III IC-67 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Utmost good faith

A mutual duty of full and frank disclosure in marine insurance. The assured must reveal all material circumstances before cover attaches, and the insurer must deal fairly. Breach can allow avoidance of the contract.

Insurable interest

A financial relationship with the insured property such that the assured benefits from its safety or suffers from its loss. In marine insurance it must exist at the time of loss.

Principle of indemnity

The assured is restored to the pre-loss financial position, no better and no worse. Wear, tear and depreciation are deducted from partial loss settlements; new-for-old is not given.

Proximate cause

The dominant and efficient cause of a loss, as opposed to the last or most remote event. Recovery depends on whether the proximate cause is an insured peril.

Actual total loss

Occurs when the subject-matter is destroyed, so damaged it ceases to be the insured thing, or irretrievably lost, such as a vessel missing for a reasonable period.

Constructive total loss

Occurs when the subject-matter is reasonably abandoned because total loss appears unavoidable, or repair and recovery costs would exceed the insured value. Notice of abandonment is required.

Notice of abandonment

A formal notice from the assured to insurers declaring abandonment of the subject-matter and claiming a constructive total loss. Failure to give it limits recovery to a partial loss.

Particular average

An accidental partial loss or damage to the insured subject-matter borne solely by its owner, distinct from general average contributions shared by all interests in the adventure.

General average

An extraordinary sacrifice or expenditure intentionally and reasonably incurred for the common safety of ship, cargo and freight, shared proportionately by all interests saved under the York-Antwerp Rules.

Sue and labour clause

Obliges and entitles the assured to take reasonable steps to avert or minimise a covered loss, with those expenses recoverable from insurers in addition to the sum insured.

Institute Cargo Clauses (A)

All-risks cargo cover subject only to stated exclusions, including inherent vice, delay, insolvency, ordinary leakage and wilful misconduct. Burden rests on insurers to prove an exclusion applies.

Institute Cargo Clauses (B)

Named-perils cargo cover broader than (C) but narrower than (A). Covers earthquake, volcanic eruption, lightning, water damage and washing overboard, but not theft or non-delivery.

Institute Cargo Clauses (C)

The narrowest standard cargo cover. Covers major casualties such as stranding, sinking, burning, collision and general average sacrifice, but excludes earthquake, water damage and theft.

Cargo transit clause duration

Cargo cover runs from leaving the named warehouse until delivery to the consignee's warehouse, ending at 60 days after final discharge if delivery has not occurred.

Valued policy

A marine policy stating an agreed value for the subject-matter, which is conclusive between the parties absent fraud. Total loss settlements pay the insured value, not market value.

Unvalued policy

A marine policy without an agreed value. The measure of indemnity is the insurable value of the subject-matter at the commencement of the risk, proved by the assured.

3/4 collision liability clause

A hull clause under which insurers pay three-quarters of the assured's liability to another vessel, leaving the remaining quarter with the assured or covered elsewhere.

Sistership clause

Where one insured vessel collides with a sister ship, liability is treated as third-party liability, but recovery from insurers is limited by the insured value to market value ratio.

Perils of the sea

Fortuitous accidents or casualties of the sea, such as heavy weather damage or sinking. Ordinary action of wind and waves, wear and tear are not perils of the sea.

Inchmaree clause

Extends hull cover to accidents in loading, discharge or navigation and to latent defects in machinery or hull, provided due diligence was exercised by the assured and management.

Both-to-blame collision clause

A clause allowing the carrying vessel to recover from cargo the amount cargo owners pay the non-carrying vessel under a both-to-blame collision, preserving the contractual exemption.

Subrogation

On paying a claim, insurers acquire the assured's rights of recovery against third parties responsible for the loss, limited to the amount paid and never prejudicing the assured.

Inherent vice

A characteristic of the goods themselves that causes deterioration without external accident, such as spontaneous combustion or natural shrinkage. Excluded from cargo cover under all Institute Cargo Clauses.

Salvage charges

Reward payable to salvors for saving maritime property at sea, recoverable under the policy independently of the sum insured, distinct from sue and labour expenses.

Abandonment of cargo

Where cargo is abandoned due to a peril, the assured may claim a constructive total loss if recovery costs exceed value; notice must be given to insurers.

Constructive total loss freight

Freight is a constructive total loss when the voyage is frustrated and the freight cannot be earned, with the assured entitled to claim as if a total loss occurred.

Warranty in marine insurance

A condition that must be exactly complied with, whether or not material to the risk. Breach discharges insurers from liability from the date of breach, unless waived.

Implied warranty of seaworthiness

In voyage policies, the vessel must be seaworthy at the commencement of the risk. Breach allows insurers to avoid liability for losses attributable to the unseaworthiness.

Implied warranty of legality

The adventure insured must be lawful and carried out lawfully. A voyage in breach of trade sanctions or customs law may render the policy unenforceable from the outset.

Deviation and change of voyage

An unjustified departure from the insured route discharges insurers from liability for losses occurring after deviation, unless the deviation is excused by necessity or waived.

Double insurance

Where the same interest is insured with more than one insurer for a total exceeding the insurable value, the assured may recover only the indemnity, with contribution between insurers.

Reinsurance in marine

Insurers transfer part of their risk to reinsurers. The original assured has no direct claim against reinsurers; recovery flows through the ceding insurer under the reinsurance contract.