I85PREP
⌘ K
IRDAI Surveyor Marine Cargo (S-03) study materials
IRDAI Surveyor Marine Cargo (S-03) study resources

IRDAI Surveyor Marine Cargo (S-03) practice questions

One question at a time. Build your IRDAI Surveyor Marine Cargo (S-03) understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Marine Insurance Fundamentals and Legal Framework

Under the Marine Insurance Act framework adopted in India, which document is the formal evidence of the contract of marine insurance and must be issued when the assured pays the premium?

  1. The certificate of insurance
  2. The slip
  3. The policy Correct answer.
  4. The cover note

Explanation

The marine policy is the formal instrument that documents the contract of marine insurance and it becomes admissible in evidence once the premium is paid, as required by the stamping and policy provisions. The slip is only the preliminary record of the risk placed with underwriters, while a cover note and a certificate are interim or ancillary documents that do not substitute for the policy itself.

Question 2Marine Insurance Fundamentals and Legal Framework

A cargo owner insures a consignment of steel coils. Which principle requires the assured to disclose every material circumstance within his knowledge before the contract is concluded, even if no question is asked?

  1. Principle of utmost good faith Correct answer.
  2. Principle of subrogation
  3. Principle of indemnity
  4. Principle of contribution

Explanation

Marine insurance is a contract of utmost good faith, which imposes on the assured a positive duty to volunteer all material circumstances known to him before the contract is concluded. Indemnity, subrogation and contribution are separate principles governing recovery, not the pre-contract duty of disclosure.

Question 3Marine Insurance Fundamentals and Legal Framework

In a marine cargo policy, the term 'insurable interest' is best described as which of the following?

  1. A legal or equitable interest in the subject matter of insurance that is exposed to maritime peril Correct answer.
  2. The insurer's right to recover from a carrier after paying a claim
  3. The interest payable on premium financed by the broker
  4. Any financial interest a person may choose to create in a shipment

Explanation

Insurable interest means a legal or equitable relationship to the insured subject matter such that the assured benefits from its safe arrival and is prejudiced by its loss or damage. It must exist at the time of loss for cargo, and a mere expectation or voluntarily manufactured interest is insufficient.

Question 4Marine Insurance Fundamentals and Legal Framework

Which of the following losses is a 'particular average' loss in marine cargo insurance?

  1. A partial loss accidentally caused to the insured cargo by a peril insured against Correct answer.
  2. Expenses incurred at a port of refuge to preserve the adventure
  3. A voluntary sacrifice of cargo to save the adventure from a common peril
  4. The total destruction of the entire consignment

Explanation

Particular average denotes an accidental partial loss suffered by the insured property alone, borne by the owner or the insurer of that property. General average, by contrast, involves a voluntary sacrifice or expenditure for the common safety of the adventure.

Question 5Marine Insurance Fundamentals and Legal Framework

A general average act is recognised in marine insurance because it involves which characteristic?

  1. Damage caused solely by the negligence of the master to the ship only
  2. An intentional and reasonable sacrifice or expenditure made for the common safety of ship, cargo and freight in a peril Correct answer.
  3. Loss suffered by one cargo owner with no benefit to any other party
  4. Wear and tear arising from ordinary handling of the cargo

Explanation

General average requires an extraordinary, intentional and reasonable sacrifice or expenditure incurred for the common safety of the maritime adventure, with the resulting loss shared by all parties saved. Ordinary wear and tear or isolated negligence losses do not qualify.

Question 6Marine Insurance Fundamentals and Legal Framework

Which of the following is a 'constructive total loss' of cargo?

  1. The cargo is physically destroyed in a fire on board
  2. The cargo is jettisoned during a storm
  3. The cargo is sold at a loss at the destination market
  4. The cargo is abandoned because the cost of recovering and repairing it would exceed its insured value Correct answer.

Explanation

A constructive total loss arises where the subject matter is not totally destroyed but is reasonably abandoned because actual total loss appears unavoidable or because recovery and repair costs would exceed its value. Physical destruction is an actual total loss, and jettison in a general average act is treated separately.

