Marine Insurance Dictionary


ABS American Bureau of Shipping.
Abandonment This is a condition precedent to a constructive total loss (CTL). In order to claim a CTL the assured must tender reasonable notice of abandonment to the insurer and can do so verbally or in writing.
Act of God When a misfortune occurs which could not have been prevented by reasonable precautionary measures this is termed an Act of God.
Actual Total Loss An actual total loss can occur in four ways. (1) Where the subject matter is completed destroyed. (2) Where the subject matter ceases to be the thing of the kind insured. This is also termed “Lost of Specie”. (3) Where the assured is irretrievably deprived of the subject matter, although it has retained its specie. (4) And, in the case of hull insurance, a missing ship is deemed an actual total loss when it has been posted as “missing” at Lloyd’s
Additional Premium When an insurance has been accepted by the insurer and the premium agreed, the addition of any further liability to the insurer incurs an additional premium. The term is also used when the insurer agrees a basic premium for the basic conditions of the insurance and at the same time agrees to extend the basic conditions subject to the payment of an additional premium.
Adjuster See “Claims Adjuster” and “Average Adjuster”.
Ad Val. Or Ad Valorem An expression used to state that the value of the goods or interest is to be taken into account.
Advance Freight Freight paid in advance is, in practice, deemed to have been earned and is therefore not returnable in the event that the carrier fails to deliver the goods at destination. The owner of the cargo has an insurable interest in advance freight and can include it in the insured value of his goods.
Advance Premium An American expression denoting deposit premium.
Adventure This refers to the period during which the subject matter is exposed to perils whether insured or not.
Air Cargo Clauses The current air cargo clauses were published by the Institute of London Underwriters in 1982 for attachment to the MAR form of policy. They may be used for all sendings of goods by air, except sendings by post (ie. airmail). They provide ‘all risks’ cover, similar to the cover in the ICC(A) 1983, on which they are based. The difference between the A clauses and the air cargo clauses is found in the duration of cover.
Air Sendings Goods in transit by air. For standard insurance cover see entry ‘Air Cargo Clauses’.
Always Open A term used in the placing of open covers; it means that the insurance remains continuous from the date of inception until notice of cancellation has been given by either party and such notice has expired.
American Foreign Insurance Association A group of American Insurance Companies who offer consolidated facilities for the writing of insurance business outside the USA.
Anchor Policy A Lloyd’s Policy form.  So called because the Lloyd’s symbol on the policy contains an anchor.
A.O.A. or a.o.a. Any one accident.
A.O.B. or  a.o.b. Any one bottom.
A.O.E. Any one event.
A.O.I. or a.o.i. Any one loss.
A.O.O. or a.o.o.
or a.o.occ.
Any one occurrence.
A.P. Additional premium.
Arrests, Restraints and Detainments These perils may be expressed in a marine policy as exclusions or in a war risks policy as risks covered.  When used as exclusions they relate to all forms of arrest etc, whether the arrest, etc be judicial or warlike.  When used in a war policy as risks covered, they relate solely to warlike arrests, etc.  It is customary for a war risks policy to incorporate a specific exclusion regarding judicial arrests etc.
Assailing Thieves This term was applied, by the MIA, 1906, to the peril ‘thieves’ in the S.G. form of policy.  It limited the cover to only persons from outside the vessel who committed acts of violent theft.  With the abrogation of the S.G. policy, the peril ‘thieves’ was omitted from cargo policies, so its definition is of no importance regarding cargo insurance today.  The peril was carried on into the 1983 hull cover, but was clearly expressed as ‘violent theft by persons from outside the vessel’, so the term ‘assailing thieves’ has become obsolete.
Assignee Is the person to whom the interest or beneficial rights under a policy have been assigned.  An assigned acquires no greater rights in a policy than the assignor had, so that if the assignor is guilty of misrepresentation by which the insurer may avoid the contract, the insurer may equally avoid the contract after it has been assigned.
Assignment of Interest When the rights in a property which is the subject of marine insurance change hands the insurable interest therein is assigned by implication.  It is not to be implied that the rights in the policy are automatically assigned at the same time.
Assignment of Policy Unless the policy conditions provide otherwise, a marine policy is freely assignable to any person who has an insurable interest in the property at risk.  The policy may be assigned either at the time the interest passes or before.  It cannot be assigned after the interest passes because a person who has no insurable interest has no valid policy to assign.  In practice, agreement is made or implied to assign the policy before the interest passes.
Assignor The person who assigns his interest or beneficial rights under a policy to the assignee.
Assured The assured is the person who, having an insurable interest in the property at risk which is the subject matter of the insurance, effects an insurance in this respect.
Assurer The assurer is the person or Company who holds himself liable to compensate the assured in the event of a loss to the insured property proximately caused by a peril insured against.
Attachment Date The date on which risk attaches.  In practice, at Lloyd’s the leading underwriter enters the month the risk attaches on the broker’s slip.  This gives a basis for assessing the period of credit allowed for premium payment.
Attachment of Interest The Assured need not have an insurable interest at the time of effecting the insurance but in order to claim under the policy he must have an insurable interest at the time of loss and he must have some expectation of acquiring such interest at the time of effecting the insurance.  An assignee taking over a policy or acquiring an interest after inception of the risk may have the benefit of the assignor’s interest in respect of loss by the insertion in the policy of the expression “lost or not lost”.  (This term does not appear in the 1983 hull clauses).  Insurable interest attaches as soon as the assured is in a position where he may lose by reason of an accident to the property at risk.
Attachment of Risk The term relates to the time when the property, to which the insurable interest relates, becomes exposed to insured perils.  If an underwriter writes his line before the risk attaches, he is not liable for any losses which occur before the risk attaches.  If the underwriter writes his line after the risk attaches, it should be made clear whether he intends to cover losses incurred before he wrote his line.  Cargo underwriters do this by accepting the ‘lost or not lost’ clause in the standard (1982) cargo clauses.  There is no equivalent clause in the (1983) hull clauses.
Average This is the marine insurance term or a partial loss.   Particular charges are not to be included when calculating average.

In non-marine insurance the term “subject to average” is used in which case it means that in the event of a claim arising and it being proved that the amount insured is less than the true value the assured must bear his proportion of the loss.

Average Adjuster An average adjuster is an expert in loss adjustment in marine insurance, particularly with regard to hulls and hull interest.  He is more particularly concerned with general average adjustments.  He is usually appointed to carry out general average adjustments for the shipowner on whom falls the onus to have the adjustment drawn up.  His charges and expenses form part of the adjustment.


Bailee A party (eg port &/or dock authority, warehouseman, container operator, etc) who enters into a contract of bailment with the bailor to look after the goods whilst in the care of the bailee.  The overseas carrier is also a bailee in regard to the contract of carriage.  A bailee has an insurable interest in his potential liability under the contract.
Bailee Clause Prior to the introduction of the Institute Cargo Clauses (1982) most sets of cargo clauses incorporated the bailee clause.  Its purpose was to direct the attention of the assured to his duty to protect insurers’ interests by preserving all rights against carriers and other bailees.  Whilst the clause does not appear in the Institute Cargo Clauses (1982), its substance appears in the ‘duty of the assured’ clause, therein.
Bailor A party who entrusts his goods to a bailee under a contract of bailment.
Ballast Material carried in a vessel to ensure stability when the vessel is without cargo, or with only a small amount of cargo.  A vessel is said to be “in ballast” at such times.  The passage is called a ‘ballast passage”.  A ship proceeds in ballast when she is en route to another port for the purpose of picking up cargo.
Ballast Passage A ballast passage occurs when the vessel is on a passage from one port to another without cargo.
Bareboat Charter Under this form of time charter the charterer hires the vessel and pays all expenses incurred during the period of the charter.  The Institute Time Clauses (Hulls) automatically terminate the policy if the assured hires out his vessel on bareboat charter without first obtaining written approval from the insurers to continue the contract during the charter hire.
Barge Either dumb or powered, barges are mainly used for bulk cargo carriage, but are also used for the carriage of goods from ship to shore or vice versa and for onward carriage where the overseas vessel cannot navigate due to the shallow draught required.  A dumb barge is one without means of propulsion and it is usual for such barges to be towed individually, or in strings, by powered barges or tugs.
Barratry The MIA, 1906, defines barratry as a wrongful act, wilfully committed, by the master or crew to the prejudice of the shipowner, or, as the case may be, the charterer.  The peril is covered by the Institute Hull clauses, but is subject to due diligence on the part of the owners, managers or charterers.  The peril does not apply to cargo insurance and is not incorporated in cargo policies.
Basis of Valuation Declarations under an open cover must not exceed the limit any one vessel as provided by the cover.  Subject to this, shipments may be declared even after loss provided the shipments come within the scope of the cover.  To protect the insurer regarding the declared value of such late shipments a clause is inserted in the open cover defining the basis which shall be used to reach the acceptable insured value.

The basis normally includes the prime cost of the goods, plus insurance charges, freight and a fixed percentage representing the profit to the seller.

B.D.I. Both days inclusive.
BIMCO Baltic and International Maritime Conference.
Bilge A drainage space in a ship.  The bilges are located at the lowest part on each side of the ship (i.e. at the curbed portion which lies between the side shell plating and the bottom shell plating).  Surplus water in the ship is drained into the bilge tanks from which it is pumped out of the ship.
Bill of Lading A shipping document prepared by the shipping agent and containing a complete description of the goods to be shipped.  The carrier signs the bill of lading, but will qualify it if the goods are unsound or improperly packed.  He may refrain from qualifying the bill if the shipper is prepared to give him a letter of indemnity to protect him from liability for damage to the goods.  An unqualified bill is called “Clean” and a qualified bill is called “Foul”, “Dirty” or “Unclean”.  A “Clean” bill is only prima facie evidence that the goods were sound when shipped.  A bill of lading may be “Shipped” or “Received for Shipment”.
Bona Fide Made in good faith.
Bonded Goods Goods, on which duty has not been paid, held in bond either by the Customs or in a bonded warehouse.  Goods which are only in the port for transhipment are held in bond.
Bordereau Plural Bordereaux.  A French word in common use in the insurance market.  A schedule or list.  It may be used in reinsurance and treaties where details of the month’s or quarter’s underwriting entries by the original company are submitted on bordereaux.
Both to Blame Collision Clause In marine insurance this clause is referred to in the Institute Cargo Clauses where it is stated that the assured shall not be prejudiced by reason of signing a contract of affreightment containing the “Both to Blame Collision Clause”.  The clause in the contract of affreightment protects the carrier who has indirectly paid part of the collision damage to his own cargo by reason of the operation of some foreign laws.
Breach of Condition When a condition of the insurance is broken by the assured the insurer may avoid the contract from inception.
Breach of Contract Where one of two parties to a contract breaks one of the conditions of the contract whereby the aggrieved party suffers a wrong or injury, the aggrieved party has the right to sue for damages for breach of contract.  The marine broker being the agent of the assured, there is an implied contract between the agent and his principal, so that if this principal suffers a wrong or injury due to the broker’s negligence the broker may be sued for damages in respect of breach of contract under the law of agency.
Breach of Warranty Whether or not it affects a claim on the policy the assured must literally comply with a warranty in the policy.  In the event of breach of warranty by the assured the insurer is, automatically, discharged from all liability as from the date of the breach; but he remains liable for insured losses occurring prior to that date.
Breakage Ordinary breakage is considered to arise out of negligence and is not contemplated as an insured marine peril by the insurer when assessing the premium rate.  For this reason ordinary breakage, which occurs on fragile goods such as glass, china, asbestos sheets and earthenware, is excluded from the policy by the Marine Insurance Act (Section 55 (2)(C)) unless the policy specifically includes “breakage”.  Obviously a high rate would be charged by the insurer to include the risk on fragile goods.
Break Bulk Method of carrying cargo.  Sometimes termed “conventional carriage”.  It is carriage of goods other than by unit carriage (eg containers).  Generally, the term is applied to goods that have been carried to a certain point by container, or some other form of unit carriage, and have been removed from the container for onward carriage.
Breakdown Clause Applies to refrigerating machinery in a vessel as specified in the clause.  The clause attaches to policies covering goods which are subject to deterioration due to non-refrigeration and/or delay.  It provides that the insurer shall be liable for any deterioration proximately caused by the breakdown of machinery but only when the breakdown period exceeds 24 hours or some other specified period.
Bulk Cargo Carrier Vessels employed exclusively in carriage of bulk cargoes.  The term is generally used for coke or coal carriers.
Bulk Oil Clauses A set of Institute trade clauses published in February 1983.  In general, cover follows the same pattern as the Institute B clauses (1982), but relating to loss and/or contamination of the cargo.  Additional risks include leakage from pipelines during loading, etc; negligence of masters, officers or crew in pumping cargo ballast or fuel; and contamination due to stress of weather.  The usual exclusions are incorporated, except deliberate damage and, of course, insufficiency of packing, etc.  Duration of cover is from tank to tank with a 30 day time limit after the carrier arrives are the discharge port.  A special claims adjustment clause is incorporated.
Bullion Gold or silver valued by its weight, ignoring its coin value.
Bunkers A term used for fuel on which the ship is run.  It derives from the storage space for the fuel which is called a “bunker”.
Bureau Veritas This is a French Classification Society.  Vessels registered with the Bureau Veritas may appear in Lloyd’s Register with the notation BV shown.  The cypher to denote full class in the Bureau Veritas Register is 3/3 L1.1.


Cancellation If the risk does not attach and the subject matter is not imperilled the insurance is cancelled automatically.  Once he subject matter has been imperilled cancellation can only be effected by agreement between parties, except where one of the parties is at fault in circumstances where he aggrieved party is entitled to avoid the policy.

(See “Cancellation Clauses”, “Termination Clauses” and “Cancelling Returns”.)

