Extended Operational and Trade Vocabulary

Marine Insurance, P&I and Claims glossary

The London-market and P&I vocabulary of marine insurance and claims: abandonment and constructive total loss, the slip and acceptance, accommodation lines, average adjusting through the AAA, the Marine Insurance Act 1906 and the Institute Clauses, and the claims process from notice through subrogation. Grounds each term in the underwriting practice and the casualty allocation it governs.

385 defined terms.

Showing 250 on this page (page 1 of 2).

A

AAA: Association of Average Adjusters, UK professional body for general average adjusters founded 1869.
Abandonment: act by which an insured cedes proprietary rights in the insured property to underwriters as a precondition for claiming a constructive total loss.
Absolute Total Loss: alternative term used in some markets for actual total loss where the subject matter is irretrievably destroyed.
Acceptance: underwriter's signature on a slip binding the offered share of the risk.
Accommodation Line: business written by an underwriter as a favor to a broker or assured rather than on technical merit.
Account: the aggregate of premium and claims relating to an assured, broker, or class of business.
Accumulation: aggregation of exposures from a single event affecting multiple insured risks.
Acquisition Cost: brokerage and commission paid to place the risk.
Actual Total Loss (ATL): total loss under section 57 of the Marine Insurance Act 1906 where the subject matter is destroyed, so damaged as to cease to be a thing of the kind insured, or irretrievably deprived from the…
Additional Premium (AP): extra premium charged for held-covered situations, breach of warranty, deviation, or change of voyage.
Adjuster: see Average Adjuster; the practitioner who calculates general average or particular average claims.
Adjustment: the calculation prepared by an average adjuster apportioning loss between interests.
Admiralty Court: the Admiralty division of the English High Court hearing maritime claims in rem and in personam.
Adventure: the marine adventure within section 3 of the Marine Insurance Act 1906.
Affreightment: Contract for the carriage of goods by sea.
Agency Agreement: contract between an insurer and an agent setting underwriting authority limits.
Aggregate Limit: maximum payable in respect of all claims in the policy period.
Agreed Value: the value stated in the policy under section 27 of the Marine Insurance Act 1906, conclusive between assured and underwriter in the absence of fraud.
All Risks: cover against all fortuitous physical loss or damage not specifically excluded, codified for cargo in Institute Cargo Clauses (A).
Allision: contact between a moving vessel and a fixed object such as a wharf or bridge.
American Institute Hull Clauses (AIHC): standard US hull form last revised June 2, 1977.
American Steamship Owners Mutual P&I Association: the American Club, US-based International Group P&I club incorporated 1917.
Article 13 Salvage Convention 1989: provision setting criteria for fixing the reward for successful salvage.
Article 14 Salvage Convention 1989: provision granting special compensation to salvors preventing or minimizing environmental damage.
Article III Rule 6: Hague and Hague-Visby Rules provision imposing a one-year time bar on cargo claims from delivery or expected delivery.
Assignment of Policy: transfer of the benefit of a marine policy under section 50 of the Marine Insurance Act 1906.
Assured: the party named in the policy entitled to claim under it.
Athens Convention 2002: Protocol to the 1974 Athens Convention on Carriage of Passengers and their Luggage by Sea, supported by P&I blue cards.
Attachment: the moment risk under a policy commences.
Attachment Point: the loss level at which an excess of loss reinsurance layer begins to respond.
Average: Loss apportioned in general or particular average under York-Antwerp Rules.
Average Adjuster: independent professional who prepares general average and complex particular average statements.
Average Bond (Lloyd's Form): agreement by cargo interests to pay any contribution due in general average, executed on Lloyd's Average Bond form.
Average Disbursements: expenses incurred in collecting general average contributions, themselves admissible in general average.
Average Guarantee: written undertaking, typically by cargo underwriters, to pay the cargo's general average contribution.

