Marine + Hull Glossary of Terms

Act of God A calamity beyond human control which happens to property - lightning, for example. Damage done by an Act of God would not be the responsibility of a bailee, although he/she might be responsible for many other calamities. Acts of God are excluded by the usual bill of lading and, to the extent not specifically assumed, by insurance policies. Admiralty Courts Courts of law that deal with matters pertaining to the sea. arine !nsurance "aw# - $%o &iew a copy of the Australian arine !nsurance Act '()( *as amended+ please clic, on this lin, Australian arine !nsurance Act Affreightment A contract to carry merchandise. All Other Perils and Misfortunes A phrase in the perils clause of a policy meaning perils of the same nature as those specifically enumerated. Assailing Thieves (see also Piracy) %heft by force, &iolence or brea,ing and entering. Does not include ordinary or clandestine pilferage. Average -artial loss or damage due to perils insured. Average Irrespective of Percentage .roadest /with a&erage/ clause. "osses by perils insured are paid in full without deductible or franchise. Average Ad uster An ad0uster of marine losses. !are"oat Charter A type of charter in which the shipowner pro&ides only the ship and gi&es the charterer complete control, management and operation of the &essel for an agreed leasing period1 the charterer has to appoint the crew and pay all operating costs including stores and bun,ers1 also ,nown as demise charter. !arratry 2illful and illegal sin,ing, casting away, or damaging a ship at sea or its cargo. !ill of #ading A document issued by a carrier which is a receipt for the merchandise or other property to be transported, and which outlines 0ust what the carrier agrees to do and his responsibilities for the property.

Cargo Goods being transported1 the load of a truc, or the goods carried by a ship. %he cargo of a ship does not include the e3uipment needed to operate the ship. Carrier %he transporter of goods and merchandise, such as a railroad, truc,er, airline, or steamship line. Cesse A clause in a &oyage charterparty which stipulates that the charterer4s liability ceases once the cargo has been shipped. Cesser and lien clause A clause in a &oyage charterparty # which stipulates that the charterer4s liability ceases once the cargo has been shipped and the owners ha&e a lien on the cargo for freight deadfreight, demurrage and general a&erage contributions. Charterer A person or firm who enters into a contract with a shipowner for the transportation of cargo or passengers for a stipulated period of time, i.e. a shipowner4s customer. Charterparty A written contract between shipowner and charterer whereby a ship is hired1 all terms, and conditions and exceptions are stated in the contract. C$ % &$ (C&') Cost and &reight 5 a term of sale under which the seller is responsible for arranging transportation to a destination, but the buyer handles any insurance to co&er the transit ris,. C$ I$ &$ Cost( Insurance and &reight 5 a term of sale under which the seller is responsible for arranging transportation and insurance to a destination1 in effect, a /price deli&ered at destination./ Claims Agent A representati&e of the insuring underwriters, usually located o&erseas, who has been authori6ed to accept the papers and documents re3uired to pro&e a claim. 2hile the claims agent does not ha&e authority to ma,e settlement with the claimant, he/she performs a &aluable ser&ice in expediting the processing of a claim *see also settling agent+. Classification )ociety A classification society is a non-go&ernmental organi6ation in the shipping industry, often referred to as 4Class4. !t establishes and maintains standards for the construction and classification of ships and offshore structures, super&ises that construction is according to these standards and carries out regular sur&eys of ships in ser&ice to ensure the compliance with these standards. %o a&oid liability, they explicitly ta,e no responsibility for the safety, fitness for purpose, or seaworthiness of a particular ship. Common Carrier

7ne who offers to transport merchandise for hire and must accept shipments from anyone who wishes to use his/her ser&ices. Common carriers must abide by different rules and laws than pri&ate or contract carriers who transport only the goods of those with whom they ha&e made agreements. Consignee 7ne to whom goods are sent. Consignor %he sender of goods. Country *amage Damage to cotton in bales caused by poor methods of bailing, discoloration, etc. %his term is used in arine Cargo insurance of cotton. *eclaration A report by Assured to company of the details of shipment*s+ insured under an open policy. *emurrage 8ee paid by the charterer to the shipowner when the latter4s ship is detained beyond the specified date agreed in the charterparty *eviation A &essel going to some other port or ta,ing some other courses than described in the policy of marine insurance. *raft A de&ice used by the seller to collect from the buyer. &$ A$ )$ &ree Along )ide 5 a term of sale under which the seller agrees to pay all charges and assume all ris,s until the goods sold ha&e been placed on a wharf or a lighter alongside the ship. &$ C$ % )$ &ree of Capture and )ei+ure 5 a clause added to the policy to exclude the broad war ris, co&erage gi&en in most basic forms of marine policies. &$ O$ !$ &ree on !oard 5 part of a term of sale under which the seller#s responsibility ends and the buyer#s begins at the point designated. &$ P$ A$ &ree of Particular Average 5 meaning the insurer will not pay a partial loss unless the &essel meets with a specified accident. &ranchise A pro&ision in some policies stating that the insurance company shall not be responsible for