Question 7Marine Insurance Fundamentals and Legal Framework

A cargo policy contains a 'warehouse to warehouse' clause. What does this clause extend cover to?

  1. The period after delivery, until the goods are sold by the consignee
  2. The transit from the consignor's warehouse to the consignee's warehouse, subject to the stated duration limits Correct answer.
  3. Only the period while the goods are stored in a port warehouse awaiting shipment
  4. Only the period while the goods are on board the vessel

Explanation

The warehouse to warehouse clause extends cover from the moment goods leave the consignor's premises until they are delivered to the consignee's premises, subject to the termination provisions of the clause. It does not extend indefinitely after delivery or apply only to storage.

Question 8Marine Insurance Fundamentals and Legal Framework

An assured fails to disclose that the cargo consists of hides with a strong odour, a fact material to the risk. The insurer seeks to avoid the policy. Which ground best supports the insurer's position?

  1. Failure to pay the premium within the grace period
  2. Non-disclosure of a material circumstance affecting the risk Correct answer.
  3. Absence of a certificate of insurance
  4. Breach of the principle of contribution

Explanation

The duty of utmost good faith requires disclosure of every material circumstance known to the assured, and a circumstance is material if it would influence a prudent insurer's decision on the risk or premium. Non-disclosure of such a fact entitles the insurer to avoid the contract.

Question 9Marine Insurance Fundamentals and Legal Framework

Under the principle of indemnity, how is a partial loss of damaged cargo typically measured where the goods arrive damaged and are sold?

  1. The freight paid to the carrier
  2. The difference between the sound value and the damaged value of the goods at destination Correct answer.
  3. The original invoice value of the goods without any deduction
  4. The full insured value is paid regardless of the extent of damage

Explanation

Indemnity for damaged cargo is generally measured by the difference between the sound market value and the damaged market value at destination, subject to the sum insured. This restores the assured to the financial position he would have enjoyed had the loss not occurred, without profit.

Question 10Marine Insurance Fundamentals and Legal Framework

A cargo interest pays its share of general average contribution. How is this treated under a standard marine cargo policy?

  1. It is recoverable only if the shipowner waives his lien
  2. It is recoverable only as a total loss
  3. It is never recoverable because general average is a separate legal regime
  4. It is recoverable as a general average contribution where the peril insured against caused the sacrifice Correct answer.

Explanation

Where a general average sacrifice or expenditure has been incurred to avoid a peril insured against, the cargo interest's contribution is recoverable under the policy as a general average loss. The insurer effectively stands in the position of the contributing cargo owner.

Question 11Marine Insurance Fundamentals and Legal Framework

An assured assigns his marine cargo policy to a buyer of the goods. Under the Marine Insurance Act provisions on assignment, what is the effect?

  1. The assignment is void unless registered with the port authority
  2. The assignee obtains the right to sue on the policy without any need for the insurer's consent Correct answer.
  3. The policy lapses automatically on assignment
  4. The assignee must obtain a fresh policy before any claim can be made

Explanation

A marine policy may be assigned, and upon assignment the assignee is entitled to sue on the policy in his own name, without the insurer's consent, provided the assignment is made bona fide and the assignee has an insurable interest. The policy does not lapse merely because it is assigned.

Question 12Marine Insurance Fundamentals and Legal Framework

Which of the following perils is typically covered under an Institute Cargo Clauses (C) policy?

  1. Theft and non-delivery of the entire consignment
  2. General average sacrifice and jettison Correct answer.
  3. Breakage of fragile goods caused by rough handling
  4. Inherent vice of the cargo

Explanation

Institute Cargo Clauses (C) provide a restricted cover that includes major casualties such as stranding, sinking, burning and collision, together with general average sacrifice and jettison. Theft, non-delivery, breakage from rough handling and inherent vice are not covered under clause (C).

Question 13Marine Insurance Fundamentals and Legal Framework

A surveyor is asked to advise on the effect of a 'both to blame collision' clause in a cargo policy. What does this clause address?

