CIIG Advanced Diploma common mistakes
CIIG Advanced Diploma · Understand the traps and how to avoid them.
Treating the Incoterms rule as the sole determinant of who bears cargo risk, and concluding that because a sale is CIF the seller must insure for the buyer's benefit in every respect, or that under FOB the buyer automatically has cover from the moment goods leave the factory.
Candidates memorise the Incoterms delivery points but not the interaction between risk transfer, insurable interest, and the obligation to insure. They conflate the point of delivery with the point at which insurable interest attaches, and forget that CIF/ CIP impose a minimum cover obligation (Institute Cargo Clauses (C)) while other terms impose none.
What to do instead
For each transaction, draw a three-column timeline: physical custody, risk transfer, and insurable interest. Map the named Incoterms rule onto each column, then state separately whether an insurance obligation exists and at what minimum level. Practise with CIF, CIP, FOB, and DAP side by side until the distinctions are automatic.
Describing the Institute Cargo Clauses as a single cover and answering questions about exclusions by listing the (A) exclusions when the scenario is written on (C) terms, or vice versa, and asserting that (A) is 'all risks' with no exclusions.
The three clause sets share numbering and structure, so candidates recall the shape of the clauses but not which risks sit in which set. The 'all risks' label for (A) encourages the false belief that nothing is excluded.
What to do instead
Build a comparison grid with the three sets as columns and the perils (stranding, sinking, collision, discharge at port of distress, fire, earthquake, volcanic eruption, lightning, washing overboard, jettison, piracy) as rows, marking which set covers each. Then list the exclusions common to all three sets separately from those that differ. Test yourself by naming the set from a claim description rather than the reverse.
Applying the principle of indemnity as if it always means new-for-old replacement, or ignoring the interplay of insurable value, sum insured, and the measure of indemnity when the policy is valued versus unvalued.
Candidates learn 'indemnity equals making good the loss' as a slogan and then fail to apply the policy's own valuation machinery. They also miss that a valued policy displaces the market-value calculation, and that underinsurance triggers the average or sum-insured limitation rather than a simple proportional reduction by intuition.
What to do instead
Work numerical claims end to end: state whether the policy is valued or unvalued, identify the basis of valuation in the policy, calculate the measure of indemnity, then apply any average or limit. Do at least ten such calculations covering partial loss, total loss, salvage, and underinsurance before the exam.
Confusing general average with particular average, and failing to identify which sacrifices and expenditures qualify for contribution and how the contributory values are apportioned.
Both terms contain 'average', and candidates remember the labels without the underlying logic that general average requires an intentional and extraordinary sacrifice for the common safety. They then misclassify jettison or salvage remuneration as particular average, or omit the ship's and freight's contributions.
What to do instead
Learn the York-Antwerp Rules test as a checklist: intentional act, reasonable, extraordinary, for the common safety, in a moment of peril. Then practise apportioning a general average over contributory values of ship, cargo, and freight, remembering that sacrificed cargo contributes on its arrived value and that the party whose goods were sacrificed recovers its contribution.
Answering subrogation questions by saying the insurer 'takes over the claim' without distinguishing subrogation from assignment, and without addressing the requirement that the insured be indemnified first and that the insurer can recover only up to the amount paid.
Subrogation is taught as a one-line principle. Candidates miss the procedural conditions, the effect of a waiver of subrogation clause, the position where the insured has already been paid in full, and the rule that the insurer cannot profit from recovery.
What to do instead
Write out the subrogation mechanics as a sequence: indemnity paid, rights transferred by operation of law, insurer steps into the insured's shoes, recovery capped at the amount paid, any surplus returned to the insured. Then examine how a waiver of subrogation clause, a co-insurance clause, or an uninsured loss changes each step.
Underwriting a cargo risk by quoting a rate from a comparable account without articulating the rating factors, and failing to explain how packing, stowage, route, transit mode, carrying vessel age, and claims history feed into the terms, deductible, and rate.
Candidates default to pattern-matching against remembered examples because they have not internalised a structured risk-assessment framework. They also overlook that cargo underwriting is about the voyage and the packing as much as the commodity.
What to do instead
Adopt a fixed underwriting checklist: commodity and its susceptibility, packing and marking, mode and route including transhipment, carrier quality and vessel age, duration and storage, previous loss record, and any special perils. For each practice scenario, produce a short underwriting note that names the factors, states their effect on terms and rate, and justifies any exclusion or deductible.
Treating the proximate cause as the last event in the chain, so that a loss following a chain of events is attributed to the final incident rather than to the dominant efficient cause, and then misapplying exclusions.
The phrase 'proximate cause' invites a temporal reading. Candidates do not practise separating a remote initiating cause (for example, defective packing) from a later physical event (for example, water damage after a fall), and so reach the wrong conclusion on whether an exclusion bites.
What to do instead
For each causation question, write the event chain in order, then ask which cause is dominant and efficient in bringing about the loss, and whether any intervening act breaks the chain. Test the answer by asking whether the loss would have occurred without that cause. Practise with chains that mix an excluded cause and a covered peril in both orders.
Answering reinsurance questions by describing reinsurance as simply 'insurance for insurers' and failing to distinguish facultative from treaty, proportional from non-proportional, and quota share from surplus, or to explain how a cargo reinsurance programme responds to a large single loss.
Reinsurance is often studied last and at a high level. Candidates learn the vocabulary without the mechanics of cession, retention, and recovery, and cannot trace a claim through a layered programme.
What to do instead
Draw a simple programme: retention, quota share, surplus, then excess of loss layers with attachment points. Take one large cargo loss and trace the amount borne by the cedant and each reinsurer, showing how the layers interact. Learn the distinguishing features of facultative and treaty in a short table and use that table to answer definitional questions.
Ignoring the regulatory and ethical dimension by treating compliance as a matter of good intentions, and failing to identify specific obligations such as fair presentation of the risk, sanctions screening of voyages and parties, anti-money-laundering checks, and the duty of utmost good faith.
Candidates see regulation and ethics as soft content and skip detailed revision. They then cannot name the concrete duties, or they assume the broker's disclosure duty removes the insured's own obligation.
What to do instead
Build a one-page obligations map: who owes what to whom (insured to insurer, broker to insurer and client, insurer to regulator), and the consequence of breach for each. Add a sanctions and AML checklist covering parties, vessel, route, and cargo. Revise by applying the map to short scenarios rather than reciting principles.
Handling a claim by jumping to the settlement figure without first establishing policy response, and skipping the documentary and procedural steps such as notice, survey, preservation of rights against carriers, and time limits.
Candidates are drawn to the arithmetic and neglect the sequence that must be satisfied before any payment. They also forget that recovery rights against third parties can be lost if notice and reservation are not given promptly.
What to do instead
Use a fixed claims workflow: notify, check policy and cover, appoint surveyor, gather documents, establish cause and quantum, consider salvage and general average, preserve subrogation rights, then settle. For every practice claim, write the workflow steps before doing any calculation, and note the relevant time limits and carrier liability regimes.