Complete Glossary of
Marine Terms & Abbreviations
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Sacrifice
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.
Salvage
An award payable to a third party for services rendered to preserve maritime property from peril at sea. Pure salvage is awarded only to a third party acting independently of contract and is payable only when the property has been saved. The award is based on the value of the property saved, the hazard and degree of skill involved and the expense of the operation. The contributory value for apportionment of salvage is calculated in the same way as for general average but the values are assessed at the place where the salvage operation is completed. The contributory value is compared with the insured value, as with general average, and any resultant under-valuation is reflected in a proportionate reduction in the contribution paid by the insurer. Any guarantee given by the insurer Is therefore subject to qualification unless a counter guarantee is given by the assured. A salvor cannot claim an award where the circumstances leading to the salvage act were brought about by the wrongful or negligent act of the salvor.
The insurance term for a salvage award is salvage charges and such charges incurred to preserve the insured property from a peril insured against are recoverable under the policy as a loss by that peril. Whereas contribution to general average is not payable by any of the interests involved which do not reach their destination, any salvage contribution is still payable on such property, provided the salvage operation was successful. For this reason, salvage charges are payable by insurers in addition to a total loss resulting from a subsequent casualty. Despite the principle of pure salvage, in practice Lloyd’s form of Salvage Agreement is used on a no cure no pay basis.
The term salvage may also be used to describe the property saved.
Salvage Association
The Salvage Association was formed in 1856 by Marine insurance and shipping interests in London. Its cumbersome former title "The Association for the Protection of Commercial Interests as respects Wrecked and Damaged Property" was discontinued when a new Royal Charter (Eliz. II) redefined the objects of the Association in 1971 and granted the title Salvage Association. The basic foundation of the Association is the investigation of casualties in which marine underwriters are interested, but since 1971 its activities have been extended to offer services to a much wider field, including non-marine and aviation matters.
When a casualty is reported and a claim seems possible it is common practice for the interested underwriters (Lloyd’s or Companies') to instruct the Salvage Association to act on their behalf. The Association initiates an examination of the circumstances of the casualty and ascertains the extent of damage to the property; subsequently providing the owner with information and recommendation for the protection and preservation of the interests of all parties.
The Association is non-profit making and its affairs are managed by a Committee comprised of representatives from Lloyd's and English Insurance Companies.
Salvage Award
An amount awarded to a salvor for services rendered in the salvage of property in peril at sea.
The award may be made by a court or by arbitration, depending on the terms of the salvage contract. Underwriters contribute towards a salvage award insofar as the award is in respect of insured property in peril from an insured risk, subject to any restrictions imposed by the policy (eg a policy deductible) and, except where the policy provides otherwise, subject to reduction to reflect under-insurance, if any.
Salvage Guarantee
An agreement, whereby a guarantor agrees to make good a salvage award if the party responsible fails to pay it to the salvor. The salvor (termed "Contractor" in the form) will discharge the maritime lien which he is entitled to attach to the salved property, in exchange for such an agreement subscribed by an acceptable guarantor or guarantors. Lloyd’s may issue such an agreement for use in conjunction with Lloyd’s Standard form of Salvage Agreement.
Payment in relation to the Lloyd’s form is guaranteed by the Corporation of Lloyd’s who require to hold a policy written by acceptable insurers, or an Indemnity subscribed by syndicates at Lloyd’s; whereby they will be reimbursed if they have to make good any sum under the guarantee.
Salvage Loss
A compromised settlement on a cargo policy, usually when the adventure has been terminated short of destination and damaged goods are sold at the intermediate port. The underwriter pays the difference between the sum insured by the policy and the proceeds of the sale.
There is a form of constructive total loss settlement which has the same result a constructive total loss, except that no notice of abandonment is required. This is known as a "salvage loss".
The term "salvage loss" originates from the practice of a forced sale at port of distress of badly damaged cargo in order to prevent the cargo from becoming a total loss.
Such losses are paid by underwriters by deducting the net sale proceeds from the insured value, treating the claim as a total loss less salvage or a "salvage loss".
The reason for this method of adjustment is that, as already discussed, the insurance is on the voyage as well as on the cargo itself. It is therefore reasonable to treat on a total loss basis cargo that cannot be forwarded to destination.