any loss which is less than a certain amount. !f the loss e3uals or exceeds that amount, howe&er, it will be paid in full. &reight %he income of the ship owner from carrying cargo or earned by the employment of his ship. &reight &or,arder A specialist in handling o&erseas shipping details of exports and imports. General Average A principle of maritime law according to which the owners of ship and cargo share in a loss incurred &oluntarily *see general a&erage sacrifice+. General Average Contri"ution %he proportionate shares of the &essel owner and each of the cargo owners in order to ma,e up the expenditure or sacrifice incurred for the common good. General Average )acrifice %he &oluntary destruction of part of the &essel or the cargo, or the deliberate expenditure of funds in time of gra&e peril, which is successful in a&oiding total disaster *see general a&erage contribution+. -arter Act $applicable 9:A registered &essels or those &essels operation in 9:A 2aters; A law passed by Congress $9:A; in '<(=. %he >arter Act pro&ides that a &essel owner is not responsible for loss or damage caused by faults or errors in na&igation, pro&ided the ship owner has ta,en proper care to see that his/her ship is in all respects seaworthy and properly manned and e3uipped. Implied .arranty A warranty is a representation by the policyholder that certain conditions exist or will be met. ?&en if the warranty is not in writing, it may exist as an /implied/ warranty, e.g., that a building is not on fire when insured, or that a &essel is seaworthy. Import As a &erb, to ship goods into a country from abroad. As a noun, the goods so shipped. Inchmaree Clause Co&ers losses resulting from latent defect in hull and machinery of &essel and losses resulting from errors in na&igation or management of the &essel by master or crew. Inherent /ice %he 3uality that something has to deteriorate or damage itself without outside help. 8or example, mil, sours. !nherent &ice is excluded from co&er by almost all policies. Institute Clauses Clauses in a policy which ha&e been standardi6ed for the trade by the American !nstitute of arine 9nderwriters. %he "ondon !nstitute clauses, used by the .ritish mar,et, are those adopted by the !nstitute of "ondon 9nderwriters.

0ettison %o throw part of the cargo or gear of the &essel o&erboard to lighten the load and sa&e the &essel. %he owner of the 0ettisoned goods is entitled to a /general a&erage,/ i.e., the loss is shared by the owners of the &essel and the owners of the cargo which was not thrown away. #anded /alue 2holesale mar,et &alue at destination on final day of discharge from ocean &essel. #atent *efect A defect not immediately apparent. #aycan A ship chartering term which stands for laydays commencement and cancelling1 specifies the earliest date on which laytime can commence and the latest date, after which the charterer can opt to cancel the charterparty #aytime %ime allowed by the shipowner to the &oyage charterer to carry out the cargo loading and/or discharging operations1 laytime may be expressed as a certain number of days or number of tons of cargo loaded/unloaded per day which allows the charterer the option of adding together the loading and discharging times1 in this case, demurrage does not commence until the combined times exceed the total time specified for both operations #etter of Credit A document issued by the buyer#s ban,, through its foreign correspondent ban,, establishing a credit against which the seller may draw after complying with specific instructions. #ighter A small harbor craft, generally not self-propelled, used to load or unload a &essel. #loyds 'egister A catalogue of ships describing each ship 5 dimensions, age, place of construction, registry, ownership, etc. A necessary tool for the ocean marine underwriter. :imilar information is published by the American .ureau of :hipping. #loyds )yndicate A group of underwriters at "ondon "loyds who entrust the underwriting of their business to one underwriter. #ost or 1ot #ost A clause used in ocean marine insurance under which the company will pay e&en if the loss insured against has occurred prior to the effecti&e date of the insurance. %he company would, of course, not be liable if the policyholder ,new that the loss had occurred when he/she bought the insurance. !n days past, a ship could easily be lost or damaged and the owner would not find out about it until later, during which time he might want to insure it.

