Cargo Flashcards
Positive cover under “A” clauses 2009
RISKS COVERED
Risks 1. This insurance covers all risks of loss of or damage to the subject-matter insured except as excluded by the provisions of Clauses 4, 5, 6 and 7 below.
Exclusions under clause 4 of “A” clauses
EXCLUSIONS
4. In no case shall this insurance cover
4.1 loss damage or expense attributable to wilful misconduct of the Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject-matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subjectmatter insured to withstand the ordinary incidents of the insured transit where such packing or preparation is carried out by the Assured or their employees or prior to the attachment of this insurance (for the purpose of these Clauses “packing” shall be deemed to include stowage in a container and “employees” shall not include independent contractors)
4.4 loss damage or expense caused by inherent vice or nature of the subject-matter insured
4.5 loss damage or expense caused by delay, even though the delay be caused by a risk insured against (except expenses payable under Clause 2 above)
4.6 loss damage or expense caused by insolvency or financial default of the owners managers charterers or operators of the vessel where, at the time of loading of the subject-matter insured on board the vessel, the Assured are aware, or in the ordinary course of business should be aware, that such insolvency or financial default could prevent the normal prosecution of the voyage This exclusion shall not apply where the contract of insurance has been assigned to the party claiming hereunder who has bought or agreed to buy the subject-matter insured in good faith under a binding contract
4.7 loss damage or expense directly or indirectly caused by or arising from the use of any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.
Unseaworthiness and unfitness under clause 5 of “A” clauses
5.1 In no case shall this insurance cover loss damage or expense arising from 5
5.1.1 unseaworthiness of vessel or craft or unfitness of vessel or craft for the safe carriage of the subject-matter insured, where the Assured are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded therein
5.1.2 unfitness of container or conveyance for the safe carriage of the subject-matter insured, where loading therein or thereon is carried out prior to attachment of this insurance or by the Assured or their employees and they are privy to such unfitness at the time of loading.
5.2 Exclusion 5.1.1 above shall not apply where the contract of insurance has been assigned to the party claiming hereunder who has bought or agreed to buy the subject-matter insured in good faith under a binding contract.
5.3 The Insurers waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the subject-matter insured to destination.
Differences of cover afforded by “B” and “C” clauses
- C least cover, B slightly less, A most cover
- C doesn’t include loss involving water apart from jettison
- GA and jettison covered in all of them
An assured who wishes to insure against serious events only may, for a cheaper premium, opt for the restricted cover that is provided in the (B) and (C) clauses. These provide cover against certain specified risks only, the (C) clauses being more restricted than the (B) clauses, as the following shows.
B Clause - Risks
Risks
1. This insurance covers, except as excluded by the provisions of Clauses 4, 5, 6 and 7 below,
1.1 loss of or damage to the subject-matter insured reasonably attributable to
1.1.1 fire or explosion
1.1.2 vessel or craft being stranded grounded sunk or capsized
1.1.3 overturning or derailment of land conveyance
1.1.4 collision or contact of vessel craft or conveyance with any external object other than water
1.1.5 discharge of cargo at a port of distress
1.1.6 earthquake volcanic eruption or lightning, (not in (C) clauses)
1.2 loss of or damage to the subject-matter insured caused by
1.2.1 general average sacrifice
1.2.2 jettison or washing overboard (washing overboard not in (C) clauses)
1.2.3 entry of sea lake or river water into vessel craft hold conveyance container or place of storage, (not in (C) clauses)
1.3 total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft. (not in (C) clauses)
The list of perils is exactly the same in the 1/1/82 (B) and (C) clauses
Exclusions differences in A, B & C clauses
Exclusions are common to A, B and C caluses but B and C clauses, in addition, contain the following exclusions:
- 4.7 deliberate damage to or deliberate destruction of the subject-matter insured or any part thereof by the wrongful act of any person or persons
Thus if a vessel is deliberately scuttled, then the reluctant total loss of claim will not be admissable even if the assured was not privy to the scuttling of the vessel.
- Piracy is excluded in ICC B and C- physical loss/damage to goods due to actions of pirates as well as piratical ransoms under GA.
Cl. 1.1 loss or damage “reasonably attributed” to examples
In 1.1, it is loss or damage that is “reasonably attributed” to the perils named in that section that is covered. These words can be given a wider construction / interpretation than if merely said “caused by”. If it is reasonable to attribute the loss or damage to one of the listed perils then it falls within the policy.
Example: The cargo is in a storage shed at an intermediate place on the insured transit. A fire in the shed causes the roof to collapse, damaging the cargo. The cargo itself is not touched by the fire. The damage to the cargo is thus not caused by the fire but reasonable attributable to the fire.
