A
/Abaft
“Aft of.” See “Aft.”
To relinquish or tender all rights of ownership of hull or cargo to insurers as the preliminary step to recovering an insurance claim for an actual or constructive total loss.
Persons or cargo on a vessel or other conveyance.
ABS - See “American Bureau of Shipping.”
Accident
An unforeseen occurrence or happening; a fortuitous event.
A natural event such as flood, storm, lightning, or earthquake not caused by nor preventable by any human agency, and for which no transporter can be held accountable.
Actual Cash Value
Fair market value of property; as opposed to replacement cost or replacement cost less depreciation. See also “Agreed Valuation.”
Actual Total Loss – See “Total Loss.”
A court having legal jurisdiction over maritime matters; in the United States, the Federal District Courts and the U.S. Supreme Court, not the State Courts.
Admiralty Law
The branch of law dealing with maritime matters.
ADR – See “Alternative Dispute Resolution.”
Ad Valorem
“According to value” or “agreed value“; e.g. an ad valorem freight rate is based on the cargo’s value, not its weight or volume.
The commercial enterprise involving uncertainties, risks, and hazards, in which a vessel and cargo are subjected to the peril of a loss, delay or damage at sea. Merchandise is shipped by the seller on speculation to arrive safely at a foreign port to be sold for a profit. The vessel carries the merchandise in order to earn freight. The vessel and cargo together make up the “common venture.” In clipper ship days, the captain participated in the profits of the venture to give him the incentive to make profitable voyages for the owners. Fishing vessel owners still give their crew “shares” of the venture’s profits.
Advice of Shipment
A notice sent to a buyer advising that the shipment has gone forward, the name of vessel, routing, and anticipated arrival date, etc.
Affreightment – See “Contract of Affreightment.”
Towards or near the stern of a vessel.
Agent
A person authorized to transact business for or on behalf of another person or company; e.g. a “ship’s agent” would book cargo for the pending voyages of a shipping line and make other arrangements for the vessel and/or its owners such as supplies and repairs.
The value of cargo or a vessel agreed between the owner and the insurance company at time of inception of an insurance policy .
A.I.D. (Agency for International Development)
A U.S. government agency.
Air Waybill
The contract of carriage between a shipper and an air carrier; serves a similar purpose as the Bill of Lading on a vessel, but it is not a negotiable document like an ocean Bill of Lading.
ALAE – See “Allocated Loss Adjusting Expense.”
ALE (Allocated Loss Expense) – See “Allocated Loss Adjusting Expense.”
Allision
The striking of a moving vessel with a stationary vessel or other stationary object. See also “Collision.”
Allocated Loss Adjusting Expense (ALAE)
Costs paid by an insurance company to adjust a particular claim; e.g. a survey fee on a cargo water damage claim.
The broadest form of insurance coverage available, providing protection against all perils of physical loss or damage from an external cause. Loss must be fortuitous, i.e. accidental, to be covered. All risks does not cover inevitable loss, wear and tear, delay, inherent vice, pre-shipment condition, inadequate packaging, or loss of market.
Alongside
An area next to the side of a vessel. Cargo delivered “alongside” is placed on the dock or barge within reach of the transport ship’s tackle so it can be loaded.
Alternative Dispute Resolution (ADR)
Optional ways of settling disputes between parties other than by a formal trial. The most common forms of ADR are:
- Negotiation
The process in which disputing parties and their attorneys discuss and compromise their differences.
- Settlement Conference
Any meeting of disputing parties and their attorneys in which they discuss possible settlement of the issues. It may be Voluntary if agreed by the parties (see “Mediation” below), or Mandatory if ordered by the court. Many courts mandate a pre-trial settlement conference in which a judge presides but does not make a final decision on the issues.
- Mediation
An informal process in which the disputing parties choose one neutral mediator to conduct a meeting and help them resolve their disputes by discussing, negotiating, and reaching a settlement acceptable to all of them. Mediation can be either Voluntary if agreed by the parties, or Mandatory if ordered by the court. The mediator does not make a final decision on the issues.
- Arbitration
A formal procedure in which the disputing parties choose one or three neutral arbitrators to conduct a hearing, listen to the positions of the parties, evaluate evidence and testimony, and then make a decision on the issues. Arbitration can be either Binding or Non-Binding on the parties, as they agree beforehand.
- Early Neutral Evaluation
An informal procedure that compels the disputing parties to evaluate the strengths and weaknesses of their positions early in a dispute. The early neutral evaluator is an attorney with expertise in the issues involved, who critiques and responds candidly to the merits of the positions of the parties, and makes specific recommendations about the terms of the settlement agreement, thereby providing a “reality check” for all parties. The neutral evaluator does not make a final decision on the issues.
- Mini-Trial
A flexible procedure in which the disputing parties agree to the format of an abbreviated trial. The rules of evidence are relaxed and witnesses are not usually called. A neutral advisor monitors the proceedings in which the parties present their cases to a judge, magistrate, or jury who then give an advisory opinion on the probable outcome of the case. Mini-trials provide a realistic preview of how the parties might fair at trial. The judge, magistrate, or jury does not make a final decision on the issues.
The geographic scope of a voyage, including time extensions, covered by cargo insurance; e.g. Warehouse to Warehouse Clause, South American Clause, and the Marine Extension Clauses.