Cancellation Clauses These should not be confused with a ‘termination clauses’.  A termination clause is incorporated in the contract to cancel cover immediately upon the happening of a specified circumstance (e.g. outbreak of a major war brings into operation the termination clause in a policy covering a ship against war risks and automatically terminates the policy with immediate effect).  A cancellation clause, on the other hand, is incorporated in the contract to allow either party the option of cancelling the contract by giving notice of intent.
C & F Cost and freight.  Sale term relating to goods in transit.  This is the same as C.I.F. except that the seller does not arrange insurance for the buyer.
Capacity The maximum amount of liability in the aggregate that an insurer can accept without risking insolvency.
Cargo Goods and/or property and/or merchandise carried by a vessel for the purpose of earning freight.
Cargo All Risks Clauses This term was used to define the standard Institute “all risks” cargo clauses for use with the S.G. form of policy.  These clauses were withdrawn with abrogation of the S.G. policy, in 1982.  The replacement clauses (for use with the MAR form of policy) still cover “all risks” and are known as the A clauses; but the cover is subject to many exclusion clauses which did not appear in the old clauses.
Cargo F.P.A. Clauses These were introduced for attachment to the Lloyd’s S.G. policy and its company market cargo equivalent.  With the abrogation of these policy forms the FPA clauses were withdrawn.  Insurers in the London market do not write FPA cover any more.  So there is no replacement set of these clauses available for use with the MAR form of policy.  It is not practical to use the FPA clauses with a MAR form of policy.
Cargo Interest An insurable interest connected with cargo.  The term is used when referring to any allied interest other than the cargo owner’s, which is obviously a cargo interest, to differentiate from hull interest.
Cargo W.A. Clauses This set of standard clauses was published by the Institute of London Underwriters for attachment to Lloyd’s S.G. policy or the company market cargo equivalent policy form.  When these forms of policy were withdrawn, in 1982, the ICC W.A. were, also, withdrawn, since it would be impractical to use these clauses with the MAR form of policy.  No replacement set of WA clauses was introduced for use with the MAR form of policy.
Carrier Shipowner or other person who carries goods by vessel.
Casualty An accident or fortuity.
Certificate of Insurance A document is issued to the assured certifying that an insurance has been effected and that a policy has been issued.  In marine insurance practice, certificates are used where an open cover is effected with underwriters.
Certificate of Origin Gives full details of the country of origin in respect of goods.  Is used as evidence of origin.
CFR Cost and freight – Incoterms.
Charterer A hirer of a vessel from the owner either for a period of time or a voyage.
Charterparty Conditions under which a charterer hires a vessel.
C.I.F. or c.i.f. Cost, insurance, freight.  A term of sale for goods in transit.  The seller pays all costs of transit to the final destination and arranges insurance protection on the terms specified by the buyers.  The insurance premium and shipping charge are included in the price paid by the buyer.  Whilst the seller is responsible for the goods under they are handed over to the buyer he assigns the policy or certificate to the buyer on receipt of payment for the goods, leaving the buyer to claim on the insurance in the event of an insured loss occurring.  It is customary for the insured value to include, in addition to C.I.F., a percentage to cover the seller’s profit.
CIP Carriage (or freight) and insurance paid (named point) – Incoterms.
Civil Commotions Internal national disorders.  Loss of or damage to the insured interest is not covered against this peril without the incorporation of the Strikes clauses.  The standard Strike clauses always include this peril.
Claims Adjuster An official employed by a Company to be responsible on behalf of the Company for claims settlement.
Claims Payable Abroad A provision which may be expressed in a policy and certificate, at the request of the assured, which permits the collection of claims abroad from an authorised person whose name is stated in the policy and certificate.
Classification Refers to the classing of a vessel with one of the recognised Societies.
Classification Clause This clause is used in Open Policies or Open Covers. Since such insurances are effected subject to subsequent declaration of shipments and carrying vessel it is necessary to incorporate a clause which specifies the minimum standard required for carrying vessels if the premium is to remain as stated in the scheduled attached to the insurance.
Clean An expression used to denote that the conditions of a shipping document are without any detrimental qualifications.  A detrimentally qualified document may be referred to an “unclean”, “foul” or “dirty”.  The word “clean” may also be used in insurance when referring to an open cover or a treaty or any other form of insurance or reinsurance for a period of time.  In this case it means that the insurance has suffered no claims.
Club Protection & Indemnity Club or P&I Club.
Club Call Payments by members of a P&I club to the club. When the tonnage of a member’s vessel is entered in the Club the member pays only a nominal entry fee. Periodically the Club aggregates the total claims upon the Club together with the funning expenses and sends a “call” to each member to pay his proportion of the total outgoings of the Club.
C.M.R. Convention on the Contract for the International Carriage of Goods by Road.
C/N Cover Note or Credit Note
Coastal Liner Small liners up to 4,500 tons approximately engaged in coastal and local voyages.
C.O.G.S.A. Carriage of Goods by Sea Act.
Co-Insurance When two or more insurers each have part of the risk under a single insurance.
Collision Means collision or actual contact with another ship or vessel. In determining collision liability, where the insured ship collides with another vessel it is necessary to be more specific in determining what, in fact, constitutes a collision; this requires actual physical contact between two vessels and does not embrace excessive wash, nor liability incurred by the assured by reason of contact of the vessel with anything other than a vessel.
Collision Costs Legal costs incurred in defending an action by the other vessel’s owners against the insured vessel or in pressing a claim against the other vessel to recover in respect of damage to the insured vessel.
Combi Ship A ship designed to carry cargo both conventionally and by container.
Commencement of Adventure The adventure commences when the insured interest is exposed to the possibility of peril.
Common Carrier A carrier who agrees to carry any goods. A carrier who refuses to carrycertain types of good, mainly for safety of the vessel and other cargo, is not a common carrier.
Compliance with a Warranty A warranty must be strictly complied with, whether or not is material to the risk, or the insurer is discharged from liability as from the date of the breach.
Concealment Non-disclosure of a material circumstance probably amounting to fraud.
Condition A condition is imposed in the contract by the insurer and must be literally complied with unless it is waived by the insurer. A condition goes to the root of the contract and non-compliance by the assured enables the insurer to avoid the policy from inception.
Conference Lines A liner conference is a group of shipping lines regularly serving a particular trade route and aimed at reaching agreement on the stabilisation of freight rates and on organisation and working conditions in that trade.
Conference System A system employed by shipping lines to establish regular services and economic running of their lines.
Consequential Loss A loss following and consequent on a loss proximately caused by a peril insured against. The insurer is not liable for consequential loss. Neither is consequential loss allowed in general average except where it is directly consequential on the general average act. Loss of market is an example of consequential loss.
Consideration This term has more than one meaning in marine insurance.  It can relate to the premium paid to bind the insurer to the performance of the contract and is used in this manner in the policy wording.  The MIA (1906) uses the term in regard to the insurer’s obligations under the contract, when it refers to return of premium because the consideration for which the premium was paid totally fails.  In simple terms, the Act is referring to circumstances where the subject matter insured is never exposed to risk.
Consign To despatch goods.  To send forward.
Consignee Person to whom the goods are consigned.
Consignor The person who consigns the goods.
Construction Total Loss In marine insurance the assured has the right to abandon the insured property to the insurer and to claim a constructive total loss where, because of the operation of an insured peril, (a) the insured is deprived of the insured property and is unlikely to recover it, or (b) an actual total loss appears to be inevitable, or (c) in the case of a ship – the estimated costs of recovery and repair would exceed the repaired value or (d) in the case of cargo – the estimated costs of recovery, reconditioning and forwarding to destination would exceed the arrived value.

It is a condition precedent to a CTL claim that the assured must give notice of abandonment to the insurer.

Constructive Total Loss Clause In a cargo policy this clause, merely, indicates to the assured the circumstances in which he can claim a constructive total loss, as provided by the MIA (1906).  In a hull policy this clause reduces the assured’s legal rights in claiming a CTL, in that it replaced the ‘repaired’ value with the ‘insured’ value in the calculation.  This prevents the assured from claiming a CTL where the repaired value is less than the insured value and the comparison costs do not exceed the latter.
Container A large metal box in which many packages can be stowed in advance of loading on the ship so that the container can be loaded, stowed and discharged as a complete unit.  Containers vary in length and size being up to some 40 ft. long and 8 ft. wide.  They are of light, but strong, metal construction with opening doors at either end.  Some containers, generally of only 20 ft. in length, have been designed with side opening doors as well.  Special loading and unloading facilities are generally necessary at the ports of loading and discharge.  Uniformity in size and design of the containers and specialisation by the carrying vessels are essential for the efficiency of carriage by containers.
Contamination Losses proximately caused by contamination are not covered by the policy.  Losses due to contamination but proximately caused by a peril insured against (i.e. seawater damage) are recoverable.  The policy may be extended to cover the risk of contamination if the insurer agrees to accept this peril.
Contingency The happening of a foreseen occurrence or event, but which is not an inevitability.  For example, “Back Freight”.
Contingency Risk An insurance when the insurer holds himself liable to pay a fixed amount in the event of a specified contingency occurring.
Contingent Interest An insurable interest which may attach during the currency of the adventure by the happening of a contingency.  Buyer’s interest may be a contingency interest if he acquires title to the goods after the commencement of transit.
Contract of Affreightment The bill of lading or other form of contract in respect of the carriage of goods.  It is one of the documents of title required as collateral by a bank when advancing credit against goods in transit.
Contract of Carriage The contract between an overseas carrier and the consignor of cargo carried aboard the ship.  This is usually in the form of a bill of lading.
Contract of Marine Insurance An agreement whereby the insurer undertakes to indemnify the assured to the extent agreed in the event of a marine loss.  The contract is concluded when the insurer initials the slip.  The contract is not valid in law unless it is embodied in a properly executed policy.
Contractual Liability Liability incurred by a party to a contract to the benefit of the other party.  Legal liability is in the absence of contract.
Contribution There are two meanings for this term in marine insurance.  The first is used when at the time of loss there are in existence two or more insurances covering the same interest.  This is termed double insurance and, provided there is no fraud, the Marine insurance Act 1906 in Section 80 provides that each insurer is bound to contribute, with other insurers, rateably toward the loss in proportion to the amount for which he is liable under the policy.  An insurer who, in such circumstances, has paid more than his rateable proportion may claim a contribution for the amount overpaid from the other insurers.  In any case, the insured may not recover more than a property indemnity, that is the amount of his loss plus and profit included under a value policy, over all.  The second use of the term “contribution” concerns the insured’s contribution to general average of salvage charges and the insurer’s liability in respect thereof.
Contributory Value The value on which general average contributions are based.  It is the nett arrived value of the interest plus any amount to be made good in general average.
Conventional Carriage The carriage of goods packaged or in small units, other than by container.
Conveyance Craft, lighter, rivercraft, barge, road transport, rail or similar.  The overseas vessel is not intended to be embraced by the term.  Aircraft where no sea transit is involved are not embraced, now where the use of aircraft is not a customary method of mobbing the goods inland to or from the port.
Cost of Removal If it is necessary for the vessel to be removed to another place for repair, with the insurer’s approval, the costs of removal and return if necessary are part of the reasonable cost of repairs.
Costs Legal costs incurred by the assured in defending a claim for which the insurer would be liable.  Where the insurer approves the defence action these are borne by the insurer.  May also refer to expenses incurred in connection with a general average act.
Country Damage Damage or deterioration of baled or bagged goods (such as cotton or coffee), prior to loading on the overseas vessel, caused by the absorption of excessive moisture from damp group or exposure to weather, or damage or deterioration from grit, dust or sad forced into the subject matter of the insurance by windstorm or inclement weather.
Cover Note A document issued by a broker to the assured evidencing the terms and rate on which an insurance has been placed.  The insurer has no legal obligation under a broker’s cover note, but in the event of negligence of the broker whereby the assured is prejudiced the cover note may be used by the assured in evidence against the broker.
C.R.O. Cancelling Returns Only.
Cubic Ton For the purpose of calculating displacement tonnage 33 cubic feet of water is deemed to be equivalent to one cubic ton.  For the purpose of calculating gross and net registered tonnages 100 cubic feet of space is deemed to be the equivalent to one ton.
Cut Through Clause The original assured has no legal rights in a reinsurance contract.  In the absence of any express provision to the contrary in the reinsurance contract, where the reassured does not settle a claim on the original insurance, no claim is collectible under the reinsurance contract.  This means that the unsatisfied original assured cannot pursue an action against the reinsurer to reimburse himself for his loss.  A cut through clause is a condition in the reinsurance contract which guarantees payment to a party who is not party to the reinsurance contract.  Thus, depending on how it is worded, the clause might afford the opportunity for the original assured to claim directly from the reinsurer.


