This glossary is intended for use as an introduction to marine terminology only.
Accident
An unforeseen occurrence of happening; fortuitous event.
Act of God
A natural event, not preventable by any human agency, such as flood, storms, or lightning. Force of nature that a carrier has no control over, and therefore cannot be held accountable for.
All Risks
The broadest form of coverage available, providing protection against all risk of physical loss or damage from any external cause. Does not cover loss or damage due to delay, inherent vice, pre-shipment condition, inadequate packaging, or loss of market. Loss must be fortuitous to be covered.
Approved Merchandise
Goods that are not particularly susceptible to loss or either by reason of their nature or because they are well packed. This term embraces practically all manufactured articles or new merchandise.
As-Is-Where-Is
Description of the terms under which damaged property is sold, meaning that it is to be sold at its present location and in its present condition without warranty as to quality or quantity. See "Salvage Value".
Average Clauses
The perils Clause establishes the basic perils that are covered by the policy, and a total loss due to one of these perils is covered in full. The various Average Clauses determine when PARTIAL LOSSES due to a peril in the Perils Clause are covered. The Average Clauses fall into two categories:
F.P.A. (Free of Particular Average) and W.A. (With Average).
Bareboat Charter
A contract to rent a vessel without equipment, crew, fuel, or stores.
Bill of Lading (B/L, Blading, Lading)
The document issued on behalf of the carrier describing the kind and quantity of the goods being shipped, the shipper, the consignee, the ports of loading and discharge and the carrying vessel. The Bill of Lading serves as:
A) Receipt for the merchandise given to the shipper by the carrier
B) Document of title giving lawful possessor title to goods
C) The contract of carriage between shipper and carrier; and
D) Evidence of the apparent condition of the goods when received by the carrier. (If the cargo shows damage, the Master will note exceptions on the B/L,
e.g., "all coils rusted," or "13 bags broken and leaking." A B/L lacking such exceptions is a "clean" Bill of Lading, and prima facie evidence of the apparent good order of the cargo).
Break Bulk
Loose cargo, such as cartons, stowed directly in the ship's hold as opposed to containerized or bulk cargo. See "Containerization".
Bulk Shipments
Shipments which are not packaged, but are loaded directly into the vessel's holds. Examples of commodities that can be shipped in bulk are ores, coal, scrap, iron, grain, rice, vegetable oil, tallow, fuel oil, fertilizers, and similar commodities.
Carriage of Goods by Sea Act (C.O.G.S.A.)
1936 Statute governs the acts that a carrier is responsible for, and it defines the terms used in shipping. The act provides that the shipowner's liability will be limited to ?500.00 per shipping package, and it states that there is a one year time limit for filing suit against the carrier. This act automatically applies to international ocean movements but not to domestic ocean transits unless the carrier agrees to be bound by it
Carrier
Usually means Steamship Company, but can also refer to trucking company, airlines, or railroads as transporters of cargo.
Certificate of Insurance (Policy of Insurance)
Document issued on behalf of the Underwriter stating the terms and conditions of the marine insurance. Issued when evidence of insurance is required, as by the bank issuing the Letter of Credit (especially on export shipment.)
Charterer
One who rents, hires, or leases a vessel from its owner.
Charter Party
A document containing the terms of a contract for the renting or leasing of a vessel by the owner to the charterer.
Collision
In marine insurance, a vessel striking another vessel or floating (not stationary) object.
Commercial Invoice
The seller's bill of sale for the goods sold, specifying type of goods, quantity and price of each type, and terms of sale.
Common Carrier
Transporter who hold himself out to the general public for the transportation of goods over a definite route and according to a regular schedule.
Concealed Damage
Damage to the contents of a package which is apparently in good condition externally.
Consignee
Party who is to receive goods; usually buyer.
Consignor
Party who ships goods; shipper; usually seller.
Containerization
Shipping system based on large cargo-carrying containers ranging up to 40' long that can be easily interchanged between trucks, trains, and ships without rehandling the contents.
Contingency Insurance
A coverage contingent upon non-performance of a policy issued abroad. If the Assured buys or sells on terms under which the insurance is arranged by the other party, and that Insurance protects the Assured's interest in such shipment.
