The following Marine Insurance ‘Terms’ are an A-Z glossary of the terms used in the world of marine insurance.
Marine Insurance defined
A contract of marine insurance ‘policy’ is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure.
Marine Insurance is governed by marine laws, primarily ‘Admiralty Laws’, and while particular to each countries own laws, marine law is international similar in all respects.
Act of God
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. ‘Marine Insurance Law’ - [To view a copy of the Australian Marine Insurance Act 1909 (as amended) please click on this link Australian Marine Insurance Act
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 – (see also Piracy)
Theft by force, violence or breaking and entering. Does not include ordinary or clandestine pilferage.
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.
An adjuster of marine losses.
Back to Top
A type of charter in which the shipowner provides only the ship and gives the charterer complete control, management and operation of the vessel for an agreed leasing period; the charterer has to appoint the crew and pay all operating costs including stores and bunkers; also known as demise charter.
Willful and illegal sinking, casting away, or damaging a ship at sea or its cargo.
Bill of Lading
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.
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.
The transporter of goods and merchandise, such as a railroad, trucker, airline, or steamship line.
A clause in a voyage charterparty which stipulates that the charterer's liability ceases once the cargo has been shipped.
Cesser and lien clause
A clause in a voyage ‘ charterparty ’ which stipulates that the charterer's liability ceases once the cargo has been shipped and the owners have a lien on the cargo for freight deadfreight, demurrage and general average contributions.
A person or firm who enters into a contract with a shipowner for the transportation of cargo or passengers for a stipulated period of time, i.e. a shipowner's customer.
A written contract between shipowner and charterer whereby a ship is hired; all terms, and conditions and exceptions are stated in the contract.
C. & F. (CFR)
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.
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."
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).
A classification society is a non-governmental organization in the shipping industry, often referred to as 'Class'. It establishes and maintains standards for the construction and classification of ships and offshore structures, supervises that construction is according to these standards and carries out regular surveys of ships in service to ensure the compliance with these standards. To avoid liability, they explicitly take no responsibility for the safety, fitness for purpose, or seaworthiness of a particular ship.
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.
One to whom goods are sent.
The sender of goods.
Back to Top
Damage to cotton in bales caused by poor methods of bailing, discoloration, etc. This term is used in Marine Cargo insurance of cotton.
A report by Assured to company of the details of shipment(s) insured under an open policy.
Fee paid by the charterer to the shipowner when the latter's ship is detained beyond the specified date agreed in the charterparty
A vessel going to some other port or taking some other courses than described in the policy of marine insurance.
A device used by the seller to collect from the buyer.
F. A. S.
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.
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.
F. P. A.
Free of Particular Average
– meaning the insurer will not pay a partial loss unless the vessel meets with a specified accident.
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.
The income of the ship owner from carrying cargo or earned by the employment of his ship.
A specialist in handling overseas shipping details of exports and imports.
Back to Top
A principle of maritime law according to which the owners of ship and cargo share in a loss incurred voluntarily (see general average sacrifice).
General Average Contribution
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).
[applicable USA registered vessels or those vessels operation in USA Waters]
A law passed by Congress [USA] 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.
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.
As a verb, to ship goods into a country from abroad. As a noun, the goods so shipped.
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.
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.
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.
Back to Top
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.
Wholesale market value at destination on final day of discharge from ocean vessel.
A defect not immediately apparent.
A ship chartering term which stands for laydays commencement and cancelling; specifies the earliest date on which laytime can commence and the latest date, after which the charterer can opt to cancel the charterparty
Time allowed by the shipowner to the voyage charterer to carry out the cargo loading and/or discharging operations; laytime may be expressed as a certain number of days or number of tons of cargo loaded/unloaded per day which allows the charterer the option of adding together the loading and discharging times; in this case, demurrage does not commence until the combined times exceed the total time specified for both operations
Letter of Credit
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.
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.
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.
Back to Top
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.
The perils which are insured against in an ocean marine insurance policy.
A contract of marine insurance ‘policy’ is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. Note:
Marine Insurance is governed by marine laws, primarily ‘Admiralty Laws’, and while particular to each countries own laws, marine law is international similar in all respects. [a list of typical marine law clauses and sections are described at the end of this dictionary] – click here to fast track
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.
Specific to marine insurance applications, maritime perils
means the perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind, or which may be designated by a policy of marine insurance.
The commander of a commercial vessel.
Back to Top
A period of time during which a vessel under time charter is unable to meet the requirements agreed between the charterer and shipowner due to some reasons within the control of the latter; in this case, e.g. machinery breakdown, the charterer is not required to pay hire money
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 cancelled.
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."
Theft not limited to the taking of a whole package or all of the property insured.
Robbery on the high seas.
The Plimsoll Line, also called an international Load Line, indicates the maximum safe draft, and therefore the minimum freeboard for a commercial vessel to maintain sufficient reserve buoyancy. in various operating conditions. The line is physically painted on the hull of merchant ships, and was first suggested by the 19th-century English politician Samuel Plimsoll.