Thus:
| Insured value | $100,000 |
|
| Proceeds (gross) | $15,000 |
|
| Sale charges | 1,000 ---------------- |
|
14,000 |
||
Claim |
$ 86,000 |
Salvage Sales
Since one of the main reasons of a surveyor’s function is the assessment of the loss, the salvage sale is an item which is of the utmost importance. If a surveyor is well aware of the residual value of a damaged consignment, he has a very comfortable negotiating position versus the claimant. If the claimant then continues to seek a depreciation and/or extra costs beyond this amount, the surveyor can still propose that the goods can be placed at the disposal of the Cargo Underwriters in view of a salvage sale.
SAR
Search and rescue
Scantling
The thickness of a steel plate in a ship.
Scraping the bottom
Removing weed and incrustation from the underside of a ship. Not covered by a boll policy; not even when necessary to repair damage recoverable under the policy.
Seaworthiness
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 poli¬cies waive breach of the warranty except where the insured or their servants are privy to the unseaworthiness. Breach of the warranty is not excused in a hull voyage policy, literal compliance therewith being required. Although there is no warranty of seaworthiness in a hull time policy, claims arising from unseaworthiness may be prejudiced if the ship sails in an unseaworthy condition with the knowledge of the insured.
Seaworthiness Admitted Clause
A clause in a policy whereby the insurer admits that no claim under the policy will be repudiated as a result of unseaworthiness. This clause does not defeat the right of the insurer to proceed, in the name of the assured, against a carrier who is liable for the loss.
The clause in the Institute Cargo Clauses goes on to ensure that the assured is not prejudiced by reason of the wrongful act or misconduct of the shipowners or their servants, committed without privity of the assured.
Secondhand Machinery
When machinery is insured as cargo it is deemed to be new machinery unless the policy specifically states that it is second hand. It is usual to incorporate the Second Hand Replacement Clause in a policy covering second hand machinery enabling the insurer to replace damaged parts with either second hand material, or allow a deduction for new-for-old.
Seller's Interest
The insurable interest of the seller. The seller has such an interest only until the title to the goods passes to the buyer. The policy may be assigned by the seller to the buyer but assignment must take place before, or at the time that, the seller’s interest ceases. The seller cannot assign the policy after he has lost his insurable interest.
Sentimental Loss
A market loss to goods brought about by fear that goods may have suffered from a known casualty whereas no such loss exists in fact.
This is, in effect, loss of market and is not covered by the policy. It occurs when undamaged cargo is discharged from a ship which has damaged cargo on board. It is often associated with a fear of loss by taint.
Tea is particularly subject to loss in value if stowed in proximity with damaged cargo.
The phrase is also used in Household and Personal Effects claims, where the claimant erroneously claims for a loss of sentimental (emotional) value.
Settling Agent
An underwriter's representative who is authorized to settle claims.
SG Policy
The 'Ships Goods' policy form adopted by Lloyd's, in 1779, as a standard for all marine insurance business. The form covered both ship and goods on a specified voyage and required considerable adaptation to be used for modern hull and cargo business. The London company market adopted separate policy forms for hull and cargo business, but these were very similar to Lloyd's SG form and still required adaptation.
In January, 1982, the London cargo insurance market replaced the SG form with the MAR form of policy. The London hull insurance market took the same measure in October 1983. The Institute clauses published for use with the SG form and its company counterpart have been withdrawn.
Ship's Articles
The agreement between the master and his crew, giving details of conditions and terms.
Ship's Husband
The shipowner's agent who superintends the vessel when in port.
Ship Arrest
Because of the right in rem in admiralty law, an aggrieved party can arrest a vessel through the powers of the court, which has admiralty jurisdiction.
Shipped Bill
A Bill of Lading that acknowledges the goods have been loaded on the ship.
Shipper
The person tendering goods for carriage
Not to be confused with the party issuing the B/L or the vessel operator who is the carrier.
Shipper's Receipt
An alternative to a bill of lading used in consolidation of container shipments. It does not give legal title to the goods.
Short Delivery
Traditonally, the quantity of cargo delivered is less than the bill of lading quantity.
