Giving up the proprietary rights in insured property to the underwriter in exchange for payment of a constructive total loss.

Actual 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.

Agreed Value

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 Risks
All fortuitous causes of loss. It does not embrace inevitable loss such as wear and tear.

A written form submitted to underwriter to obtain quotation for a risk, and contains particulars of the risk.

The passing of beneficial rights from one party to another.

Annual Policy
Designed for clients with 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.

Certificate of Insurance
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.

Compromised Total Loss
An arranged settlement on a hull policy where there is not claim for actual or constructive total loss, but where it is impractical to repair the vessel.

Constructive Total Loss
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.
Date Restrictions

With some policies, your boat is only insured during specific dates of the year. This can potentially lower your insurance payments in months where 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, which will be deducted from all losses recoverable under a policy.

The duty of the insured and his broker to tell the underwriter every material circumstance before acceptance of risk.

Earned Premium
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 on risk.

Emergency Services

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.

Excess Liabilities
Insurance to cover the excess amount of liability for general average contributions, salvage claims, sue and labour charges and three-fourths collision liability where the full amount is not covered by a hull policy.
Held Covered
A provisional acceptance of risk, subject to confirmation that cover is needed at a later date. Where applicable to an 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 covered comes into effect.

Insurable Interest
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.

Lay-Up Period

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.

Letter of Credit
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 a 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.

Material Circumstances
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.

Material Representation
A statement made to the underwriter before acceptance of risk which is material to the decision in accepting and rating the risk.
Navigational Limits

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.

Notice of Abandonment
A condition which 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 re-insurance provided the policy incorporates the "waiver" clause, action taken by an underwriter to prevent or reduce the loss is not deemed to be an acceptance of abandonment.


People who will be operating the boat – often used to determine premium payment rates.

Pollution Liability

If included in your policy, this coverage will help cover you in the event of a fuel or oil discharge into the water.

Proximate Cause
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.

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 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.

Settling Agent
An underwriter's representative who is authorized to settle claims.

Salvage Charges
The reward 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.

Sue and Labour Charges
Charges incurred by an insured in averting or diminishing a loss. They are recoverable in addition to the full sum insured.

Towing Liability

It is necessary to include this overage in your policy if you anticipate towing or pulling anything behind your boat.

Utmost Good Faith
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.

Voidable Policy
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."

Without Prejudice
Occasionally claims may be paid which 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.

​* 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.

Terminology (Yacht Terms)

ANM Maritime Solutions Group P.A.