DAF Delivered at frontier – Incoterms.
Damage by other cargo Taint damage or contact damage to the insured cargo caused by other cargo.  Without the operation of an insured peril damage by other cargo is not covered y the policy.
Damaged Value The actual value on arrival at destination.  On hulls this is the value without any repairs being taken into account.  On cargo the value may be net or gross.  Gross damaged value is the value of the damaged cargo after all landing charges and duty have been paid.  Net damaged value is the value of the damaged cargo before all landing charges and duty are paid.  Claims are calculated on cargo by comparing sound and damaged gross values.
Dangerous Goods If goods of a dangerous, explosive or inflammable nature are shipped, without consent of the master or his knowledge of their nature, the master may land or destroy or render innocuous the goods without any compensation being payable to the owner.  The shipper may be held liable for damages and expenses in respect of such goods.  The master may treat equally any goods of such dangerous nature loaded with hi s knowledge and consent, if they become a danger to the ship or cargo, without incurring any liability except to general average, if any.
DCP Delivered carriage (or freight) paid (Incoterms).
Deadfreight When space is booked on a vessel but is not used the freight is still payable and is called “deadfreight”.  The right to such deadfreight is usually exercised only under charterparties.
Deadweight Tonnage A calculation based on the weight of cargo, stores and fuel necessary to bring the ship down to her loadline marks.  It is often defined as being the carrying capacity of the ship.  Where practical, hull insurers use a formula for determining the deadweight of a ship as a basis for calculating her size in estimating the appropriate premium necessary to cover the anticipated cost of repairing the ship.
Deck Cargo Cargo carried on deck.  Such cargo is not embraced by the terms of the Carriage of Goods by Sea Act 1924.  Insurance on cargo is deemed to apply only to cargo under deck unless the insurance specifically states the cargo is carried on or over deck.  Jettison of deck cargo is only allowable in general average if the cargo is so carried by custom of trade.
Declaration A statement.  An advice made by the assured under an open cover.
Deductible An amount or percentage specified in the policy which must be exceeded before a claim is payable.  When the deductible is exceeded only the amount which is in excess of the deductible is recoverable under the policy.  At one time it was common for the word ‘excess’ to be used for this purpose in English policies, but this practice has died out in favour of ‘deductible’.  The deductible is, normally, expressed in the policy as a sum of money and is, generally, applied only to partial loss claims.
Defeasible Interest A defeasible interest is an insurable interest which ceases during the currency of the voyage.  Such an interest would be the interest of a seller who loses title to goods whilst they are enroute.
Defence Costs Legal expenses incurred by the assured in defence of a claim for which the insurer would be liable.  It is the practice for the insurer to agree to reimburse the assured for such costs where properly incurred with the insurer’s consent.
Delay Losses proximately caused by delay are excluded from cover (this applies, equally, to a cargo insurance covering ‘all risks’), even though the delay may be caused by an insured peril.  The exclusion does not affect liability for general average or salvage contributions, even though these may incorporate expenses consequent upon delay.
Demise Charterparty Occurs when the charterer agrees to take over the vessel completely for a period of time, whereby he supplies his own master, engineers and crew.
Demurrage Money paid to the shipowner in compensation for delay of a vessel beyond the period allowed in a charterparty when loading or discharging.  In marine insurance the term is used to denote any loss of hire period incurred by the shipowner.
Denting Peril mainly affecting hollowware metal products.  It is usual to exclude this peril unless the premium is loaded to cover the risk.
Deposit Premium A premium paid in advance as a deposit when it is not practicable at the time of placing to assess the final premium.  It is usual for a provision to be made at the time of placing to allow for adjustment on expiry of the policy.  In some cases the deposit is specified as a minimum premium, in which case the adjustment is made only if the final premium exceeds the deposit premium.
Depreciation Loss in value.  A percentage of depreciation is assessed in respect of cargo damage to apply to the insured value to ascertain a claim.  When a vessel is unrepaired at the expiry of the hull policy a reasonable allowance is given under the policy for depreciation by reason of the unrepaired damage, but not exceeding the reasonable cost of repairs had they been carried out at the proper time.
Description of Goods Goods must be described in the policy with reasonable certainty in order that they may be readily identifiable as being the subject matter covered by the policy.  It is usual to show the “marks” on the policy for this purpose.
Detainment Refers to the act of detaining ship or cargo and depriving the assured from the use thereof.  Detainment by executive or political acts is excluded from both hull and cargo policies covering marine risks, but is deemed to be covered by war risks policies.
Deterioration Loss in quality without the help of an outside agency.  Since this is not a fortuity it is not embraced by the term “risk”, so deterioration is not covered by an “all Risks” policy unless it is specifically included.  Deterioration cover is generally sought by the owner of perishable goods, the proximate cause of loss being delay.  Delay is an excluded peril unless the policy states otherwise, hence it is usual in deterioration insurance to state “including deterioration from any cause whatsoever.
Deviation Clause A clause in a hull voyage policy which provides that the assured shall not be prejudiced by deviation on condition that he notifies the insurer immediately he is advised of the deviation and agrees to any amended conditions and an additional premium, if required. A bill of lading or charterparty usually contains a deviation clause allowing the vessel to deviate without liability of the carrier to the cargo owner in respect of such deviation.
Dirty Bill of Lading See “Bill of Lading”.  A bill of lading is labelled “dirty” when it is qualified by the carrier stating that the goods were not sound or were improperly packed when received by the carrier for carriage.
Discolouration Applicable to metal products.  Synonymous with “rust”.
Displacement Tonnage See “Load Displacement” and “Light Displacement”.
D/O Delivery order.
Double Insurance Double insurance occurs when two or more policies are effected on the same interest and adventure so that the total sum insured exceeds the properly insurable amount.  The assured may claim on either policy but he may not retain more than the properly allowable indemnity.
Draught The depth of water required to maintain a vessel afloat.  May also be spelled “draft”.
Draught Marks Marks cut in the stem and sternpost of a ship.  A mark is cut every 12 inches and the depth from the lowest point of the keel is indicated by 6 inch figures.
Dumb Barge A barge which has no means of propulsion.
Dunnage Timber or other means of packing used to separate cargo in stowage, thereby preventing damage during the voyage.
Duration of Cover – Cargo In the majority of cases goods are insured on a warehouse to warehouse basis.  In general, cover attaches as the good leave the warehouse or place of storage at the place named in the policy and terminates when the goods are delivered to the final warehouse or place of storage at the place named in the policy.  The goods are deemed to be insured on a ‘voyage’ basis, and, except for the period after discharge from the overseas vessel, there is no overall time limit to the cover.  The basic cargo clauses apply a time limit of 60 days from midnight on the last day of discharge from the overseas vessel.  In certain trades special clauses have been agreed, in which the point of attachment and termination may vary from the norm; further the time limit after discharge may, also, vary.  Details regarding duration of cover are expressed in the ‘transit clause’ for both the basic cargo clauses and the various sets of trade clauses.  Cover against war risks is restricted to the time during which the goods are waterborne; although this rule is relaxed a little during transhipment at an intermediate port or place.


Earned Premium Premium in respect of that part of the insurance where the adventure has attached and terminated and during which the insurer was on risk.  If the policy pays a total loss the whole premium is deemed earned.
Excess A deductible.  An amount or percentage specified in the policy which must be exceeded before claims are payable.  When the amount or percentage is exceeded only the excess of that amount or percentage is payable.
Ex Gratia Payment A payment made by the insurer in respect of a claim for which he is not legally liable.  The insurer may make such a payment as a sign of goodwill or  to accommodate a valued assured.  It is important to note that a reinsurer is not obliged to follow an ex gratia payment made by the original insurer.
Experience The past claims experience of the assured.  When a broker approaches an insurer he must be prepared to disclose the experience of the assured to the insurer.  Failure to advise the insurer correctly on this material fact, on enquiry, amounts to non-disclosure and the insurer may avoid the policy from inception unless the difference between what was stated and what was true merely diminished the risk.
Ex Quay Expression in a sale contract whereby all charges are the responsibility of the buyer once the goods are delivered to the quay.
Ex Ship In a sale contract the obligation of the seller is to pay freight to destination if agreed “ex ship”.  The insurable interest is generally a seller’s interest on the sea voyage in such cases, the buyer’s interest attaching “ex ship”.
Ex warehouse A term for the sale of goods.  The term usually relates to the seller’s warehouse.  The buyer is responsible for the goods and all charges from the time they leave the seller’s warehouse.  The title to the goods usually passes to the buyer at this point, subject to agreement to the conditions for payment for the goods, and insurable interest during the whole period of transit is vested in the buyer who normally arranges his own insurance.  Where the term relates to a port warehouse or to a warehouse other than that of the seller the seller remains responsible for the goods until they leave such port or other warehouse, arranging his own insurance up to the time his interest passes.


Face of Cargo A shipping term used in respect of stowage.  Where cargo is stowed in such a manner that any side of it is exposed and unsupported by either the side of the ship or by other cargo the exposed side is called the “face of the cargo”.  This face should be properly braced to prevent the cargo shifting.  Particular attention should be given to the strength of the bracing where the face overlooks other cargo which may be damaged by contact in the event of movement of the facing cargo.
F.A.P. French abbreviation which means the same a F.P.A. or Free of particular average.  Franc d’Avarie Particuliere.
F.A.S. or f.a.s. Free alongside steamer (or ship).  A term of sale for goods in transit.  The seller is responsible for the goods and all charges until the goods are delivered alongside the overseas vessel to await loading.  The buyer’s responsibility attaches as the seller’s interest ceases.  Whether or not the seller arranges insurance for himself beyond F.A.S. depends on the terms of payment for the goods, for the seller’s insurable interest continues until title to the goods passes to the buyer.
F.C. & S. Free of capture and seizure.
f.i.o.s. Free in and out stowed (shipping).
f.i.o.s.t. Free in and out stowed and/or trimming (cargo shipping term).  ‘Stowed’ related to bagged or packaged cargo, whereas ‘trimming’ relates to bulk cargo.
Flotsam Goods lost from a vessel which remains afloat.
FOA FOB airport; Fuel Oil.
F.O.B. or f.o.b. Free on board.  This term of sale for goods in transit can be applied to various points in the period of transit, as specified in the sale of contract.
F.O.C. Flag of Convenience.
Force Majeure An act of God.  Any occurrence completely beyond human control and which could not have been avoided by foresight.   A superior power.  Circumstances beyond one’s control (eg. an earthquake).
Forwarding Charges A clause in the Institute cargo clauses provides that, where the overseas carrier terminates the contract of carriage short of destination and discharges the insured goods at such port or place, the insurance cover shall also terminate unless the assured gives prompt notice the insurer to request continuance of cover.  Subject to compliance with this condition, and payment of an additional premium if required, cover will be continued for an agreed period (usually 60 days, but variations occur in trade clauses) at such port or place.  If the goods are sold and delivered at the port or place before expiry of the period cover terminates immediately on such delivery.  If the assured decides to forward the goods to the destination named in the policy, and does so within the agreed (eg 60 day) period, cover continues in the normal way to terminate in accordance with term of the transit clause.
F.P.A. Free of particular average.  Refers to a policy which does not cover particular average losses.  This type of insurance was common in the London cargo insurance market until the new clauses were introduced for use with the MAR form of policy.  Then the standard FPA clauses were withdrawn and the FPA method of insurance was discontinued.  However, whilst many overseas markets have followed the London market change in practice, this is not so in every market.
Free Alongside Ship A sale term for goods in transit which means that the seller’s interest in the goods ceases when the goods are delivered alongside the vessel.  Loading risk being the interest of the buyer.
Freeboard The depth from the underside of the main deck to the waterline.
Free in and out Chartering term whereby the charterer of a vessel under voyage charter agrees to pay the costs of loading and discharging the cargo.
Freight Ton A system of charging freight.  A freight ton can be calculated either by weight of 2,240 lbs. of cargo or by sea occupied by the cargo at 40 cu. ft per freight ton.  The former method is used when the cargo is heavy but occupies a small space.  The latter method is used when the cargo is light but occupies a large space.
Frozen Food Clauses The Institute cargo clauses for frozen food were published in January 1986 for use with the MAR form of policy.  They are available for use in respect of all forms of frozen food, except frozen meat.
Frozen Meat Clauses Although the 1986 frozen meat clauses, for use with the MAR form of policy, follow the pattern of the ICC (1982) regarding the basic structure of the conditions, no B set of clauses was published.  However, there are two sets of A clauses in addition to a set of C clauses.  The frozen meat clauses are not designed for the insurance of chilled, cooled or fresh meat, nor for any frozen products other than meat.  In common with other sets of trade clauses, the frozen meat clauses follow the standard ICC (1982), but with amendments to suit the particular type of cargo.


G/A or G.A. General Average.
G.A. Act General Average act.
Garbling The removal of damaged tobacco from a bale which contains a quantity of sound tobacco.  This prevents further loss and provided the damage is from an insured peril insurers pay the cost for garbling.
General Average The term ‘average’ is used in marine insurance in connection with partial loss.  When related to ‘particular average’ it is concerned only with accidental damage to insured property.  When used in connection with ‘general average’ it can relate to deliberate sacrifice of property, GA expenditure and GA contribution.  General average is a ‘rule of the sea’ and is incorporated in all contracts of carriage.  It applies, therefore, to property at risk in a common adventure, whether or not the property is insured.  It can be applied, also, the freight being earned by a ship operation whose ship is involved in a GA act.  The saving of life or personal effects is not included in a GA adjustment.

General average is a principle whereby all parties to an adventure, who benefit from the sacrifice or expenditure, must contribute to make good the amount sacrificed or the expenditure incurred.

General Average Contribution A payment by one of the parties involved in a general average adjustment toward the average fund.  The contribution is based on the contributory value of the interest and is such proportion of the fund as the contributory value of the individual interest bears to the total of the contributory values of all the interests that contribute to make good the GA loss.
General Average Fund A fund created by the shipowner and Average Adjuster jointly from the deposits collected in respect of a general average adjustment.  Interest accrues in the fund on the deposits and is credited to the depositors.  The shipowner may be allowed to draw direct on the fund for general average expenditure without awaiting the final adjustment.
General Average Guarantee In the American market the term “average bond” is used to describe a general average guarantee.  When a consignee is required to furnish a general average deposit he may call upon the insurer of the goods to pay the deposit for him.  The insurer is not obliged to do this.  Alternatively, the consignee may request an underwriter’s guarantee.  The insurer may agree but he may wish to qualify the guarantee to ensure that he is not held liable for more than the proper amount due under the policy (see “General Average Contribution”).
General Average Sacrifice The sacrifice of property exposed to risk in a marine adventure in time of peril for the purpose of preserving the remainder of the interests from a total loss.
General Average Loss A loss or damage to the insured interest directly consequential on a general average act.  It includes both expenditure and sacrifice.
Germanischer Lloyd This is a German Classification Society.  Vessels registered with Germanischer Lloyd may appear in Lloyd’s Register with the notation GL.  The cypher to denote full class in the Germanischer Lloyds Register is 100A4.
Gross Regional Tonnage The tonnage of a ship as registered before deduction of light and air spaces, machinery and navigating spaces and other parts of the vessel to arrive at the net registered tonnage.  Port charges, canal dues and other charges are based on the net registered tonnage .  This form of tonnage is not calculated on weight but on 100 cubic feet per registered ton or at 1,000 cubic centimetres per ton if based on metric tons.  The gross tonnage of a warship is her displacement tonnage, calculated by the cubic area occupied by the vessel below the water line at 33 cubic feet per ton.
Groupage A system whereby relatively small units of cargo are grouped together to be stuffed into a container.
G.R.T. Gross Registered Tonnage


Hague Rules Following an International Maritime Law Conference in Brussels in 1922 a set of rules was agreed to establish the rights and immunities of carriers in respect of the carriage of goods by sea.  Many of the countries agreeing to the rules later incorporated them in statutory Acts, such as the “Carriage of Goods by Sea Act 1924”.  These rules were replaced by the Hague/Visby rules in 1968 and the Carriage of Goods by Sea Act (1971) followed to replace the 1924 Act.  Further agreements resulted in the Hamburg Rules in 1978, although, so far, no further UK Act has appeared to give legal effect to the Hamburg Rules.
Hague/Visby Rules A set of rules devised by international agreement to amend the Hague Rules, 1924, and the basis for determining the rights and responsibilities of overseas carriers and shippers in regard to the carriage of goods.  The amendment took the form of the Brussels Protocol of 1968 but could not be enforced at law until sufficient signifying countries had ratified the agreement.  The British Carriage of Goods by Sea Act, 1971, was based on the amendment, but due to delay in ratification by the required number of countries, did not receive Royal Assent until 1977.  At the time of revision (1987), although acceptance of the rules is not worldwide, more than 20 countries have ratified the rules.
H & M A slip abbreviation used for the insurance of a ship and meaning ‘hull and machinery’.  Where used in relation to the insurance of a sailing vessel, the abbreviation is deemed to mean ‘hull and materials’.
Hamburg Rules The United Nations held a diplomatic conference in March 1978 to consider a UNCITRAL draft convention on the carriage of goods by sea which draft had been approved by UNCTAD.  The delegates adopted a set of rules which came to be known as the ‘Hamburg Rule’.  For these rules to receive force of law they need to be ratified by twenty countries.  However, at the time of revision (1987) only a few countries have ratified the rules.
Harter Act U.S.A. law passed in 1893 to protect shipowners from liability for damage to cargo due to faults or errors in navigation provided the shipowner has exercised due diligence to ensure the vessel is properly manned, equipped and seaworthy.  Partly superseded by the introduction of the U.S. Carriage of Goods by Sea Act 1936, the Harter Act now applies only to coastwise shipping not embraced y the U.S. Carriage of Goods by Sea Act.
Hatch or Hatchway Opening in a ship’s deck through which cargo is lowered to or brought up from the holds.
Haulage A charge made by the Rail, Canal or Dock Authorities for the use or haulage of trucks, carriages or wagons whether loaded or not, also for the use of lines.  A separate charge is made if the Authorities provide loading and unloading services.
HAWB House Air Waybill. An air waybill issued by a freight forwarder.
H B/L House Bill of Lading. A bill of lading issued by a freight forwarder or non-vessel owning carrier (NVOC).
H/C or h/c A slip abbreviation for ‘held covered’.
Heavy Lift A single unit of cargo that is too heavy to be handled by the average ship’s cargo handling gear.  Specialised vessels, termed ‘heavy lift” ships, are fitted with derricks capable of lifting single items weighting anything between 25 and 1,000 tons.
Held Covered This term is used where an assured wishes to be certain, in advance, that his interest will continue to be insured in the event of a circumstance arising whereby the insurance would not continue in the absence of any prior agreement.
Hellenic Register of Shipping A Greek Classification Society wherein Greek registered vessels are classed.  The highest class in this register is shown by the cypher A100E.  Vessels classed with the Hellenic Register may appear in Lloyd’s Register with the notation HR.
High Seas Parts of oceans and/or seas which are not within any territorial waters and are therefore beyond the jurisdiction of any State.
Hold Part of a ship below deck where cargo is stowed.  Ships are divided by bulkheads into several holds which are numbered consecutively.
Hold Harmless An American expression used when a claim has been paid but there is a possibility of the claim being put forward a second time legitimately by another party.  By the term the assured agrees to “hold harmless” the insurer in such an eventuality.  That is, the assured agrees to refund to the insurer the claim paid.  Also used when an assured is required to give to a third party a “hold harmless” agreement in which case the insurers are asked to accept the assured’s liability arising from such agreement.
Home Port The Port of Registry of a ship.
Home Trade Shipping trade within U.K. limits.  Usually deemed to include Continental ports between Brest and Elbe.
Hook Damage Holes torn in baled goods or made in sacks, causing leakage, by the handling hooks used by stevedores.
Hull This is the shell of the ship without taking into account the ship’s machinery.
Hull and Machinery A term used in a hull slip or policy to define the subject matter insured as being the named ship itself, rather than an ancillary shipowner’s interest relating to the ship.


