State Farm Insurance License Practice Exam

What does the term 'Jettison' refer to in maritime insurance?

1. The act of claiming insurance post-incident

2. The action of disposing cargo to avert damage

3. The procedure for filing a loss report

4. The process of surveying damaged property

The correct answer is: The action of disposing cargo to avert damage

The term 'jettison' in maritime insurance refers to the action of disposing of cargo in order to avert further damage or to prevent the ship from sinking. This practice is typically undertaken in emergency situations where the safety of the vessel and its crew is at risk. When cargo is jettisoned, it is usually thrown overboard to lighten the load and stabilize the ship, allowing it to navigate more safely through perilous conditions. Understanding this concept is critical because it highlights the measures that can be taken to mitigate loss in maritime operations. It is also relevant to the principles of general average, where all parties may share the loss incurred from the jettisoned cargo, ensuring that the costs are equitably distributed among those with a financial interest in the voyage. This terminology is not just about the physical act of throwing goods overboard; it also encompasses the associated legal and insurance implications arising from such actions during maritime incidents.