Example: An earthquake beneath the seabed causes a tidal wave that rolls for a hundred kilometres across the sea. The vessel on which the insured cargo is stowed is tossed violently on the wave, causing the stow to collapse, damaging the cargo. The damage is not caused by the earthquake but is reasonably attributable to it.
Example: The railway wagon carrying the insured cargo is derailed. There is no damage to the cargo from the derailment. Cargo is transferred to lorry to continue its transit. Some cargo is stolen whilst being transferred from the derailed train in the lorry. That is a loss by theft which is not one of the perils insured against under B or C clauses. However, it is reasonable to attribute the theft to derailment of the train and the assured should recover as a loss reasonably attributable to derailment of land conveyance.
The burden of proof is always on the assured to show that one of the specifically names perils has operated to bring about the loss.
Duration of cover under the Transit Clause Cl 8
- 8.1 Subject to Clause 11 below, this insurance attaches from the time the subject-matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit, continues during the ordinary course of transit and terminates either
8.1.1 on completion of unloading from the carrying vehicle or other conveyance in or at the final warehouse or place of storage at the destination named in the contract of insurance,
8.1.2 on completion of unloading from the carrying vehicle or other conveyance in or at any other warehouse or place of storage, whether prior to or at the destination named in the contract of insurance, which the Assured or their employees elect to use either for storage other than in the ordinary course of transit or for allocation or distribution, or
8.1.3 when the Assured or their employees elect to use any carrying vehicle or other conveyance or any container for storage other than in the ordinary course of transit or
8.1.4 on the expiry of 60 days after completion of discharge overside of the subject-matter insured from the oversea vessel at the final port of discharge, whichever shall first occur.
8.2 If, after discharge overside from the oversea vessel at the final port of discharge, but prior to termination of this insurance, the subject-matter insured is to be forwarded to a destination other than that to which it is insured, this insurance, whilst remaining subject to termination as provided in Clauses 8.1.1 to 8.1.4, shall not extend beyond the time the subject-matter insured is first moved for the purpose of the commencement of transit to such other destination.
8.3 This insurance shall remain in force (subject to termination as provided for in Clauses 8.1.1 to 8.1.4 above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to carriers under the contract of carriage.
Cover under ICC in the event of termination of the contract of carriage
ICC A (B & C same): Cl 9
Termination of Contract of Carriage
9. If owing to circumstances beyond the control of the Assured either the contract of carriage is terminated at a port or place other than the destination named therein or the transit is otherwise terminated before unloading of the subject-matter insured as provided for in Clause 8 above, then this insurance shall also terminate unless prompt notice is given to the Insurers and continuation of cover is requested when this insurance shall remain in force, subject to an additional premium if required by the Insurers, either
9.1 until the subject-matter insured is sold and delivered at such port or place, or, unless otherwise specially agreed, until the expiry of 60 days after arrival of the subject-matter insured at such port or place, whichever shall first occur, or
9.2 if the subject-matter insured is forwarded within the said period of 60 days (or any agreed extension thereof) to the destination named in the contract of insurance or to any other destination, until terminated in accordance with the provisions of Clause 8 above.
Cover under ICC in the event of forwarding or change of voyage - ICC A (B and C same) Cl 12
12.Where, as a result of the operation of a risk covered by this insurance, the insured transit is terminated at a port or place other than that to which the subject-matter insured is covered under this insurance, the Insurers will reimburse the Assured for any extra charges properly and reasonably incurred in unloading storing and forwarding the subject-matter insured to the destination to which it is insured.
This Clause 12, which does not apply to general average or salvage charges, shall be subject to the exclusions contained in Clauses 4, 5, 6 and 7 above, and shall not include charges arising from the fault negligence insolvency or financial default of the Assured or their employees.
Cover under ICC in the event of change of voyage ICC A (B and C same) Cl 10
- 10.1 Where, after attachment of this insurance, the destination is changed by the Assured, this must be notified promptly to Insurers for rates and terms to be agreed. Should a loss occur prior to such agreement being obtained cover may be provided but only if cover would have been available at a reasonable commercial market rate on reasonable market terms.
10.2 Where the subject-matter insured commences the transit contemplated by this insurance (in accordance with Clause 8.1), but, without the knowledge of the Assured or their employees the ship sails for another destination, this insurance will nevertheless be deemed to have attached at commencement of such transit.