I.C.C. Institute Cargo Clauses; International Chamber of Commerce.
Implied Condition A condition that does not appear in the policy but which is understood to be incorporated therein and is equally binding as though it were expressed in the policy.
Implied Warranty A warranty that is not expressed in the policy specifically but which is understood by both parties to be incorporated in the contract.
Inadequate Packing Goods should be packed adequately to withstand the normal hazards to be encountered in the contemplated transit.  It is the consignor who decides the method of packing in most cases, although the insurer may influence the decision with an express warranty requiring that the goods be packed professionally.  The cargo insurer does not intend to cover loss of or damage to the goods caused by inadequate packing and, to reinforce this intention, the ICC A, B & C all incorporate an exclusion clause, which states that the insurance does not cover loss, damage or expense cause by insufficiency or unsuitability of packing or preparation of the subject matter insured.  Improper stowage in a container, or lift van, is deemed to be inadequate packing, in practice, and this is, also, affected by the exclusion clause, but only if the stowage is carried out prior to attachment of cover or by the assured or their servants.
Inception of the policy The time when the insurance comes into force.
Inchmaree Clause In the case of Thames & Mersey Marine Ins. Co. Ltd. v Hamilton, Fraser & Co., 1887, it was held that the S.G. policy did not incorporate the peril ‘negligence’.  The vessel involved was called the ‘Inchmaree’ and when a new clause was introduced to hull policies, following the court decision, to extend cover to incorporate negligence of master officers or crew the clause became known as the Inchmaree clause.  For nearly 100 years this clause was an integral part of the clauses used in hull policies.  During this time it was amended several times, mostly to add further perils as the need to cover additional perils arose, so that it became alternatively referred to as the ‘negligence’ clause or the ‘additional perils’ clause.  It was withdrawn as a separate clause when the 1983 hull clauses were drafted for use with the MAR form of policy.  Such parts of the Inchmaree clause that were retained were incorporated in the ‘risks’ clause in the new hull clauses.
INCOTERMS A set of international rules for the interpretation of terms used in overseas trading.  The rules were first introduced by the International Chamber of Commerce in 1936 and were updated in 1953 and again in 1980.  Their use is optional, but incorporation of the rules in a trading contract reduces misunderstandings which can arise in interpretation of the terms in the contract.
Increased Value Clause – Cargo The ‘increased value’ clause appear in all sets of Institute Cargo Clauses used for attachment to the MAR form of policy.  These include the ICC (1983) A, B & C and all sets of trade clauses based on any of these.  The effect of the clause is to increase the insured value in the policy by aggregating it with the insured value in the other policy; thereby making the sum insured in each policy a proportion of the full value insured and reducing the insurer’s liability under the policy in proportion to the under insurance indicated by comparing the sum insured with the aggregated insured value.
Increased Value (Cargo) The value expressed in a policy of marine insurance is conclusive between the insurer and assured whether it is correct or not.  It is the duty of the assured to advise an insured value which is as near as it is possible to estimate that the actual gross arrived sound value will be.  When goods are sold after the insurance has attached they are generally insured for the price the seller expected to get at destination.  The buyer, naturally, expects to obtain more for the goods than he paid for them and so the insured value based on the seller’s price is probably lower than the arrived value is estimated by the buyer to be.  In such cases the buyer will wish to insure for the excess over the existing value to the increased value for the cargo.  It is customary for the buyer to insure for an additional amount on the same terms as the existing policy and it is generally more convenient to arrange for an increase in the insured value on that policy.
Indemnity The making good of a loss to the assured by financial payment.  It does not include any profit to the assured in its pure sense but may, in practice, embrace some profit by agreement as in the case of cargo “valued policies”.
Indirect Damage Damage caused indirectly by a peril insured against but not proximately caused by such peril.
Inevitable Accident Where an accident occurs and no fault can be attributed to any of the parties involved.  No liability therefore attaches to the assured concerned, nor has he any claim on the other party.
Inevitable Loss A loss which must happen and which is not dependent on a fortuity.  This is not an insured peril, nor can it be a general average loss.
Infestation Infested with vermin.  Unless the policy specifically includes this risk it is excluded from the policy.
In Force A policy or contract is in force from the time it has been accepted by the insurer to the time it expires or is cancelled.
Inherent Vice A quality inherent in the nature of goods which results in inevitable loss of or damage to the goods in certain circumstances.  Spontaneous combustion is a form of inherent vice.
Initial Premium A deposit premium.  A premium paid at inception of the insurance with the intention of adjustment to the correct premium later.
Inland Marine Inland marine is one of these categories and embraces river, canal and inland water risks of small craft, barges, also piers, wharves, bridges and similar items incidental thereto.  In the American market the inland marine risks extend to such insurances as “horse and wagon” and others which have no connection with marine business at all.  The marine market usually writes inland marine risks, some of which come under incidental non-marine business.
Inst. Class. Institute Classification Clause (Cargo).
Institute Cargo Clauses A This set of standard cargo clauses (C1.252 1/1/82) was published by the Institute of London Underwriters for attachment to the MAR form of policy only.  In practice it is referred to as the ICC (1982) A and is used in circumstances where the insurer and assured agree to ‘all risks’ conditions in a cargo insurance contract.
Institute Cargo Clauses B This set of clauses (C1.253 1/1/82) was introduced by the ILU for use only with the MAR form of policy.  There is no equivalent set of clauses for use with the S.G. form of policy.  In practice, they are referred to as the ICC(1982) B.
Institute Cargo Clauses C This set of clauses (C1.254 1/1/82) was introduced by the ILU for use only with the MAR form of policy.  There is no equivalent set of clauses for use with the S.G. form of policy.  The clauses are available as an alternative to the ICC(1982) B, on which they are based.  They are identical to the B clauses, except in the case of the specified perils covered under clause 1, some of the perils in the B clauses being omitted from the C clauses.  The omitted perils relate to earthquake and volcanic eruption, loss or damage by water, loss overboard and sling losses.
Institute Cargo Clauses – Air This set of clauses (C1.259 1/1/82) was introduced by the ILU for use only with the MAR form of policy.  For outline cover one should refer to the entry under the heading ‘Air Cargo Clauses’.  The air cargo form of policy have been withdrawn by the ILU.
Institute Classification Clause See “Classification Clause”.
Insurable Interest English law prohibits any person from entering into a contract of marine insurance where the proposer has no insurable interest in the adventure to be insured, nor any reasonable expectation of acquiring such interest.  An ‘insurable interest’ means that the proposer must stand to lose something if the property at risk is lost, damaged or detained or he may incur a liability in respect of the property or suffer  because it fails to arrive on time.
Insured Peril A marine insurance policy covers losses proximately caused by the perils insured by the policy (some cargo clauses express perils in respect of which the assured need only prove that the loss was reasonably attributable thereto for a claim to succeed).  An insured peril may be specifically expressed in the policy or be embraced in a general description, such as ‘all risks’.  A peril which is not embraced within the policy conditions is termed an ‘uninsured’ peril.
Insured Value The value expressed in a policy as an agreed value for insurance purposes.  The MIA (1906) section 27 provides that the value so specified in a marine insurance policy is, in the absence of fraud, conclusive between insurer and assured of the insurable value of the property insured.
Interest The relationship of the assured to the subject matter of the insurance; whereby the assured may suffer loss or incur liability in the event that the subject matter is lost or damaged.
Interruption of Voyage The ICC(1983) provide that, where the goods are discharged at an intermediate port or place, and the contract of carriage is terminated, the cargo insurance cover, also, terminates at the same time.
In transitu In transit, applies to goods during the voyage.
Inure To come into use or effect, or to serve for one’s use or benefit.
Irrevocable Letter of Credit A letter of credit whereby the issuing bank undertakes the obligation of the buyer to the seller to settle the debt express therein, subject to the seller fulfilling certain specified conditions and subject to confirmation by the buyer.


j. and/or w.o. Jettison and/or washing overboard.
Jason Clause A clause appearing in contracts of affreightment where disputes may be subject to American Law.  By the Harter Act 1893 the shipowner is not liable for faults in navigation or management provided he has exercised due diligence to make the vessel seaworthy.  Nevertheless he could not claim any contribution from the cargo owner for general average expenditure or sacrifice which resulted from faulty navigation or mismanagement.  Carriers, therefore, introduced a clause into contracts of affreightment whereby the cargo owners agreed t6o pay such contributions.  The case of the vessel “Jason” in 1912 tested the validity of the clause, and the present clause, the “New Jason Clause”, provides that the expenditure or sacrifice must not result from lack of due diligence by the shipowner for the cargo owner to be liable for general average contributions.
Jetsam Goods jettisoned from a vessel.
Jettison Casting property overboard to lighten the vessel in time of peril.  This could apply to either cargo or part of the ship, but mostly concerns cargo in practice.  Where property is so sacrificed in saving a common adventure it will probably be allowed in general average and is then termed ‘general average sacrifice’.
Joint Cargo Survey When there is some question of carrier’s liability it is often necessary for a surveyor appointed by the cargo owner to co-operate with a surveyor appointed by the carrier in order to carry out a joint survey.
Jones Act An Act passed by the U.S. Congress in 1920 which provided that a seaman injured in the course of his employment as a result of the negligence of the shipowner, master or fellow crew member, could recover damages for his injuries.
Jurisdiction The limit or extent within which the powers of a legal authority concerned with the administration of justice may be exercised.  The MAR policy form, used in the English marine insurance market, specifies that the policy is subject to English jurisdiction.


Keel Block When a ship is drydocked she rests on keel blocks that hold her in an upright position.  The trim of the vessel is such that the stern settles on the keel blocks first as the water is pumped out of the drydock and, as it does so, shores are wedged in either side (working from stem to stern) so that, finally, the vessel rests in a sort of cradle.
Knocked Down Condition Applicable to vehicle transit as cargo.  Vehicles may be shipped in a dismantled or “knocked down” condition.
Knock for Knock The principle of single liability applied between insurers.  Where two vessels are in collision the principle could be applied, although in marine insurance practice it is seldom so.  The expression is more common to motor insurance where under this principle, each insurer bears the cost of repairing the property which he insures, to the extent that it is covered  by the insurance, without seeking to recover the cost from the insurer of the other property involved in the accident.
Knot A measurement of speed.  One nautical mile per hour.  A nautical mile measures 6,080 feet.
Known Loss A loss of which the assured and/or the insurer is aware at the time the insurance is effected.  Cargo insurance is placed on a “lost or not lost” basis, whereby the insurer agrees to cover losses occurring prior to acceptance, if the risk has already commenced, provided the assured was not aware of the loss at that time.  If he was aware of it he must have communicated the information to the insurer or there would be non-disclosure of a material fact.  In some cases the insurer is aware of a casualty occurring to the vessel carrying the cargo which he is asked to insure.  He may then insist on a warranty that there is “no known loss”.


