Ocean Cargo Insurance. Glossary Of Terms. Chubb Group. 2007

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Transcript of Ocean Cargo Insurance. Glossary Of Terms. Chubb Group. 2007

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    OCEAN CARGO INSURANCE

    GLOSSARY OF TERMS

    THIS GLOSSARY CONTAINS DEFINITIONS OF TERMS COMMONLY USED IN

    CONNCETION WITH OCEAN CARGO INSURANCE. THIS INFORMATION WAS

    COMPILED FRO THE 2002 A to Z OF INTERNATIONAL TRADE PUBLISHED BY

    THE INTERNATIONAL CHAMBER OF COMMERCE, VARIOUS PUBLICATIONS

    OF THE AMERICAN INSTITUTE OF MARINE UNDERWRITERS AND OTHER

    SOURCES.USED AS AN INTERNAL REFERENCE GUIDE TO HELPUNDERSTAND THE NOMENCLATURE OF THE OCEAN CARGO INSURANCE

    MARKET.

    THIS INFORMATION IS CURRENT AS OF FEBRUARY 2007.

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    Ocean Cargo Glossary - PMM Dept - Version 3: February 2004 Page 1

    Ocean Cargo Glossary

    ABI: An abbreviation for Automated Broker Interface, an EDI facility available to Customs Brokers forthe reporting of customs entry information to U.S. Customs and which facilitates release of cargo.

    Abaft: "Aft"- Towards the rear (stern) of a vessel.

    Abandonment: In marine insurance, a term used to define the act of an insured giving up the proprietaryrights in insured property to the underwriter in exchange for payment of a constructive total loss.

    Abeam: At right angle to a vessel's centerline.

    ABS: An abbreviation for "American Bureau of Shipping", the classification society of the USA. Also, theirpublication listing the names and particulars of vessels classed by them and others.

    Absolute Exclusion: A clause in an insurance policy that excludes certain types of losses or causes ofloss without qualification (Example: excluding shortage, leakage or contamination).

    Access Trunk: The passageways between the various vessel decks, for example from the weather deckto the tween deck or from the tween deck to the lower hold.

    Accident: In marine insurance, an unforeseen occurrence or event; a fortuitous event, usually resulting inphysical damage to a conveyance or cargo.

    Accident To A Conveyance: An accident to the vessel or other conveyance transporting cargo thatusually results in damage to the conveyance and/or cargo.

    Accumulation Clause: A clause in a cargo policy which automatically increases the policy limit (usuallyto twice the amount) if shipments accumulate at some point or place during transit without the assured's(or assignees, if any) knowledge or consent.

    Acknowledgement: In marine insurance, a form issued to acknowledge that insurance is in effect for aspecific shipment. Usually issued to a consignee by the shipper or someone acting on their behalf, suchas a freight forwarder. The issuer may not have details of the actual coverage provided by the policy.

    Actinic Degradation: The diffusion of light and impedance of heat rays.

    ACS: An abbreviation for Automated Commercial System. an electronic system of U.S. Customs whichallows on line access to certain trade information.

    Actual Cash Value: ACV - In general, the actual value of the subject matter at the time of loss. Usuallyits cost when new less depreciation, but including covered expenses/costs.

    Actual Total Loss: An actual total loss exists when the shipment has been completely destroyed, or

    damaged to such an extent that it is "no longer the thing that it was", or is lost without any chance ofrecovery.

    ACV: Actual Cash Value - In general, the actual value of the subject matter at the time of loss. Usuallyits cost when new less depreciation, but including covered expenses/costs.

    Addendum: Endorsement - In general, an attachment to an insurance policy which adds, deletes orchanges coverage provided by the basic policy form. An addendum.

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    Ocean Cargo Glossary - PMM Dept - Version 3: February 2004 Page 2

    Adjuster: Individual charged with the responsibility of determining if a particular loss is covered by theinsurance policy and, if so, the amount which will be paid to the claimant. May be a company employee orindependent (public) adjuster acting on the companys behalf.

    Admitted Insurance: Insurance which must be placed in a domestic insurance market with anappropriately licensed insurance company.

    Ad Valorem: In general, any charge based on a monetary value.

    Ad Valorem Bill of Lading: Valued Bill of Lading - A bill of lading issued by the carrier which indicatesan amount which the shipper has declared as the value of merchandise. The carrier will be liable for thisamount in the event he is found liable for loss or damage to the merchandise.

