Cargo Insurance Terms

* ABANDONMENT

The cession by the insured to the insurer of the remains of his property, and rights relating to it, when a constructive total loss is claimed.

ACTUAL TOTAL LOSS

There is an actual total loss (a) where the subject-matter of insurance is completely destroyed; (b) where it ceases to be a thing of the kind insured; or (c) where the insured is irretrievably deprived of it.

ASSIGNMENT

  1. Transfer of a right.
  2. The document making the transfer of a right. The right transferred may be an interest in the subject-matter of insurance, in the contract of insurance, or in policy moneys due to the insured.

AVERAGE

  1. The arithmetic mean.
  2. In marine insurance, loss or damage.
  3. In non-marine property insurance, where average is said to apply and there has been under-insurance, the insured’s claim is reducible in proportion to the under-insurance.

BASIS OF VALUATION

To protect the insurer under an open cover where shipments may be declared and added to the insurance even after a loss a clause in the policy defines the basis to be adopted for their valuation.

BENEFIT OF INSURANCE

Term used, e.g., in a contract of carriage, where some person such as a bailee stipulates that he shall receive the benefit of insurance effected by the owner.

BILL OF LADING

A shipping document containing a description of the goods to be shipped.

C. & F.

Cost and freight.

CARGO INTEREST

Insurable interest relating to cargo, other than the interest of the cargo owner.

CLASSIFICATION CLAUSE

A clause in a marine cargo policy specifying the minimum standard of the vessels to be used in the carriage if additional premium is to be avoided. Vessels must be fully classed by a recognised classification society but additional premium may be required if a vessel is over a specified age.

CLASSIFICATION SOCIETY

A society formed to inspect ships and to describe and grade them for the information of insurers, e.g., Lloyd’s Register of Shipping. An approved ship is said to be fully classed.

* CONSTRUCTIVE TOTAL LOSS

Subject to any express provision in the policy, there is a constructive total loss where the subject-matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred.

In particular, there is a constructive total loss:
Where the assured is deprived of the possession of his ship or goods by a peril insured against, and (a) it is unlikely that he can recover the ship or goods, as the case may be, or (b) the cost of recovering the ship or goods, as the case may be, would exceed their value when recovered; or in the case of damage to goods, where the cost of repairing the damage and forwarding the goods to their destination would exceed their value on arrival.

CONTRIBUTION

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