  1. The apportionment of general average between ship and cargo
  2. The insurer's liability where the carrying vessel collides with another vessel and both are at fault Correct answer.
  3. The assured's liability to the carrier for collision damage
  4. The premium adjustment following a collision

Explanation

The both to blame collision clause addresses the situation where the carrying vessel collides with another vessel and both are at fault, allowing the insurer to bear the assured's share of the other ship's claim. It protects the assured from bearing the portion of loss attributable to the other vessel's fault.

Question 14Marine Insurance Fundamentals and Legal Framework

Under the principle of subrogation, once an insurer has indemnified the assured for a cargo loss, what right does the insurer acquire?

  1. The right to recover the amount paid from third parties legally liable for the loss Correct answer.
  2. The right to cancel the policy and retain the premium
  3. The right to claim the assured's future profits on the cargo
  4. The right to demand a fresh survey of the cargo

Explanation

Subrogation transfers to the insurer, upon payment of the indemnity, the assured's rights of recovery against third parties responsible for the loss, so that the assured cannot recover twice. The insurer steps into the assured's shoes but cannot recover more than the indemnity paid.

Question 15Marine Insurance Fundamentals and Legal Framework

An assured insures the same cargo with two insurers for the same interest and the same risk. What principle governs the apportionment of the loss between the insurers?

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

Explanation

Contribution is the principle by which insurers covering the same interest against the same risk share the loss rateably, so that the assured does not recover more than an indemnity. Each insurer contributes its proportion of the loss.

Question 16Marine Insurance Fundamentals and Legal Framework

A cargo policy is described as a 'valued policy'. What is the legal significance of this?

  1. The value of the subject matter is conclusively fixed by the policy for the purpose of measuring indemnity Correct answer.
  2. The insurer may reduce the value after a survey
  3. The policy value is open and determined only at the time of loss
  4. The premium is valued at the time of claim

Explanation

In a valued policy the agreed value of the subject matter is fixed in the policy and, in the absence of fraud, is conclusive for measuring the indemnity. This is distinct from an unvalued policy, where the value is determined at the time of loss.

Question 17Marine Insurance Fundamentals and Legal Framework

A cargo surveyor is asked whether a loss caused by the assured's wilful misconduct is recoverable. What is the correct position under marine insurance law?

  1. It is not recoverable because wilful misconduct of the assured is an excluded cause of loss Correct answer.
  2. It is recoverable if the carrier also contributed to the loss
  3. It is recoverable because the assured paid the premium
  4. It is recoverable only as a general average sacrifice

Explanation

Loss caused by the wilful misconduct of the assured is excluded from cover, since the assured cannot recover for a loss he intentionally brought about. This is a fundamental limitation on the scope of marine cover.

Question 18Marine Insurance Fundamentals and Legal Framework

A consignment of perishable fruit is damaged because it was loaded in a damaged refrigerated container, a condition known to the shipper before shipment. Which exclusion most directly applies?

  1. General average
  2. Insufficient packing or preparation of the subject matter by the assured Correct answer.
  3. Constructive total loss
  4. Both to blame collision

Explanation

Insufficient or unsuitable packing or preparation of the subject matter by the assured is an excluded loss under standard cargo clauses, because the defect arises from the assured's own side rather than an insured peril. The damaged container rendered the packing or preparation inadequate for the transit.

Question 19Marine Insurance Fundamentals and Legal Framework

An assured claims for a loss caused by delay, where the cargo deteriorated because the voyage was prolonged by a covered peril. How is the claim treated under standard Institute Cargo Clauses?

  1. The loss is excluded because loss caused by delay is expressly excluded, even where the delay results from an insured peril Correct answer.
  2. The loss is covered only if the carrier admits liability
  3. The loss is covered because the underlying peril was insured
  4. The loss is covered as a general average sacrifice

Explanation

The Institute Cargo Clauses expressly exclude loss, damage or expense caused by delay, and the exclusion applies even if the delay results from a peril that is otherwise insured. Proximate cause analysis does not override this express exclusion.

Question 20Marine Insurance Fundamentals and Legal Framework

A cargo owner signs a contract of carriage containing a clause excluding the carrier's liability for negligence. How does this affect the assured's rights against the cargo insurer?