B

Back-to-Back Cover: reinsurance written on identical terms to the original direct insurance.
Bailee: party in possession of goods of another, whose liability may be covered by liability insurance.
Bareboat Charterers' Liability: P&I cover responding to demise charterers' obligations toward the registered owner and third parties.
Barratry: a wrongful act willfully committed by the master or crew to the prejudice of the owner or charterer, an insured peril in traditional hull cover.
Berth Standard of Average: clause limiting cargo damage claims to damage discoverable on outturn at the discharge berth.
Binding Authority: contract under which an underwriter delegates authority to a coverholder to bind risks on its behalf.
Bipartite Slip: placing slip signed by leading underwriter and broker, the basic Lloyd's contract document.
Blue Card: certificate issued by a P&I club evidencing insurance for liabilities under CLC 1992, Bunker Convention 2001, Wreck Removal Convention 2007, or Athens 2002.
Both-to-Blame Collision Clause: bill of lading clause obliging cargo to indemnify the carrying ship against cargo liability paid by the non-carrying ship and recovered from the carrier under US law.
Bottomry: ancient maritime loan secured on the ship, largely obsolete.
Breach of Warranty: failure to comply with a promissory warranty; under the Insurance Act 2015 the insurer is discharged from liability only while the breach continues.
Breach of Warranty Cover (Mortgagees): insurance protecting a mortgagee against avoidance of the owner's hull policy.
Broker: intermediary placing risks with underwriters on behalf of the assured.
Brokerage: commission paid by underwriters to the placing broker, typically deducted from premium.
Builders' Risks: cover for hulls under construction, commonly written on Institute Clauses for Builders' Risks 1/6/88.
Bumbershoot: a marine umbrella liability policy covering excess marine and non-marine liabilities.
Bunker Convention 2001: International Convention on Civil Liability for Bunker Oil Pollution Damage.
Burning Cost: ratio of incurred losses to premium used for pricing reinsurance treaties.

C

Cancelling Returns Only (CRO): provision allowing return of premium only on cancellation of cover.
Cargo Insurance: insurance of goods in transit, traditionally written on Institute Cargo Clauses.
Cargo's Proportion of General Average: amount payable by cargo interests in adjustment of general average.
Casualty: a marine accident causing or threatening loss.
Cedant: insurer ceding risk to a reinsurer.
Certificate of Insurance: document issued under an open cover evidencing insurance on a specific shipment.
Cesser Clause: Charterparty term ending charterer's liability after cargo loaded, against owner's lien.
Change of Voyage: voluntary change of destination after risk has attached, held-covered under Institute Cargo Clauses.
Charterers' Liability: P&I and FD&D cover for time, voyage, or slot charterers.
Civil Liability Convention 1992 (CLC): International Convention on Civil Liability for Oil Pollution Damage, requiring blue card evidence of insurance.
Claim: notification by an assured of a loss said to be covered by the policy.
Claims Adjuster: professional handling claims on behalf of insurers or assureds.
Claims Co-operation Clause: reinsurance term requiring the cedant to involve the reinsurer in claims handling.
Claims Control Clause: reinsurance term giving the reinsurer control over investigation and settlement of claims.
Claims Lead: market practice nominating one or two underwriters to agree claims on behalf of the following market.
Claims Made: liability policy responding to claims first notified during the policy period.
Class Maintenance Warranty: ITC Hulls 1/10/83 clause 4.1 requiring maintenance of class.
Club Call: see Supplementary Call; mutual contribution from members.
Club Correspondent: independent local representative appointed by a P&I club to assist members in handling incidents in a port.
Coinsurance: sharing of a single risk by two or more insurers in stated proportions on the same policy.
Collision Liability Clause: ITC Hulls clause 8 covering three-fourths of collision liability to other vessels and their cargo.
Combined Single Limit: liability limit applying to combined property damage and bodily injury.
Commercial Frustration: doctrine under which a contract is discharged, relevant to delay-in-start-up insurance.
Common Carrier: Carrier offering services to the public, with strict liability at common law.
Composite Insurer: insurer authorized to write both life and general business, the latter including marine.
Composite Policy: single policy covering several insureds with distinct interests.
Conduct Clause: ITC Hulls 1/10/83 clause 6.2 covering certain perils only without privity of the assured.
Constructive Total Loss (CTL): total loss under section 60 of the Marine Insurance Act 1906 where actual total loss appears unavoidable or repairs would exceed the repaired value (ITC Hulls 1/10/83 uses insured value).
Container Liability: P&I or specialist cover for shipowner's liability for leased containers.
Continuation Clause: ITC Hulls 1/10/83 clause 2 extending cover at pro rata premium for completion of voyage if the vessel is at sea at expiry.
Contract of affreightment: COA, agreement to carry a stated quantity of cargo over a period.
Contribution: principle requiring co-insurers to share liability proportionally; also cargo's payment in general average.
Corporate Member (Lloyd's): limited liability member providing Lloyd's capacity since 1994.
Country Damage: cargo damage occurring in the country of origin before main carriage, often excluded.
Cover Note: broker's confirmation to the assured that cover has been placed pending issue of the policy.
Coverholder: Lloyd's-approved entity binding risks under a binding authority.
Cross Liabilities: principle in collision adjustment treating each ship as paying the other in full proportion to blame.
CTL Notice: notice of abandonment served by the assured to claim a constructive total loss under section 62 of the Marine Insurance Act 1906.
Currency Clause: provision fixing the currency of premium and claim.