Label Clause There are two types of this clause in use in the marine market, both of which concern canned or similar goods where identification or sale may be affected by damage to the attached labels.  In the event of contact with water the labels may be damaged or washed off.  The most common form of the clause excludes claims for lost or damaged labels and limits the insurer’s liability to the cost of relabelling and repacking the goods. The little used form of the clause excludes claims for lost or damaged labels unless caused by the vessel being stranded, sunk, burnt, on fire or in collision or contact with any substance other than water.
Labour Costs When repairs are carried out on a ship for the insurer’s account all ordinary labour costs are part of the cost of repairs and are payable under the policy.
Laden Loadline The loadline marked on the side of a ship indicating the maximum depth the vessel is allowed to sink, when lade, to comply with the loadline regulations.  Also termed “Load Waterline”.
Laid Up Relates to ship insurance effected for a period of time and to periods during which the vessel is laid up out of commission.
Land Risks Those perils which may operate when cargo is in transit on and to the port of loading or from the port of discharge.  These risks are not maritime in nature and unless embraced by the perils specified in the policy form (i.e. fire), they are not covered by the ordinary policy except when expressly specified therein.  They are covered by the term “all risks” when the policy contains a warehouse to warehouse clause.
Latent Defect A hidden flaw or defect in the construction of the ship which is not readily discoverable by a competent person using reasonable skill in an ordinary inspection.  Unless the policy so provides damage caused by a latent defect is not recoverable, nor is the mere discovery of a latent defect.
Lay Days Under a voyage charterparty it is essential that the vessel is not delayed longer than necessary when discharging or loading cargo.  For this reason a fixed number of “lay days” is allowed for the purpose of loading or discharge.  It is usual to specify the number of days allowed separately for either loading or discharge but in some cases “reversible lay days” are agreed.  This agreement allows a fixed number of days in total for both loading and discharge.  If the vessel is still “lying” at thew harf on expiry of the specified lay days “demurrage” or loss of hire, is payable by the charterer.
Laytime A shipping charterparty term.  In a voyage charterparty laytime is the period of time agreed during which the shipowner is required to make the chartered vessel available to the charter for loading and/or discharging cargo.
L/C Label Clause or Letter of Credit.
L.C.L. An abbreviation used in the practice o conveying goods by container.  It refers to ‘less than full container load’.
Leader Leading underwriter; Leading company.
Leading Underwriter An insurer whose lead is followed by other underwriters on a placing slip.  The broker negotiates the contract and the premium rate with the leading underwriter.
Leakage Except where the policy provides otherwise, section 55 (2c) of the MIA, 1906, excludes ‘ordinary leakage’ in the subject matter insured.  This refers to cargo which is subject to loss in volume or weight by reason of evaporation or other natural causes.
Legal Expenses A cargo assured may incur legal expenses in a suit against a third party who was legally responsible for loss of or damage to the insured goods.  The insurer is not liable to reimburse the assured for such expenses except where the legal action has been taken with the consent of the insurers to purse their subrogation rights.
Legal Liability A liability which can be enforced in a court of law.  Matters of conscience or moral liability are of no concern to insurers.  A ‘liability’ insurance covers only legal liability incurred by the assured.
Letter of Credit In general, the term indicates a document which authorises payment of an agreed sum of money to the person named therein.  When such a document is used in the “documentary credit system” for payment of goods it is usually “irrevocable” and authorises the bank named in it to pay for the goods; the document being honoured by the issuing bank when it is confirmed by the consignee who he takes up the documents of title following arrival of the goods at the destination port.
Letter of Indemnity This is a document which is given to a party of whom it is required that an unqualified guarantee be given when the circumstances demand a qualified guarantee.  The letter agrees to indemnify the guarantor against any loss he may suffer by reason of not qualifying the guarantee.
Letter of Subrogation A document giving authority to the insurer to sue a third party in the name of the assured for damages when that third party is responsible for a loss which has resulted in a claim under the policy.
Lift Van The part of a rail van which is detachable from the rail flat so that the goods can be removed from the train as a single unit, rather than be unloaded from the van.  The loaded van can, then, be carried by a motor transporter to a depot for unloading; thereby freeing the train of ‘flats’ for quicker loading and ‘turn round’.
Lighter Originally the term referred to a craft which was used to lighten a ship by removing cargo therefrom.  However, today, the term is commonly used in respect of any craft which is used to load or unload a ship.
Lighterage Money paid by the shipowner, shipper or consignee for the use of craft or lighters in carrying cargo.
Limit any one Vessel When a contract of marine insurance cover goods to be shipped by several vessels, either named or to be advised later, it is usual to limit the insurer’s liability on the amount carried by any single vessel.  This provision always appears in open covers and open policies.
Limit of Liability Insurer’s maximum liability under a policy.
Limit per Bottom The limit any one vessel.
Liner Vessel engaged on a regular run and keeping to a time schedule.  The liner is considered a better risk than the “tramp” which is a vessel not engaged on a regular run.  Liners generally have a higher standard of maintenance and the better class of officers and crew.
Lloyd’s A society of insurance underwriter based in London.  Lloyd’s of London takes its title from a coffee house, run by a Mr Edward Lloyd.  Mr Lloyd’s first coffee house was located in Salutation Precinct, Tower St., London.  The earliest record of this establishment appeared in the London Gazette in February 1688.
Lloyd’s Broker An insurance broking organisation which has satisfied the Committee of Lloyd’s that it has attained the standard required by Lloyd’s for agents representing assured who propose contracts of insurance to Lloyd’s underwriters.
Lloyd’s Register of Shipping An independent, non-commercial Society whose function is the classification of merchant ships, the establishment of standards for their construction and maintenance and the provision of a worldwide technical service.  Lloyd’s Register, the oldest and largest classification society, was founded in 1760 by the underwriters who frequented Lloyd’s Coffee House, and was reconstituted in essentially its present form in 1834.  It has no direct connection with the Corporation of Lloyd’s.
Lloyd’s Survey Handbook A Lloyd’s publication used as a book of reference by those engaged in marine insurance and shipping when cargo losses occur.  It is particularly useful to marine superintendents and others concerned with handling of cargo.
Load Displacement A measurement in cubic tons that is equivalent to the quantity of water displaced by the vessel when floating at her load draught.
Loaded Draught The dept of water required to maintain a laden vessel afloat.
Loading the Premium Increasing the premium to charge more than would normally be charged.
Loadline The marking on the side of a ship below which the ship must not sink when the vessel is loaded and in still water.  There are generally two loadlines, one for summer and the other for winter.  A vessel may also have a fresh water loadline.  The loadline is recognisable on the side of the hull at mid-ships and has the initials of the Authority which calculated the measurement shown either side of the line.
Long Ton Weight measurement of 2,240 lbs. (Metric ton is 2204.60 lbs.)
L.O.P. Loss of profits.
Loss Overboard – Cargo The ICC(1982) A cover cargo which is lost overboard, subject to the exclusions expressed in the policy.  Subject to the policy exclusions, the ICC(1982)B cover loss of or damage to cargo caused by its being washed overboard; but not where it is otherwise lost overboard, except during loading or discharge or during discharge at a port of distress. Subject to the policy exclusions, the ICC(1982)B & C cover loss of cargo caused by jettison.
Loss of Market This risk is not insurable in the marine insurance market.  Neither is loss of market admitted as general average, since it is not directly consequential upon the act.
Loss of Profits The only basic form of profit insurance is that on ordinary cargo when the profit anticipated is included in the agreed insured value of the cargo.  Provision is made for the inclusion of such profit in the valuation clause in open covers and floating policies.  Insurances on loss of profit alone are, in effect, loss of market insurances and are not readily acceptable in the London Market.
Loss of Specie This is an actual total loss.  Loss of specie occurs where the insured property is so damaged that it ceases to be a thing of the kind insured, that is, it changes its specie.  The test can be applied, also, to circumstances where the insured property cannot be used for the purpose for which it was intended.  Examples would be bags of cement which had been immersed in seawater or bags of potatoes which had suffered a similar fate and had become too soft to be sold for human consumption.
Loss of Time The MIA, 1906, section 55, excludes losses proximately cased by delay even when the delay is caused by an insured peril.  However, the Act does allow the parties to the contract to incorporate this risk into the contract, at their option.
Loss Payee Clause A provision, in a policy, which states the name of the person or persons to whom claims, if any, are to be paid.
Loss Ratio The ratio found by applying the total of claims paid in proportion to the net premium income over a given period.
Loss Reserve A reinsurance treaty provision entitling the ceding Company to retain an amount of money to cover claims which have been presented to the ceding Company but have not yet been actually settled under the original policy.
L.P.S.O. Lloyd’s Policy Signing Office.
L.R. Lloyd’s Register.
Lutine Bell The bell salved in 1859 from the frigate Lutine, which was lost at sea in 1799, now hangs in the Underwriting Room at Lloyd’s.  Traditionally it is rung to command attention for any announcement of importance.


Malicious Damage The ICC(1982) B & C specifically exclude deliberate damage to or deliberate destruction of the subject matter insured or any part thereof by the wrongful act of any person or persons.  A similar exclusion appears in trade clauses based on either of these sets of the ICC(1982).  However, by agreement with the insurer the exclusion may be deleted from the ICC, or any of the sets of trade clauses to which it applies, and the Institute Malicious Damage Clause be incorporated in the policy.  This clause (CI.266 1/8/82) is published by the ILU for use only with the MAR form of policy.  In consideration of payment of an additional premium the insurer agrees to delete the ‘deliberate damage’ exclusion and, subject to the policy exclusions, to cover loss of or damage to the subject matter insured caused by malicious acts, vandalism or sabotage.
Manifest The document which contains all details of the cargo on board the ship.  It is more reliable than a bill of lading because bills of lading may be issued when the cargo is delivered for loading, but the manifest is not completed until the cargo is loaded.  The manifest must be accurate because it is the official document for Consular and Customs Authorities.
MAR Policy Form With the abrogation of the marine S.G. policy for cargo insurance contracts, in January 1982, Lloyd’s market replaced it with a new policy form, called the MAR policy.  At the same the Institute of London Underwriters published its own equivalent policy form, called the Marine policy.  Although there are some variations between the two forms, to obtain uniformity, practitioners refer to either form as the ‘Mar policy’.
Marks Identification marks on a crate, box, parcel or similar.  The term is used, also, to indicate the loadline markings on the side of a ship.
Master Captain of a merchant ship.  The master is responsible to the owners for his vessel.  The title “Captain” is purely a courtesy title.
Measure of Indemnity The extent of the liability of the insurer for loss.  This is based on the loss suffered by the assured, but is always subject to limits agreed in the policy.


Named Peril A peril specified in a policy.
Natural Loss Inevitable loss in volume or weight of cargo during the period of cover is natural loss.
Nippon Kaiji Kyokai This is a Japanese Classification Society.  Vessels registered with the Nippon Kaiji Kyokai may appear in Lloyd’s Register with the notation NK shown, the cypher to denote full class in the Nippon Kaiji Kyokai is  NS .   The Society is often referred to as the “Japanese Marine Corporation”.
No Known Loss An insurer may be asked to accept an insurance after the risk has attached.  If he agrees he will usually accept on a “lost or not lost” basis, whereby he is liable for losses which occurred before he accepted this risk.  The assured should advise the insurer if he knows of any loss after the time of placing or there is non-disclosure, but many insurers avail themselves of the additional protection of warranting “no known loss”.
Non Carrying Vessel Expression used in connection with claims by cargo owners against carriers in respect of collision liability.  In disputes the vessel carrying the cargo concerning which the claim is made is called the “Carrying Vessel”.  The other vessel is called the “Non Carrying Vessel”.
Non-Compliance with a Warranty A warranty is a promise by the assured that something shall or shall not be done or that a state of affairs will or will not exist.  A warranty must be strictly complied with.  Non-compliance discharges the insurer from liability as from the date of the breach.
Non-Contribution Clause A clause in a policy providing that in the event of a loss occurring which would be recoverable under the policy no claim is payable if another policy exists covering the same risk.  This may occur where a fire policy and a marine policy overlap on the same goods.  In the absence of the clause each policy should pay proportionately toward the loss.
Non-Delivery Applicable to cargo policies.  The term refers to circumstances where an entire package, which should have been delivered at destination, has not been delivered and there is no evidence to account for its disappearance.  It does not apply to circumstance where only part of a package is missing; this being termed ‘shortage’.
Non-Disclosure The assured and/or his agent (the broker) must disclose to the insurer, before the risk is accepted, any material fact or circumstance which is known or should be known to either and/or both the assured and/or his agent.  If either of them fails in this obligation the insurer may avoid the contract.
Normal Course of Transit More commonly referred to as the ‘ordinary course of transit’, because it so designated in the Transit Clause in the Institute Cargo Clauses.

Once the goods commence transit from the place named in the insurance contract, they must be carried by a customary method of carriage and transit must be by the most direct route (unless otherwise agreed) to the specified destination without unreasonable delay. Any delay within control of the assured to avoid would be deemed to be unreasonable.

See “Transit Clause” and “Delay”).

Norske Veritas This is a Norwegian Classification Society.  Vessels registered with the Norske Veritas may appear in Lloyd’s Register with the notation NV shown.  The cypher to denote full class in the Norske Veritas Register is X 1.A.1.
Notice of Cancellation (See “Cancellation Clauses”)
Notice of Abandonment Notice of abandonment is a condition precedent to a claim for constructive total loss.  It is a procedure whereby the assured notifies the insurer that he intends to abandon the insured property to the insurer in return for a CTL settlement.  The purpose of the notice is to enable the insurer to take such measures as are available to him to prevent or minimise the loss and is, in effect, an authority by the assured permitting the insurer to take such measures.  Failure to give proper notice of abandonment means that the assured can claim only for an actual total loss or for a partial loss, not for a constructive total loss.
Notification of Claim against Carrier Where there is apparent damage to goods on discharge the consignee must give notice of the damage in writing to the carrier or his agent at the port of discharge before or at the time of removal of the goods into the custody of the person entitled to take delivery of them.  It is the duty of the consignee to carry out an immediate examination of the goods on discharge or as soon as practicable thereafter, but in any case notification of damage which is not immediately apparent must be given to the carrier within 3 days of delivery to the consignee.  Notice need not b given if the survey is a joint survey.  Failure to observe these principles will prejudice a claim against the carrier.
Not to Inure Clause The Carriage of Goods by Sea Act, 1971, states that any clause in a contract of carriage which allows the overseas carrier to claim benefit of the insurance effected by the owner shall be void.
N.R.T. or n.r.t. Net registered tonnage.
Nuclear Exclusion Insurers, today, are well aware of the catastrophic loss which would follow the hostile detonation of any weapon of war employing nuclear fission or some similar power.  In addition to the customary war exclusion clause, all sets of marine insurance clauses incorporate a separate clause which applies a nuclear exclusion to claims.  In the ‘marine’ and ‘strikes’ cargo clause this excludes loss, damage or expense arising from the use of nuclear and similar weapons.
Numbered Rules The “Numbered Rules” refers to the rules specified in the York Antwerp Rules on general average, other than the lettered rules therein.  When applying the York-Antwerp Rules  the circumstance must applies, then the lettered Rules must be considered to determine whether there is general average.
NV Norske Veritas (ship classification).
N.V.O.C. Non vessel owning carrier


o/b On or before.
O/B On board.
O/C Off cover or open cover.
O B/L Ocean bill of lading.
Occurrence A chain of events which together form one happening.  Example: – A ship collides with another, catches fire and sinks.  The whole is one occurrence.  If there are no contributing factors  a single event may be termed an occurrence.
Off Risk When an insurer has been “on risk” in respect of an insurance and his liability has ceased he is said to be “off risk”.
Oil Damage Oil can seep into cargo packaging and cause damage or contamination which can seriously affect the contents.  Except in the case of an ‘all risks’ policy, the standard cargo clauses do not cover such damage or contamination.
On Risk The insurer is “on risk” when an insurance attaches in respect of which he has written a line.
Onus of Proof of Claim The onus always lies with the claimant.  The assured must prove his loss.  The insurer defending a claim on the grounds of unseaworthiness must prove the unseaworthiness.  The effect is that the person making the claim must prove his right to the claim and a person defending a claim must prove his grounds of defence.  The onus is on the person whose property has been sacrificed in general average to claim contribution from the general average fund.
O/P Open Policy
Open Cover A form of long term insurance contract whereby the insurer guarantees to accept risks when they are put forward by the assured as they arise during the period of the contract.  The assured agrees to declare every item that falls within the scope of the cover and does not have the option to place such risk elsewhere should he consider it advantage-ous so to do.  Thus, the open cover is an obligatory contract binding both parties to its terms, rates and conditions.
Open Policy A formal policy issued to give legal validity to a long term marine insurance contract such as a cargo open cover.  In the absence of a formal policy, a marine insurance contract may not be recognised by a court of law.  No premium is paid but a nominal premium amount or rate is specified in the policy to comply with the requirements of contract law.
Ordinary Course of Transit See “Normal Course of Transit”.
Ordinary Loss See “Natural Loss”.
Ordinary Loss in Weight or Volume In this context the word ‘ordinary’ relates to the dictionary definition , meaning ‘regular’ or ‘commonplace’.  The term is used in cargo insurance in connection with cargo that may be subject to loss of volume during transit, such as liquid cargoes (e.g. oil, etc.), by reason of variations in temperature.  Ordinary loss in weight can occur due to evaporation of moisture content in certain cargoes (e.g. grain) during the course of transit.  The Institute cargo clause (1982) exclude ordinary loss in weight or volume.
Ordinary Wear and Tear See “Wear and Tear”.
O/S or o/s Outstanding.
Other Cargo The insurer is not liable for damage caused by the insured cargo to other cargo, unless the policy specifically incorporates this peril.
Out of Commission When a vessel is not required for the purpose for which it is intended it is usual for the owner to have it laid up, out of commission.
Outstanding Claims Claims which have been provisionally advised by the assured or reassured but which are in the process of investigation and so have not been settled.
Outturn In shipping this is the amount or weight of the cargo discharged from the ship.  In insurance the expression may also refer to the condition of the cargo on discharge.
Outturn Report Report on the outturn of the ship.  The report may be on the daily outturn figure or on the whole outturn.
Overage A term used in respect of the additional premium payable on an open cover or policy when insured goods are carried by a vessel which dos not come within the scope of the provisions of the Institute Classification Clause.
Overcarriage When a carrier is unable to enter the intended port of discharge, or will be unable to discharge the goods at that port, he will, probably, carry the goods over to the next suitable port for discharge.  When by so doing he is exercising a right granted to him under the contract of carriage, he has discharged his obligation to the cargo owner by such action and is not liable for any expenses incurred by the cargo owner to reship the goods back to the originally intended discharge port or to a port or place which would be more suitable for the assured.  In fact, the carrier may even be entitled to demand extra freight for the overcarriage.
Over-deck Cargo which is not stowed underdeck on a ship; sometimes referred to as ‘on deck’.  Where it is market practice for certain goods to be stowed on deck, they are deemed to be so carried on the ship.  Otherwise, in the absence of agreement in the contract                                                                     of carriage to the contrary, goods are deemed to be stowed underdeck.  Accordingly, cargo insurers will rate a risk on the assumption that goods, other than those carried on deck by custom of trade, are being carried underdeck on the overseas vessel; except where they have been advised to the contrary.
Overinsurance See “Double Insurance”.
Over Ship’s Rail The shipowner’s responsibility for the cargo attaches as loading commences and ceases when it is landed and free of tackle.
Oxidisation See “Rust”.


