Arkansas Insurance Adjuster Practice Exam

In Ocean Marine insurance, which term of sale states that the seller is responsible for damage to the cargo during shipment?

1. Free on Board

2. Cost, Insurance, and Freight (CIF)

3. Free Alongside Ship

4. Delivered Ex Ship

The correct answer is: Cost, Insurance, and Freight (CIF)

CIF is short for "Cost, Insurance, and Freight", which indicates that the seller is responsible for the cost of shipping, insuring the cargo during transit, and freight charges. This means that if the cargo is damaged during shipment, the seller is responsible for covering the cost of insurance to compensate for the damage. Option A, "Free on Board", only states that the seller is responsible for delivering the goods to the designated port, but does not include insurance coverage. Option C, "Free Alongside Ship", means that the seller is responsible for delivering the goods alongside the designated ship, but the buyer is responsible for loading the goods onto the ship and securing insurance. Option D, "Delivered Ex Ship", indicates that the seller is responsible for delivering the goods to the designated port, but it is the buyer's responsibility to cover all other charges, including insurance. Therefore, only option B accurately states that the seller is responsible for damage to the cargo during shipment.