The exact location of the Load Line is calculated and/or verified by a Classification Society which then issues the relevant certificates.
|Plimsoll Line Symbol
A place from which goods are sent out of a country or received from abroad. The location of the customs usually determines the port.
Protection and Indemnity Insurance
Broad type of marine legal liability coverage specifically designed to cover commercial vessels operating on the high seas as many ship owners desire the much broader coverage offered by protection and indemnity insurance since it offers a worldwide coverage and includes protections against liabilities arising from a broader range of risks then standard marine liability covers offered to pleasurecraft; such as,
- Injury, illness and death of crew, passengers and stevedores;
- Repatriation of crew and substitute expenses;
- Diversion and other expenses incurred in landing refugees, sick persons and stowaways;
- Collision liability;
- Excess collision liability;
- Pollution by oil or other substances;
- Property damage;
- Towage contract liabilities, and liability under other contracts and indemnities;
- a Cargo loss, shortage and damage;
- Unrecoverable general average contributions;
- Salvor's expenses under the 1980 Lloyd's Standard Form of Salvage Agreement;
- Fines, certain legal and other costs;
- Wreck removal;
- Excess War Risks liability.
Click here for more information about Protection and Indemnity Insurance
‘P&I Clubs’ [Protection & Indemnity Insurers]
P&I Clubs are independent, non-profit making mutual insurance associations, providing cover for its Ship-Owner and Charterer members against third party liabilities relating to the use and operation of commercial vessels. Each club is controlled by its members through a board of directors or committee elected from the membership. Approximately 90% of the world’s ocean-going tonnage is covered by thirteen principal underwriting member clubs of the International Group of P&I Clubs (UK).
Click here for more information about P&I Clubs
A sworn statement by the master describing any unusual event during a voyage.
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.
Back to Top
An act accomplished for the welfare of all interests, such as throwing part of a cargo overboard to keep a ship from sinking.
Property saved from loss.
An underwriter’s overseas representative authorized to investigate and pay claims.
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.
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.
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.
A specialist who conducts surveys of cargo or hulls (see survey).
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.
Back to Top
A contract for the hire of a ship or charterparty for a specified period of time; the charterer pays for the bunker fuel, fresh water, port charges, etc. in addition to charter hire.
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.
The clause in a marine policy which makes it a valued policy, by agreement in advance as to the value of the insured property.
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.
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).
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.
A document which serves as a receipt for the goods shipped and as evidence of the contract of carriage; it is issued by shipping line or shipowner to shipper or charterer.
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.
York Antwerp Rules
A set of rules adopted by the representatives of all the leading maritime nations to govern the method of applying General Average.
Common Sections Typical of a Marine Insurance Act [Law]
Mixed Sea And Land Risks
Marine Adventure And Maritime Perils Defined
Avoidance Of Wagering Or Gaming Contracts
Insurable Interest Defined
Defeasible Or Contingent Interest
Master's And Seamen's Wages
Charges Of Insurance
Quantum Of Interest
Assignment Of Interest
Measure Of Insurable Value
Insurance Is Uberrimae Fidei
Disclosure By Assured
Disclosure By Agent Effecting Insurance
Representations Pending Negotiation Of Contract
When Contract Is Deemed To Be Concluded
Contract Must Be Embodied In Policy
What Policy Must Specify
Signature Of Insurer
Voyage And Time Policies
Designation Of Subject-Matter
Floating Policy By Ship Or Ships
Construction Of Terms In Policy
Premium To Be Arranged
Nature Of Warranty
When Breach Of Warranty Excused
Warranty Of Neutrality
No Implied Warranty Of Nationality
Warranty Of Good Safety
Warranty Of Seaworthiness Of Ship
No Implied Warranty That Goods Are Seaworthy
Warranty Of Legality
Implied Condition As To Commencement Of Risk
Alteration Of Port Of Departure
Sailing For Different Destination
Change Of Voyage
Several Ports Of Discharge
Delay In Voyage
Excuses For Deviation Or Delay
When And How Policy Is Assignable
Assured Who Has No Interest Cannot Assign
When Premium Payable
LOSS AND ABANDONMENT
Included And Excluded Losses
Partial And Total Loss
Actual Total Loss
Effect Of Transhipment Etc.
Constructive Total Loss Defined
Effect Of Constructive Total Loss
Notice Of Abandonment
Effect Of Abandonment
Particular Average Loss
General Average Loss
MEASURE OF INDEMNITY
Extent Of Liability Of Insurer For Loss
Partial Loss Of Ship
Partial Loss Of Freight
Partial Loss Of Goods, Merchandise Etc.
Apportionment Of Valuation
General Average Contributions And Salvage Charges
Liabilities To Third Parties
General Provisions As To Measure Of Indemnity
Particular Average Warranties
Suing And Labouring Clause
Rights Of Insurer On Payment Of Loss
Right Of Subrogation
Right Of Contribution
Effect Of Under Insurance
Back to Top
If you have anything to add to this Dictionary of Marine Insurance terms please email us with your suggestions or amendments. email us
Thank you for using United Marine Insurance’s Dictionary of Marine Insurance Terms