Useful Resources

Here are some useful abbreviations, explanations, definitions and terms to know when dealing with MARINE INSURANCE.




PORT = Left


AFT = the portion of the vessel behind the middle area of the vessel. Towards the stern

STERN = the rear part of a ship,

1 Knot (nautical Mile) = 1.15 mph  or 1.853 kph

1 mph = 1.609 kph

BARRATRY = Wrongful, Criminal or fraudulent acts committed by either the Captain or the Crew of a ship that causes damages or loss to the            ship and/or her cargo




R.O.D. = Rust, Oxidisation, Discoloration

M.E.E.D. = Mechanical, Electrical, Electric Derangement

C.S.D. = Chipping, Scratching, Denting

B/L = Bill of Lading

L/C = Letter of Credit




FOB (Free on Board) the seller is responsible for loss of or damage to the goods until they are placed on board the vessel for shipment. Thereafter the buyer becomes responsible and he has, therefore, the option to insure where he likes.

CIF (Cost, Insurance and Freight) the seller assumes responsibility for the insurance and the insurance charges are indicated in the invoice along with the other charges.

C & F (Cost and Freight) normally the buyer’s responsibility attaches from the time the goods are placed on board the vessel and he has therefore to take care of the insurance.

EXW (Ex Works) the buyer is responsible for the loading onto the truck or container at the seller’s premises and for the subsequent cost and risks.



Set of terms for cargo insurance policies voluntarily adopted as standard terms by many international marine insurance organizations, including the Institute Of London Underwriters.


·         Institute Cargo Clauses (A) - Widest insurance cover provided

·         Institute Cargo Clauses (B) - A more restrictive cover than the clause (A) above

·         Institute Cargo Clauses (C) -  The most restrictive cover of the 3 clauses





This can occur in two circumstances

    • This arises when an Insured Item is so seriously damaged as to cease to be said item, or when the Owner of the Insured item is irretrievably deprived of the insured item (e.g. when the item is stolen and is not recovered)
    • This arises when the cost of repair of damages or recovery of item would exceed the actual value of the insured item


  • This occurs when damages to the insured item is caused fortuitously. Examples of this are collision, contact, heavy weather, fire etc.




Stands apart for Marine Insurance; In order for General Average to be properly declared,


1) There must be an event which is beyond the ship-owners control, which imperils the entire adventure;

2) There must be a voluntary sacrifice,

3) There must be something saved.


The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in damages. "General Average" requires all parties concerned in the maritime venture (Hull/Cargo/Freight/Bunkers) to contribute to make good the voluntary sacrifice. They share the expense in proportion to the 'value at risk" in the adventure




This occurs on a carrying vessel where a sacrifice of property or an extraordinary expenditure is reasonably and voluntarily made/incurred for the common safety of the interests concerned in a specific voyage.

e.g. General average sacrifice, being voluntary damages sustained to the carrying ship for the common safety of the ship and its cargo




When the carrying vessel has run aground and in a position of peril, and to refloat her

  • Tugs are employed
  • Part of cargo is deployed to other vessels or jettisoned

When fire occurs on board the carrying vessel

  • Water or chemicals are used to extinguish fire
  • Cargo is jettisoned or offloaded to get at fire

When the carrying vessel is in a collision with another vessel or structure

  • The vessel puts into a port of refuge or is detained
  • Cargo is discharged to effect repairs to vessel

All expense and damages arising out of one or more of these operations is General Average.






In all cases, whether the claim is presented against a policy of marine insurance or is submitted in general average, the Insured/Claimant has the burden of substantiating his claim/loss

This means the Insured/Claimant must produce evidence to show:

  • That the loss/damages was caused by an insured peril in terms of his policy, and
  • The extent of his claim/loss

To substantiate and support this burden of proof, the insured/claimant will need to supply relevant official documentation pertaining to his goods such as, the voyage, their values, the costs incurred commercial invoices, and other relevant documentation


An excess is the amount payable by the insured and is usually expressed as the first amount falling due, up to a ceiling, in the event of a loss. An excess may or may not be applied. It may be expressed in either monetary or percentage terms. An excess is typically used to discourage moral hazard and to remove small claims, which are disproportionately expensive to handle. In marine the term "excess" signifies the "deductible".



Is the tendency in physical objects to deteriorate because of the fundamental instability of the components of which they are made, as opposed to deterioration caused by external forces

Damage to goods which one can foresee is bound to occur during any normal transit, and which arises solely because of the nature or condition of the goods shipped. Such damage is said to arise from “inherent vice” which may be defined as an internal cause rather than an external cause of damage

A characteristic of the property insured which causes it to deteriorate naturally



Spontaneous combustion or spontaneous ignition is a type of combustion which occurs by self-heating (increase in temperature due to exothermic internal reactions), followed by thermal runaway (self-heating which rapidly accelerates to high temperatures) and finally, ignition

Some products susceptible to Spontaneous combustion is Hay, Compost, Linseed oil, coal, charcoal, Pistachio nuts, Hemp, Animal feed in bulk such as PKM (palm kernel meal) and Broll (wheat bran).


You can’t cross the sea merely by standing and staring at the water.