Here are some useful abbreviations, explanations, definitions and terms to know when dealing with Marine Insurance.
PORT = Left
STARBOARD = Right
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
COMMON -MARINE ABBREVIATIONS
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.
INSTITUTE CARGO CLAUSES
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
ACTUAL TOTAL LOSS
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)
CONSTRUCTIVE TOTAL LOSS
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.
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.
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