Packing The wise shipper packages goods so that they will withstand the normal hazards to be contemplated in the toughest leg of the adventure.  He should resist the temptation to skimp on the packaging to derive economic advantage.  If he does so he cannot rely on his insurers to reimburse him for losses, because all cargo policies incorporate a clause which excludes loss, damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured.  The term ‘packing’. In this context, is deemed to include stowage in a container or liftvan when carried out by the assured or his servants, or when carried out prior to attachment of the insurance.
Packing – Inadequate See “Inadequate Packing of Goods”.
Pair and Set Clause This is not strictly a marine clause but is mentioned herein because art objects and jewellery are frequently insured in the marine market.  Where an article is damaged or lost and the object is part of a pair or set the pair or set is ruined by such loss or damage and the assured may feel entitled to indemnity for the whole pair or set, requiring the insurer to take over whatever may remain.  To obviate this the pair and set clause is incorporated into such insurances limiting the insurer’s liability to the insured value of the lost or damaged part or object only.
Pallet A platform made of wooden slats on which packages of goods can be stacked and fastened to make a single unit of carriage.  The pallet is moved by forklift truck, thereby cutting out the hazards peculiar to manual handling.
Palletisation The use of pallets in the carriage of goods
P & I Protection and Indemnity; Protecting and Indemnity.
P & I Club Protection and Indemnity club.
P & I Risks Protection and Indemnity risks.
Paramount Clause A Clause the provisions of which take precedence over any other conditions in the policy with which they are inconsistent.  The war and strikes exclusion clause in a hull policy are so designated.
Partial Interest An insurable interest of part only of a full interest in the property at risk.  A person having partial interest has the same insurance rights in respect of that part as he would have if he had an interest in the whole.
Partial Loss This is any loss of the subject matter insured not amounting to a total loss.  If the assured brings an action for total loss and if it later proves only to be a partial loss the assured may still claim a partial loss.  Goods arriving at destination with marks obliterated are the subject of a partial loss not a total loss claim.
Partial Loss of goods Any loss of goods caused by an insured peril and not resulting in a total loss is a partial loss of goods. It is customary for only valued policies to be used on goods and the amount recoverable from the insurer for partial loss is the percentage of depreciation applied to the insured value.
Particular Average The MIA, 1906, section 64(1) defines particular average as a partial loss of the subject matter insured, caused by a peril insured against, and which is not a general average loss.  It does not include expenses incurred by or on behalf of the assured for the safety or preservation of the subject matter insured.  In practice, the term is applied to any claim for damage to ship or cargo, other than damage caused by a general average sacrifice.  It is never applied to a claim for total loss, even when it is a constructive total loss based on damage to ship or cargo.  Particular average claims on hull policies are subject to the policy deductible.
Particular Charges An expense incurred by the assured, his agents or assigns to prevent or minimise a loss of the subject matter insured from an insured peril.  Neither general average nor salvage charges are included in the term “Particular Charges”.
Perils of the Seas Only fortuitous accidents are embraced by this term.  The ordinary action of wind and waves is not a peril of the seas.  “Collision” and “stranding” are both perils of the seas, as, also, is “heavy weather”.  Perils of the seas are embraced with ‘all risks’ as in the ICC(1982)A, but are not embraced within the other two sets of standard cargo clauses B and C; these covering only certain specified perils some of which are perils of the seas.  The term ‘perils of the seas’ is extended in the 1983 hull clauses to embrace perils of ‘rivers, lakes and other navigable waters’.
Personal Effects Personal effects are not classed as goods when they are not shipped under a bill of lading.  Personal effects are not called on to pay general average contribution.
Pilferage Petty theft without breaking open cases or boxes.  It is usually difficult to prove that pilferage is the cause of shortage; for which reason it is customary, when adding this peril to a cargo policy, to include, also, theft and non-delivery.
Pirates The term ‘pirate’ has a variety of meanings, all of which can be summed up in the phrase ‘thief or robber’.  In a marine insurance context it is intended to relate to persons who rob a vessel at sea.
Plimsoll Line See “Plimsoll Mark”.
Plimsoll Mark Named after Samuel Plimsoll, its instigator, this means the loadline mark on the side of a vessel.
Policy The formal contract between the insurer and the assured, whereby the insurer undertakes to settle claims properly recoverable in accordance with the conditions set out in the policy document.
Policy Assignment The transfer of beneficial rights in a policy from the assured to another party.  The assured becomes the ‘assignor’ and the party to whom the policy is assigned becomes the ‘assignee’.
Policy Proof of Interest The assured under a policy must have an insurable interest at time of loss and he is obliged, if required, to prove this interest at the time he makes his claim.
Polish Register of Shipping See “Classification Clause” and “Polski Rejestr”.
Pollution Waste material which cannot be absorbed by the surroundings in which it is discharged.  Waste can take many forms (e.g. liquid, solid, dust, radiation, odours etc).  If the release of waste cannot be controlled pollution of air, water and soil can create a critical situation for the continuance of life in all forms.  As a marine insurance peril underwriters may be asked to insure the risk of heavy liabilities imposed on shipowners following pollution of the seas and shores.
Polski Rejestr A Polish Classification Society.
Port of Call A port in the itinerary of a voyage where the vessel is entitled to call.  A port of refuge is a port into which the vessel enters for safety, but which is not a port of call.
Port of Distress Same as “Port of Refuge”.
Port of Entry The port where the ship is entered by the Authorities into a Country or where goods pass through Customs.
Port of Refuge A port, other than a port of call, into which a vessel enters for safety.
Port of Registry Registration port of a ship.  The name of the Port of Registry is always shown on the stern of the ship.
Port Risks Insurance In principle, this is a time policy by which a ship is insured whilst she remains within the confines of a specified port area.  In practice, an alternative form of port risks insurance allows the ship to navigate outside the port area.
Premium The consideration, or sum of money, paid by the assured to the insurer in return for which the insurer agrees to indemnify the assured in the event of loss from an insured perils.  The insurer is not bound to issue a policy until the premium is paid.
Prevention of Loss There would be reason for insurance if the assured were expected to prevent all loss from occurring to insured property.  Nevertheless, there is a duty on the assured to such measures as are reasonable to prevent or mitigate loss.  On receipt of advice that an accident has occurred, the insurer may take measures to mitigate or prevent further loss.  In the absence of any provision to the contrary in the policy, such action might be construed as an admission of liability where notice of abandonment has been given as a precedent to a claim for constructive total loss.
Proof of Loss The onus is on the assured to prove that the loss has occurred, that it was caused by an insured peril and the extent of the loss.  In principle, the assured must prove that the loss was proximately caused by an insured peril.
Pro Rata In proportion.  Pro rata cancellation is arrived at by calculating the proportion the unexpired part of the policy period bears to the whole period covered by the policy.  This proportion is then applied to the policy premium.  A pro rata additional premium is arrived at by a similar calculation.
Putrefaction Putrification or deterioration.
Putrification Deterioration of perishable goods such as fruit.


Quarantine Restrictions The Health Authorities impose these restrictions to prevent the spread of infection or contagion.  The ship is isolated, no person on board being permitted to land or make direct contact with other persons outside the ship.  When the port medical officer is satisfied that there is no further danger of the spread of infection or contagion the restrictions are lifted.  The carrier is exempt from liability to the cargo owner for loss due to the complying with quarantine restrictions, by the authority of the Carriage of Goods by Sea Act 1971.
Quayage A charge made against a ship operator for use of a berth at a quayside.
Quay Port Port where goods are discharged direct onto the quay from the overseas vessel.  A port where lighters are used for discharge is called an “Overside Port” or “Craft Port”.
Quay to Quay The period of cover under a cargo policy which attaches as the goods are lifted from the quay at the port of loading and terminates when the goods are freed from the ship’s tackle or landed from craft onto the quay at the port of destination.  This can be a wider cover than “Port to Port” which does not include craft risk at the port of loading, if any.