D

Date of Attachment: the date risk under the policy begins.
Days of Grace: period allowing late payment of premium without loss of cover, no longer commonly granted in marine.
Declaration: notice to underwriters under an open cover or floating policy specifying the shipment to attach.
Declaration Linked Policy: cargo policy where the total sum insured is reduced as declarations are made.
Deductible: amount of each claim borne by the assured before the policy responds, also called franchise or excess.
Deductible Clause: ITC Hulls 1/10/83 clause 12 setting the per-event deductible, with heavy weather aggregation.
Deferred Premium: premium installment payable after inception.
Demurrage: Liquidated damages for detention of ship beyond laytime.
Denial of Cover: insurer's refusal to indemnify on grounds of policy terms, breach, or non-disclosure.
Deposit Premium: provisional premium based on estimated exposure, adjusted at year end.
Detainment: loss of free use and disposal of the vessel for a continuous period, triggering CTL under war risk cover.
Deviation: Departure from the contractual or geographic voyage; historically a fundamental breach.
Direct Action: statutory right to sue the liability insurer directly, granted in some jurisdictions but limited by pay-to-be-paid in P&I.
Disbursements: expenditure connected with the marine adventure; can be separately insured.
Disbursements Warranty: ITC Hulls 1/10/83 clause 21 limiting the amount that may be insured on disbursements and similar interests.
Discharge of Insurer: ending of the insurer's liability, for example on breach of warranty or on payment of total loss.
Disponent Owner: Charterer who treats the vessel as if owner for sub-letting.
Drydock Insurance: cover for floating dry docks or for vessels while in dry dock.
Dual Valuation Clause: ITC Hulls clause valuing the vessel at a higher figure for total loss than for partial loss claims.
Duty of Fair Presentation: assured's duty under section 3 of the Insurance Act 2015 to disclose every material circumstance known or which ought to be known.

E

Earned Premium: portion of premium relating to the expired portion of the policy period.
Endorsement: written amendment to the policy.
Errors and Omissions Clause: provision protecting assured or cedant against inadvertent failure to declare or notify.
Estimated Maximum Loss (EML): underwriter's assessment of the worst probable single loss.
Estimated Total Loss: surveyor's estimate used in deciding CTL.
Event Limit: maximum payable in respect of any one occurrence.
Ex Gratia Payment: payment made without admission of liability.
Excess of Loss (XL or XOL): reinsurance responding above a fixed retention up to a specified limit.
Excess Point: see Attachment Point.
Exclusions: perils or losses not covered by the policy.
Existing Damage Clause: deduction in particular average claims where pre-existing damage is repaired with new damage.
Exposure Rating: pricing method using underlying exposure data rather than loss experience.
Extended Conditions Clause: cargo clause extending Institute Cargo Clauses to certain otherwise excluded perils.
Extra-Contractual Obligations (ECO): liabilities of cedant beyond the original contract, sometimes reinsured.

