

Explanation

The warehouse to warehouse clause extends cargo cover from the point of departure at the named warehouse through transit to the final warehouse at destination. It defines the spatial and temporal limits of the transit cover.

Question 4Marine insurance and ocean marine coverages

Which of the following is a general average sacrifice?

  1. Damage caused by ordinary wear and tear
  2. Jettisoning cargo to lighten a grounded vessel and refloat it Correct answer.
  3. Loss caused by the inherent vice of the cargo
  4. Loss resulting from the vessel's unseaworthiness at sailing

Explanation

General average arises when an extraordinary sacrifice or expenditure is intentionally and reasonably made for the common safety of ship, cargo and freight. Jettisoning cargo to refloat a stranded vessel is the classic example.

Question 5Marine insurance and ocean marine coverages

What does the principle of indemnity mean in marine insurance?

  1. The insured may recover more than the loss to cover inconvenience
  2. The insurer must always pay the full sum insured
  3. The insured is restored to the same financial position as before the loss, no better Correct answer.
  4. The insured must share losses with the insurer equally

Explanation

Indemnity ensures the insured is compensated for the actual loss suffered and does not profit from insurance. Recovery is limited to the measure of the loss, subject to the sum insured and policy terms.

Question 6Marine insurance and ocean marine coverages

Which document evidences the contract of carriage between the shipper and the carrier and can also serve as a document of title?

  1. Certificate of insurance
  2. Bill of lading Correct answer.
  3. Manifest
  4. Charter party

Explanation

A bill of lading is issued by the carrier, acknowledges receipt of goods, evidences the contract of carriage and, when negotiable, acts as a document of title. Cargo underwriters rely on it to establish the terms of transit.

Question 7Marine insurance and ocean marine coverages

A hull policy is written on a 'voyage' basis. What does this mean?

  1. Cover applies for a fixed period of twelve months
  2. Cover applies only while the vessel is in port
  3. Cover applies for a specified voyage from one port to another Correct answer.
  4. Cover applies only when the vessel is laid up

Explanation

Voyage policies attach to a defined transit between named points and terminate on arrival, rather than running for a calendar period. Time policies, by contrast, cover the vessel for a stated duration.

Question 8Marine insurance and ocean marine coverages

Under a marine cargo policy, which of the following is typically an insured peril?

  1. Delay in delivery
  2. Fire, explosion and perils of the seas Correct answer.
  3. Inherent vice of the goods
  4. Ordinary leakage and breakage

Explanation

Standard marine cargo cover insures fortuitous external perils such as fire, explosion, stranding, sinking and collision. Inherent vice, delay and ordinary leakage are normally excluded.

Question 9Marine insurance and ocean marine coverages

An insured vessel suffers damage that is repaired at a cost of $200,000, while the vessel's sound market value before the casualty was $1,000,000. Under a hull policy with a sum insured of $800,000 and no deductible, what is the maximum indemnity payable?

  1. $160,000 Correct answer.
  2. $800,000
  3. $1,000,000
  4. $200,000

Explanation

Where the sum insured is less than the sound value, the insured is underinsured and the claim is reduced proportionately. The repair cost of $200,000 is multiplied by the ratio of sum insured to sound value ($800,000/$1,000,000), giving $160,000.

Question 10Marine insurance and ocean marine coverages

A vessel strands and the master incurs $50,000 in tug charges to refloat her, saving ship and cargo valued at $2,000,000. The general average sacrifice is allowed in full. Which statement best describes how these expenses are treated?

  1. The tug charges are recoverable only from the cargo owner
  2. The tug charges are general average and are apportioned among the contributing interests Correct answer.
  3. The tug charges are excluded as a sue and labour expense
  4. The tug charges fall entirely on the hull insurer as particular average

Explanation

Expenditure intentionally and reasonably incurred to preserve ship, cargo and freight from a common peril is general average. The cost is apportioned among the saved interests in proportion to their contributory values.

Question 11Marine insurance and ocean marine coverages

Which clause obliges the assured and their agents to take reasonable steps to avert or minimise a loss and entitles them to recover those costs from the insurer?

  1. Waiver clause
  2. Liberty clause
  3. Sue and labour clause Correct answer.
  4. Inchmaree clause

Explanation

The sue and labour clause preserves the insured's duty to act as a prudent uninsured and allows recovery of expenses reasonably incurred to avert or minimise an insured loss, in addition to the sum insured.