  1. The insurer remains liable for insured perils, but subrogation rights against the carrier may be compromised by the clause Correct answer.
  2. The insurer may refuse the claim because the assured waived rights against the carrier
  3. The policy is automatically void
  4. The insurer becomes liable for the carrier's negligence as a matter of law

Explanation

The cargo insurer's liability depends on the insured perils, not on the carrier's contractual immunities, so cover is not automatically lost. However, a clause excluding the carrier's negligence can prejudice the insurer's subrogation rights, which is why such terms are scrutinised at placement and claims stage.

Question 21Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Under the Institute Cargo Clauses (A), which statement best describes the scope of cover provided to the assured?

  1. Specified perils only, comprising fire, explosion, collision and discharge of cargo at a port of distress
  2. Total loss of the subject-matter insured arising from perils of the seas and fortuitous accidents
  3. All risks of loss of or damage to the subject-matter insured, subject to the exclusions and conditions of the clause set Correct answer.
  4. Loss or damage reasonably attributable to any external cause, excluding theft and non-delivery

Explanation

Clause 1 of the ICC (A) is an all risks cover: it indemnifies loss of or damage to the subject-matter insured unless the loss is excluded by the exclusions and conditions of the clauses. The assured bears the burden of proving that the loss was caused by a fortuity, but need not prove which particular peril operated.

Question 22Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which of the following perils is expressly covered under Institute Cargo Clauses (C) but not under Institute Cargo Clauses (B)?

  1. Total loss of a package by washing overboard
  2. Earthquake, volcanic eruption or lightning Correct answer.
  3. Entry of sea, lake or river water into the vessel, craft, hold or container
  4. General average sacrifice

Explanation

ICC (C) covers a short list of catastrophes, including earthquake, volcanic eruption and lightning, in addition to stranding, sinking, capsizing, collision, discharge at a port of distress, general average sacrifice and jettison. ICC (B) is broader and adds perils such as water entry and washing overboard.

Question 23Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Under the Institute Cargo Clauses, what is the effect of the seaworthiness and fitness exclusion in respect of loss arising from the vessel being unseaworthy?

  1. Loss is excluded in every case, irrespective of the assured's knowledge
  2. Loss is excluded only where the cargo is carried on deck
  3. Loss is covered because unseaworthiness is a peril of the seas
  4. Loss is excluded where the assured or their servants are privy to the unseaworthiness at the time of loading Correct answer.

Explanation

The exclusion applies where the loss is attributable to unseaworthiness or unfitness of the vessel, craft, container or vehicle, and the assured or their servants are privy to it at the time of loading. Without such privity the exclusion does not bite, and an innocent assured may recover.

Question 24Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

A consignment insured under ICC (A) is delivered to the consignee's warehouse and unpacked. When does cover normally terminate under the transit clause?

  1. On arrival of the vessel at the port of discharge
  2. On completion of unloading from the carrying vehicle or container at the final warehouse or place of storage Correct answer.
  3. On expiry of thirty days after discharge from the oversea vessel
  4. On issue of the delivery order by the carrier

Explanation

The transit clause attaches cover during the ordinary course of transit and terminates it on delivery to the consignee's or other final warehouse or place of storage, or on completion of unloading, whichever occurs first. The thirty-day period is a fallback limit where delivery has not yet occurred.

Question 25Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Cargo insured under ICC (B) is damaged when the vessel strands and the master jettisons part of the deck cargo to refloat. Which cover responds to the jettison?

  1. Both ICC (B) and ICC (C) cover jettison, so the loss is payable Correct answer.
  2. Jettison is excluded as a deliberate act of the assured's servant
  3. Only ICC (A) covers jettison, so the ICC (B) claim fails
  4. Jettison is covered only where it amounts to general average

Explanation

Jettison is a named peril in both ICC (B) and ICC (C), so a loss by jettison is recoverable under either clause. The deliberate nature of the act does not defeat cover because jettison is expressly insured.

Question 26Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which loss is excluded under the Institute Cargo Clauses by the insufficient or unsuitable packing exclusion?

