Alabama Property and Casualty Practice Exam

Which statement about Ocean Marine policies is NOT true?

1. They must be filed and approved before use

2. They cover cargo during transit

3. They can include ship repair coverage

4. They are available for international trade

The correct answer is: They must be filed and approved before use

Ocean Marine policies are unique in their regulatory treatment compared to many other types of insurance. One key characteristic of these policies is that they are not subject to state filing and approval requirements before use, which differentiates them from standard property and casualty insurance products. This flexibility allows insurers to create and modify Ocean Marine policies quickly in response to the dynamic needs of maritime commerce. The coverage provided by Ocean Marine policies is specifically designed to meet the needs of shipping and transit. These policies cover cargo during its transportation across oceans and can also incorporate specific options like ship repair coverage, which protects against the costs associated with fixing ships damaged during voyages. Additionally, Ocean Marine policies are inherently international, catering to businesses engaged in international trade. Such policies are structured to cover the various risks associated with transporting goods over international waters, which are not typically covered by domestic insurance policies. Understanding these nuances is crucial for anyone dealing with marine insurance, as it emphasizes the distinct nature of Ocean Marine policies in comparison to standard insurance practices.