Ocean Marine Terms
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
of law that deal with matters pertaining to the sea.
contract to carry merchandise.
All Other Perils and
A phrase in the perils clause of a policy meaning
perils of the same nature as those specifically enumerated.
Theft by force, violence or breaking and entering. Does
not include ordinary or clandestine pilferage.
loss or damage due to perils insured.
Average Irrespective of
Broadest "with average" clause. Losses by perils
insured are paid in full without deductible or franchise.
An adjuster of marine losses.
and illegal sinking, casting away, or damaging a ship at sea or its
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.
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 transporter of goods and
merchandise, such as a railroad, trucker, airline, or steamship line.
& F. (CFR) (Incoterm)
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)
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."
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).
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
who transport only the goods of those with whom they have made
One to whom goods are sent.
sender of goods.
to cotton in bales caused by poor methods of bailing, discoloration,
etc. This term is used in Marine Cargo insurance of cotton.
report by Assured to company of the details of shipment(s) insured
under an open policy.
A vessel going to some
other port or taking some other courses than described in the policy of
A device used by the seller to
collect from the buyer.
F. A. S.(Incoterm)
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.
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)
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.
of Particular Average – meaning the insurer will not pay a partial loss
unless the vessel meets with a specified accident.
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.
income of the ship owner from carrying cargo or earned by the
employment of his ship.
in handling overseas shipping details of exports and imports.
principle of maritime law according to which the owners of ship and
cargo share in a loss incurred voluntarily (see general average
proportionate shares of the vessel owner and each of the cargo owners
in order to make up the expenditure or sacrifice incurred for the
General Average Sacrifice
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).
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.
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.
a verb, to ship goods into a country from abroad. As a noun, the goods
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
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.
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.
defect not immediately apparent.
market value at destination on final day of discharge from ocean
Letter of Credit
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
small harbor craft, generally not self-propelled, used to load or
unload a vessel.
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
A group of underwriters
at London Lloyds who entrust the underwriting of their business to one
Lost or Not Lost
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.
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
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.
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.
commander of a commercial vessel.
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.
loss which falls on the particular property insured, as opposed to a
"general average," which is a loss for the account of all interests.
of the Sea
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."
not limited to the taking of a whole package or all of the property
Robbery on the high seas.
place from which goods are sent out of a country or received from
abroad. The location of the customs usually determines the port.
sworn statement by the master describing any unusual event during a
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.
act accomplished for the welfare of all interests, such as throwing
part of a cargo overboard to keep a ship from sinking.
saved from loss.
overseas representative authorized to investigate and pay claims.
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
under an open policy when the buyer wants evidence of insurance for the
specific merchandise and voyage involved.
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
Sue and Labor Clause
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.
specialist who conducts surveys of cargo or hulls (see survey).
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
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.
such as one voyage of a vessel.
Warehouse to Warehouse
from a shipment’s point of origin to its destination, even if these
points are inland.
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)
breach of warranty to void the policy must have "materially increased
the risk of loss, damage or injury within the coverage of the contract."
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.
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.
set of rules adopted by the representatives of all the leading maritime
nations to govern the method of applying General Average.
Marine Claim Adjusters