Lesson 1

MARINE INSURANCE
Marine insurance is a contract “whereby the insurer undertakes to indermnify the
assured, in manner and to the extent thereby agreed against marine losses that is to say
the losses incident to marine adventure.
Marine insurance is the insurance of ships, freight, goods and insurable interests in the
adventure of a carriage of goods by sea.
According to the subject matter insured the types of insurance are broadly divided into
five different classes:
1. Hull and Machinery
2. Protection and Indemnity (P and I)
3. Freight
4. Disbursements
5. Insurance premiums

The risks usually insured under 1 (Hull and Machinery):

a. Particular average losses by heavy weather and negligence of crew, collisions,
stranding, fire, pirates, jettison, barratry, ect.
b. General average
c. Running down (collision) clause
d. Total or constructive total loss

The risks usually insured under 2 (Protection and Indemnity):

- Compensation for third parties and the crew
- Loss of life and personal injury (seamen and persons other than seamen)
- Loss or damage to: harbours, wharves, piers, docks, buoys, beacons, ect.
- Collision (1/4), life salvage, ship’s proportion of General Average.
- Marine pollution, liability under contracts
- Cargo claim, property on board the insured vessel
- Removing shipwreck, salvors’s expenses
- Substituting crew and seamen’s lost effects
- Fine, Sue and Labour and Legal Costs
- Liability under towage Contracts
- The excess collision liability not recoverable under Standard Hull and
Machinery and Freight policies
- Cargo’s proportion of General Average and Salvage charges not recoverable
solely by reason of a breach of the contract of carriage
 - Ship’s proportions of General Average and Salvage charges not recoverable
under the Hull Policies by reason of excessive valuations.

Features of P and I Associations :

P and I associations insure members on a mutual basis and therefore are non-profit-
making. Mutual insurance is a system by which everyone becomes in effect both
Assurer and Assured, although mutual Associations are now usually incorporated so
that it is on the corporate body and not on the individual members that liability
primarily falls. Calls are levied from time to time to meet the liabilities undertaken by
the Association. Apart from the fact that these Associations are non profit-making a
unique feature is that they afford their members unlimited cover. The most important
feature is that these Associations not only insure members but protect, serve and help
them as well.
Freight insurance :
1. Warranted free from particular average under 3 per cent unless the vessel be
stranded, sunk, or on fire underwriters not withstanding this warranty to pay for
any loss caused by fire or collision with another vessel.
2. In the event of the total loss (actual or constructive) of the vessel the amount
insured shall be paid in full, whether the vessel be fully or partly loaded or in
ballast, chartered or unchartered.
3. This insurance also specially to cover loss of the subject matter insured directly
caused by :
- Accidents in loading, discharging and shifting cargo or fuel.
- Explosion on the shipboard or elsewhere.
- Bursting of boilers, breakage of shafts or any latent defect in the machinery
or hull.
- Negligence of Master, officer, crew provided such loss or damage has not
resulted from want of due diligence by the Assured, owners or Managers.
NOTE: Marine losses may be classified as follows:
1. Total loss (Actual, constructive, Presumed)
2. Partial loss (Particular Average, General Average)

LESSON 2
GENERAL AVERAGE
General average act: A general average act may be either a sacrifice or an expenditure,
extraordinary in nature, voluntarily and reasonably made or incurred, in time of
general peril, for the common safety, for the purpose of preserving from peril the
property involved in a common maritime adventure.
When all these essentials are presents, there is said to be a general average act, and the
loss is to be made good by the contribution of all concerned, when the adventure is
saved. General Average Loss: A general average loss is one caused by or directly
consequential on a general average act, which may be either a sacrifice or an
expenditure.
Examples of sacrifices:
1. Ship:
- A vessel strands and the engines are worked an anchors and or cables lost in
refloating.
- Fire lower hold, so that a bulkhead is broken down to reach the fire.
2. Cargo:
- Jettison of cargo in time of peril is the earliest from of general average.
- Cargo on fire may be further damaged by water or chemicals used to extinguish
fire and cargo not on fire can be damaged by water, the latter only is a general
average sacrifice (Fire is fortuitous, water damaged is voluntary).
- Inhereat vice causing fire, water damaged to other cargo is general average.
- Cargo burnt as fuel, general average if sufficient fuel was provided
commencement of the voyage.
3. Freight: If cargo is sacrificed and therefore not delivered, the shipowner cannot
collect his freight, which is thus sacrificed equally with the cargo.
Examples of expenditure:
- The expense of hiring craft to lighten a vessel when ashore and the cost of
restowing shifted cargo caused by heavy weather are general average
expenditure.
- If a vessel is stowed to a port of refuge by hired, the cost is treated as general
average expenditure, it is an expense incurred for the safety of the whole
adventure.