Marine *efinition !n the past, marine underwriters, fire underwriters and casualty underwriters had different ideas about what constituted /marine/ insurance. %o resol&e the resulting confusion, committees were formed to wor, with state insurance departments in creating a standard definition of marine insurance. A /@oint Committee of !nterpretation and Complaint/ was formed for the purpose of interpreting this definition as it applied to specific cases, which were submitted from time to time by interested parties. !nsurance departments ha&e, in general, adopted the findings of this committee as their own rules. Marine 23tension Clause An endorsement to an open policy gi&ing co&erage on the goods insured during detention, delay, forced discharge, reshipment and transshipment, or any other &ariation in the &oyage beyond the control of the Assured. Marine Perils %he perils which are insured against in an ocean marine insurance policy. Marine Insurance A contract of marine insurance policy# is a contract whereby the insurer underta,es to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine ad&enture. 1ote4 arine !nsurance is go&erned by marine laws, primarily Admiralty "aws#, and while particular to each countries own laws, marine law is international similar in all respects. $a list of typical marine law clauses and sections are described at the end of this dictionary; 5 clic, here to fast trac, Marine )yndicates Groups of companies acting in common to insure certain ocean marine classes. Also, a term used to describe groups which ma,e inspections and sur&eys and institute standards for the construction of &essels. Maritime Perils :pecific to marine insurance applications, maritime perilsmeans the perils conse3uent on, or incidental to, the na&igation of the sea, that is to say, perils of the seas, fire, war perils, pirates, ro&ers, thie&es, captures, sei6ures, restraints, and detainments of princes and peoples, 0ettisons, barratry, and any other perils, either of the li,e ,ind, or which may be designated by a policy of marine insurance. Master %he commander of a commercial &essel. Off -ire A period of time during which a &essel under time charter is unable to meet the re3uirements agreed between the charterer and shipowner due to some reasons within the control of the latter1 in this case, e.g. machinery brea,down, the charterer is not re3uired to pay hire money Open Policy -olicies containing all terms and conditions, but which separately record the amount and

term of each ris, to be co&ered. Also, a term used to describe policies written with no natural expiration date, but which stay in effect until cancelled. Particular Average A loss which falls on the particular property insured, as opposed to a /general a&erage,/ which is a loss for the account of all interests. Perils of the )ea Dangers specific to ocean marine transportation, such as hea&y weather, stranding and collision. -erils of the sea are distinguished from perils such as fire, which also may occur on land and would be considered /perils on the sea/ rather than /perils of the sea./ Pilferage %heft not limited to the ta,ing of a whole pac,age or all of the property insured. Piracy Aobbery on the high seas. Plimsoll #ine %he -limsoll "ine, also called an international "oad "ine, indicates the maximum safe draft, and therefore the minimum freeboard for a commercial &essel to maintain sufficient reser&e buoyancy. in &arious operating conditions. %he line is physically painted on the hull of merchant ships, and was first suggested by the '(th-century ?nglish politician :amuel Plimsoll. %he exact location of the "oad "ine is calculated and/or &erified by a Classification :ociety which then issues the rele&ant certificates. -limsoll "ine :ymbol Port A place from which goods are sent out of a country or recei&ed from abroad. %he location of the customs usually determines the port. Protection and Indemnity Insurance .road type of marine legal liability co&erage specifically designed to co&er commercial &essels operating on the high seas as many ship owners desire the much broader co&erage offered by protection and indemnity insurance since it offers a worldwide co&erage and includes protections against liabilities arising from a broader range of ris,s then standard marine liability co&ers offered to pleasurecraft1 such as,

!n0ury, illness and death of crew, passengers and ste&edores1 Aepatriation of crew and substitute expenses1 Di&ersion and other expenses incurred in landing refugees, sic, persons and stowaways1 Collision liability1

?xcess collision liability1 -ollution by oil or other substances1 -roperty damage1 %owage contract liabilities, and liability under other contracts and indemnities1 a Cargo loss, shortage and damage1 9nreco&erable general a&erage contributions1 :al&or4s expenses under the '(<) "loyd4s :tandard 8orm of :al&age Agreement1 8ines, certain legal and other costs1 2rec, remo&al1 ?xcess 2ar Ais,s liability.

