Marine Cargo Insurance – What are the options?
By Ray Park – Marine Insure
Marine Cargo Insurance has its roots in very early trade times, where traders would spread their commodities over several vessels to ‘spread the risk’. Then came the Lloyds Coffee Houses in London, where several businessmen would receive a payment for signing their name under a certain shipment of goods agreeing to pay a portion of a claim. Hence the name ‘under writer’ and the rest is history with the establishment of Lloyds of London.
Most insured cargo is covered by Institute Cargo Clauses, of which there is a host to choose from, depending on the subject matter insured and what type of cover is required. The most regularly used clauses are Institute Cargo Clauses A, B and C.
I will explain starting with the basic cover as follows:
Institute Cargo Clauses C
Loss of or damage to the subject-matter insured, reasonably attributable to
- Fire or explosion
- Vessel or craft being stranded, grounded, sunk or capsized
- Overturning or derailment of land conveyance
- Collision or contact of vessel, craft or conveyance, with any external object other than water
- Discharge of cargo at a port of distress,
- Loss of or damage to the subject-matter insured caused by
- General average sacrifice
- Jettison
General average and salvage charges, adjusted or determined according to the contract of affreightment 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 or elsewhere in this insurance.
Institute Cargo Clauses B
As per Institute Cargo Clauses C Plus:
- Jettison or washing overboard.
- Entry of sea, lake or river water into vessel, craft, hold, conveyance, container, liftvan or place of storage,
- Total loss of any package lost overboard, or dropped whilst loading onto, or unloading from, vessel or craft.
General average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause.
Institute Cargo Clauses A
- All risks of loss of or damage to the subject-matter
General average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause.
I have not gone into the exclusions within the clauses, the point of this article is to give a brief overview, although it is important to carefully review the exclusions contained in the insurers’ policy wordings.
Other Clauses to Consider
Other cargo clauses available from insurers are as follows:
- Institute Cargo Clauses Air
- Institute Theft Pilferage Non Delivery (usually an add-on to B or C clauses)
- Institute Frozen Food Clauses
- Institute Frozen Meat Clauses
- Institute Cargo Clauses Commodity Trades
- Institute War & Strikes Clauses
‘War Clauses’ are a must at all times, they include civil war as well as derelict mines, torpedoes bombs or other derelict weapons of war.
There can be confusion with the Strikes Clauses, in that they can be confused with ‘Strikes Delay’. The Strikes Clauses cover is damage caused by strikers, locked out workmen, or persons taking part in labour disturbances, riots or civil commotions, acts of terrorism, or any person acting from a political, ideological or religious motive.
‘Strikes Delay’ is rarely offered by underwriters.
Financial loss caused by delay in the voyage, is another exclusion that many unsuspecting insureds are not aware of. An example can be goods arriving so late, that the ‘season’ for such goods is ended and such goods have to be sold at a greatly reduced price due to lack of demand.
This article is only a brief overview of Marine Cargo insurance. Please contact Ray Park on 0421 881 325 or (07) 3217 9015 should you wish to discuss your specific Marine Cargo Insurance requirements.
Raymond Park is an Authorised Representative of Insurance Advisernet Australia Pty Ltd. Authorised Representative number – 282834
Disclaimer:
This information and any accompanying material does not consider your personal circumstances as it is of a general nature only. You should not act on the information provided without first obtaining professional financial advice specific to your circumstances and considering the specific Insurers Product Disclosure Statement.
The Partnership: The Trustee for Adam Lewis Family Trust and The Trustee for the Lewis Family Trust T/ as Lewis Insurance Services, Marine Insure and Insurance For My Business is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd. Advice on General Insurance products are provided by IAA. ABN: 15 003 886 687 | AFSL No: 240549 | CAR No: 430967