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Glossary of Ocean Marine Terms
A calamity beyond human control which happens to property — lightning, for example. Damage done by an Act of God would not be the responsibility of a bailee, although he/she might be responsible for many other calamities. Acts of God are excluded by the usual bill of lading and, to the extent not specifically assumed, by insurance policies.
Courts of law that deal with matters pertaining to the sea.
A contract to carry merchandise.
All Other Perils and Misfortunes
A phrase in the perils clause of a policy meaning perils of the same nature as those specifically enumerated.
Assailing Thieves
Theft by force, violence or breaking and entering. Does not include ordinary or clandestine pilferage.
Average
Partial loss or damage due to perils insured.
Average Irrespective of Percentage
Broadest "with average" clause. Losses by perils insured are paid in full without deductible or franchise.
Average Adjuster
An adjuster of marine losses.
Barratry
Willful and illegal sinking, casting away, or damaging a ship at sea or its cargo.
A document issued by a carrier which is a receipt for the merchandise or other property to be transported, and which outlines just what the carrier agrees to do and his responsibilities for the property.
Cargo
Goods being transported; the load of a truck or the goods carried by a ship. The cargo of a ship does not include the equipment needed to operate the ship.
Carrier
The transporter of goods and merchandise, such as a railroad, trucker, airline, or steamship line.
C. & F. (CFR) (Incoterm)
Cost and Freight – a term of sale under which the seller is responsible for arranging transportation to a destination, but the buyer handles any insurance to cover the transit risk.
C. I. F. (Incoterm)
Cost, Insurance and Freight – a term of sale under which the seller is responsible for arranging transportation and insurance to a destination; in effect, a "price delivered at destination."
Claims Agent
A representative of the insuring underwriters, usually located overseas, who has been authorized to accept the papers and documents required to prove a claim. While the claims agent does not have authority to make settlement with the claimant, he/she performs a valuable service in expediting the processing of a claim (see also settling agent).
Common Carrier
One who offers to transport merchandise for hire and must accept shipments from anyone who wishes to use his/her services. Common carriers must abide by different rules and laws than private or contract
carriers who transport only the goods of those with whom they have made agreements.
Consignee
One to whom goods are sent.
Consignor
The sender of goods.
Country Damage
Damage to cotton in bales caused by poor methods of bailing, discoloration, etc. This term is used in Marine Cargo insurance of cotton.
Declaration
A report by Assured to company of the details of shipment(s) insured under an open policy.
Deviation
A vessel going to some other port or taking some other courses than described in the policy of marine insurance.
Draft
A device used by the seller to collect from the buyer.
F. A. S.(Incoterm)
Free Along Side – a term of sale under which the seller agrees to pay all charges and assume all risks until the goods sold have been placed on a wharf or a lighter alongside the ship.
F. C. & S.
Free of Capture and Seizure – a clause added to the policy to exclude the broad war risk coverage given in most basic forms of marine policies.
F. O. B. (Incoterm)
Free on Board – part of a term of sale under which the seller’s responsibility ends and the buyer’s begins at the point designated. Example – f.o.b. Penna. R. R. Pittsburgh.
F. P. A.
Free of Particular Average – meaning the insurer will not pay a partial loss unless the vessel meets with a specified accident.
Franchise
A provision in some policies stating that the insurance company shall not be responsible for any loss which is less than a certain amount. If the loss equals or exceeds that amount, however, it will be paid in full.
Freight
The income of the ship owner from carrying cargo or earned by the employment of his ship.
Freight Forwarder
A specialist in handling overseas shipping details of exports and imports.
General Average
A principle of maritime law according to which the owners of ship and cargo share in a loss incurred voluntarily (see general average sacrifice).
The proportionate shares of the vessel owner and each of the cargo owners in order to make up the expenditure or sacrifice incurred for the common good.
General Average Sacrifice
The voluntary destruction of part of the vessel or the cargo, or the deliberate expenditure of funds in time of grave peril, which is successful in avoiding total disaster (see general average contribution).
Harter Act
A law passed by Congress in 1893. The Harter Act provides that a vessel owner is not responsible for loss or damage caused by faults or errors in navigation, provided the ship owner has taken proper care to see that his/her ship is in all respects seaworthy and properly manned and equipped.
Implied Warranty
A warranty is a representation by the policyholder that certain conditions exist or will be met. Even if the warranty is not in writing, it may exist as an "implied" warranty, e.g., that a building is not on fire when insured, or that a vessel is seaworthy.
Import
As a verb, to ship goods into a country from abroad. As a noun, the goods so shipped.
Inchmaree Clause
Covers losses resulting from latent defect in hull and machinery of vessel and losses resulting from errors in navigation or management of the vessel by master or crew.
Inherent Vice
The quality that something has to deteriorate or damage itself without outside help. For example, milk sours. Inherent vice is excluded from cover by almost all policies.
Institute Clauses
Clauses in a policy which have been standardized for the trade by the American Institute of Marine Underwriters. The London Institute clauses, used by the British market, are those adopted by the Institute of London Underwriters.
Jettison
To throw part of the cargo or gear of the vessel overboard to lighten the load and save the vessel. The owner of the jettisoned goods is entitled to a "general average," i.e., the loss is shared by the owners of the vessel and the owners of the cargo which was not thrown away.
A defect not immediately apparent.
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Landed Value
Wholesale market value at destination on final day of discharge from ocean vessel.
A document issued by the buyer’s bank, through its foreign correspondent bank, establishing a credit against which the seller may draw after complying with specific instructions.
Lighter
A small harbor craft, generally not self-propelled, used to load or unload a vessel.