Radioactive Contamination The introduction of radioactivity onto, or into, cargoes or hulls by radiation escaping from some radioactive substance which may be carried by the vessel as cargo or fuel.  Radio isotopes, radioactive ores, irradiated and non-irradiated nuclear fuel, radioactive waste and by-products are all carried by vessels occasionally in present day commerce.  The insurer’s liability for radioactive contamination is the same as that for any other form of contamination.  Shipowner’s liability may be involved where the contamination is caused by negligence, faulty stowage or breakdown of nuclear installations.
Rate Rate of premium.  The percentage which will be applied to the sum insured to assess the premium.
R.D.C. Running down clause.
Received Bill of Lading The bill of lading is prima facie evidence of receipt of the goods by the carrier for shipment. A “received” bill of lading does no more than this and does not acknowledge that the goods have been shipped. A “shipped “ bill of lading acknowledges shipment.
Recovery Amount of money recovered from a third party by an insurer under his subrogation rights.
Recovery Agent A person who specialises in obtaining recoveries from third parties and others.  Generally, the term is used in connection with recoveries from carriers by cargo owners or cargo underwriters.
Recovery from a Carrier When a cargo insurer has settled a claim for goods which have been delivered to the consignee by the carrier in a damaged condition, or which have not been delivered, he is subrogated to all legal rights and remedies the assured has against the carrier in respect of the loss.  In practice, these rights may be prejudiced if the assured does not carry out certain steps to preserve the rights.  To preserve his subrogation rights, the insurer inserts various relevant clauses in is cargo policy.  The ‘duty of the assured’ clause in the ICC requires the assured to ensure that all rights against carriers are preserved.  The ‘red line’ clause (more commonly referred to as the ‘important’ clause) is usually attached to cargo policies and certificates to emphasise the measures the assured should take to ensure that claims against carriers are not time barred.  When exercising his subrogation rights an insurer may recover more than the claim paid.  If this is the case, he can retain only up to the amount of the claim.  The excess amount recovered must be passed on to the assured.
Red Line Clause In practice today this clause is more commonly referred to as the ‘Important clause’ because it bear s the word IMPORTANT at its head.  To attract the attention of the assured and their assigns to its importance it is printed in red; although the colour of the ink does not give it any precedence in the construction of the policy (see “Rules of Precedence”).  The main purpose of the clause is to remind the assured of the need to take certain measures when goods are delivered damaged, or are not delivered when they should have been, to comply with the requirements of the law in establishing a claim against the carrier or the port authority, as the case may be.  A claim must be made in writing without delay and, in any case, within the time allowed by law for such claims.
Reefer Refrigerated vessel or refrigerated space.
Reefer Ship A ship with refrigerate space for cargo.
Refrigerated Cargoes Perishable cargoes carried in refrigerated holds or refrigerated containers.  Where the cargo is not in refrigerated containers it may be necessary to gradually raise the temperature from approximately 24 hours prior to discharge to enable handling of the cargo.  It is important that the refrigeration temperature is kept even throughout the voyage or deterioration of the goods is expedited.
Refrigerated Tonnage Charges in respect of the use of canals and similar are based on a ship’s net registered tonnage.  The tonnage is found by calculating the cargo carrying capacity of the ship in cubic tons at 100 cubic ft. per ton or at 1,000 cubic centimetres per ton if based on metric tons.  The gross tonnage of the ship is arrived at by taking into account the whole area inside the hull and the net registered tonnage is calculated by deducting certain specified spaces from the gross tonnage.  These spaces include engine room space, crew’s quarters, space used in navigating and operating the vessel, light and air spaces, locker rooms and similar.  An open shelter deck is not included in the net registered tonnage but a permanently closed shelter deck is.
Registered of Shipping of the U.S.S.R. This Soviet Union Classification Society is listed in the Institute Classification Clause.
Registro Italiano This Italian Classification Society is listed in the Institute Classification Clause.
Reinsurance When an insurer accepts a line on a slip he becomes liable for a loss under the insurance contemplated by the slip.  This places him in the position of being able to lose financially in the event of loss of or damage to the insured property, so that he has an insurable interest in respect of his liability.  This liability he may reinsure with another insurer or several insurers who become his reinsurers.  No insurer may reinsure for more than his liability nor on wider terms.
Rejection of Abandonment See “Notice of Abandonment”.
Rejection Risk Under the U.S. Pure Foods and Drugs laws standards are imposed on the import of foodstuffs, which are rejected if they do not conform to the minimum standard required.  Rejected goods must be returned to the country of origin, shipped elsewhere or destroyed.  Rejection risk insurance reimburses the assured for his loss in this respect.
Remedy Against Third Parties See “Subrogation”.
Removal of Wreck When a vessel is sunk in the fairway, in a harbour or in some other place where it is a danger to shipping the Authorities have the right to mark, light, buoy or even to destroy it, if the owner dos not remove the wreck, and to charge the owner of the vessel with the cost thereof.  Except where the policy cover P & I risks the hull insurer is not liable for the expense of removal of the wreck of the insured vessel unless he has taken over proprietary rights on having paid a total loss.  Insurers do not cover the assured’s liability for removal of wreck following collision, this being a P & I risk.
Renewal The practice of renewing an insurance which is due to expire.  Renewal depends on the claims experience on the expiring insurance and the insurer may decline the renewal, increase the premium or insert special conditions if the experience is poor.  On the other hand, if the experience is exceptionally good he will usually renew and may agree to a relaxation of conditions or a reduction in rate.
Repacking Where goods are damaged by an insured peril it may be possible to minimise the loss by reconditioning and/or repacking the goods.  In such cases where the repacking follows damage recoverable from the insurer, the cost of repacking is also paid by the insurer.  Repacking short of destination is an expense to prevent loss and is recoverable from the insurer as a sue and labour charge.  It may occur that the packing alone is damaged and repacking at destination is necessary to enable the goods to be sold.  This repacking is not recoverable from underwriters.
Replacement Clause Used mainly in insurances on machinery as cargo, the clause provides that in respect of damage the insurer’s liability shall be limited to replacing and fitting the broken part.  This prevents the assured from claiming an actual total loss on the grounds of “loss of speci”.  Such a claim being based on the assured’s contention that he is unable to use the machine for the purpose for which it was intended.
Replacement of Machinery This refers to machinery as cargo.
Representation A statement of fact, belief or expectation made by the assured and/or his broker to the insurer when placing the insurance.  A material representation is one which would affect a prudent insurer in deciding whether to accept, decline or how to rate the risk.  What is material is a question of fact.  A material representation must be substantially true or the insurer may avoid the contract.
Requisition Refers to circumstances where the insured ship is taken over by military or other authority under powers granted by a State.  Requisition can be for ‘title’ in which case the requisition is probably compulsory and the ship is not returned to the owner, but compensation s usually paid.
Res Nullius Nobody’s responsibility.
Respondentia An insurable interest which a lender of money has in respect of a loan to the master of a vessel to enable the vessel to continue the voyage.  In respondentia the security lies in the cargo.  It is practically only of academic interest today.
Retrospective Taking into account what has gone before.  This term is to be found mainly in reinsurance in circumstances where the reinsurer’s liability attaches some time after the original insurer’s liability.
Reversible Lay Days The days permitted for loading a cargo are termed “lay days”.  The same applies to discharge of cargo.  If a total number of days is allowed which can be used for both without distinction, such lay days are called “reversible”.
Revocable Letter of Credit A letter of credit which contains terms that can be altered or amended by the importer or his bank without the consent or knowledge of the exporter.  To avoid this disadvantage, it is customary for an exporter to insist on an irrevocable letter of credit.
Right of Contribution If there is double insurance each insurer is liable to contribute rateably to the loss in the proportion that the amount insured under his policy bears to the whole amount insured.
Rights of Carrier The rights and immunities of carriers are periodically reviewed at international conferences as changing developments in world trade demand their reconsideration. The rules agreed at the convention of 1968 (known as the Hague/Visby rules) are the most recent to receive ratification.
Rights of Recovery – Insurer Where an insurer settles a loss under a marine insurance contract he is entitled to take over the rights of the assured against any third party who was legally responsible for the loss which resulted in the claim.  The insurer’s rights do not extend beyond the amount of the claim paid.  The insurer has the first right of recovery; the assured only enjoying such part of the recovery as remains after the insurer’s rights of recovery have been satisfied.
Rights of Subrogation See “Subrogation”.
Riot The peril ‘riots’ is specifically excluded from the standard hull and cargo marine insurance conditions.  However, the marine cargo policy can be extended, at the request of the assured, to embrace riots along with strikes risks.  The hull market will, also, entertain cover for riots in a war & strikes risks policy.
Risks Clause – Cargo The clause in the ICC (1982) to which one should refer to find the perils covered by the insurance contract.  In the A clauses the embracing term ‘all risks’ is used, but in the B & C clauses the perils are individually expressed.  The perils in the C risks clauses are less in number than those expressed in the B risks clauses; but in both cases the perils are specified in two groups.  The first group is not subject to the principle of proximate cause; the assured needing to show only that the loss was reasonably attributable to the peril for the claim to succeed.  In the case of the second group the assured must show that the loss was proximately caused by the specified peril for a claim to succeed.  A similar clause appears in the various Institute trade clauses, following the pattern of the A, B or C clauses, as appropriate to the particular type of cover.
R.O.D. Rust, oxidisation and discoloration.
Roll on Roll off Vessel A ship designed with side, and/or rear and/or bow entrances each with a “let down” ramp which enables vehicles to drive into and out of the ship.
Ro Ro Abbreviation for “Roll on, roll off vessel”.
Rules of Precedence These rules are used in law when there is inconsistency between policy wordings, clauses or conditions, to establish which shall take precedence over another.  The rules are in two parts.  Part one deals with the form of wording and gives precedence to handwritten wording over typed wording, and to typed wording over printed wording.  No precedence is allowed to bold printing, italicised printing or coloured printing over any other form of printing.  The second part is concerned with the way in which the policy is constructed.  An attached clause takes precedence over a marginal clause (i.e. a clause which appears in the margin at the side of the body of the policy documents), which, in turn, takes precedence over the wording expressed in the body of the policy.
Run Off Applicable to long term contracts such as treaties.  When the contract has been cancelled there after often many risks which attached before the cancellation became effective, particularly time risks, which still have to be “run off”.  That is, the insurance or reinsurance remains in force in respect of those risks until they have “run off”.
Running Days Connected with loading or unloading cargo.  Consecutive days, but excluding Sundays and holidays.
Running Down Clause Another name for the “Collision Clause”.
Russian Register of Shipping See “Register of Shipping of the U.S.S.R.”.
Rust Not covered by the policy unless specified.  A policy covering “All Risks” would cover damage to or loss of an article due to rust proximately caused by an insured peril, such as immersion in seawater.


Sacrifice Usually a general average act.  When a sacrifice is made of property involved in a maritime adventure for the purpose of preserving the whole adventure from an insured peril, such loss is recoverable under the policy as being a loss by that peril.  The assured can recover the claim directly from his insurer without waiting for the general average adjustment to be completed.  When the adjustment has been completed the underwriter is subrogated to the rights of the assured to recover the claim from the general average fund.  Each party contributes rateable toward the fund in the proportion the saved value of this interest bears to the whole value saved by the general average act.
Safely Landed Goods are “safely landed” when they have been landed in the customary manner within a reasonable time after arrival at the discharge port.
Safe Port This term applies not only to a port where a ship and/or cargo are protected from the hazards of the sea, but also where there is no likelihood of political interference.
Sagging When a ship is supported at both ends but not in the middle.  This can occur when a ship runs aground on rocks and the tide ebbs leaving her “sagging”.
Salvage An award payable to a third party for services rendered to preserve maritime property from peril at sea.  Pure salvage is awarded only to a third party acting independently of contract and is payable only when the property has been saved.  The award is based on the value of the property saved, the hazard and degree of skill involved and the expense of the operation.  The contributory value for apportionment of salvage is calculated in the same way as for general average but the values are assessed at the place where the salvage operation is completed.  The contributory value is compared with the insured value, as with general average, and any resultant undervaluation is reflected in a proportionate reduction in the contribution paid by the insurer.
Salvage and Recovery Clause A clause in a reinsurance treaty entitling the reinsurer to press for his share of any recovery obtained on the original insurance.
Salvage Association The Salvage Association was formed in 1856 by marine insurance and shipping interests in London.  Its cumbersome former title “The Association for the Protection of Commercial Interests as respects Wrecked and Damaged Property” was discontinued when a new Royal Charter (Eliz. II) redefined the objects of the Association in 1971 and granted the title “Salvage Association”.
Salvage Tug A tug, often ocean-going, specially built and equipped for salvage work.
Salvor’s Lien When a salvor has salved property he has a lien on that property whereby he may retain the property until the salvage award has been settled.
Saving Human Life A ship may deviate to save human life on board or elsewhere without the assured being prejudiced, but the marine insurer has no liability in respect of such human life.
Scratching, Bruising and Denting Certain types of goods are susceptible to minor damage from these risks (e.g. Motor cars in transit).  Insurer usually exclude claims for scratching, bruising and denting by an exclusion clause in policies covering such interests.  Where no exclusion appears in the policy, the assured can claim for the damage provided he can show that it was caused by an insured peril.
Scuttling Opening sea cocks or letting in water deliberately to sink a ship.
SDR Special drawing right.
Seaworthiness There is an implied warranty in every voyage policy that the vessel is seaworthy at the commencement of the voyage.  That is, the vessel must be reasonably fit in all respects, including the hull, equipment, stores, bunkers, crew and officers, to encounter the ordinary perils contemplated for the voyage.
Second Hand Machinery When machinery is insured as cargo it is deemed to be new machinery unless the policy specifically states that it is second hand.  It is usual to incorporate the “Second Hand Replacement Clause” in a policy covering second hand machinery enabling the insurer to replace damaged parts with second hand material.
Second Hand Replacement Clause Used on policies covering second hand machinery as cargo.
Security The Insurer is the “security”.  The term is used when referring to the Insurer in discussion.  A group of Insurers may be embraced collectively by the one expression “security”.
Self Insured A risk undertaken by the assured himself, not placed with insurers elsewhere.
Seller’s Interest The insurable interest of the seller.  The seller has such an interest only until the title to the goods passes to the buyer.  The policy may be assigned by the seller to the buyer but assignment must take place before, or at the time, the seller’s interest ceases.  Except where the conditions of sale imply assignment of the insurance contract (e.g. CIF), the seller cannot assign the policy after he has lost his insurable interest.
Service of Suit Instituting proceedings at law to purse an action against a party to settle a dispute.  In the absence of any provision to the contrary, a suit can be served under any jurisdiction.
Settling Agent An agent authorised to pay claims under a policy.  It is customary for the name and address of the settling agent to be specified in a marine policy where payment is permitted at any place other than the head office of the insurer.
S.G. Since the abrogation of the S.G. form of marine policy in the London market, the meaning of this abbreviation is probably of little more than academic interest.  The S.G. policy was designed, originally, to insure both the ship and goods in one insurance contract for a specified voyage only.  Hence, the term means “Ship and Goods’.
SHINC Sundays and holidays included.
Shipped Bill of Lading As opposed to a “received for shipment” bill of lading, this document acknowledges that the goods have been shipped.  The person sending the goods is entitled to demand a “shipped” bill of lading.
Shipper The consignor or sender of goods by ship.
Shipper’s Interest See “Seller’s Interest”.
Shortage Circumstances where goods are delivered to the consignee for less than should have been delivered.  The term does not embrace non delivery of an entire package and is not embraced within the term ‘non-delivery (see “Non-Delivery”).  In the case of shortage the loss is determined by a comparison between the shipped weight or volume and the delivered weight or volume, as appropriate to the type of cargo insured.  In order to claim on the policy the assured must produce evidence of shipment and acceptable figures to show the amount of the shortage.
Short Shipment A shipment where only part is loaded.  The unloaded part is often termed “left out” or “shut out”.
Shut Out Cargo which has not been loaded on the ship when she sails. (See “Short Shipment”.)
S/I Sum insured.
Singleton The term is used in the hull market to refer to an insurance covering a single ship, as opposed to a fleet insurance.
SKD Semi knocked down.  A method of packing.
Slinging The act of loading or discharging by slings.  The term also applies to the charge made for fitting slings.
Sling Loss Loss of cargo by falling from slings when being loaded or discharged.  This is generally a total loss of part.  Sling losses are particularly prevalent in surf ports where discharge is carried out into lighters or small craft.  The ICC (1982) B cover total loss of an entire package dropped or lost overboard during loading, transhipment or discharge.  This cover is not provided by the C clauses.
Slings Chains or metal netting enclosing cargo in order that it may be hoisted onto or discharged from the ship.  In some cases heavy rope netting is used.
Slop Barge A vessel designed to take waste oil and oily water from a tanker thus reducing the risk of pollution to the sea.  The barge is equipped to separate oil from water, the latter being discharged into the sea.  The waste oil is taken ashore for processing.
Slop Tank A tank in which waste oil and water is stored, in a tanker cleaning operation, for subsequent disposal.
Smoke Damage Damage caused to cargo by smoke would be covered by an ‘all risks’ policy and the ICC (1982) B & C both cover damage which is reasonably attributable to fire, which would embrace smoke damage.  Nevertheless, the insurer always has the right to raise the perils excluded by the clauses in defence of the claim (e.g. smoke damage from a fire which was attributable to the wilful misconduct of the assured would not be covered).
Sound Value For the purpose of arriving at the amount due from the insurer in the event of partial loss of goods it is necessary to determine the sound value at the destination.
Special Drawing Right An IMF currency unit which was introduced by the 1979 Protocol to the Hague/Visby rules for limitation of liability.  The Protocol was implemented in the UK by sections 2 and 3 of the Merchant Shipping Act, 1971, but these sections were not given force of law until February 1984.  When the SDR unit came into force it replaced the ‘gold franc’ as a unit for calculating currency equivalents for assessment of liability limitations.  International law specifies the limits of liability of shipowners and others in SDRs; thereby providing a common basis for determining the limits.  In each case the relevant currency equivalent of the SDR is determined in accordance with the financial press and/or bank information on a daily basis, to establish the actual limit of liability in the local currency.
Specie The term specie is used in two completely separate ways in marine insurance.  The Marine Insurance Act 1906 refers to “specie” in the expression “loss of specie”.  The term “specie” is also used as a collective noun to embrace all forms of valuables carried as cargo, including precious metals, gems, money, banknotes and valuable documents.
Spontaneous Combustion May occur when fibrous cargoes, such as jute, are loaded in a damp condition or when such cargoes contain an excessive amount of oil or grease, as may be the case with baled dirty wool.  Soft coal, or lignite, is also liable to spontaneous combustion if loaded wet.
Spotting Mildew or staining on soft leather goods, such as gloves, due to damp.
Spotting Clause A clause used on policies covering soft leather goods such as gloves.  The clause excludes claims due to spotting or staining unless caused by the vessel being stranded, sunk or burnt.
S.R. & C.C. or  s.r. & c.c. Strikes, riots and civil commotions.
Steamer A ship operated by steam propulsion.  In marine cargo practice it is customary to use the term for all types of self propelled vessels.
Stevedore A contactor for labour at a port of loading and discharge.
Stoppage in Transitu When a seller of goods finds that payment is unlikely and the goods are already en route to the buyer he has the right of “stoppage in transitu”.  By this right the seller can stop the delivery of the goods at destination.  The right is extinguished if the voyage is ended or if the goods have already been sold by the buyer to another person.
Stowage Plan Plan of ship showing how cargo is stowed.  This is important when planning the unloading of the cargo.
Stranding The term doe not include bumping over a bar, a mere touch and go or a grounding by reason of the rise and fall of the tide.  The vessel must be hard and fast for an appreciable period of time.
Strikes Clause A set of clauses, published by the Institute of London underwriters, for attachment to cargo policies covering strikes, riots, civil commotions, etc.
Strikes, Riots and Civil Commotions It has been the practice for many years for insurers t exclude these risks from marine policies, both hull and cargo.  A variety of exclusion clauses have been used for this purpose.  In the mind of the marine practitioner strikes etc. risks are aligned with war risks, which are also subject to standard exclusion clauses in marine policies.  Both cargo and hull insurers are prepared to accept, subject to an appropriate premium, proposals to cover loss or damage to insured property caused by strikes and persons taking part in labour disturbances, riots or civil commotions; but circumstances dictate different methods.
Stuffing a Container Filling a container with cargo.
Subject Matter Insured The subject matter exposed to risk to which the assured’s insurable interest attaches.  In a cargo policy this would be the “goods”.  In a hull policy it would be the “ship and machinery”.  In a freight policy, the “freight”.  In a policy the subject matter must be designated with reasonable certainty so that it is readily identifiable.
Subrogation The right of the insurer to any remedies which the assured may have against third parties wholly or partly responsible for the loss in respect of which a claim has been paid.  Under subrogation rights the insurer is entitled to any recovery obtained by the assured and any recovery which he himself may obtain in the assured’s name.  The maximum amount to which the insurer is entitled under his subrogation rights is the amount of the claim paid.,  Any amount in excess of the claim which the insurer may recover must be paid to the assured.
Subrogation Form A form of subrogation.  A standard form used to obtain the agreement of the assured to the insurer pressing a claim for recovering from a third party which claim would normally be made by the assured.  The insurer automatically has rights of subrogation by statue without the form but it is often more satisfactory to obtain the form of subrogation before pressing a claim, since it obviates the necessity of proving subrogation rights.
Sue and Labour Charges Expenses incurred by the assured, their servants or agents, pursuant to the ‘duty of the assured’ clause in a hull or cargo policy.  These are recoverable under the policy insofar as they are reasonably and properly incurred, provided the measures taken by the assured, etc. were intended to prevent loss or damage to the subject matter insured by a peril insured against, and were not part of a salvage or GA act.
Sum Assured Sum insured.
Sum Insured The maximum amount of liability of the insurer under the policy.  The measure of indemnity for total loss.  The sum insured by a policy is the total of the signed lines (if more than one) in that policy.  Usually the sum insured is for the same amount as the insured value but where it is for a smaller amount all claims paid by the insurer, whether partial or total loss, are reduced in the same proportion.  The premium rate is applied to the sum insured to determine the policy premium.  Return premiums are calculated in the same manner.
Survey Fee The fee payable to a surveyor for his services in carrying out a survey and issuing a survey report.  Primarily the payment of the survey fee is the responsibility of the assured because it is part of the assured’s expense in proving the loss.
Sweat Damage Changing temperatures cause the ship’s plates in the holds to “sweat”.  That is, condensation forms on the inside of the holds and can cause damage to baled cargoes and to their cargoes vulnerable to water damage.  Sweating is particularly likely to occur when the ship in a humid climate encounters heavy weather so that hatches are battened down and ventilators closed.  It is, however, best to leave ventilators closed for cargos which do not need ventilation, such as manufactured metal goods, because warm moist outer air drawn in through the ventilators will condense on the cold surface of the cargo in the cool hold and may result in sweat damage.  Sweat damage is not covered by the ICC (1982) B or C.
Supercargo A superintendent of cargo who travels with the ship.


