Alabama Insurance Adjuster Practice Exam

Mark has an ocean marine insurance policy for varying cargo. How is his cargo coverage written?

1. On a specific value basis.

2. On an unvalued basis.

3. On a valued basis.

4. On a flexible basis.

The correct answer is: On an unvalued basis.

In ocean marine insurance, cargo coverage can be written on an unvalued basis, which means that the insurer does not assign a specific dollar amount to the insured cargo at the time the policy is issued. Instead, this approach allows for coverage of varying values of cargo that may change based on the specific shipment. When cargo is covered on an unvalued basis, it generally pertains to the insurable interest and the actual value of the cargo at the time of loss or damage, rather than a predetermined or fixed value. This is particularly useful in marine insurance scenarios where the nature of goods transported can significantly differ from one voyage to another, as well as where the value of goods can fluctuate. Understanding this context underscores why an unvalued basis is appropriate for Mark’s ocean marine insurance policy, especially when the types of cargo he deals with can vary in value.