Contract of Affreightment
The contract of carriage between shipper and carrier, usually expressed in the Bill of Lading, but subject to the Carriage of Goods by Sea Act if a United States Port and a foreign port are involved.
C.T.L. (Constructive Total Loss)
See "Total Loss".
Declaration
Form filled out by Assured and sent to the broker and insurance company when reporting individual shipments coming within the terms of an Open Cargo Policy; usually used for declaring import shipments where evidence of insurance is not required. See "Certificate".
Delay
Even under All Risks coverage, damage due to delay is not recoverable. Most Underwriters have inserted a "Delay Clause" in the Open Cargo Policy, which states specifically that damage caused by delay is not recoverable even if the delay was due to a peril insured against.
Demurrage
1) Penalty charged to cargo that is held beyond the generally allowed number of days"free time" before it is picked up by consignee.
2) A penalty that Charterer pays vessel owner for keeping vessel at port of, loading or discharge longer than agreed in the Charter Party.
Depreciation
An allowance for a decrease in value of property through deterioration, or damage.
Detention
The prevention, by governmental authority, of vessel and/or cargo leaving port, particularly during time of hostilities.
Deviation
Any unexcused departure from the prescribed or customary way of pursuing the intended voyage covered by the Policy that is of enough significance to alter the risk, such as altering the intended route. Stowage of cargo on deck when an "Under Deck" Bill of Lading has been issued is considered a deviation. An Open Cargo Policy generally includes the Deviation Clause, protecting the cargo owner in case of deviation or change of voyage, or in case of error in the description of the interest, vessel or voyage. The carrier loses the benefit of the Exemptions from Liability in the
U.S. Carriage of Goods by Sea Act in the case of intentional deviation, unless such deviation be for the purpose of attempting to save life, or property at sea.
Difference in Conditions (D.I.C.)
An Open Cargo Policy provides automatic coverage on those shipments which the Assured is obligated to insure and specifically excludes coverage on those shipments which the Assured is not obligated to insure, such as those purchased
C.I.F. However, the party responsible for insuring such shipment could be purchasing insurance with more limited insuring conditions than the Assured would have under his own Open Policy, had he had the responsibility of placing the insurance. A
D.I.C. Endorsement gives the Assured coverage for the difference in conditions between the coverage provided by the Policy covering the shipment and the broader conditions provided by the Assured's Open
Discharge
To unload cargo from a vessel.
Due Course of Transit
Uninterrupted movement of goods from point of origin to destination without delay caused by cargo owner.
Dunnage
Loose wood or other material used in a vessel's hold to secure and support cargo during voyage to prevent movement.
Duty
A Government's tax levied on imports; in the U.S., collected by U.S. Bureau of Customs.
Exception
A notation on a shipping document (Bill of Lading or Delivery Receipt) qualifying the condition of the merchandise to indicate damage.
Exhibition Cover
A Marine Cargo Policy normally covers only while in due course of transit. An Exhibition Cover extends coverage to include while the merchandise is on exhibit (usually at a trade show) and the return shipment (unless the merchandise is sold). Only the Marine Policy can be so extended to cover while ashore; the War Policy cannot.
EX (Point of Origin)
From the point where the shipment begins movement, e.g. "Ex Factory" or "Ex Mine" or "Ex Warehouse".
F.C. & S. (Free of Capture & Seizure)
Clause excluding war risks from the Marine Policy; war risks can be covered by issuing a separate War Policy with an additional premium being charged
Fire Statute
1851 U.S. Statute that provides no shipowner can be held liable for any loss or damage to merchandise on board his vessel by reason of fire on board unless this fire has been caused by the design or neglect of the shipowner.
F.O.B/F.A.S. Endorsement
If a merchant sells on F.O.B., F.A.S., C&F, or similar terms, it is the buyer's responsibility to place the marine insurance. However, if the buyer purchases marine insurance that does not have a "Warehouse-to-Warehouse" Clause, or Marine Extension clauses, the coverage may not attach until the cargo is placed aboard the vessel. If the merchant has an Open Cargo Policy, an
F.O.B./F.A.S. Endorsement provides automatic coverage on such shipments until such time as the buyer's policy attaches. A type of Contingency coverage.