Short Form Bill of Lading
A summary type bill of lading which does not incorporate all obligations and responsibilities of both parties. Unless a shipper is familiar with the carrier's tariff, he should request a full bill of lading.
Short Shipment
When the full amount intended to be shipped has not been shipped.
Short Term
A time policy (usually a hull policy) effected for a period of less than 12 months.
Short Ton
Weight measurement of 2000 lbs.
Shortage
A form of non-delivery. Non-delivery refers to the failure of a whole package to arrive at the destination without any evidence to show the cause of loss. To establish a claim it is necessary to show documentary proof that the lost property was in fact loaded. Shortage occurs when part of a package or bulk cargo fails to arrive. The policy covers neither non-delivery nor shortage unless they are specified perils. A policy specifically covering non-delivery but not specifying either shortage or short-delivery does not cover these extra perils. Many bulk cargoes are insured against shortage, which is arrived at by comparing shipped and unloaded weights. A claim should be made by the consignee against the carrier for shortage.
Shrouds
Atwartships or lateral supports to mast
Shut Out
Cargo not loaded.
A "lock-out" usually refers to a labour dispute where the workers have been locked out of their usual place of employment by their employer
Single Transit Policy
"One Off" insurance for those clients who require transit cover on an infre¬quent basis.
Sighting The Bottom
Examining the underside of a ship for damage following an accident.
The Institute hull clauses provide that the underwriters will pay the cost of sighting the bottom without applying the policy deductible and even if no damage is found, but only when the cost is incurred specially to examine the bottom following stranding. Otherwise, these costs are included in a claim for damage to the ship's bottom but are subject to the policy deductible.
Silver Nitrate
During any marine transport, the risk of wetting of cargoes is imminent and obvious.
For some cargoes, e.g. steel cargoes, it makes a huge difference whether these have been wetted by fresh or by brackish / salt water.
In order to establish this, the field test used is the "silver nitrate test". The test is carried out by a mixture of 2% silver nitrate (AgNO3), and 98% distilled water (H2O).
This solution has the aspect of water, viz: clear and colourless.
Silver nitrate has the property of reacting with Chlorides, in the form of a white emulsion.
The reaction obtained will depend on the percentage of silver nitrate in the solution. Even a solution of 3% will give a noticeable difference in reaction compared to a 2% solution, and 5% will tend to react with almost anything.
Single Administrative Document
Produced by SITPRO (Simplication of International Trade Procedures), this document was introduced to the EEC in 1988. It is part of the 'aligned series' for the improvement of trade procedures and embraces, within a single document, the functions of some 70, previously used, Customs forms.
Sistership Clause
A clause in a hull policy whereby the underwriters agree to treat sisterships as if they were separately owned (and capable of legal liability, one to the other) in regard to collision liability claims and claims for salvage charges.
SITPRO
Simpler Trade Procedures Board
Slamming
Impact of water on the bows of the ship.
Sling Loss
Cargo lost by falling from ship's lifting tackle during loading or unloading.
Slot
Space on board a vessel occupied by a container.
Slothire
A standard BIMCO slot charter for containerships.
SOB - Shipped On Board
Endorsement on a Bill of Lading confirming loading of goods on vessel.
Sound Value
For the purpose of arriving at the amount due from the insurer in the event of partial loss of goods it is necessary to determine the sound value at the destination.
To obtain equity, it is necessary to estimate the gross sound value of the goods, so that a comparison can be made with the gross damaged value in order to apply the difference as a percentage of depreciation. In the case of hull it is not necessary to find the sound value for partial loss claims because the reasonable cost of repairs is payable without reference to the actual value of the vessel.
It is usual to obtain a certificate of sound value when assessing the contributory value of the vessel with regard to general average or salvage contributions. Contributory values on cargo are calculated on net values.
Sparred
Describes a system of packing hollow-ware cargo whereby wooden supports hold the goods rigid during handling.
Special Drawing Rights
In the late 1960’s concern developed in the international business community as to the adequacy of international liquidity in a situation of expanding world trade and investment. The 1967 annual meeting of the IMF in principle agreed to supplement existing international reserves - consisting principally of gold and national currencies such as the U.S. dollar and sterling - by creating a new reserve asset in the form of the Special Drawing right.
Originally one SDR was equal to 0.888671 grammes of fine gold, which was also the par of one U.S. dollar.