Lesson 3
Implied obligations and Immunities in affreightment

The carrier accepts the responsibilities and liabilities of a bailee. However, the carrier
is impliedly exonerated for loss or damage to the cargo arising from acts of God,
perils of the sea queen’s enemies, inherent vice, fire
The carrier undertakes to provide a seaworthy ship. The implication is that the ship
shall be seaworthy when the voyage begins for that particular voyage and for the
cargo carried.
3. The vessel must proceed on the agreed voyage with reasonable despatch.
4. No deviation
Deviation is justified in the following cases:
a. For purposes necessary for the prosecution of the voyage or the safety of the
adventure
b. To save human life
c. Where there is any express clause permitting deviation
5. The shipper undertakes not to ship dangerous goods without notice
6. The carrier’s right to freight is impliedly secured by a lien on the goods.
7. if subsequent to the formation of a contract of affreightment, its performance
becomes impossible (for example, by the outbreak of hostilities), the parties are
released from its performance

LESSON 4
BILLS OF LADING
B/L is a contract between a shipper and carrier for the carriage of goods by sea.
Three functions of B/L:
1. Receipt for goods shipped.
2. Evidence (statement) of the terms of the contract of affreightment.
3. Document of title to the goods specified in the B/L.
It is a receipt given by a shipowner in acknowledgment of the shipment of the goods
specified in the bill, it may also contain or evidence the terms of the contract of
affreightment under which the goods are to be carried and delivered by the shipowner,
it is a document of title to those goods by means of which the property may be
transferred and upon which money may be advanced.
Classification of Bills of Landing:

Bs/L

Shipped B/L
Received for shipment B/L (Custody B/L)

