Insurance terminology can often be confusing; adding the uniqueness of the marine / maritime world and can be even more of a struggle.
Giving up the proprietary rights in insured property to the underwriter in exchange for payment of a constructive total loss.
The insured property is completely destroyed; or The insured is irretrievably deprived of the insured property; or Cargo changes in character so that it is no longer the thing that was insured (e.g., cement becomes concrete); or A ship is posted "missing" at Lloyd's, in which case both the ship and its cargo are deemed to be an actual total loss.
With this policy type, your insurance carrier and you agree on the value of your hull and hardware when the policy begins. In the event of a total loss of the boat, this will be the amount that you receive from the policy. An agreed value policy differs from actual value, in which you would be compensated for the current market value of the boat in the event of a claim.
All fortuitous causes of loss. It does not embrace inevitable loss such as wear and tear.
A written form is submitted to the underwriter to obtain a quotation for risk and contains particulars of the risk.
The passing of beneficial rights from one party to another.
Designed for clients with a small turnover of Goods in Transit. A deposit premium is paid and this is adjusted at the end of the year based on declarations made.
A document presented by the insurance company or insured as evidence that insurance is in effect. The insured may assign his rights under this negotiable document to a third party, usually the consignee, by endorsing the reverse of the certificate.
An arranged settlement on a hull policy where there is no claim for actual or constructive total loss, but where it is impractical to repair the vessel.
The position which exists when the cost of repairing or recovering lost or damaged property plus the value of the salvage would exceed the property's value when repaired or recovered.
With some policies, your boat is only insured during specific dates of the year. This can potentially lower your insurance payments in months when you anticipate being unable to use your boat due to weather.
Form used by insured in reporting shipments under an Open Cargo Policy when no evidence of insurance is required.
A specific dollar amount, or percentage of the insured value, will be deducted from all losses recoverable under a policy.
The duty of the insured and his broker is to tell the underwriter about every material circumstance before the acceptance of risk.
This applies when insurance is terminated before the expiry date of the insured period. The earned premium attaching to the period during which the underwriters have been at risk.
This coverage includes the recovery of a sunken boat, towing on a body of water, or a trailer. Clarify what your emergency policy covers with your agent, as this varies from policy to policy.
Insurance to cover the excess amount of liability for general average contributions, salvage claims, sue and labor charges, and three-fourths collision liability where the full amount is not covered by a hull policy.
A provisional acceptance of risk, subject to confirmation that cover is needed at a later date. Where applicable to existing insurance, coverage is conditional, in practice, on prompt advice to the underwriter as soon as the insured is aware of the circumstances to be held covered coming into effect, and a reasonable additional premium is payable if the risk is covered comes into effect.
It is illegal for anyone to insure without an insurable interest, or in the case of marine insurance, a reasonable expectation of acquiring such interest. In general, one has such interest when one's relationship to property at risk may expose one to loss or liability where one stands to gain by the safety of the property.
The time during which you will not be using your boat. If you have a policy that includes a lay-up period, be aware of the dates. Using your vessel during lay-up means that you will not be covered by your insurance.
Method of payment between buyer and seller. The buyer opens a Letter of Credit in favor of the seller at his local bank by depositing the amount of the purchase price and dictating certain documents which the seller must present in order to obtain payment. The Letter of Credit will be sent to a bank in the vicinity of the seller and upon presentation of the documents called for, the local bank will release payment.
Any circumstances which would influence the judgment of a prudent underwriter in determining whether to accept a risk and the amount of premium to change.
A statement made to the underwriter before acceptance of risk is material to the decision in accepting and rating the risk.
Your policy may outline specific limits to where you can use your boat and be covered. It is important to only operate your vessel within these limits and clarify with your agent exactly where you are covered. Some policies may only cover you within a certain distance from land; others may not cover you if you’re boating outside your home state. Be sure to talk with your underwriter so you understand exactly where your vessel will be insured.
The failure of the insured or their broker to disclose a material circumstance to the underwriter before acceptance of the risk. A breach of good faith.
A condition that must precede a constructive total loss. If the insured fails to give notice to the underwriter, the loss can be treated only as a partial loss unless an actual total loss is proven. An underwriter who accepts notice admits liability for the loss. Notice is not necessary where it would not benefit the underwriter, where the underwriter waives the obligation, or in the case of a reinsurance provided the policy incorporates the "waiver" clause, action taken by an underwriter to...
People who will be operating the boat – are often used to determine premium payment rates.
If included in your policy, this coverage will help cover you in the event of a fuel or oil discharge into the water.
The most direct cause of loss, that is, the most effective, but not necessarily the last, in a series of events.
The amount recovered from a third party responsible for a loss on which a claim has been paid.
A statement of fact made by the insured or their broker when negotiating insurance with the underwriter.A statement of fact made by the insured or their broker when negotiating insurance with the underwriter.
There is an implied warranty in every voyage policy that the ship must be seaworthy at the commencement of the insured voyage or, if the voyage is carried out in stages, at the commencement of each stage of the voyage. To be seaworthy, the ship must be reasonably fit in all respects to encounter the ordinary perils of the contemplated voyage, properly crewed, fuelled and provisioned, and with all her equipment in proper working order. Cargo policies waive breach of the warranty except where ...