  1. Loss caused by the carrier stowing the container badly on board
  2. Loss caused by the vessel encountering heavy weather
  3. Loss caused by packing that is inadequate for the ordinary risks of the insured transit Correct answer.
  4. Loss caused by theft of the cargo from a warehouse

Explanation

The clauses exclude loss, damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured to withstand the ordinary incidents of the insured transit. The exclusion addresses the assured's own packing obligation, not the carrier's stowage.

Question 27Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Under the Institute Cargo Clauses, what is the position where a claim is paid for a total loss of part of the insured cargo and the assured later recovers that part?

  1. The assured must abandon the recovered cargo to the insurer before any adjustment is made
  2. The assured may retain both the indemnity and the recovered cargo without adjustment
  3. The insurer must pay a further total loss on the whole consignment
  4. The assured must refund the loss paid on that part and the insurer succeeds to the assured's rights of recovery Correct answer.

Explanation

Where a total loss of part is paid and the subject-matter is later recovered, the assured must refund the amount paid on that part and the insurer is subrogated to the assured's rights. This prevents the assured from recovering twice for the same loss.

Question 28Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which statement correctly describes the duration of cover for cargo insured under ICC (A) when the transit is delayed beyond the assured's control?

  1. Cover ceases immediately on the first day of any delay
  2. Cover continues during delay, provided the delay is not caused by the assured and the transit is not otherwise terminated Correct answer.
  3. Cover continues indefinitely until the cargo reaches the final warehouse
  4. Cover ceases unless the insurer issues a fresh policy for the delay period

Explanation

The transit clause expressly holds the insured covered during delay, deviation, forced discharge, transhipment or any other variation of the adventure, provided these arise from circumstances beyond the control of the assured. Cover still ends on the events that terminate the transit.

Question 29Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Cargo is insured under ICC (C). The carrying vessel sinks in mid-ocean and the cargo is totally lost. Which statement is correct?

  1. The loss is recoverable only if the assured proves the vessel was seaworthy
  2. The loss is recoverable because sinking is a named peril under ICC (C) Correct answer.
  3. The loss is not recoverable because total loss requires a constructive total loss notice
  4. The loss is not recoverable because ICC (C) covers only partial loss

Explanation

Sinking is one of the named perils in ICC (C), so a total loss caused by sinking is recoverable under that clause. The clause does not limit recovery to partial losses, and seaworthiness matters only through the privity exclusion.

Question 30Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

What does the 'both to blame' collision clause in a cargo policy typically address?

  1. The assured's liability to the carrying vessel under a collision liability clause, where the carrier is partly to blame Correct answer.
  2. The apportionment of salvage remuneration between cargo and hull interests
  3. The payment of general average contributions by cargo owners
  4. The insurer's right to recover from a negligent third party

Explanation

The both to blame collision clause responds to the assured's legal liability to the carrying vessel under a bill of lading collision clause, typically where both vessels are at fault and the carrier is entitled to limit or exclude liability. It protects the cargo interest against that liability.

Question 31Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which of the following is a requirement for a valid notice of abandonment in a marine cargo claim?

  1. It must be given before the vessel sails from the port of loading
  2. It must be given in writing only and never verbally
  3. It must be given with reasonable diligence after the assured receives reliable information of the constructive total loss Correct answer.
  4. It must be accepted by the insurer for the abandonment to be effective

Explanation

A notice of abandonment must be given with reasonable diligence after the assured receives reliable information of the loss, and it may be written or oral. The insurer's acceptance is not required; an unaccepted notice leaves the assured's rights unaffected.

Question 32Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Cargo insured under ICC (A) is stolen from a container yard during the ordinary course of transit. Which statement best describes the insurer's position?

  1. The insurer must indemnify the loss because theft is covered unless an exclusion applies Correct answer.
  2. The insurer may decline because the loss occurred on land rather than at sea
  3. The insurer may decline unless the assured proves the identity of the thief
  4. The insurer may decline because theft is not a peril insured under ICC (A)

Explanation

ICC (A) is an all risks cover, so theft during the ordinary course of transit is covered unless a specific exclusion, such as the exclusion for loss while the cargo is outside the insured transit or for insolvency, applies. The assured does not need to identify the thief.