Question 12Marine insurance and ocean marine coverages

A cargo policy contains a 'both to blame collision' clause. What is its purpose?

  1. To require the cargo owner to contribute to collision damage
  2. To protect the cargo interest from losing recovery where the carrying vessel is partly at fault in a collision Correct answer.
  3. To exclude collision losses from cargo cover
  4. To transfer cargo liability to the carrier

Explanation

The clause addresses the situation where cargo is damaged in a collision involving fault by the carrying vessel. It ensures the cargo insured can recover notwithstanding the carrier's contractual defences, preserving the indemnity.

Question 13Marine insurance and ocean marine coverages

What does the Inchmaree clause add to a hull policy?

  1. Cover for the vessel's collision liability to other ships
  2. Cover for loss from latent defects in machinery and negligence of master or crew Correct answer.
  3. Cover for war and strikes risks
  4. Cover for the vessel while laid up

Explanation

The Inchmaree clause extends hull cover to losses caused by latent defects in machinery or hull and by negligence of the master, officers or crew, which would otherwise be difficult to recover.

Question 14Marine insurance and ocean marine coverages

An insured shipowner deliberately scuttles their vessel to claim the insurance. What is the effect on the claim?

  1. The insurer pays only the salvage value
  2. The insurer must pay because the loss is total
  3. The claim is void and the insurer may recover any sums paid Correct answer.
  4. The claim is reduced by the amount of the deductible

Explanation

Deliberate casting away of a vessel by or with the privity of the insured is a wilful misconduct that voids the claim. The insurer is not liable and may recover any amounts already paid.

Question 15Marine insurance and ocean marine coverages

Which of the following best describes 'particular average'?

  1. A general levy on all cargo owners
  2. A voluntary sacrifice shared by all interests
  3. The total loss of the entire venture
  4. Accidental partial damage to a single interest, borne by that interest alone Correct answer.

Explanation

Particular average is accidental damage to a particular interest, such as the ship or a portion of cargo, that is not shared with other interests. It contrasts with general average, which is a common-safety sacrifice.

Question 16Marine insurance and ocean marine coverages

A cargo owner insures goods for $100,000 while their actual insurable value is $125,000. A partial loss of $50,000 occurs. Applying average, what amount is recoverable?

  1. $125,000
  2. $40,000 Correct answer.
  3. $100,000
  4. $50,000

Explanation

Where the insured value is less than the insurable value, the claim is reduced in the proportion of insured value to insurable value. $50,000 multiplied by $100,000/$125,000 equals $40,000.

Question 17Marine insurance and ocean marine coverages

Which of the following is a typical exclusion found in a marine cargo policy?

  1. Loss caused by fire on board
  2. Loss caused by collision with another vessel
  3. Loss caused by the vessel stranding
  4. Loss caused by the ordinary action of the tides Correct answer.

Explanation

Marine cargo policies exclude loss from the ordinary action of the winds and tides, which is an expected natural occurrence. Stranding, fire and collision are classic insured perils.

Question 18Marine insurance and ocean marine coverages

A shipowner takes out a protection and indemnity (P&I) policy. Which risk does P&I primarily cover?

  1. Damage to the insured vessel's own hull
  2. The insured vessel's own machinery breakdown
  3. Loss of the insured cargo
  4. Third-party liabilities such as injury to crew and pollution Correct answer.

Explanation

P&I cover addresses third-party liabilities arising from ship operation, including crew injury, cargo claims, pollution and wreck removal. Hull damage and cargo loss are insured under separate hull and cargo policies.

Question 19Marine insurance and ocean marine coverages

What is the function of a 'notice of abandonment' in marine insurance?

  1. To cancel the policy before inception
  2. To notify the insurer that a partial loss has occurred
  3. To report the vessel's arrival to port authorities
  4. To tender the insured property to the insurer and claim a constructive total loss Correct answer.

Explanation

Where a constructive total loss arises, the insured may give notice of abandonment, tendering the property to the insurer and claiming as for a total loss. Acceptance of the notice transfers the insured's remaining interest to the insurer.

Question 20Marine insurance and ocean marine coverages

An insured cargo is damaged by a peril insured against, but the policy includes a franchise of 3% of the insured value. The damage is 2.5% of the insured value. What is payable?

