Glossary

ABS
(American Bureau of Shipping) – America’s classification society that surveys vessels and grants their “class” provided the vessel meets the standards of construction, materials and workmanship; prints the “Record”, an alphabetical register of vessels that completely describes them.

ACT OF GOD
A natural event, not preventable by any human agency, such as flood, storms or lightning. Forces of nature that a carrier has no control over, and therefore cannot be held accountable.

ALL OTHER PERILS & MISFORTUNES
Phrase in cargo policy meaning perils of the same nature as those described specifically in the Perils clause.

“ALL-RISKS”
One of the broadest forms of coverage available, providing protection against “All-Risks” of physical loss or damage from any external cause. Does not cover loss or damage due to delay, inherent vice, pre-shipment condition, inadequate packaging or loss of market. Loss must be fortuitous to be covered.

ASSAILING THIEVES
Forcible taking of property, but not sneak thievery or theft by any of the ship’s crew.

AVERAGE
Any partial loss or damage due to insured perils.

AVERAGE AGREEMENT
Document signed by cargo owners by terms of which they agree to pay any General Average contribution properly due so that cargo may be released after a General Average loss has occurred.

AVERAGE CLAUSES
Clauses in Cargo policy that determine the amount of Particular Average loss recovery.

AVERAGE IRRESPECTIVE OF PERCENTAGE
Broadest “with average” clause. Losses by insured perils are paid regardless of percentage.

BARGE
A large, flat-bottomed, open-deck type of vessel that usually is towed or pushed by tug. Mainly used in the rough trades, carrying coal, ore lumber, etc. also called a “lighter”.

BARRATRY
Fraudulent, criminal or wrongful act by ship’s captain or crew which causes loss or damage to the ship or cargo.

BILL OF LADING
Contract of carriage between shipper and steamship company which is the ship owner’s receipt for the goods and is the document of title for the shipper or consignee.

BREAK BULK
Loose cargo, such as cartons, stowed directly in the ship’s hold as opposed to containerized or bulk cargo.

BULK SHIPMENTS
Shipments which are not packaged, but are loaded directly into the vessel’s hold; e.g. ores, coal, grain, fuel oil, fertilizers and similar commodities.

CARGO WAR RISK POLICY
A separate cargo policy covering cargo while waterborne only (except at transshipping point, which may be on land or water) that insures against war risks.

CARRIER
May be trucker, vessel, railroad or air carrier.

CERTIFICATE OF INSURANCE OR SPECIAL POLICY
A document prepared by the insured or the insurance company to provide evidence of insurance to the buyer or bank for export/import shipment. The certificate contains an abstract of the more important conditions in the policy and incorporates the terms and conditions of the policy.

C.I.F.
Cost Insurance Freight (see Terms of Sale)

C.O.G.S.A.
Carrier of Goods by Sea Act.

COLLISION
In marine insurance, a vessel striking another vessel or floating object.

CONSIGNEE
Individual or company to whom cargo is shipped, usually the buyer.

CONSIGNOR
Individual or company who ship goods; usually the seller.

CONSTRUCTIVE TOTAL LOSS (CTL)
An instance in which the cost of recovering and/or repairing damaged goods would, when recovered or repaired, exceeds the insured value.

CONTINGENCY INSURANCE
A coverage contingent upon performance of a policy issued abroad. If the Assured buys or sells on terms under which the insurance is arranged by the other party, and that insurance fails to
respond to a legitimate loss, the Contingency Insurance protects the Assured’ s interest in such shipment.

DECK CARGO
Cargo carried outside rather than within enclosed cargo spaces of a vessel and usually insured for FPA conditions only.
DECLARATION
Form filled out by the assured and sent to the insurance company when reporting individual shipments coming within the terms of an open policy. Usually used for declaring import shipments where evidence of insurance is not required.

DEVIATION
A vessel going to some other point or taking some course other than that described in the Bill of Lading.

DUE DILIGENCE
Proper care and attention on the part of a vessel owner to the maintenance and welfare of the vessel and crew.

DUTY
A government’s tax levied on imports. For example, in the U.S., duties collected by U.S. Customs Service.

E

EXCEPTIONS
Notations made on a delivery receipt by the person (or company) receiving a shipment, or made on the bill of lading by the carrier regarding damage or variance in the shipment.

F

F.A.S.
Free Alongside Steamer (see Terms of Sale)
F.C. & S.
Free of Capture & Seizure

FPA
Free of Particular Average

FREE OF PARTICULAR AVERAGE, AMERICAN CONDITIONS (FPAAC)
Average clause that limits recovery of partial losses under the Perils clause to those losses directly resulting from fire, stranding, sinking or collision of the vessel.

FREE OF PARTICULAR AVERAGE, ENGLISH CONDITIONS (FPAEC)
Same as FPAAC except that partial losses under the Perils clause are fully recoverable if the vessel has been stranded, sunk, burnt, been on fire or in collision, without requiring that the damage actually be caused by one of these perils.