F

Facultative Obligatory (Fac/Oblig): hybrid treaty under which the cedant may cede individual risks which the reinsurer must accept.
Facultative Reinsurance: reinsurance of an individual risk negotiated separately for that risk.
FD&D Cover: Freight, Demurrage and Defence cover provided by P&I clubs or specialist mutuals for legal costs in disputes excluded from P&I.
Federal Maritime Commission: US regulator of common carriers in the US foreign trades.
FFO: fixed and floating objects, P&I head of cover for liability for damage to property other than ships.
First Loss: cover responding from the ground up subject to a stated limit without proportional contribution.
Fixed Premium P&I: P&I cover written by commercial market insurers at non-mutual rates.
Floating Policy: cargo policy under section 29 of the Marine Insurance Act 1906 describing the insurance in general terms, with details supplied by declaration.
FOB Insurance: cover attaching when the goods cross the ship's rail, the seller's risk under Incoterms FOB.
Force Majeure: contractual excuse for non-performance; relevant to delay cover.
Forwarding Charges: cost of forwarding goods to destination after an insured peril, recoverable under Institute Cargo Clauses.
Franchise: minimum percentage or amount of loss before the policy responds, the policy then paying the full loss.
Fraudulent Claim: see section 12 of the Insurance Act 2015 entitling insurer to refuse the claim and recover sums paid.
Free of Capture and Seizure (FC&S): warranty excluding war risks from standard hull and cargo cover.
Free of Particular Average (FPA): old cargo terms excluding particular average unless caused by stranding, sinking, burning, or collision; replaced by ICC (C).
Freight at Risk: freight payable on delivery and therefore exposed to loss, eligible for separate insurance.
Fronting: arrangement where a licensed insurer issues a policy on behalf of an unlicensed reinsurer.
Frustration of Adventure: principle ending the assured's interest where the voyage is frustrated, relevant to war risk and CTL.
Full Terms Cancellation: cancellation of a policy with full return of premium for unused period.
Funnel Mark Clause: cargo clause requiring goods to be marked with consignee details to facilitate identification.

G

General Average (GA): voluntary sacrifice or extraordinary expenditure intentionally and reasonably made for the common safety, codified in the York-Antwerp Rules.
General Average Absorption Clause: hull provision allowing absorption of small GA cases without declaring GA on cargo.
General Average Act: act giving rise to a GA claim, defined in Rule A of the York-Antwerp Rules.
General Average Bond: undertaking by cargo interests on Lloyd's form to pay any GA contribution found due.
General Average Contribution: amount payable by each contributing interest in GA proportional to contributory value.
General Average Deposit: cash payment by cargo interests as security pending adjustment.
General Average Disbursements: expenses incurred to enable the common adventure to continue, allowable in GA.
General Average Guarantee: written guarantee from cargo underwriters in lieu of cash deposit.
General Average Sacrifice: voluntary destruction or damage of property to save the common adventure.
Good Faith: foundational principle of marine insurance under section 17 of the Marine Insurance Act 1906, modified by the Insurance Act 2015.
Grain Insurance: cargo insurance of bulk grain, often subject to trade clauses.
Group Excess Loss Reinsurance: International Group's collective reinsurance program above the Pool retention.
Group Solvency: solvency monitoring of International Group clubs collectively.

H

Hague Rules 1924: International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading.
Hague-Visby Rules: 1968 Visby Protocol and 1979 SDR Protocol to the Hague Rules.
Hamburg Rules 1978: UN Convention on the Carriage of Goods by Sea, in force 1992; limited adoption.
Heavy Weather Damage: hull damage from sea perils, with successive heavy weather periods aggregated under ITC Hulls 1/10/83 clause 12.2.
Held Covered: provision continuing cover on breach of warranty, deviation, change of voyage, or misdescription subject to notice and additional premium.
HNS Convention 2010: International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010 Protocol.
Hold Harmless Agreement: contractual indemnity often reviewed for the contractual liability extension of P&I.
Honour Policy: policy without insurable interest, void under section 4 of the Marine Insurance Act 1906.
Hull and Machinery (H&M): insurance of the ship and her machinery against physical loss or damage.
Hull Interest: increased value or disbursements interest separately insured up to the ITC Hulls warranty limit.