An underwriter's representative who is authorized to settle claims.
The reward is payable to salvors for saving life and property at sea.
The right of the underwriter to step into the shoes of the insured, following payment of a claim, to recover the payment from a third-party responsible for the loss. Subrogation is limited to the amount paid on the policy.
Charges incurred by an insured in averting or diminishing a loss. They are recoverable in addition to the full sum insured.
It is necessary to include this overage in your policy if you anticipate towing or pulling anything behind your boat.
A basic principle of insurance. Mutual trust in negotiating an insurance contract. The insured and their broker must disclose and truly represent every material circumstance to the underwriter before acceptance of the risk. A breach of good faith entitles the underwriter to avoid the contract.
Where the underwriter has the right to avoid a policy (e.g., in the event of a breach of good faith), the policy is termed "voidable."
Occasionally claims may be paid that the underwriter feels are not actually covered by the policy. Such payments are "without prejudice" and are not to be treated as a precedent for future similar claims.
The exposure of property to risk at sea.
Partial loss or damage.
Appointed by the shipowner to prepare General Average Statement.
The clause in marine policy which sets out the coverage provided in the event of partial loss.
Indicates that partial losses will be paid regardless of any franchise or percentage.
The right of an underwriter, in the event of a breach of good faith or delay in commencement of an insured voyage to step aside from the insurance contract and to treat it as though they had never accepted the risk.
A criminal or wrongful act by the ship's master or crew causing loss or damage to the ship or cargo.
A clause by which the bailee of goods claims the benefit of any insurance policy effected by the cargo owner on the goods in care of the bailee. Such a clause in a contract of carriage issued in accordance with the Carriage of Goods by Water Act is void at law.
Commonly referred to when determining the navigational territory of your vessel; refers to waters over five miles from land.
The maximum value at risk per shipment/sending/aircraft.
Commonly referred to when determining the navigational territory of your vessel; refers to waters within five miles of the coast.
The contract evidencing the agreement of a shipowner to lease his vessel to another person or firm.
Where two or more parties share the same risk. A co-insurer is not obliged to follow the decision of another co-insurer, except where they have given authority for the other party to act on their behalf. Each co-insurance is a separate contract with the insured.
Physical impact between two or more ships or vessels used for navigation. In collision liability insurance, the term does not include contact of the insured vessel with anything other than a ship or vessel.
A secondary insurance coverage which will protect an insured's financial interest if the primary insurance coverage effected by others does not respond for a covered loss.
This relates to situations where more than one party covers the risk. Each party is deemed to be liable for its portion of the loss. If the insured has recovered in full from one insurer, that insurer is entitled to recover from the other insurer that part of the loss which should have been paid by the latter. The term, as used in marine insurance, also applies to contributions paid by the insured in connection with salvage and/or General Average.
The value of property saved as a result of a General Average Act which forms the basis for determining each party's contribution in General Average.
A non-negotiable document evidencing insurance which may or may not indicate the terms of coverage.
A firm which specializes in clearing imported merchandise for transit to the interior. Normally responsible for obtaining and submitting all documents for clearing merchandise through customs and arranging inland transport as well as paying all charges related to these functions.
A form required by Canada Customs for all merchandise entering Canada. It indicated country of origin, description of merchandise and amount of estimated duty to be paid before merchandise is released by customs.
Average clause which limits recovery of partial losses to those caused by fire, stranding, sinking or collision.
Same as FPAAC except that the partial losses referred to are recoverable if the vessel has stranded, sunk, burned, been on fire in collision, regardless of whether such losses were actually caused by any of these perils.
Like a deductible, but if the amount of the merchandise is met or exceeded, the loss is paid in full.
Loss arising through a voluntary sacrifice of any part of the ship or cargo, or an expenditure, to safeguard the ship and the rest of the cargo.
Such losses or expenditures are contributed to by all the interests at risk on the basis of their respective values.
Document require of cargo owners, after a GA loss, obtaining their agreement to pay any contribution that may become due.
Throwing the cargo or ship's property overboard to save other property from a common danger.
All additional premiums charged on an open cover declaration where the carrying vessel is outside the scope of the classification clause. It may be applied, also, to additional premium charged for breach of navigational warranties (e.g., institute warranties) where the ship is more than 15 years old.
A particular loss caused by marine perils, other than a General Average loss.
Hazards arising on navigable waters through natural forces such as abnormally heavy seas, high winds, etc.
The deliberate casting away or destruction of property to prevent greater loss. General Average sacrifice is for the common good and saved interests make good the sacrifice in proportion to the saving enjoyed.
"One Off" insurance for those clients who require transit cover on an infrequent basis.
An international code governing General Average.
* This is not a complete list of insurance terminology, but a helpful reference for some of the more common terms you’ll encounter while shopping for boat insurance. If you have any questions or concerns while obtaining your quote, please do not hesitate to ask your underwriter.