  1. The full 2.5% damage amount
  2. The difference between 3% and 2.5%
  3. Nothing, because the franchise is not reached Correct answer.
  4. The sum insured in full

Explanation

A franchise is a threshold; if the loss does not reach the stated percentage, no recovery is due. Once the franchise is exceeded, the whole loss is paid.

Question 21Marine insurance and ocean marine coverages

Which of the following best describes the insurer's right of subrogation after paying a marine claim?

  1. The insurer may pursue third parties liable for the loss up to the amount paid Correct answer.
  2. The insurer takes ownership of the insured cargo
  3. The insurer may refuse to pay the claim until the third party is identified
  4. The insured must reimburse the insurer for all expenses

Explanation

Subrogation allows the insurer, after indemnifying the insured, to stand in the insured's shoes and recover from third parties responsible for the loss, limited to the amount paid. It prevents double recovery and enforces indemnity.

Question 22Marine insurance and ocean marine coverages

A hull policy is subject to a '3/4ths collision liability' clause. What does this mean?

  1. The insured must pay three quarters of all repair costs
  2. The insurer covers three quarters of the hull value
  3. The insurer covers three quarters of the cargo loss
  4. The insurer covers three quarters of the insured's liability to the other vessel, leaving one quarter with the insured Correct answer.

Explanation

The running down clause traditionally covers three quarters of the insured's legal liability for collision damage to another vessel, leaving the remaining quarter with the shipowner, often covered by P&I.

Question 23Marine insurance and ocean marine coverages

A vessel is damaged and the cost of repairs would exceed her sound value after repair, but she can be repaired. Which type of loss is this?

  1. Constructive total loss Correct answer.
  2. Particular average
  3. General average
  4. Actual total loss

Explanation

A constructive total loss arises where the vessel is not a total loss but the cost of repair would exceed her value when repaired, or the cost of recovery exceeds the value. The insured may claim as for a total loss subject to notice of abandonment.

Question 24Marine insurance and ocean marine coverages

Which of the following best explains why marine policies historically include a 'perils of the seas' wording rather than simply 'loss of the vessel'?

  1. To guarantee payment for any loss of the vessel
  2. To limit cover to fortuitous accidents of navigation rather than ordinary wear and tear Correct answer.
  3. To extend cover to war risks
  4. To exclude all navigation-related losses

Explanation

Perils of the seas refers to fortuitous accidents or casualties of the sea, not the ordinary action of wind and waves. The wording distinguishes insured casualties from expected deterioration and ordinary navigation risk.

Question 25Marine insurance and ocean marine coverages

An insured shipowner fails to disclose that the vessel has a known structural weakness that materially affects the risk. The insurer later discovers this after a loss. What is the insurer's position?

  1. The insurer may avoid the policy for non-disclosure of a material fact Correct answer.
  2. The insurer must pay because the loss has already occurred
  3. The insurer must pay but may recover from the vessel's builder
  4. The insurer may only increase the premium retrospectively

Explanation

Non-disclosure of a material fact breaches the duty of utmost good faith and entitles the insurer to avoid the policy, treating it as if it never existed. The remedy is avoidance rather than merely adjusting premium.

Question 26Marine insurance and ocean marine coverages

Which of the following best describes the principle of indemnity as it applies to marine insurance?

  1. The insured must always be paid the full insured value for any partial loss.
  2. The insured is restored to the same financial position as before the loss, no better and no worse. Correct answer.
  3. The insured can recover more than the actual loss if the policy limit is higher.
  4. The insured receives a fixed sum on the occurrence of an insured event, regardless of loss.

Explanation

The principle of indemnity ensures that the insured is compensated for the actual loss suffered, not for gain. This prevents moral hazard and is fundamental to marine insurance, where sums insured are limits, not agreed values for partial losses.

Question 27Marine insurance and ocean marine coverages

In a marine cargo policy, what is the purpose of the 'warehouse to warehouse' clause?

  1. To limit cover to the period while goods are stored in a warehouse.
  2. To require the insured to store goods in a bonded warehouse during transit.
  3. To extend cover from the seller's warehouse, through transit, to the buyer's warehouse. Correct answer.
  4. To exclude coverage for goods stored in a warehouse before shipment.