I

IBNR: incurred but not reported losses, a reserve held for late-reported claims.
In rem Action: Admiralty action against the ship rather than the owner personally.
Increased Value (IV): separate cover topping up hull values, restricted by ITC Hulls 1/10/83 clause 21.
Indemnity: Letter of indemnity, used for instance to obtain delivery without an original bill of lading.
Indirect Loss: consequential loss generally excluded from marine policies.
Inherent Vice: defect or quality in the goods causing self-destruction, excluded under ICC (A) clause 4.4.
Inland Transit Cover: insurance for the inland leg of a through transit.
Institute Cargo Clauses (A) 1/1/09: standard all-risks cargo wording published by the International Underwriting Association and Lloyd's Market Association.
Institute Cargo Clauses (Air) 1/1/09: equivalent all-risks wording for air cargo.
Institute Cargo Clauses (B) 1/1/09: named-perils cargo wording covering specified casualties.
Institute Cargo Clauses (C) 1/1/09: most restrictive named-perils cargo wording, broadly equivalent to old FPA terms.
Institute Classification Clause: clause requiring carriage on classed vessels of acceptable age.
Institute Frozen Food Clauses (A) and (C): standard wordings for frozen food in cold-chain transit.
Institute Mortgagees' Interest Clauses Hulls 30/5/86: cover protecting mortgagees against avoidance, breach, or invalidity of hull insurance.
Institute Radioactive Contamination Exclusion Clause: standard exclusion in market wordings.
Institute Replacement Clause 1/12/34: machinery clause limiting recovery to cost of replacing the damaged part.
Institute Strikes Clauses (Cargo) 1/1/09: cover for loss caused by strikers, locked-out workers, or persons taking part in labor disturbances.
Institute Time Clauses Hulls 1/10/83 (ITC Hulls): long-standing hull and machinery wording in widespread use.
Institute Time Clauses Hulls 1/11/95: revised hull wording, less widely adopted than 1/10/83.
Institute Voyage Clauses Hulls 1/10/83: voyage hull cover companion to the time clauses.
Institute War and Strikes Clauses Hulls Time 1/10/83: hull war risk wording, often providing the basis for war risk pool cover.
Institute War Clauses (Cargo) 1/1/09: cargo war risk wording.
Insurable Interest: legal or equitable relationship to the adventure giving the right to insure, required by section 5 of the Marine Insurance Act 1906.
Insurance Act 2015: UK statute replacing the duty of utmost good faith disclosure regime and reforming warranties.
Insured Value: see Agreed Value.
International Convention on Salvage 1989: convention introducing the Article 14 special compensation regime.
International Group of P&I Clubs (IGP&I): association of thirteen mutual P&I clubs sharing claims through the Pool and Group Excess Loss program.
International Hull Clauses (IHC) 1/11/03: hull wording promoted by the International Underwriting Association, intended to update ITC Hulls 1/10/83.
International Oil Pollution Compensation Funds (IOPC Funds): 1992 Fund and Supplementary Fund providing compensation supplementing CLC.
Inward Reinsurance: reinsurance accepted by an insurer or reinsurer.
ISM Compliance Warranty: clause requiring compliance with the International Safety Management Code.
ISPS Code: International Ship and Port Facility Security Code, mandatory under SOLAS XI-2.
ITF Claim: International Transport Workers' Federation claim relating to seafarer wages and entitlements, covered under P&I within ITF terms.

J

Jettison: Throwing cargo overboard to lighten the ship, may give rise to general average.
Joint Hull Committee (JHC): Lloyd's and IUA committee responsible for standard hull clauses.
Joint Survey: Inspection attended by both load and discharge interests.
Joint War Committee (JWC): Lloyd's/IUA committee publishing listed areas for war/strikes risk.
JWC Listed Areas: Geographic zones triggering hull war additional premium.