Question 33Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Under the Institute Cargo Clauses, how is general average treated when the assured has not insured the cargo for its full contributory value?

  1. The insurer pays the contribution only after the assured pays the full value into court
  2. The insurer pays only that proportion of the general average contribution which the insured value bears to the contributory value
  3. The insurer pays nothing because under-insurance voids the policy
  4. The insurer pays the general average contribution in full, and the assured is not required to bring the under-insurance into account for that contribution Correct answer.

Explanation

The general average clause provides that the insurer pays the general average contribution in full, and where the contributory value exceeds the insured value, the assured is not required to bring the under-insurance into account for that contribution. Under-insurance is dealt with separately for partial losses.

Question 34Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which peril is covered under ICC (B) but is outside the scope of ICC (C)?

  1. General average sacrifice
  2. Jettison
  3. Earthquake, volcanic eruption or lightning Correct answer.
  4. Washing overboard of the entire package

Explanation

Earthquake, volcanic eruption and lightning are named perils in both ICC (B) and ICC (C), so they do not distinguish the two clauses. The distinguishing extensions of ICC (B) include entry of sea, lake or river water and washing overboard.

Question 35Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

A cargo policy incorporates the Institute Cargo Clauses (A) and the insured value is stated as the CIF value plus ten per cent. What is the effect of this valuation?

  1. It is void because marine policies must be valued at market value
  2. It applies only to general average contributions
  3. It limits the insurer's liability to the invoice cost only
  4. It fixes the measure of indemnity for a total loss and is conclusive between the parties in the absence of fraud Correct answer.

Explanation

A valued policy fixes the agreed value of the subject-matter, and that value is conclusive between the parties in the absence of fraud for the purpose of measuring a total loss. The CIF plus ten per cent basis is a common commercial convention reflecting expected profit.

Question 36Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which exclusion in the Institute Cargo Clauses addresses loss caused by the insolvency or financial default of the owners, managers, charterers or operators of the vessel?

  1. The inherent vice exclusion
  2. The insufficiency of packing exclusion
  3. The insolvency and financial default exclusion Correct answer.
  4. The delay exclusion

Explanation

The clauses exclude loss, damage or expense arising from insolvency or financial default of the owners, managers, charterers or operators of the vessel, where the assured is aware of the default at the time of loading. This is a distinct exclusion from packing, inherent vice and delay.

Question 37Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Cargo is insured under ICC (A) and is damaged by a latent defect in the carrying container supplied by the assured. Which statement is correct?

  1. The loss is covered because ICC (A) is an all risks cover and no exclusion applies
  2. The loss is covered because latent defects are a named peril under ICC (A)
  3. The loss is excluded because it is attributable to the insufficiency or unsuitability of the container prepared by the assured Correct answer.
  4. The loss is excluded because containers are never part of the insured transit

Explanation

The clauses exclude loss arising from insufficiency or unsuitability of packing or preparation, and containers or lifts supplied by the assured are treated as part of that preparation. Although ICC (A) is an all risks cover, the exclusions operate to remove this loss.

Question 38Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

What is the effect of the 'change of voyage' provision in a marine cargo policy?

  1. Cover is displaced only if the change is made after the cargo is loaded
  2. Cover is displaced where the destination is changed before the risk has attached, unless the insurer is promptly notified and agrees to hold covered Correct answer.
  3. Cover continues automatically for any new destination without notification
  4. Cover is unaffected because the transit clause covers all deviations

Explanation

Where the destination is changed before the risk has attached, the insurance does not attach to the altered voyage unless the insurer is promptly notified and agrees to hold covered, with any additional premium and terms. Once the risk has attached, the transit clause may still protect the assured during variations beyond their control.

Question 39Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which of the following losses is excluded under the Institute Cargo Clauses as being caused by delay?

  1. Loss caused by the vessel deviating to save life at sea
  2. Loss caused by transhipment necessitated by a casualty
  3. Loss caused by forced discharge at a port of distress
  4. Loss caused by delay, even where the delay is caused by an insured peril Correct answer.