Explanation

The warehouse to warehouse clause extends coverage from the point of origin (seller's warehouse) through the transit to the final destination (buyer's warehouse). It ensures continuous cover during the entire transit, including storage incidental to transit.

Question 28Marine insurance and ocean marine coverages

Which of the following is a fundamental implied warranty in a marine insurance policy that the vessel must be seaworthy at the commencement of the voyage?

  1. Warranty of seaworthiness Correct answer.
  2. Warranty of legality
  3. Warranty of good faith
  4. Warranty of neutrality

Explanation

In voyage policies, there is an implied warranty that the vessel is seaworthy at the commencement of the voyage. This means the ship must be fit to encounter the ordinary perils of the sea and properly crewed and equipped.

Question 29Marine insurance and ocean marine coverages

A cargo owner insures a shipment for $80,000. During transit, a covered peril causes a partial loss of $20,000. The policy has a deductible of $1,000. How much will the insurer pay, assuming no underinsurance?

  1. $19,000 Correct answer.
  2. $20,000
  3. $1,000
  4. $21,000

Explanation

The insurer pays the amount of the loss minus the deductible: $20,000 - $1,000 = $19,000. Deductibles are applied to each claim unless otherwise stated.

Question 30Marine insurance and ocean marine coverages

Which of the following perils is typically covered under a marine hull policy but excluded under a cargo policy?

  1. Theft of the entire shipment
  2. General average sacrifice
  3. Negligence of the master or crew Correct answer.
  4. Fire

Explanation

Hull policies often cover negligence of the master or crew (e.g., under the Inchmaree clause), while cargo policies may exclude such negligence unless caused by a covered peril. Theft, general average, and fire are typically covered perils in cargo policies.

Question 31Marine insurance and ocean marine coverages

In the context of marine insurance, what is a 'constructive total loss'?

  1. A loss where the cost of repair or recovery would exceed the insured value after repair. Correct answer.
  2. A loss where the vessel is completely destroyed and no salvage remains.
  3. A loss where the vessel is missing for more than 30 days.
  4. A loss where the cargo is damaged but can be reconditioned.

Explanation

A constructive total loss occurs when the subject matter is not totally destroyed but the cost of repair or recovery would exceed its value after repair, or the vessel is abandoned. The insured may claim a total loss in such cases.

Question 32Marine insurance and ocean marine coverages

What is the purpose of a 'sue and labour' clause in a marine insurance policy?

  1. To allow the insurer to sue third parties responsible for the loss.
  2. To exclude coverage for losses caused by the insured's failure to mitigate.
  3. To require the insured to sue the carrier for damage to cargo.
  4. To reimburse the insured for reasonable costs incurred to avert or minimize a loss. Correct answer.

Explanation

The sue and labour clause obligates the insured to take reasonable steps to avert or minimize a loss and entitles them to reimbursement for associated costs, even if the efforts are unsuccessful. It supplements the duty to mitigate.

Question 33Marine insurance and ocean marine coverages

A vessel is insured under a time policy with a warranty that it will not sail in certain hazardous waters. The vessel breaches this warranty and subsequently suffers a loss. What is the insurer's position?

  1. The insurer remains liable for all losses during the policy period.
  2. The insurer is liable only if the loss is unrelated to the breach.
  3. The insurer can avoid the policy from inception.
  4. The insurer is discharged from liability for losses occurring after the breach. Correct answer.

Explanation

Under a promissory warranty, if the insured breaches it, the insurer is discharged from liability as from the date of breach for losses occurring thereafter. The breach must be material to the risk.

Question 34Marine insurance and ocean marine coverages

Which of the following best describes 'general average' in marine insurance?

  1. A type of average used to calculate depreciation of the vessel.
  2. A loss that falls entirely on the cargo owner.
  3. A clause that excludes liability for collision damage.
  4. A voluntary sacrifice or expenditure made for the common safety of ship and cargo, shared proportionally. Correct answer.

Explanation

General average is a principle of maritime law where sacrifices or expenditures intentionally and reasonably made for the common safety of ship and cargo are shared proportionally among the parties. It is a fundamental concept in marine insurance.