    Ad Valorem Duty: Customs duty assessed on the value of the goods.

    Advance: Part of the formula used to determine insured value. It is an agreed percentage increaseapplied to the total of invoice and ocean/air freight. This provides for unknown expenses at the time ofshipment, such as port fees, clearance charges and inland freight in the country of destination, and aportion of the assureds profit. It also may be used to develop sufficient value on the merchandise in orderto prevent coinsurance in the event of a General Average.

    Advanced Freight: Freight paid to the carrier by the shipper or consignee (depending upon the terms ofsale) or someone acting on their behalf, such as a freight forwarder, when merchandise is accepted forshipment. Not refundable, even if the vessel and/or cargo does not arrive at the intended port ofdischarge. Also referred to as Prepaid Freight.

    Advising Bank: A bank, usually in the country of origin, that receives a letter of credit from the issuingbank and advises the shipper, or other party named in the letter of credit as the beneficiary, that a letter ofcredit has been opened in their favor and of the steps they must take to collect payment. The advisingbank assumes no obligation to pay the credit.

    AES: An abbreviation for Automated Export System, an EDI facility enabling exporters to electronicallyfile SED data with multiple federal agencies simultaneously.

    AFT: "Abaft" - Towards the rear (stern) of a vessel.

    Affreightment: Contract of Affreightment, Contract of Carriage - A contract which sets forth theobligations of both a shipper and a carrier concerning transportation of the merchandise. The mostcommon forms of affreightment are known as Bills of Lading and Waybills.

    Agency For International Development: An agency of the US government that subsidizes privateshipments of goods and services to foreign countries.

    AICC: An abbreviation for American Institute Cargo Clauses, a set of standard insurance clausesadopted by the American Institute of Marine Underwriters for voluntary usage by member companies.These clauses have worldwide recognition and acceptance.

    AID: An abbreviation for "Agency For International Development", an agency of the US government thatsubsidizes private shipments of goods and services to foreign countries.

    AIMU: An abbreviation for American Institute of Marine Underwriters, a non-governmental, non-profittrade association representing ocean marine insurers in the United States. Primarily through committeescomprised of individuals from member companies, AIMU establishes voluntary standards for insurancecoverage wording, vessel classification criteria, loss control practices and claim procedures. Through aseries of bulletins, AIMU advises member companies of current shipping and trade practices andregulatory issues which may affect their industry.

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    Ocean Cargo Glossary - PMM Dept - Version 3: February 2004 Page 4

    Angle of Repose: The angle at which a dry bulk cargo settles in the hold of a vessel. It is the angleformed between the horizontal plane of the holds floor and the conical slope of non-cohesive (free-flowing) granular material. The smaller the angle of repose the greater the chance of the cargo shiftingwithin the hold of the vessel.

    Anti-dumping: A term used to denote laws enacted to penalize anyone involved in the unfair tradepractice of dumping. Penalties may be imposed in the form of additional duties, fines, penalties orimprisonment.

    Antioxidant: The material, typically ethoxyquin or butylated hydroxytoluene, that is used as a stabilizer toprevent the spontaneous combustion of cargoes such as fishmeal and iron ore briquettes. The antioxidanthas to be applied in certain amounts (parts per million) and at certain times (during production but notmore than 12 months prior to shipment) in order to achieve effectiveness.

    Application: In general, a document submitted by an assured, or their insurance broker if permitted bylaw, to an insurance company setting forth the full particulars of a risk for which they wish to obtaininsurance.

    Apron: The portion of a pier, dock, wharf or quay directly adjacent a vessel on which cargo is assembledprior to loading or subsequent to discharge.

    A/R: An abbreviation for All Risks, an insuring term meaning that coverage is provided for loss due tofortuitous events, not just from named perils, unless the loss or cause of loss is excluded in the policy orby an implied exclusion.

    Assailing Thieves: A marine peril meaning the forcible taking of the vessel or cargo as opposed toclandestine theft.

    Assignee: A party to whom certain rights or benefits have been transferred.

    Assignment: In general, the transfer of a right or benefit to another party. An assured may transfercertain of their rights under a cargo policy to another usually by issuing a Special Cargo Policy orCertificate of Insurance.

    Assured: The party