Explanation

The clauses expressly exclude loss, damage or expense caused by delay, even where the delay is caused by a peril insured against. Market loss from late arrival is therefore not recoverable, although physical loss from a listed peril may still be.

Question 40Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

A shipment insured under ICC (B) is lost when the vessel is stranded and the cargo is subsequently destroyed by fire. Which statement best describes the insurer's liability?

  1. The loss is not recoverable because fire is excluded under ICC (B)
  2. The loss is recoverable because fire is not a peril insured under ICC (B), but stranding is, so the causal sequence matters
  3. The loss is recoverable only if the assured proves the fire was accidental
  4. The loss is recoverable because fire is a named peril under ICC (B) and the loss was proximately caused by it Correct answer.

Explanation

Fire and explosion are named perils in ICC (B), so a loss proximately caused by fire is recoverable even where the fire followed a stranding. The assured does not need to prove the fire was accidental, since fire is an insured peril.

Question 41Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

What does the 'termination of adventure' clause in a marine cargo policy provide?

  1. Cover continues automatically for thirty days after the adventure ends at no extra premium
  2. Cover terminates when the adventure ends, and the assured may elect to continue cover on the cargo at an additional premium Correct answer.
  3. Cover terminates only when the assured gives written notice to the insurer
  4. Cover is extended to any subsequent storage without notification

Explanation

The termination of adventure clause allows the assured, in the event of termination of the adventure at a port other than the destination, to continue cover on the cargo at an additional premium, subject to prompt notification. Without such election, cover ends when the adventure terminates.

Question 42Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Cargo insured under ICC (A) is found to be damaged by inherent vice after arrival. Which statement is correct?

  1. The loss is excluded, and the insurer bears no liability for deterioration attributable to the nature of the goods Correct answer.
  2. The loss is covered if the assured did not know of the inherent vice
  3. The loss is covered because ICC (A) covers all risks without exception
  4. The loss is excluded only if the cargo was carried on deck

Explanation

The inherent vice exclusion removes loss, damage or expense caused by the nature of the subject-matter insured, such as ordinary deterioration or susceptibility to heat. All risks cover does not extend to losses that are not fortuitous.

Question 43Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which statement correctly describes the effect of the Institute Cargo Clauses' craft, lighter and transhipment provision?

  1. Cover excludes all transhipment unless the insurer agrees in writing beforehand
  2. Cover applies only to the oversea vessel and not to feeder craft
  3. Cover requires the assured to pay an additional premium for every transhipment
  4. Cover includes transit by craft or lighter and transhipment incidental to the ordinary course of transit Correct answer.

Explanation

The transit clause includes transit by craft or lighter and transhipment incidental to the ordinary course of transit, so feeder and lighter movements within the adventure are covered without separate agreement. This reflects the practical reality of multimodal carriage.

Question 44Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Under the Institute Cargo Clauses, what is the position where the assured fails to take reasonable measures to avert or minimise a loss after a casualty?

  1. The assured forfeits the entire insured value even if the loss was unaffected
  2. The insurer may reduce or refuse the claim to the extent the loss was increased by the assured's failure Correct answer.
  3. The policy is automatically void from inception
  4. The insurer must pay the claim in full regardless of the assured's conduct

Explanation

The duties of the assured clause requires the assured to take reasonable measures to avert or minimise loss, and the insurer may reduce or refuse the claim to the extent the loss was increased by the assured's failure. The remedy is proportionate to the increase in loss.

Question 45Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

A cargo policy covers a shipment under ICC (C). The cargo is damaged by entry of sea water when the vessel's hatch cover fails in heavy weather. Which statement is correct?

  1. The loss is not recoverable because the assured failed to prove the vessel was seaworthy
  2. The loss is not recoverable under ICC (C) because entry of sea water is not a named peril in that clause Correct answer.
  3. The loss is recoverable because heavy weather is a named peril under ICC (C)
  4. The loss is recoverable because sea water damage is covered under all marine policies

Explanation

ICC (C) does not list entry of sea, lake or river water as a named peril; that extension appears in ICC (B). The assured under ICC (C) must therefore bring the loss within one of the narrower listed perils, such as stranding or sinking, to recover.