Specie
The term specie is used in two completely separate ways in marine insurance. The Marine Insurance Act 1906 refers to specie in the expression "loss of specie".
The term "specie" is also used as a collective noun to embrace all forms of valuables carried as cargo, including precious metals, gems, money, banknotes and valuable documents.
Specific Exclusion
A specific exclusion is one which is printed, typed, impressed on or written into a policy. A specific exclusion need not necessarily reduce the cover afforded by the policy. It may be there merely to draw to the attention of the assured the fact that the policy does not cover the excluded peril. for this reason the deletion of a specific exclusion does not incorporate into the policy, even by implication, the peril which is the subject of the exclusion. The deletion merely reverts the policy to the cover afforded before the exclusion was specified.
Specific Performance
The remedy sought by a plaintiff who, instead of damages for a breach of contract, seeks the enforcement of the terms of the contract.
Spontaneous Combustion
May occur when fibrous cargoes, such as jute, are loaded in a damp condition or when such cargoes contain an excessive amount of oil or grease, as may be the case with baled dirty wool. Soft coal, or lignite, is also liable to spontaneous combustion if loaded wet.
This is inherent nature and no claim is recoverable under the policy on the cargo which is subject to the spontaneous combustion. Fire damage to other cargoes or to the ship is recoverable under the policies applicable to such other cargo or ship as a loss by fire.
Spudding
Settling the legs of a drilling rig in the seabed.
Statement of Claim
The first step in the pleadings to an action, in which the plaintiff particularises his claim and the legal grounds on which it is based.
Statute-Barred
A debt or liability, the claim to which is barred by lapse of time under a country's Statutes of Limitation.
Stay
Wire rope running Fore and aft to the mast, as support for the mast
STC - Said to Contain
Abbreviation, commonly found on bills of lading
Stem
the foremost part of the hull
Stemming
Arranging bunkers.
Stern Thruster
A propeller or water jet system set in the stern of the ship and positioned to give a sideways thrust to assist manoeuvring in a confined space.
Stoppage In Transit
When a seller of goods finds that payment is unlikely and the goods are already en route to the buyer he has the right of "stoppage in transitu". By this right the seller can stop the delivery of the goods at destination.
The right is extinguished if the voyage is ended or if the goods have already been sold by the buyer to another person.
Straddle Carrier
A vehicle specially constructed to lift and move containers in a dock area or container terminal area.
Straight Bill of Lading (not a document of title)
A bill of lading naming a specific party as the consignee. It is non negotiable and only the named party can take delivery of the cargo.
Stranding
The term does not include bumping over a bar, a mere touch and go or a grounding by reason of the rise and fall of the tide. The vessel must be hard and fast for an appreciable period of time.
In hull insurance it is normal for a policy to contain the Customary Strandings Clause which provides that groundings in certain specified areas shall not be deemed strandings. Thus, the cost of sighting the bottom is not covered by the policy in the case of such groundings.
Strikes Cover
Limited to damage caused to insured property by strikers, locked out work¬ers and persons involved in a labour dispute. Does not include loss or expense incurred as a result of strikes.
Strike Expenses
Expenses incurred as a result of a strike, such as forwarding costs for goods that cannot be discharged at the scheduled destination port or extra freight charged for overcarriage to another port when the scheduled discharge port is strikebound.
These expenses are not covered by the marine policy with the standard strikes clauses attached thereto.
Strikes, Riots And Civil Commotions
The ICC(A) does not cover these risks, except where rioters attack a ship from the shore when they are designated as pirates.
To make the lack of cover clear to a cargo assured all cargo policies contain a strikes exclusion clause which excludes the above perils. In practice, it is usual to extend the policy to nullify the exclusion and to incorporate the risks of strikes, riots, civil commotions and malicious damage into the cargo policy by payment of a scale additional premium. the risks are usually incorporated in conjunction with war risks, the additional premium being increased to cover both sets of risks.
The risks of strikes, riots, civil commotions and malicious damage are, in a like manner, incorporated in the war policies on hull and freight. Claims under any of these clauses are payable irrespective of percentage.
Stripping
Unloading goods from a container; removing brand labels from salvaged goods before resale.
Sometimes also called de-stuffing.