1. According to the way of carriage:

- Direct B/L
- Transhipment B/L
 - Liner B/L
- Through B/L
- Local B/L
- B/L issued pursuant to a voyage C/P
2. According to the receiver of the goods:
- Blank (bearer) B/L
- Order B/L
- Open B/L
- Straight B/L
- Collective (groupage, omnibus) B/L
3. According to the value:
- Clean B/L
- Unclean (clause, foul, dirty) B/L
NOTE: The following clauses do not convert a clean in to an unclean B/L:
a. Clause which do not expressly state that the goods or packaging are
unsatisfactory, e.g, “second-hand cases”, “used drums”, etc.
b. Clauses which emphasize the carrier’s non-liability for risks arising through the
nature of the goods or the packaging.
c. Clauses which disclaim on the part of the carrier knowledge of contents,
weight, measurement, quality, or technical specification of the goods
Some forms of B/L (code names):
- CONGENBILL (uniform Bill of Lading)
- CONBILL (uniform Bill of Lading)
- CONLINEBIL (Liner Bill of Lading)
- CONLINETHROUGHBILL (Liner through Bill of Landing)
Some “DO’S” and “DON’TS” in regard to B/L:
1. Do see that the B/L is properly dated. This is the date on which the vessel
completes the loading of the cargo described in the bill.
2. Do see that cargo is actually shipped before sighting.
3. Do see that the amount of demurrage incurred at port of loading is endorsed on
the face of the bill.
4. Do see especially when laydays are reversible, that time taken to load is
endorsed on the face of the bill.
5. Don’t part with cargo before the sighting the B/L.
6. Don’t sign a B/L known to contain a false description of the goods.
7. Don’t omit to insert the amount of any dead-freight which may be due under
the terms of the C/P.
8. Don’t accept any verbal or written assurances of the shippers at variance with
the actual conditions of the goods.
 9. Don’t fail to include relevant entry regarding advance of freight.
MULTIPLE CHOICE
Choose the best answer (A, B, C or D) that best fits the blank space:
1. Marine insurance is a contract between the insurer and ________.
A. the assured B. the buyer C. the seller D. the insure
2. Marine insurance is the insurance of ships, freight, goods and ______ in the adventure of
a carriage of goods by sea.
A. insurable interests B. insurable capital C. interest insure D. capital insure
3. Marine insurance has agreements which are against _______ incident to marine
adventure.
A. total loss B. marine loss C. land loss D. general loss
4. In marine insurance the insurer undertakes to _______ the assured.
A. compensation B. indemnity C. indemnify D. guarantee
5. ______ is an accident that happens when two vehicles hit each other with force.
A. proportion B. protection C. incident D. collision
6. The ships were ______ in shallow water.
A. collided B. fired C. lose D. stranded
7. The captain was forced to ________ the cargo and make an emergency landing.
A. collision B. jettison C. protection D. insurance
8. A fraud or gross negligence of a ship’s master or crew at the expense of its owners or
users is ___.
A. barratry B. barrack C. bark D. backache
9. ____ is an amount of money given for a particular purpose.
A. allowance B. budget C. bureaucracy D. disbursement
10. The cost of repair of a damaged ship more than the value of the ship is called ______ in
marine hull insurance.
A. total loss B. constructive total loss C. general average D.
particular loss
11. P & I insurance covers the ________ for third parties and the crew.
A. Value B. cover charge C. compensation D. restitution
12. P & I insurance covers the loss of life and personal _____
A. injury B. damage C. indemnity D. barratry
13. P & I insurance covers the loss or damage to harbours, wharves, piers, docks, ____,
beacons, etc.
A. boys B. buoys C. boils D. boilers
14. P & I insurance covers the removing ____, salvors’ expenses.
A. crew B. tackles C. shipwreck D. insurance
15. P & I insurance covers the _________ crew and seamen’s lost effects.
A. subtitle B. substitute C. subsidiary D. substituting
16. Protection and Indemnity associations insure members on a _____ basis.
A. mutual B. altogether C. assemble D. resemble
17. The most important feature in P and I association is that not only insure members but
protect, ___ and help them as well.
A. assure B. ensure C. serve D. sure
18. In freight insurance ______ from particular average is under 3 per cent.
A. guarantee fee B. port cost fee C. commission free D. warranted free
19. Marine losses can be classified as total loss and ______ loss.
A. actual B. constructive C. presumed D. partial
20. ______ insurance covers bursting of boilers, breakage of shafts in the machinery or hull.
 A. P and I B. Freight C. Machinery and Hull D.
Disbursements
21. ______ insurance covers accidents in loading, discharging and shifting cargo or fuel.
A. Machinery and Hull B. P and I C. Freight D. Disbursements
22. _____ insurance covers marine pollution, liability under contracts.
A. Machinery and Hull B. P and I C. Freight D. Disbursements
23. ______ insurance covers the risk caused by heavy weather.
A. Machinery and Hull B. P and I C. Freight D. Disbursements
24. ______ refers the underwriter, usually undertakes to pay only three quarters of the
damage incurred by the other vessel.
A. Running down B. General average C. Particular average D. Sue and Labour
25. _____________ gives the details of the liability for expenses incurred