Question 46Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Under the Institute Cargo Clauses (A), which statement correctly describes the scope of cover provided?

  1. Cover extends only to total loss and does not respond to partial damage.
  2. Cover is on an all risks basis subject only to the exclusions set out in the clauses. Correct answer.
  3. Cover applies solely to losses occurring while cargo is on board the ocean vessel.
  4. Cover is limited to the named perils listed in the schedule of the clauses.

Explanation

ICC (A) is an all risks cover: it indemnifies every fortuitous loss or damage unless the loss falls within one of the express exclusions. The assured bears the burden of proving the loss occurred during the transit insured, but need not prove which peril caused it. Clauses (B) and (C) are the named perils wordings, not (A).

Question 47Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Cargo insured under ICC (B) is damaged when sea water enters through a hatch cover that had been left unsecured by the crew before sailing. Which statement best describes the insurer's position?

  1. The claim fails because the loss arose from unseaworthiness of the vessel.
  2. The claim is payable because entry of sea water into the vessel, craft or container is a peril insured against under ICC (B). Correct answer.
  3. The claim fails because ICC (B) covers sea water damage only following stranding or sinking.
  4. The claim is payable only if the assured proves the crew acted with intent to cause the loss.

Explanation

ICC (B) expressly covers loss caused by entry of sea water into the vessel, craft, hold, conveyance, container, liftvan or place of storage. The exclusion for unseaworthiness applies only where the assured had knowledge or privity of it, so a crew omission unknown to the assured does not defeat the claim. Negligence of the crew is not an excluded cause under these clauses.

Question 48Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which statement correctly describes the effect of the 'insolvency or financial default' exclusion in the Institute Cargo Clauses?

  1. It applies only to ICC (C) and does not appear in ICC (A) or ICC (B).
  2. It does not affect the assured's right to recover where the loss is caused by a peril insured against, independent of the insolvency. Correct answer.
  3. It excludes loss arising from insolvency of the carrier, provided the assured was aware of the financial difficulties at the time of loading.
  4. It excludes any loss occurring after the carrier becomes insolvent, regardless of the assured's knowledge.

Explanation

The insolvency exclusion bars recovery where the loss is attributable to the financial failure of the carrier or operator, but it does not remove cover for a loss caused by an insured peril that happens independently. If cargo is damaged by an insured peril, the subsequent insolvency of the carrier does not convert that loss into an excluded one. The exclusion is common to all three Institute Cargo Clauses.

Question 49Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

Which loss is covered under ICC (C) but falls outside the scope of ICC (B)?

  1. Loss caused by general average sacrifice. Correct answer.
  2. Loss caused by washing overboard.
  3. Loss caused by entry of sea water into the vessel.
  4. Loss caused by earthquake, volcanic eruption or lightning.

Explanation

General average sacrifice is covered under all three Institute Cargo Clauses, including ICC (C), which is the narrowest of the three. Perils such as earthquake, volcanic eruption, lightning and washing overboard appear in ICC (B) but not in ICC (C). The question therefore tests a loss that ICC (C) covers while ICC (B) covers more, so the sacrifice item is the one that sits within (C) yet is not a (B)-only peril.

Question 50Marine Cargo Insurance Clauses and Institute Cargo Clauses (A), (B), (C)

What does the 'Duration of cover' clause in the Institute Cargo Clauses provide regarding when cover attaches?

  1. Cover attaches when the policy is issued by the insurer, irrespective of the movement of the goods.
  2. Cover attaches when the goods are loaded on board the overseas vessel at the port of shipment.
  3. Cover attaches when the goods first move in the ordinary course of transit for the purpose of immediate loading. Correct answer.
  4. Cover attaches only when the assured gives written notice of the commencement of the transit.

Explanation

The transit clause provides that cover attaches from the time the goods first move in the ordinary course of transit for the purpose of immediate loading, and continues during the ordinary course of transit. It is not tied to the date of issue of the policy or to loading on the ocean vessel alone. No separate notice of commencement is required to attach cover.