Cover under ICC in the event of necessity for both to blame collision clause ICC A (B and C same) Cl 3
This insurance indemnifies the Assured, in respect of any risk insured herein, against liability incurred under any Both to Blame Collision Clause in the contract of carriage. In the event of any claim by carriers under the said Clause, the Assured agree to notify the Insurers who shall have the right, at their own cost and expense, to defend the Assured against such claim.
Cover under ICC in the event of salvage charges and general average Cl 2 ICC A (B and C same)
General Average 2. This insurance covers general average and salvage charges, adjusted or determined according to the contract of carriage and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses 4, 5, 6 and 7 below.
Cover under ICC for duty of assured Cl 16
Duty of Assured 16.It is the duty of the Assured and their employees and agents in respect of loss recoverable hereunder
16.1 to take such measures as may be reasonable for the purpose of averting or minimising such loss, and
16.2 to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised and the Insurers will, in addition to any loss recoverable hereunder, reimburse the Assured for any charges properly and reasonably incurred in pursuance of these duties.
Claim for constructive total loss under ICC Cl 13
13.No claim for Constructive Total Loss shall be recoverable hereunder unless the subject-matter insured is reasonably abandoned either on account of its actual total loss appearing to be unavoidable or because the cost of recovering, reconditioning and forwarding the subject-matter insured to the destination to which it is insured would exceed its value on arrival.
Claim on unidentified cargo sold damaged at destination - Case: Spence and another v Union Marine Insurance Co. [1868]
Case: Spence and another v Union Marine Insurance Co. [1868]
The plaintiff was owners of 43 bales of cotton shipped at Mobil to Liverpool, and insured by the defendants. The plaintiff’s 43 bales were part of a consignment of 532 bales hipped under 1 bill of lading. Whilst enroute, the vessel was stranded and was wrecked, therefore most of the cargo was landed in a damaged and with many identifying marks obliterated. Most of the cargo was then forwarded to Liverpool, but of the 43 bales owned by the plaintiff, only 2 could be identified. The plaintiff gave NOA for the other 41 bales, and claimed for a TL of those bales, but UW contended that the loss was only partial. The court contended that there was no total loss, only partial loss (MIA 56(6) Where the goods reach their destination in specie, but by reason of obliteration of marks or otherwise, they are incapable of identification, the loss, if any, is partial and not total.)
Apportion them between receivers according to the amounts they were meant to receive
Adjustment of particular average on goods with reference to s. 71 of the Marine Insurance Act, 1906 and law cases.
71 Partial loss of goods, merchandise, &c.
Where there is a partial loss of goods, merchandise, or other moveables, the measure of indemnity, subject to any express provision in the policy, is as follows:—
(1) Where part of the goods, merchandise or other moveables insured by a valued policy is totally lost, the measure of indemnity is such proportion of the sum fixed by the policy as the insurable value of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued policy:
(2) Where part of the goods, merchandise, or other moveables insured by an unvalued policy is totally lost, the measure of indemnity is the insurable value of the part lost, ascertained as in case of total loss:
(3) Where the whole or any part of the goods or merchandise insured has been delivered damaged at its destination, the measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy, as the difference between the gross sound and damaged values at the place of arrival bears to the gross sound value:
(4) “Gross value” means the wholesale price, or, if there be no such price, the estimated value, with, in either case, freight, landing charges, and duty paid beforehand; provided that, in the case of goods or merchandise customarily sold in bond, the bonded price is deemed to be the gross value. “Gross proceeds” means the actual price obtained at a sale where all charges on sale are paid by the sellers.
Claim for general average sacrifice and expenditure on a cargo policy
General Average 2. This insurance covers general average and salvage charges, adjusted or determined according to the contract of carriage and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses 4, 5, 6 and 7 below.
Underinsurance and claims in general average and for salvage charges
When cargo is insured under a valued policy – always just use the value stated in the policy for your working out – not the sound (PA)
Documents required for adjusting a cargo claim
Original certificate of insurance and/pt policy (open cover conditions etc) for value of goods and terms of sale in defining insurable interest, Original invoice, packing list, certificate of origin and bill of lading for carriers liability, survey report, delivery tickets, out-turn report and port receipts, loading surveys, mates receipts, any corres with carriers concerning condition of cargo on discharge (insured should put carriers on notice immediately – part of their obligation under ICC)
Insurable interest and benefit of insurance under ICC Cl 11
11.1 In order to recover under this insurance the Assured must have an insurable interest in the subject matter insured at the time of the loss.