5P%I Clu"s6 7Protection % Indemnity Insurers8 -B! Clubs are independent, non-profit ma,ing mutual insurance associations, pro&iding co&er for its :hip-7wner and Charterer members against third party liabilities relating to the use and operation of commercial &essels. ?ach club is controlled by its members through a board of directors or committee elected from the membership. Approximately ()C of the world#s ocean-going tonnage is co&ered by thirteen principal underwriting member clubs of the !nternational Group of -B! Clubs *9D+. Protest A sworn statement by the master describing any unusual e&ent during a &oyage. 'egistered Tonnage A commercial ship is measured by its cargo capacity in /tons,/ with each ton occupying ')) cubic feet. %he cubic capacity of all enclosed spaces is thus measured and the ship#s /tonnage/ determined. )acrifice An act accomplished for the welfare of all interests, such as throwing part of a cargo o&erboard to ,eep a ship from sin,ing. )alvage -roperty sa&ed from loss. )ettling Agent An underwriter#s o&erseas representati&e authori6ed to in&estigate and pay claims. )hore Clause A marine cargo policy clause co&ering an ocean shipment against named perils while on land 5 necessary because the policy pro&ides protection from warehouse to warehouse.

)pecial Marine Policy !ssued under an open policy when the buyer wants e&idence of insurance for the specific merchandise and &oyage in&ol&ed. )trand9)tranding A &essel strands when it runs aground. )tri:es( 'iots and Civil Commotion ()$'$ % C$C$) :tri,es, Aiots and Ci&il Commotion perils excluded in the basic marine cargo policy, but co&erable by endorsement. )ue and #a"or Clause A clause within marine and inland marine policies whereby the policyholder, in the e&ent of a loss, is re3uired to ta,e all necessary means to sa&e the property from further loss, and the insurer agrees to pay the costs e&en if the property becomes a total loss despite the policyholder#s efforts. %he insurer may pay a total loss plus the cost of the attempted sal&age. )urvey !n cargo insurance, an examination of damaged property to determine the cause, extent and &alue. !n hull insurance, an inspection of the ship to help determine its insurability or, after a loss, the cause and extent of damage. )urveyor A specialist who conducts sur&eys of cargo or hulls *see sur&ey+. )yndicate Policy A policy issued on behalf of a group of companies sharing a ris, or class of ris,s. A syndicate policy carries the names of all the participating companies and usually designates the share of the liability assumed by each company. Time Charter A contract for the hire of a ship or charterparty for a specified period of time1 the charterer pays for the bun,er fuel, fresh water, port charges, etc. in addition to charter hire. Trade #oss A loss, usually small in amount, specific to certain ,inds of cargo and which, because it is expected, is uninsurable. 8or example, seepage or e&aporation of li3uid from wooden cas,s. /aluation Clause %he clause in a marine policy which ma,es it a &alued policy, by agreement in ad&ance as to the &alue of the insured property. /enture An underta,ing, such as one &oyage of a &essel. .arehouse to .arehouse

Co&erage from a shipment#s point of origin to its destination, e&en if these points are inland. .arranty A statement by the Assured, the truth of which determines the &alidity of the insurance contract. A warranty may relate to matters existing at or before the issuance of the policy *affirmati&e warranty+. 7r it may be an underta,ing by the Assured that something be done or omitted after the policy ta,es effect and during its continuance *promissory warranty+. .ar 'is: Insurance !nsurance against loss or damage to property due to the acts of enemies at war with us. %his co&erage is freely written on marine ris,s, but not on property on land. During 2orld 2ar !!, the go&ernment assumed, for a premium, war ris,s on land and the program was handled by insurers on the go&ernment#s behalf and participated in by them. !n ?urope, the go&ernment paid for such damage. .ay"ill A document which ser&es as a receipt for the goods shipped and as e&idence of the contract of carriage1 it is issued by shipping line or shipowner to shipper or charterer. .ith Average An insuring condition on cargo that agrees to pay losses due to certain named marine periods, pro&ided the loss e3uals or exceeds a specific percentage *see franchise+. "osses less than this amount are paid only if the &essel meets with a specified accident. ;or: Ant,erp 'ules A set of rules adopted by the representati&es of all the leading maritime nations to go&ern the method of applying General A&erage.