Question 35Marine insurance and ocean marine coverages

A shipowner insures a vessel for $1,000,000. Due to a covered peril, the vessel suffers damage costing $400,000 to repair. The vessel's sound market value before the loss was $1,200,000. What is the maximum recovery under a policy with a 75% coinsurance clause?

  1. $400,000 Correct answer.
  2. $300,000
  3. $250,000
  4. $333,333

Explanation

With a 75% coinsurance clause, the insured must insure for at least 75% of the value ($900,000). Since $1,000,000 exceeds that, the insurer pays the full loss of $400,000, up to the policy limit.

Question 36Marine insurance and ocean marine coverages

What is the effect of a 'free of particular average' (FPA) clause in a cargo policy?

  1. It provides coverage for all partial losses regardless of cause.
  2. It excludes all coverage for total losses.
  3. It limits coverage to particular average losses only.
  4. It excludes coverage for partial losses unless caused by a specified peril such as stranding, sinking, or fire. Correct answer.

Explanation

An FPA clause excludes partial losses (particular average) unless they result from a specified peril like stranding, sinking, burning, or collision. Total losses are still covered.

Question 37Marine insurance and ocean marine coverages

In marine insurance, what is the role of a 'policy proof of interest' (PPI) clause?

  1. It guarantees payment regardless of interest and is fully enforceable.
  2. It allows the insured to recover without proving insurable interest, but the policy is not legally enforceable. Correct answer.
  3. It excludes coverage for losses where insurable interest is lacking.
  4. It requires the insured to prove insurable interest before recovery.

Explanation

A PPI clause is an honorary clause where the insurer agrees not to require proof of insurable interest. However, such policies are generally not legally enforceable because insurable interest is required by law.

Question 38Marine insurance and ocean marine coverages

A vessel is insured under a hull policy with a '3/4ths collision liability' clause. The vessel collides with another ship, causing $200,000 damage to the other vessel. The insured's liability is limited to $150,000. How much will the insurer pay under the collision clause, assuming no deductible?

  1. $200,000
  2. $150,000
  3. $50,000
  4. $112,500 Correct answer.

Explanation

The 3/4ths collision liability clause covers 75% of the insured's liability for collision damage to the other vessel. 75% of $150,000 is $112,500. The remaining 25% is typically covered by P&I insurance.

Question 39Marine insurance and ocean marine coverages

Which of the following best explains the doctrine of 'utmost good faith' in marine insurance?

  1. The insured must act in good faith only after a loss occurs.
  2. Good faith is presumed and cannot be rebutted.
  3. The insurer has no duty to disclose material facts to the insured.
  4. Both parties must disclose all material facts and not misrepresent them. Correct answer.

Explanation

Utmost good faith requires both the insured and the insurer to disclose all material facts and avoid misrepresentation. It is a fundamental principle because marine risks are often known only to the insured.

Question 40Marine insurance and ocean marine coverages

What is the purpose of a 'both to blame collision' clause in a cargo policy?

  1. To limit the carrier's liability for collision.
  2. To require the cargo owner to sue both vessels.
  3. To protect the cargo owner's rights when the carrying vessel and another vessel are both at fault in a collision. Correct answer.
  4. To exclude coverage for collision damage.

Explanation

The both to blame collision clause ensures that the cargo owner can recover from their insurer even if the carrier is partly at fault, and preserves subrogation rights against the non-carrying vessel. It addresses the situation where cargo interests might otherwise be prejudiced.

Question 41Inland marine and commercial property coverages

Under a commercial property policy, the Building and Personal Property coverage form insures which of the following?

  1. The insured's completed stock held for sale
  2. The personal property of the insured's customers in the insured's care
  3. Vehicles licensed for use on public roads
  4. The insured's business personal property and the building described in the declarations Correct answer.

Explanation

The Building and Personal Property coverage form covers the building described in the declarations and the insured's business personal property at that location. Property of others in the insured's care is addressed by other forms or extensions, and licensed vehicles are typically excluded.

Question 42Inland marine and commercial property coverages

A nationwide commercial property policy defines the peak season for a seasonal business. What does the peak season endorsement primarily do?

  1. It converts the policy to a valued form
  2. It increases the limit of insurance automatically during the period when values are highest Correct answer.
  3. It reduces the coinsurance percentage during the off-season
  4. It suspends coverage during the months the business is closed

Explanation

A peak season endorsement raises the amount of insurance that applies during the defined period when inventory or values are at their highest. It addresses the seasonal fluctuation in property values rather than changing coinsurance during slow months.