G

GENERAL AVERAGE
Loss resulting from a voluntary sacrifice of any part of the vessel or cargo, or an expenditure to safeguard the vessel and the rest of the cargo. When such a loss occurs, it is paid on a pro-rata basis by the ship owner and all cargo owners.

I

INCHMAREE CLAUSE
Covers losses resulting from a latent defect in the vessel’s hull or machinery and losses resulting from errors in navigation of the vessel by the master or crew; as long as the damage does not result from want of due diligence by the vessel owner.

INDEMNITY
Repayment or reimbursement for loss or damage.

INHERENT VICE
A loss caused by the inherent nature of the cargo insured and not the result of a casualty or external cause.

INVOICE
Document which shows the terms of sale; contains full descriptions of goods, sale price, charges, discounts, etc.

INSURED VALUE
Usually computed by adding the invoice cost, guaranteed freight, other costs and insurance premium plus a percentage, commonly 10%. This usually represents landed value.

J

JETTISON
Voluntary dumping overboard of either cargo or ship’s material or stores, to protect other property from a common danger.

L

LANDED VALUE
Wholesale market value at destination on final day of discharge.

LIGHTER
A large, open flat-bottomed barge used in unloading and loading ships wherever shallow water prevents the ships from coming into the shore.

LOSS OF MARKET
Situation in which, for one reason or another, sound cargo is no longer wanted by the consignee when it arrives. This is known as a “business loss” and is not recoverable under a marine cargo policy; e.g. Christmas tress arriving in January damaged.

M

MARINE EXTENSION CLAUSE
Cargo policy clause that continues coverage on goods during deviation, delay, reshipment and transshipment, or any other variation in normal transit beyond the assured’ s control.

MARINE SURVEYOR
Specialist who determines the nature, extent and cause of loss and/or damage.

MASTER’S PROTEST
Sworn statement by captain describing any unusual happening during the voyage.

O

ON-DECK CARGO
Cargo carried on the main deck of the vessel, or other spaces above the main deck; is susceptible to damage by wind, sea water and being washed overboard.

P

PALLET
A low portable platform, usually wooden, on which cargo is stacked for storage or transportation; a skid.

PARTICULAR AVERAGE
Partial loss sustained by goods insured.

PERILS OF THE SEA
Stranding, sinking, collision and hazards from natural forces in or about navigable waters (windstorm, rough weather, etc., but not fire explosion, etc., which are perils on the sea).

PILFERAGE
The theft of part of the contents of a shipping package.

R

RO-RO
Roll-on-Roll-off; A specially constructed vessel having a ramp on the top which can be raised to a vertical position and lowered to permit trucks and trailers to load under their
own power.

S

S.R. & C.C.
Strikes Riots & Civil Commotion

SALVOR
A third party who saves or assists in the saving of a vessel or property from loss at sea.

STRANDING
The grounding of the vessel, causing it to remain fast for an appreciable length of time.

SUBROGATION
The operation by which the insurance company (on payment of a claim) assumes all of the assured’ s rights to recovery from any third parties; substitution of one creditor for another.

T

TERMS OF SALE
The following are brief descriptions of the more common Terms of Sale (fully defined in the Guide to Incoterms), setting forth the obligations of the seller and buyer.

FREE ON BOARD (FOB) – The seller assumes charges and risk for the goods until they are loaded on board a named carrier at a named point, which may be an inland point or a port. The buyer is responsible for any loss or damages after loading on board the carrier. The buyer should specify FOB to control insurance without relying on the seller.

FREE ALONGSIDE (FAS) – The seller assumes charges and risk until the goods are delivered alongside the vessel. Loss or damage from alongside the vessel is the responsibility of the buyer.

COST AND FREIGHT (C & F) – The seller assumes responsibility for the charges and for loss or damage until the goods enter the carrier’s custody or are loaded on board the vessel. The buyer is responsible for loss or damage at this point.

COST INSURANCE AND FREIGHT (CIF) – The seller’s price includes cost of the goods, marine insurance and all transportation charges to the named destination point.
TERMS OR METHODS OF PAYMENT
If the insured is not paid for any reason, he/she must dispose of the goods. Therefore he/she still has an insurable interest.
Following are the more common terms or methods of payment:

COLLECTION BY DRAFT – The seller bears the risk until he is paid. If for some reason, the buyer does not accept the shipment, the seller has to dispose of the goods. By arranging the insurance, the seller can minimize the risk of loss.

OPEN ACCOUNT – When sales are made on account, the seller has financial risk similar to collecting by draft. Here again, the seller should attempt to arrange the insurance.

LETTER OF CREDIT – In this procedure, the buyer establishes credit in U.S. money through his or her bank in favor of the seller. If the seller collects by this means, the letter of credit often stipulates that he/she arrange the insurance.

TRANSSHIPMENT
To transfer from one ship or conveyance to another for further transit.

v

VALUATION CLAUSE
Provides basis for determining insured value of a shipment under the open cargo policy.

w

WAR RISK
Insurance against loss or damage to property as a result of war risks (separate policy).

WAREHOUSE TO WAREHOUSE
An export/import policy clause that provides protection from the shipper’s warehouse and during ordinary course of transit to the consignee’s warehouse.