A catalogue of ships describing each ship – dimensions, age, place of construction, registry, ownership,etc. A necessary tool for the ocean marine underwriter. Similar information is published by the American Bureau of Shipping.Lloyds Syndicate
A group of underwriters at London Lloyds who entrust the underwriting of their business to one underwriter.
Lost or Not Lost
A clause used in ocean marine insurance under which the company will pay even if the loss insured against has occurred prior to the effective date of the insurance. The company would, of course, not be liable if the policyholder knew that the loss had occurred when he/she bought the insurance. In days past, a ship could easily be lost or damaged and the owner would not find out about it until later, during which time he might want to insure it.
Marine Definition
In the past, marine underwriters, fire underwriters and casualty underwriters had different ideas about what constituted "marine" insurance. To resolve the resulting confusion, committees were formed to work with state insurance departments in creating a standard definition of marine insurance. A "Joint Committee of Interpretation and Complaint" was formed for the purpose of interpreting this definition as it applied to specific cases, which were submitted from time to time by interested parties. Insurance departments have, in general, adopted the findings of this committee as their own rules.
Marine Extension Clause
An endorsement to an open policy giving coverage on the goods insured during detention, delay, forced discharge, reshipment and transshipment, or any other variation in the voyage beyond the control of the Assured.
Marine Perils
The perils which are insured against in an ocean marine insurance policy.
Marine Syndicates
Groups of companies acting in common to insure certain ocean marine classes. Also, a term used to describe groups which make inspections and surveys and institute standards for the construction of vessels.
Master
The commander of a commercial vessel.
Open Policy
Policies containing all terms and conditions, but which separately record the amount and term of each risk to be covered. Also, a term used to describe policies written with no natural expiration date, but which stay in effect until canceled.
Particular Average
A loss which falls on the particular property insured, as opposed to a "general average," which is a loss for the account of all interests.
Perils of the Sea
Dangers specific to ocean marine transportation, such as heavy weather, stranding and collision. Perils of the sea are distinguished from perils such as fire, which also may occur on land and would be considered "perils on the sea" rather than "perils of the sea."
Pilferage
Theft not limited to the taking of a whole package or all of the property insured.
Piracy
Robbery on the high seas.
Port
A place from which goods are sent out of a country or received from abroad. The location of the customs usually determines the port.
Protest
A sworn statement by the master describing any unusual event during a voyage.
Registered Tonnage
A commercial ship is measured by its cargo capacity in "tons," with each ton occupying 100 cubic feet. The cubic capacity of all enclosed spaces is thus measured and the ship’s "tonnage" determined.
Sacrifice
An act accomplished for the welfare of all interests, such as throwing part of a cargo overboard to keep a ship from sinking.
Salvage
Property saved from loss.
Settling Agent
An underwriter’s overseas representative authorized to investigate and pay claims.
Shore Clause
A marine cargo policy clause covering an ocean shipment against named perils while on land – necessary because the policy provides protection from warehouse to warehouse.
Special Marine Policy
Issued under an open policy when the buyer wants evidence of insurance for the specific merchandise and voyage involved.
Strand/Stranding
A vessel strands when it runs aground.
Strikes, Riots and Civil Commotion (S.R. & C.C.)
Strikes, Riots and Civil Commotion perils excluded in the basic marine cargo policy, but coverable by endorsement.
Sue and Labor Clause
A clause within marine and inland marine policies whereby the policyholder, in the event of a loss, is required to take all necessary means to save the property from further loss, and the insurer agrees to pay the costs even if the property becomes a total loss despite the policyholder’s efforts. The insurer may pay a total loss plus the cost of the attempted salvage.
Survey
In cargo insurance, an examination of damaged property to determine the cause, extent and value. In hull insurance, an inspection of the ship to help determine its insurability or, after a loss, the cause and
extent of damage.
Surveyor
A specialist who conducts surveys of cargo or hulls (see survey).
Syndicate Policy
A policy issued on behalf of a group of companies sharing a risk or class of risks. A syndicate policy carries the names of all the participating companies and usually designates the share of the liability assumed by each company.
Trade Loss
A loss, usually small in amount, specific to certain kinds of cargo and which, because it is expected, is uninsurable. For example, seepage or evaporation of liquid from wooden casks.
Valuation Clause
The clause in a marine policy which makes it a valued policy, by agreement in advance as to the value of the insured property.
Venture
An undertaking, such as one voyage of a vessel.
Warehouse to Warehouse
Coverage from a shipment’s point of origin to its destination, even if these points are inland.
Warranty
A statement by the Assured, the truth of which determines the validity of the insurance contract. A warranty may relate to matters existing at or before the issuance of the policy (affirmative warranty). Or it may be an undertaking by the Assured that something be done or omitted after the policy takes effect and during its continuance (promissory warranty). Many states have restricted by statute the common law rule that "any breach of warranty voids an insurance policy." For example, under the New York law (15C) a breach of warranty to void the policy must have "materially increased the risk of loss, damage or injury within the coverage of the contract."
War Risk Insurance
Insurance against loss or damage to property due to the acts of enemies at war with us. This coverage is freely written on marine risks, but not on property on land. During World War II, the government assumed, for a premium, war risks on land and the program was handled by insurers on the government’s behalf and participated in by them. In Europe, the government paid for such damage.
With Average
An insuring condition on cargo that agrees to pay losses due to certain named marine periods, provided the loss equals or exceeds a specific percentage (see franchise). Losses less than this amount are paid only if the vessel meets with a specified accident.
A set of rules adopted by the representatives of all the leading maritime nations to govern the method of applying General Average.
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