Fortuitous
Accidental; happening by chance.
F.P.A.A.C. (Free of Particular Average-American Conditions)
Limits recovery of partial losses to those directly CAUSED BY the vessel stranding, sinking, burning, or being in collision with another vessel.
F.P.A.E.C. (Free of Particular Average-English Conditions)
Limits recovery of partial losses due to a peril in the Perils Clause to those occurring on a voyage in which the vessel is stranded, sunk, burnt, or in collision with another vessel. Under
F.P.A.E.C. it is NOT NECESSARY that the actual damage be caused by the vessel stranding, sinking, burning, or being in collision, but only that one of these HAS OCCURRED during the voyage to open up the F.P.A. Warranty.
Franchise
The percentage of insured value of fixed dollar amount in the policy which must be reached before an insured loss is paid in full.
Similar to a deductible in that insured losses less than the franchise are not paid. Different from a deductible in that insured losses equal to, or more than, the franchise are paid in full.
Freight
The money charged by the carrier for transportation goods.
General Average (G.A.)
Ancient principle of equity in which all parties in a sea adventure (ship, cargo, and freight) proportionately share losses resulting from a voluntary and successful A) Sacrifice of part of the ship or cargo to save the whole adventure from an impending peril, or B) Extraordinary expenses necessarily incurred for the joint benefit of ship and cargo.
General Average Adjuster
A marine specialists who adjusts and prints the statement of General Average; appointed by the shipowner, as a rule, and in the United States is usually a member of the Association of Average Adjusters; collects security and authorizes release of cargo to owners when cargo is fully secured.
General Average Bond
A bond prepared by the General Average Adjuster wherein the owner of the goods binds himself to pay his proportion of the General Average. Ordinarily General Average Adjusters will not authorize delivery of the goods to the owner until he signs this bond which is AKA Average Agreement.
General Average Deposit
A cash deposit (usually based on the estimated percentage of General Average) which the General Average Adjuster demands from the owner of the goods to secure the payment of his proportion of the General Average. This cash deposit is usually demanded as additional security to the General Average Bond. See "General Average Guarantee".
General Average Guarantee
The Insurance Company's written guarantee to the Adjuster guaranteeing to pay the proportion of General Average finally assessed against the goods insured. This guarantee is usually accepted by the Adjuster in lieu of a cash deposit and is additional security to the bond signed by the owner of the goods.
Grounding
Striking or touching the bottom; running ashore. See "Stranding".
Hague Rules
A set of rules for the regulation of foreign bills of lading in the carriage of goods by sea that resulted from a 1921 conference of maritime nations at the Hague. The 1922 revised Hague Rules were recommended to the governments of the maritime nations or adoption as the basis for their Carriage of Goods by Sea Act which would provide for enforcement. The
U.S. adopted the Hague Rules with some changes in 1936 when it passed C.O.G.S.A.
Harter Act
1893 U.S. Statute that relieves the owner of a ship from the consequences of careless or negligent acts in the navigation or in the management of the vessel, and from liability for losses caused by inherent defects or weakness in the vessel itself, provided the owner or his manager has taken all precautions to furnish a seaworthy vessel that has been adequately equipped and manned by a competent master and crew; this act still applies to domestic water shipments by common carriers, although it has been superseded by
C.O.G.S.A. on shipments to and from foreign countries.
Increased Value Insurance
Insurance that covers an increase in the value of the property insured. A rising market usually necessitates such insurance, which is ordinarily for a separate amount in excess of the total insured value of the property which has increased in value.
Inherent Vice
A loss caused by the inherent nature of the thing insured and not the result of a casualty or external cause.
Irrespective of Percentage
Means that all loss or damage due to a peril insured against is collectible in full, without a franchise having to be reached, or a deductible applied. See "Average Clauses".
Joint Policy
A policy in which two or more underwriters (companies) participate insuring a single risk. This is not reinsurance.
