CAIB 3 Chapter 4 Study Questions with
Answers
Identify, in addition to transportation over the ocean, four other incidental methods of
transportation covered under a marine cargo insurance policy - ✔✔1. Air
2. Land
3. Rail
4. Vessels operating on inland waterways or lakes
Identify the four parties who may have an insurable interest in cargo being shipped - ✔✔1.
Sellers
2. Buyers
3. Carriers
4. Financial institutions
Identify two documents to be reviewed to determine insurable interest of the parties above -
✔✔1. Terms of sale/contract
2. Bills of Lading
Identify the two terms the broker will normally focus on identifying under the terms of sale -
✔✔1. The INCOTERM under which goods are being shipped
2. The method of payment for the goods
Identify the three questions which address the issue of insurable interest under the INCOTERMS
- ✔✔1. The point in transit at which the seller has fulfilled its obligations
2. Which of the buyer or seller is responsible for carriage from one point to another
3. Which of the buyer or seller is responsible for insurance
, Identify the responsibility of the buyer and seller under ex works INCOTERMS - ✔✔Buyer - pays
for the invoice cost of goods and must arrange insurance from the works to final destination
Seller - sells at the invoice cost
Identify the responsibilities of the buyer and seller under f.o.b (free on board) INCOTERM -
✔✔Buyer - takes responsibility for goods once they are on board the vessel. Insurance is the
responsibility of the buyer from this moment until final delivery
Seller - responsible for carriage and loading costs and any damage until goods are loaded on
board. Insurance is the responsibility of the seller from works until on board
Identify the responsibilities of the buyer and seller under f.a.s (free alongside) INCOTERM -
✔✔Buyer - takes responsibility for goods as soon as they are alongside the vessel or on the
quay. Insurance is the responsibility of the buyer from this moment until final delivery
Seller - responsible for carriage and unloading costs until goods are alongside the vessel or on
the quay. Insurance is the responsibility of the seller from works up to this point
Identify the responsibilities of the buyer and seller under f.o.r (free on rail) INCOTERM -
✔✔Buyer- is responsible for goods once they have been loaded on rail or trailer. Insurance is
the responsibility of the buyer from this moment until final delivery to final destination
Seller - is responsible for goods until they are loaded on the rail or trailer. Insurance is the
responsibility of the seller from works until this time
C. & F. (CFR) (cost + freight charges paid until port of discharge) - ✔✔Buyer - takes
responsibility for the goods once they are loaded onto the carrying vessel. Insurance is the
responsibility of the buyer from this moment until final delivery
Seller - is responsible for goods until loaded onto the carrying vessel. Insurance is the
responsibility of the seller from works until this time
C.i.f (cost, insurance + freight) - ✔✔Buyer - is not responsible for insurance as this is included in
the contract price. However, increased value cover at the ultimate destination may be required
to meet charges or increased market value
Seller - is responsible for providing insurance, but usually follows the buyers instructions
Answers
Identify, in addition to transportation over the ocean, four other incidental methods of
transportation covered under a marine cargo insurance policy - ✔✔1. Air
2. Land
3. Rail
4. Vessels operating on inland waterways or lakes
Identify the four parties who may have an insurable interest in cargo being shipped - ✔✔1.
Sellers
2. Buyers
3. Carriers
4. Financial institutions
Identify two documents to be reviewed to determine insurable interest of the parties above -
✔✔1. Terms of sale/contract
2. Bills of Lading
Identify the two terms the broker will normally focus on identifying under the terms of sale -
✔✔1. The INCOTERM under which goods are being shipped
2. The method of payment for the goods
Identify the three questions which address the issue of insurable interest under the INCOTERMS
- ✔✔1. The point in transit at which the seller has fulfilled its obligations
2. Which of the buyer or seller is responsible for carriage from one point to another
3. Which of the buyer or seller is responsible for insurance
, Identify the responsibility of the buyer and seller under ex works INCOTERMS - ✔✔Buyer - pays
for the invoice cost of goods and must arrange insurance from the works to final destination
Seller - sells at the invoice cost
Identify the responsibilities of the buyer and seller under f.o.b (free on board) INCOTERM -
✔✔Buyer - takes responsibility for goods once they are on board the vessel. Insurance is the
responsibility of the buyer from this moment until final delivery
Seller - responsible for carriage and loading costs and any damage until goods are loaded on
board. Insurance is the responsibility of the seller from works until on board
Identify the responsibilities of the buyer and seller under f.a.s (free alongside) INCOTERM -
✔✔Buyer - takes responsibility for goods as soon as they are alongside the vessel or on the
quay. Insurance is the responsibility of the buyer from this moment until final delivery
Seller - responsible for carriage and unloading costs until goods are alongside the vessel or on
the quay. Insurance is the responsibility of the seller from works up to this point
Identify the responsibilities of the buyer and seller under f.o.r (free on rail) INCOTERM -
✔✔Buyer- is responsible for goods once they have been loaded on rail or trailer. Insurance is
the responsibility of the buyer from this moment until final delivery to final destination
Seller - is responsible for goods until they are loaded on the rail or trailer. Insurance is the
responsibility of the seller from works until this time
C. & F. (CFR) (cost + freight charges paid until port of discharge) - ✔✔Buyer - takes
responsibility for the goods once they are loaded onto the carrying vessel. Insurance is the
responsibility of the buyer from this moment until final delivery
Seller - is responsible for goods until loaded onto the carrying vessel. Insurance is the
responsibility of the seller from works until this time
C.i.f (cost, insurance + freight) - ✔✔Buyer - is not responsible for insurance as this is included in
the contract price. However, increased value cover at the ultimate destination may be required
to meet charges or increased market value
Seller - is responsible for providing insurance, but usually follows the buyers instructions