A. Running down B. General average C. Particular average D. Sue and Labour
26. _________ allows vessel to pull vessel in distress or when in need of assistance but not to
undertake salvage.
A. Inch Maree B. Negligence C. Sister ship D. Towage
27. _________ happens in specified areas which does not constitute a stranding.
A. Grounding B. Running down C. Towing D. Noticing
28. A general average is a ______ or an expenditure in marine adventure.
A. damage B. sacrifice C. jettison D. collision
29. A ______ in which the cost of damage to a ship or goods is shared by all the insurance
companies.
A. general loss B. general average loss C. total loss D. partial loss
30. A ____ is caused by directly consequential on a general average act.
A. general average loss B. actual loss C. total constructive loss D.
presumed loss
31. A vessel _____ and the anchors lost in refloating, which is an example of ship sacrifice.
A. strand B. grounds C. robbed D. worked
32. Fire in lower hold so that a _______ is broken down to reach the fire, which is an
example of ship sacrifice.
A. hull B. jetty C. bulkhead D. jettison
33. Jettison of cargo in time of peril is called ________ sacrifice.
A. ship B. cargo C. goods D. stuff
34. Cargo on fire may be damaged by water or chemicals, which is ___________ sacrifice.
A. total loss B. fortuitous C. voluntary D. general average
35. Inherent vice causing fire, water damage to other cargo is ______________.
A. general average B. constructive total loss C. presumed average D. partial
loss
36. General average expenditure is when _______ cargo caused by heavy weather.
A. restowing B. shifting C. hiring D. lightening
37. A charter-party is a/ an __________ between shipowner and a charterer for use or hire of
a ship.
A. document B. element C. agreement D. dealing
38. Voyage ________ acquires the services of a ship for a specified voyage.
A. C/P B. Tnc C. Pc D. CEO
39. A bill of lading may be a ______ instrument, a charter party is not.
A. changeable B. negotiable C. voluntary D. sacrificed
40. A bill of lading is a contract between _____ and the _____.
A. buyer – seller B. shipowner – agent C. charterer – shipowner D. shipper
- carrier
41. Implied obligations and immunities in a contract of ____ include clauses between carrier
and shipper.
A. affreigh B. affeightment C. affreighment D. affreightment
42. The carrier is impliedly exonerated for loss or damage to the cargo ____ acts of God,
perils of the sea, Queen’s enemies, inherent vice, fire.
A. arise from B. arising from C. arising of D. arise of
43. If, subsequent to the formation of a contract of affreightment, its performance becomes
impossible (for example, by the outbreak of hostilities), the parties are _____ from its
performance.
A. released B. arising C. preserving D. compensating
44. A General Average ___ is one caused by directly or consequential a General Average
____, which may be either a sacrifice or an expenditure.
A. Act – Loss B. Act – Act C. Loss – Act D. Loss - Loss
45. ____ see that the amount of demurrage incurred at port of ___ is endorsed on the face of
the bill
A. Do / discharge B. Don’t / discharge C. Do/ loading D. Don’t/ loading
46. ____ omit to insert the amount of any ____ which may be due under the terms of the C/P
A. Do/ dead-freight B. Don’t/ demurrage C. Don’t/detention D. Don’t/ dead-
freight
47.____ see that cargo is actually _____ before sighting
A. Do/ shipped B. Do/ shipper C. Don’t/ ship D. Don’t/ shipping
48. ______ part with cargo ______ sighting the B/L
A. Do/ after B. Don’t/ after C. Don’t / before D. Do/ before
49. ______ fail to include relevant entry __________ advance of freight
A. Do/ regard B. Don’t/ regarding C. Do/ regarded D. Don’t/
regard
50. ______ see that the B/L is properly dated. This is the date on which the vessel ________
the loading of cargo described in the bill.
A. Do/ ready B. Do/ completes C. Don’t/ finish D. Do/ completed
51. _____ accept any verbal or written _____ of the shipper at variance with the actual
conditions of the goods.
A. Do/ assurances B. Don’t/ assurances C. Don’t/ assurer D. Do/ assured
52. ____ see especially when ___ reversible, that time taken to load is endorsed on the face of
the bill.
A. Do/ laytime B.Do/layday C.Don’t/ laycan D. Do/laydays
53. ________ sign a B/L known to contain a false _______ of the goods.
A. Don’t/ description B. Do/ description C. Don’t/ describe D. Don’t/
described
54. The main part of a ship that goes in the water is_______
A. machinery B. hull C. draft D.
liner
55. The partners should obey all terms and conditions of____________.
A. requirements B. achievements C. liability insurance D. associations
56. An accident in which two or more vehicles hit each other while moving in different
directions is______.
A. Collision B. jettison C. fluctuation D. constraint
57. The expenditure of freight is the _______ of hiring craft to lighten a vessel
A. expense B. outgoings C. costs D. overheads
58. The vessel must procced on the agreed voyage with reasonable______.
A. liner B. dispatch C. dispatches D. steamers
59. The carrier’s right to right is ______secured by a lien on the goods.
A. simplified B. implied C. impliedly D. imply
60. B/L is a contract between a _____ and a carrier for the carriage of goods by sea.
A. shipper B. shipping C. ship owners D. ladder