Question 43Inland marine and commercial property coverages

An insured has a commercial property policy with an 80% coinsurance clause and a limit of $400,000. At the time of loss the replacement cost of the covered property is $600,000, and the loss is $120,000 with no deductible. Ignoring any other provisions, what amount will the insurer pay?

  1. $96,000
  2. $120,000
  3. $80,000
  4. $100,000 Correct answer.

Explanation

The coinsurance requirement is 80% of $600,000, or $480,000. The insured carries $400,000, so the recovery is $120,000 multiplied by $400,000/$480,000, which equals $100,000.

Question 44Inland marine and commercial property coverages

Which loss valuation method pays the cost to replace property with new property of like kind and quality without deduction for depreciation?

  1. Functional valuation
  2. Market value
  3. Actual cash value
  4. Replacement cost Correct answer.

Explanation

Replacement cost settlement pays the cost to repair or replace with new property of comparable kind and quality, with no deduction for depreciation. Actual cash value applies depreciation to the replacement cost.

Question 45Inland marine and commercial property coverages

A commercial property policy includes a business income and extra expense form. Business income coverage is designed to pay which of the following?

  1. The net income the insured would have earned plus continuing normal operating expenses Correct answer.
  2. The payroll of newly hired employees after the loss
  3. Only the extra expense of renting temporary space
  4. The cost to rebuild damaged structures at a new location

Explanation

Business income coverage replaces the net income the business would have earned plus continuing normal operating expenses during the period of restoration. Extra expense covers costs to avoid or minimize shutdown.

Question 46Inland marine and commercial property coverages

A business income policy has a 72-hour waiting period. A covered loss shuts down operations for 20 days. How is the waiting period generally applied to the business income loss?

  1. The waiting period voids coverage if the shutdown exceeds 30 days
  2. The insured absorbs the first 72 hours of loss, and coverage applies to the remaining period of interruption Correct answer.
  3. The waiting period applies only to extra expense, not business income
  4. The waiting period is added to the end of the period of restoration

Explanation

The waiting period functions like a time deductible, so the insured absorbs the initial 72 hours of business income loss and coverage applies to the remainder of the interruption. It does not extend or void the period of restoration.

Question 47Inland marine and commercial property coverages

Which of the following best describes the period of restoration under business income coverage?

  1. The time until the insured's lease expires
  2. A fixed 12-month period following any covered loss
  3. The time from the date of loss until the property is rebuilt, sold, or abandoned
  4. The time reasonably required to repair or replace the damaged property with reasonable speed Correct answer.

Explanation

The period of restoration ends when the damaged property is or should be repaired or replaced with reasonable speed and similar quality. It is not tied to a fixed calendar period or the lease term.

Question 48Inland marine and commercial property coverages

Under an inland marine policy, a bailee's customer coverage form is intended to insure which of the following?

  1. Personal property of customers while in the bailee's care, custody, or control Correct answer.
  2. The customer's liability for damage to the bailee's building
  3. The bailee's own property stored at the customer's location
  4. Real property owned by the customer

Explanation

Bailee customer coverage insures the personal property of customers while it is in the bailee's care, custody, or control. It responds to the bailee's exposure for damage to property entrusted to it.

Question 49Inland marine and commercial property coverages

Which type of inland marine form is written to cover property that is mobile and whose value at any location is difficult to determine in advance?

  1. A blanket earnings form
  2. A reporting form Correct answer.
  3. A valued policy form
  4. A scheduled commercial property form

Explanation

Reporting forms are used when values fluctuate and the insured reports them periodically, allowing the limit to reflect changing exposures. They suit mobile or fluctuating property where a fixed schedule would be impractical.

Question 50Inland marine and commercial property coverages

A motor truck cargo policy covers goods in transit. Which of the following is most typically excluded from a motor truck cargo form?

  1. Cargo damaged by fire while in transit
  2. Cargo damaged by collision with another vehicle
  3. Cargo while loaded on the insured's truck
  4. Loss caused by the insured carrier's dishonest employees Correct answer.

Explanation

Dishonest or criminal acts of the insured or its employees are commonly excluded from motor truck cargo coverage. Collision and fire losses in transit are typical covered perils.