11.2 Subject to Clause 11.1 above, the Assured shall be entitled to recover for insured loss occurring during the period covered by this insurance, notwithstanding that the loss occurred before the contract of insurance was concluded, unless the Assured were aware of the loss and the Insurers were not
Benefit of insurance under ICC Cl 15
15.This insurance
15.1 covers the Assured which includes the person claiming indemnity either as the person by or on whose behalf the contract of insurance was effected or as an assignee,
15.2 shall not extend to or otherwise benefit the carrier or other bailee
INSTITUTE CLASSIFICATION CLAUSE 01/01/2001 INSTITUTE CLASSIFICATION CLAUSE 01/01/2001
QUALIFYING VESSELS
1 This insurance and the marine transit rates as agreed in the policy or open cover apply only to cargoes and/or interests carried by mechanically self-propelled vessels of steel construction classed with a Classification Society which is:
1.1 a Member or Associate Member of the International Association of Classification ** Societies (IACS) , or
1.2 a National Flag Society as defined in Clause 4 below, but only where the vessel is engaged exclusively in the coastal trading of that nation (including trading on an inter-island route within an archipelago of which that nation forms part).
Cargoes and/or interests carried by vessels not classed as above must be notified promptly to underwriters for rates and conditions to be agreed. Should a loss occur prior to such agreement being obtained cover may be provided but only if cover would have been available at a reasonable commercial market rate on reasonable commercial market terms.
AGE LIMITATION
2 Cargoes and/or interests carried by Qualifying Vessels (as defined above) which exceed the following age limits will be insured on the policy or open cover conditions subject to an additional premium to be agreed.
Bulk or combination carriers over 10 years of age or other vessels over 15 years of age unless they:
2.1 have been used for the carriage of general cargo on an established and regular pattern of trading between a range of specified ports, and do not exceed 25 years of age, or
2.2 were constructed as containerships, vehicle carriers or double-skin open-hatch gantry crane vessels (OHGCs) and have been continuously used as such on an established and regular pattern of trading between a range of specified ports, and do not exceed 30 years of age.
CRAFT CLAUSE
3 The requirements of this Clause do not apply to any craft used to load or unload the vessel within the port area.
NATIONAL FLAG SOCIETY
4 A National Flag Society is a Classification Society which is domiciled in the same country as the owner of the vessel in question which must also operate under the flag of that country.
PROMPT NOTICE
5 Where this insurance requires the assured to give prompt notice to the Underwriters, the right to cover is dependent upon compliance with that obligati on.
LAW AND PRACTICE
6 This insurance is subject to English law and practice.
Country damage clause
This clause covers damage or deterioration of baled or bagged goods prior to loading on vessel, used by the
absorption of excessive moisture from damp ground or exposure to weather, or grit, dust or sand entering
the subject-matter due to windstorm or inclement weather
This insurance is to include Country Damage whensoever’s occurring even if such Country Damage is
occasioned prior to attachment of this insurance or prior to the attachment of the Insured’s interest.
Nevertheless, this insurance is only to pay claims for Country Damage where such Country Damage causes
a direct loss to the Insured, and it is warranted that the Insured shall in the event of Country Damage being
discovered take all such measures to protect their rights as regards Country Damage as they would have
taken had they been uninsured, but no legal proceedings shall be taken except with the written consent of
Underwriters.
Underwriters agree to pay costs and expenses of any legal proceedings incurred with their consent.
In marine cargo insurance, damage to baled cotton caused from poor methods of baling, handling or storing which discolour and strain the cotton.
In goodacre – means the deterioration/damage of cotton fibre caused by absorption of moisture from the exterior resulting from exposure to the weather or from storage on damp group. It includes also damage by the penetration of dust or sand but excludes contamination from other goods, and all damage suffered after the inception of the ocean voyage
Location clause
Notwithstanding anything contrary to this contract of insurance Insurers’ liability in respect of any one accident or series of accidents arising from the same event in any one location shall not exceed the sum of XXXX(as stated in the quotation/policy Cl395)
This limits UW’s liability in respect of any one accident in any one location to a specified amount
Replacement clause
UW’s liability becomes restricted to the cost of replacement or repair of parts not exceeding the insured value of the complete machine
Difference between floating and open policies
Check syllabus - too long
Liability for extra expenses for discharging damaged cargo – under which insurance might this fall
Perhaps allowed under GA when necessary to conduct repairs – discharging worthless cargo is not covered as per the alchemist on the hull policy – only the cost of removing cargo which has caused damage to the hull (cargo solidified – not allow most of the discharge of cargo but do allow the cost f the cargo stuck on the hull) F13 Treatment of costs of extraordinary discharge That no distinction be drawn in practice between discharging cargo for the common safety of ship and cargo, and discharging it for the purpose of effecting at an intermediate port or ports of refuge repairs necessary for the prosecution of the voyage.