Stuffing / Stripping
The action of packing / unpacking a container.
Stuffing
Placing goods into a container.
Subrogation
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.
Substituted Expenses
Expenses incurred in place of loss or expense which would be allowed as general average (e.g. cost of removal of a ship, with general average damage, to a place where repairs would cost less).
Sue And Labour Clause
This clause formed part of the SG policy form and was the basis for applying to the policy expenses incurred by the assured to prevent loss for which underwriters would have been liable.
The clause was not retained when the MAR form of policy was introduced to replace the SG policy in 1982 (cargo) and 1983 (hull), and was, therefore, omitted from the new cargo and hull clauses drafted for attachment to the MAR form of policy.Nevertheless, the effect of the sue and labour clause is incorporated in the 'duty of the assured' clause in the new clauses.
Sue And Labour
It is the duty of the assured to act at all times as though he were uninsured and to take such measures for the preservation of the insured property as a prudent uninsured person would take. To this end he may sue, labour and act in defence of the property without prejudice to his rights under the policy. This means that he may taken any reasonable action or incur any reasonable expense to prevent or minimise a loss. Provided the loss which is minimised or prevented is proximately caused by an insured peril the insurer will reimburse the assured for such expense as he may so incur, whether or not the action taken is successful.
Under this principle, the insurer is liable for sue and labour charges in addition to a subsequent total loss. Such charges can only be incurred by the assured or his servants or agents and must be incurred short of destination.
In hull insurance, subject to the I.T.C., Sue and Labour expenses are recoverable from insurers, subject to the policy deductible. Sue and Labour charges can be incurred only for the benefit of the subject matter insured.
If they are for the common benefit they are not sue and labour but may be recoverable as general average.
Survey Fees And Sale Charges
These charges are extra charges which are added to any claim recoverable from underwriters with certain exceptions. It occasionally happens that a surveyor is requested by the assured to examine cargo for damage but which turns out to be sound. Underwriters are not liable for such survey fees.
Certain commodities, such as wool and fruit, for example, are sometimes shipped "on consignment", ie they were consigned to selling agents in the country of destination to be sold on behalf of the shipper for the best market price obtainable.
In these cases the costs of sale, which are to be incurred anyway, would not form part of the claim on underwriters.
Sweat Damage
Changing temperatures cause the ship’s plates in the holds to "sweat". That is, condensation forms on the inside of the holds. this can cause damage to baled cargoes and to other cargoes vulnerable to water damage. Sweating is particularly likely to occur when the ship in a humid climate encounters heavy weather so that hatches are battened down and ventilators closed.
It is, however, usually best to leave ventilators closed for cargoes which do not need ventilation, such as manufactured metal goods, because warm moist outer air drawn in through the ventilators will condense on the cold surface of the cargo in the cool hold and may result in sweat damage.
SWIFT
Society for Worldwide Interbank Financial Telecommunications
Sympathetic Damage
Loss suffered by cargo following damage to other goods in the same ship. An example would be taint arising from odour given off by another cargo.
Such loss is not recoverable under a cargo policy except, possibly, where the odour was caused by an insured peril (eg seawater entering the hold)
Syndicate (Lloyd's)
A group of underwriting members at Lloyd's whose acceptances and liabilities are handled jointly by an underwriting agency acting on their behalf, while each member remains legally liable solely for his/her own share of the syndicate's liability.
S. to S.
Station to station
s.a.n.r.
Subject to approval no risk. Subject acceptance no risk
s.a.p.l.
Sailed as per list
S.D.
Sea damaged
S/D
Short delivery
S.D.H.F.
Standard Dutch Hull Form
S.D.R.
Special drawing rights
S.G.
Ship and goods (Letters now meaningless, at head of traditional marine policy form)
S.O.L.A.S.
Safety of life at sea
S.R. & C.C.
Strikes, riots and civil commotions
S.R. & C.C. & M.D.
Strikes, riots, civil commotions and malicious damage
S.R.L.
Ship repairer's liability
S.S.
Steamship
S.S. or B.
Stranded, stunk or burnt
S.S.O.
Struck submerged object
S.W.D.
Sea water damage
s/a
Subject to approval
S/A
Subject to acceptance. Salvage Association