American Bureau of Shipping (ABS)
Inspection service in the United States that inspects and surveys vessels and grants their “class” if the vessel meets the standards of construction, material, workmanship, and maintenance; and certifies the vessel as “seaworthy.” ABS publishes the RECORD, which is an alphabetical register of vessels describing the date built, dimensions, engines, type of construction, and other pertinent data.
Amidships
In the vicinity of the middle portion of a vessel; between bow and stern.
Apparent Good Order
Cargo that is received and appears to be free of damage so far as can be determined without opening the package or container.
Approved Merchandise
Under an Open Cargo Policy, goods that are approved by the insurance company for coverage under the specified insuring conditions and rates of the policy. Other goods can be “held covered,” but subject to terms and conditions to be determined.
Approved Packing
Packaging that meets the packaging industry standards of sufficient design and construction to protect the cargo from the normal hazards expected to be encountered during the intended voyage, including normal domestic handling and storage from point of origin to final destination.
Approved Vessel
In the American market, a cargo-carrying vessel over 1,000 net registered tons and under 20 years of age that insurance companies accept to carry the insured cargo without additional premium. Shipments aboard other vessels are accepted and may be subject to additional premiums, called “penalties,” which results in these vessels being called “penalty vessels.” The London market uses a different standard.
Arbitration -See “Alternative Dispute Resolution.”
Arranged Total Loss - See “Total Loss.”
A legal action in Admiralty to seize a vessel, cargo, container or other maritime property as security for a claim or to enforce a maritime lien. The claim may be brought “in rem” against the arrested property itself and not necessarily against the property’s owner (which may be unknown). See “Attachment” and “In Rem.”
Arrival Notice
A notification of the vessel’s arrival by the transporter to the consignee, or the “Notify Party,” or the “Also Notify Party” as listed on the Bill of Lading.
As Is Where Is
Description of the terms under which property is sold, meaning that it is to be sold at its present location and in its present condition without warranty as to quality or quantity. See “Salvage Value.”
Persons committing robbery by force; e.g. at gunpoint. The term does not include theft by any of the vessel’s crew or passengers, clandestine theft, or pilferage by stealth; one of the perils enumerated in the “Perils” clause of a Marine Insurance Policy. See also “Barratry.”
Assignment
The transfer of rights, title, and interest from one party to another by contract or by endorsing a check, bill of lading, or policy of insurance over to another party. An Assignee acquires no greater rights than were held by the Assignor.
Astern
- At or towards the rear of the vessel.
- Behind a vessel.
- To move in a reverse direction.
Athwart / Athwartships – See “Transverse.”
A seizure of property to secure an eventual judgment against the owner. Unlike arrest, the property is not the named party in the case and the defendant must own the property for it to be subject to attachment. See “Arrest” and “In Rem.”
Average
Any loss or damage to a vessel or cargo that is due to an insured peril and is less than a total loss. See “Particular Average,” “General Average,” and “Average Clauses.”
A marine claims specialist who prepares statements of Particular or General Average, etc. concerning claims for losses, expenses and contributions. The person is usually appointed by the vessel owner and is usually a member of the Association of Average Adjusters.
Average Agreement – See “General Average Agreement.”
Average Bond – See “General Average Agreement.”
Average Clauses (Particular Average Clauses)
The perils listed in the insurance policy establish the basic perils that are covered by a named peril policy, and a total loss of an entire vessel or an entire cargo shipment due to any one of these perils is covered in full. The various Average Clauses determine when PARTIAL LOSSES due to a named peril in the policy are covered.
The Average Clauses fall into two categories: FPA (Free of Particular Average) and W A (With Average):
- FPA – AC (Free of Particular Average – American Conditions) – Limits recovery of partial losses to those directly CAUSED BY the vessel stranding, sinking, burning, or being in collision with another vessel.
- FPA – EC (Free of Particular Average – English Conditions) – Limits recovery of partial losses due to a named peril in the policy occurring on a voyage in which the vessel is stranded, sunk, burnt, or in collision with another vessel. Under F P A – E C, it is NOT NECESSARY that the actual damage be caused by the vessel stranding, sinking, burning, or being in collision, but only that one of these HAS OCCURRED sometime during the voyage to open up the F PA Warranty. Today these conditions are usually worded so that damages caused by collision are covered, but so that a collision does not open the FPA warranty.
- WA if amounting to 3% (With Average with a Franchise equal to 3% of the insured value ) – Limits recovery of partial losses due to a named peril in the policy to those reaching a Franchise (3% is usual for many commodities, but the Franchise can be any percentage of the insured value, or any amount agreed upon by the insurance company and the Assured). See “Franchise.” The Clause can be written in a variety of ways, including:
- With Average, if amounting to 3%.
- With Particular Average, if amounting to 3%.
- Particular Average Payable, if amounting to 3%.
- Average Payable, if amounting to 3%.
- To pay Particular Average, if amounting to 3%.
- Subject to Particular Average, if amounting to 3%.
- WA Irrespective of Percentage
(With Average, No Franchise) – Allows full recovery of all partial losses due to a named peril in the policy. This clause can also be written in a variety of ways, as above, with the words “if amounting to 3%” replaced by “irrespective of percentage,” or deleted entirely.
