Texas General Lines — Property and CasualtyCommercial LinesHard
A maritime shipping company regularly transports general cargo across the Pacific Ocean. They are concerned about potential losses to the cargo itself due to perils of the sea, such as heavy weather, stranding, or collision. They also want to ensure that if they are held liable for damage to another ship or its cargo, they have coverage. Which type of Ocean Marine insurance would address these concerns?
- AHull Insurance
- BFreight Insurance
- CCargo Insurance
- DProtection & Indemnity (P&I) Insurance
Show answer & explanationAnswer & explanation
Correct answer: C. Cargo Insurance
Cargo Insurance covers the actual goods being transported, protecting the owner of the cargo against perils of the sea. While P&I covers liability, the primary concern for the *cargo itself* falls under Cargo Insurance.
Why the other options are wrong
- A. Hull Insurance covers physical damage to the vessel itself, not the cargo being transported.
- B. Freight Insurance covers the loss of income (freight charges) the shipowner would earn if the cargo is lost, not the value of the cargo itself.
- D. Protection & Indemnity (P&I) Insurance covers marine liabilities for bodily injury, damage to docks, pollution, and liability for damage to *another's* cargo, but not direct damage to the insured's own cargo.
Ocean Marine Cargo Insurance
A type of Ocean Marine insurance that covers the goods or merchandise being transported by sea against various perils, protecting the financial interest of the cargo owner.
- Covers the actual goods being shipped.
- Protects against perils of the sea (e.g., collision, stranding, heavy weather).
- Can be 'all risks' or 'named perils'.
- Often includes war risk and strike, riot, civil commotion coverage.
Memory trick: The 'Cargo' needs its own 'Insurance' at sea.