K

Kidnap and Ransom (K&R): specialist cover for ransom payments and crisis response, often arranged alongside war risk cover for high-risk transits.
Knock-for-Knock Agreement: mutual waiver of recourse between contracting parties, common in offshore contracts.

L

Latent Defect: defect in machinery or hull not discoverable by due diligence, addressed by ITC Hulls 1/10/83 clause 6.2.2 (Inchmaree-style cover).
Lay Member: Lloyd's individual Name with unlimited liability, of declining importance since corporate capital.
Layer: tranche of cover in an excess of loss program.
Leading Underwriter: first underwriter to sign the slip, whose decisions on certain matters bind the following market.
Leading Underwriter Agreement (LUA): market protocol defining the leader's authority.
Letter of Indemnity (LOI): Counter-promise to compensate for action taken at requester's request.
Letter of Undertaking (LOU): security letter issued by a P&I club to secure release of a ship from arrest.
Liability to Cargo: P&I head of cover for the shipowner's liability under bills of lading and similar contracts.
LIBA: London and International Insurance Brokers' Association.
Limitation of Liability: Right of shipowner to cap liability under LLMC 1976/1996.
Limited Conditions Insurance: cargo cover narrower than Institute Cargo Clauses (C).
Liner Negligence Clause: extension to cargo cover treating negligence of carriers as an insured peril.
Liquidator's Insurance: cover for hulls under insolvency administration.
LLMC 1976: Convention on Limitation of Liability for Maritime Claims, the modern global limitation regime.
Lloyd's: insurance market in London operating under the Lloyd's Act 1871 and 1982.
Lloyd's Average Bond: standard form bond signed by consignees for the release of cargo subject to GA contribution.
Lloyd's Open Form (LOF): Standard salvage agreement with no-cure-no-pay basis and SCOPIC.
Lloyd's Standard Salvage and Arbitration Clauses (LSSA): procedural clauses applying to LOF salvages.
Lloyd's Syndicate: underwriting member at Lloyd's, identified by syndicate number.
Long-Tail Business: business where claims develop over many years, including marine liability.
Loss of Hire Insurance: cover for daily indemnity following insured damage causing the vessel to be off-hire or out of service.
Loss Reserve: amount set aside to meet estimated outstanding claims.
Loss Settlement: agreement and payment of an insured loss.

M

Major Casualty Clause: clause requiring immediate notice to underwriters of major incidents.
Marine Insurance Act 1906: UK statute codifying marine insurance law, substantially amended for non-consumer business by the Insurance Act 2015.
Marine Liability Insurance: liability cover for shipowners, charterers, terminals, and others involved in marine adventure.
Marine Open Cover: see Open Cover.
Market Value Clause (Cargo): clause valuing claims at destination market price.
Material Circumstance: information which would influence the judgment of a prudent insurer, relevant to fair presentation.
Mortgagees' Additional Perils (Pollution): cover protecting mortgagee against pollution claims by authorities.
Mortgagees' Interest Insurance (MII): cover for ship mortgagees against loss of security through failure of the owner's hull cover.
Multi-Year Policy: policy with a period exceeding twelve months, common for builders' risks.
Mutual Insurance: insurance by an association of members for their common account, the structural form of P&I clubs.

N

Nairobi Convention 2007: Nairobi International Convention on the Removal of Wrecks, supported by P&I blue cards.
Named Perils: cover responding only to perils specifically listed, as in ICC (B) and (C).
NAV Clause: navigation provision restricting trading area or use of the vessel.
New Jason Clause: Charter clause preserving general average rights in jurisdictions like the United States.
No Cure No Pay: traditional salvage principle that salvors are paid only on success.
Nomination: Buyer's request to a supplier for a specified quantity and grade of bunkers at a stated port.
Non-Disclosure: failure to disclose material circumstance, now governed by the Insurance Act 2015 proportionate remedies.
Norwegian Marine Insurance Plan (NMIP) 2013: comprehensive Nordic hull and war risk wording maintained by Cefor and revised every two years.