bottomry, bottomage, bottomry bond
(insurance-historic) A loan made to a ship’s owner or ship’s master acting as the owner’s agent, to carry on or complete a voyage, pledging the “bottom” or keel of the vessel as collateral. Such loans were often made to effect emergency repairs. If the ship was lost, the lender lost his investment; if the ship arrived safely, the lender received his principal, plus interest, often 30, 40, or 50 percent.
An early form of bottomry was mentioned in the Code of Hammurabi (1750 BC). Bottomry bonds fell out of favor by the mid-1800s primarily because of their low priority against other liens against a vessel. While bottomry bonds used the vessel as collateral, respondentia used a ship’s cargo as collateral. See also respondentia.