Taint Cargo may become tainted either by being stowed in close proximity to another cargo which is likely to taint it or by the action of damage by seawater or other cause to another cargo which in turn causes such other cargo to taint the insured cargo.
Tare Weight of a container.  This may apply to wrapping, boxes, crates, drums or even wagons.
T.B.A. “To be advised” or “To be agreed”, as appropriate (e.g. “Vessel to be advised” or “Rate to be agreed”.)
T.E.U. Twenty foot equivalent unit (used in capacity measurements – container ships and ports).
Theft An act of stealing property which belongs to another party.  Theft is embraced within the ‘all risks’ cover of the ICC (1982) A, but neither the ICC(1982) B nor C cover theft.  However, the risk may be added to the B or C clauses, with agreement of the insurer, by incorporating the ‘theft, pilferage and non-delivery clauses’ into the contract.
Theft, Pilferage and Non-Delivery Clause This clause, published by he Institute of London Underwriters under reference CI.272 (1/12/82), is for use only with the MAR form of policy and only in conjunction with Institute Cargo Clauses.  It extends the cover in the ICC (1982) B or C or the relevant Institute trade clauses, as appropriate, to embrace loss or damage to the insured goods caused by theft, pilferage or by non-delivery of an entire package; always subject to any exclusions incorporated in the insurance (e.g. Strikes, etc).
Through Bill of Lading          A bill of lading which does not cease when the goods are discharged.  It attaches as soon as the goods are in transit to the port of loading and continues after discharge until they arrive at he destination inland.  Although the carrier usually makes it clear that before loading and after discharge the goods are at the cargo owner’s risk.
Time Charterparty A contract or agreement whereby the shipowner hires out his ship for a period of time to another person.
Tons Cubic ton (displacement) = 33 cubic feet of seawater.

Cubic ton (ship tonnage) = 100 cubic feet

Ton, laden = 40 cubic feet

Long ton = 2240 lhs.

Metric ton (tonne) = 1000 kilograms (2204.60 lbs)

Short ton = 2000 lbs.

Tonne Metric measurement of weight (1,000kilograms)
Tort An action in tort is a legal action arising in the absence of a contract.  Claims under the collision case would come in this category.
Tortfeasor The person against whom an action in tort is brought.  The negligent shipowner or manager in a collision case would be a tortfeasor.
Total Distribution Cost An exporter’s total cost for obtaining or producing the goods, plus the costs of packing, moving, shipping and delivering the goods to the consignee.
Total Loss Loss of the subject matter insured either as an actual total loss or a constructive total loss resulting in the payment of the total sum insured under the policy.  Except where the policy states otherwise (an unlikely event), all marine policies cover total loss; though some policies may exclude partial loss.  The term total loss includes a constructive total loss unless the policy specifies otherwise.  A total loss claim on a policy that cover partial loss which turns out subsequently to be only a partial loss may still be claimed as a partial loss, even though it was submitted by the assured as a total loss.
Tow The ship being towed by a tug
Towage The act of towing a vessel.
T.P.N.D. or T.P. & N.D. Theft, pilferage and non-delivery
Trade Clauses Sets of cargo clauses which embrace special conditions agreed between insurers and trade associations.
Trade Losses Losses incurred by cargo without the operation of an insured peril, being losses which are common to a particular trade. Examples would be evaporation of oil or breakage of glass.
Tramp A vessel not engaged on a regular run.  A vessel engaged on a regular run is called a “Liner”.  Tramps are mainly engaged in carriage of bulk cargo.  Passenger accommodation, if any, is limited in tramps.
Transhipment Taking goods off one vessel and loading them onto another.  Where transhipment is beyond the control of the cargo assured the policy continues under the “transit clause” without additional premium unless the insurer has stipulated an additional premium to be paid in the event of transhipment or the assured was aware of the intended transhipment when the insurance was effected and the insurer was not.  If the assured is aware of the intention to tranship he must advise the insurer at the time of affecting the insurance or there is non-disclosure of a material fact, unless transhipment is customary for the particular voyage and should be known already to the insurer.
Transhipment Bill of Lading See “Through Bill of Lading”.
Transit Clause All sets of Institute cargo clauses incorporate clauses which specify when cover  attaches and terminates.  These are under the general heading ‘Duration of Cover’.
Trip Charterplay An agreement between a shipowner and a charterer, whereby the latter hires the vessel named in the contract on a time charter basis but for a specific voyage.
Trip Insurance American expression denoting an insurance on a single journey as opposed to a period insurance.
T/S Transhipment
T.S.I. Total sum insured
Tug and Tow The “Tug” is the vessel which is towing.  The “Tow” is the vessel which is being towed.  The principle of tug and tow are complicated, but basically it may be said that the tug is responsible for the tow.
Twenty Four Hours Clause A clause attached to a cargo policy, usually on refrigerated goods, where delay is an insured peril and which includes the risk of breakdown of refrigerating or propelling machinery.  The effect of the clause is to make claims payable only where the breakdown of machinery lasts for not less than 24 consecutive hours.


Uberrimae Fidei Utmost Good Faith.
Ullage Trade ullage.  Natural loss of liquid cargoes in transit.  This is usually due to evaporation and occurs whether or not there is an accident.  Since it is an inevitability, and not a risk, ullage is not covered by the policy and, therefore, the recognised percentage for ullage must be deducted from any claim based on the difference between shipped and arrived quantities.
UNCTAD United Nations Conference on Trade and Development.
Undeclared Cargo If a shipment has not been declared under an open cover or floating policy it may be declared later, even after loss, provided the failure to declare was an error made in good faith.  If cargo is wilfully undeclared to the carrier no claim can be made by that cargo for general average, but the cargo must contribute towards any other general average payable.
Under-deck Shipments Goods not customarily carried on deck are always deemed by the insurer to be shipped under-deck unless the policy states that the goods are “on deck” or “over-deck”.  Shipments are carried under-deck when in holds or spaces below the main deck.  Goods carried in a lighter for under-deck shipment are deemed to be carried under deck.
Underinsurance When an insurance policy is effected for an amount which is less than the value at risk there is underinsurance.  In the event of underinsurance the assured is deemed to be his owner insurer for the difference between the policy sum insured and the insurable value.
Underwrite To write a risk.  An insurer writes, or underwrites, a risk when he accepts liability for any loss to the subject matter insured from an insured peril.
Unearned Premium Premium paid on risks in respect of which the property has never been exposed to peril so that the insurer could not have had any liability.
Unidentifiable Cargo The marks and labels on cargo must be sufficient to withstand the ordinary voyage and the carrier cannot be held liable for unidentification of cargo due to lack of marks.
Unit Carriage Method of carrying goods.  The term embraces all methods whereby a number of packages are grouped into a single unit for handling, stowage and carriage; including containerisation and palletisation.
Unitisation The practice of placing several packages of goods into a single unit or container in order to expedite and make easier the loading, stowage and discharge of such goods.
Unstuffing The practice of removing goods from a container.  Sometimes termed ‘stripping a container’.
Uplifting Increasing a premium by loading the rate.
Utmost Good Faith A contract of marine insurance is based on the utmost good faith, and, if the utmost good faith is not observed by either party, the contract may be avoided by the other party.
U/W or U/Wr or U/wr Underwriter.


Vermin The policy may be extended at the insurer’s option to cover the risk of vermin, but it is not, generally, the practice of insurers to cover this risk.
V.L.C.C. This is a colloquial abbreviation which is used to indicate a very large vessel.  Since this is usually a bulk oil carrier the abbreviation is interpreted, generally, as “Very Large Crude Carrier”, though it may be used in practice to indicate a very large cargo carrier or a very large container carrier.
Voyage Charterparty A contract of hire between a shipowner and a charter, whereby the ship is hired to carry a specified cargo between specified ports or places; the shipowner earning freight based on the goods carried.


Wear and Tear Cargo insurance policies expressly exclude loss caused by ordinary wear and tear; except where provided otherwise.
War Cancellation Clause During peacetime the premium rate charged for war risks insurance is relatively low, reflecting the minimal risk at that time of loss or damage by war perils.  If the risk increased, but no major conflict develops, insurers either increase the rate for acceptances or defer acceptance of risks until things quiet down.
Warehouse to Warehouse Cover A term used loosely to show that a cargo is insured against all the perils expressed in the policy (other than war risks) throughout the whole period of transit.  That is, from commencement of transit at the inland warehouse or place of storage, at the place named in the policy, to delivery at the final inland warehouse or place of storage at the destination named in the policy.  A ‘Warehouse to Warehouse” policy or certificate incorporates a ‘Duration’ clause which specifies when cover attaches and terminates.
Warehouse Risk Insurance of goods whilst in warehouse.  This risk generally occurs at the customs or other warehouse at the port or place of shipment or discharge.  If the warehouse period is within the “ordinary course of transit” the marine insurance cover continues and no special policy is necessary.
War Exclusion Clause All insurance policies, other than those that specifically cover war risks , incorporate a war exclusion clause.
War Perils Perils caused by, in consequence of or associated with hostile acts by authorities using political or executive powers.  The term does not include arrests, restraints or detainments by authorities exercising judicial powers (e.g. detainment under quarantine restrictions, seizure as security against legal obligations such as collision liability, arrests through non-payment of fines or other financial defaults.
Warranty A marine insurance warranty is a promissory warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some condition shall be fulfilled, or whereby the assured affirms or negatives the existence of a particular state of facts.
War & Strikes Cancellation Clauses – Cargo Open Cover It is customary for a cargo open cover to incorporate a cancellation clause which entitles either party to cancel the war and/or strikes risks cover by giving the other party 7 days notice in writing.  It is also customary to incorporate a cause which allows cancellation of strikes risks in respect of shipments to or from the USA by giving only 48 hours notice.
Washing Overboard A peril specified in the ICC (1982) B and in trade clauses based thereon, as appropriate.  It is restricted to loss of cargo which is washed over the side of the ship by waves that sweep the deck during heavy weather.  The peril would be embraced within the ‘all risks’ cover of the A clauses, but is not among the perils specified in the C clauses.  It does not embrace ‘loss overboard’ from any other cause; such as deck cargo which breaks loose during heavy weather and falls overboard.
Wharf The place where a ship moors alongside to discharge or load cargo.
Wharfage Payment for the use of a wharf.
Wharfinger A person having charge of a wharf.
White Rust Oxidisation on metals which are treated to prevent red rust, such as galvanised metals.  The insurer’s liability is the same as that for “rust”, which see herein under a separate entry.
Without Prejudice In cases where the insurer is presented with a claim for which he feels he is not strictly liable under the terms of the policy he may agree to pay this “without prejudice”.  This means he is paying without argument on his particular occasion but it is not to be used as a basis for demanding settlement of similar future claims.
Write To underwrite a risk.  An insurer writes a risk when he accepts liability under an insurance contract.


XOL Excess of loss.
XSL Excess loss.
X/S Excess – see “Deductible”


Y/A Rules York-Antwerp Rules.
Yaw A ship “yaws” when her bow moves from side to side, usually causing her to maintain a zig zag course.  In most case, it is caused by lack of steerage control.
York-Antwerp Rules A set of rules to enable uniformity to be obtained in adjustment of general average.  The 1974 rules contain a Rule of Interpretation which provides that the specific circumstances detailed in the numbered rules shall be considered first.  If the situation does not fit any of the numbered rules the lettered rules must be applied.  Most general average is settled in accordance with the York-Antwerp Rules, but if the contract does not provide for these rules, the adjustment will either by made on Foreign adjustment or on English Law and Practice.  Whichever set of rules is used the marine insurer agrees to abide by the decisions of the adjuster where the policy is involved.
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