Cargo & Transport Insurance

To protect the interest of the Assured, from the time he is contractually at Risk against physical loss or damage.

Land, sea, and air transports would all be covered under one policy and effected as per the Standard Institute Cargo Clauses(A, B or C). The main types of losses covered by the Institute Cargo Clauses A 1982 (All risks) are as follows:

1. Particular Average:

Is defined as a partial loss of the subject matter insured, cause by a peril insured against, and which is not a general average loss. It does not include expenses incurred by or on behalf of the Assured for the safety or preservation of the subject matter insured. The term is applied to any claim for damage to ship or cargo, other than damage caused by a general average sacrifice. It is never applied to a claim for total loss, even when it is a constructive total loss based on damage to ship or cargo.

2. General Average:

The term average is used in Marine Insurance in connection with partial loss. When related to particular average it is concerned only with accidental damage to insured property. When used in connection with general average it can related to deliberate sacrifice of property. General Average is a rule of the sea and is incorporated in all contracts of carriage. It applies, therefore, to property at risk in a common adventure, whether or not the property is insured.

It can be applied, also, to freight being earned by a ship Operator whose ship is involved in a GA act. General average is a principle whereby all parties to an adventure, who benefit from the sacrifice or expenditure, must contribute to make good the amount sacrificed or the expenditure incurred.

General average applies only to Maritime adventures, so it cannot arise in connection with goods in transit overland. Most adjustments are made in accordance with the York/Antwerp Rules and it is customary for the Policy Conditions to accept such adjustments.

3. Constructive Total loss:

The Assured has the right to abandon the Insured property to the Insurer and to claim a constructive total loss where, because of the operation of an insured peril, (a) the Insured is deprived of the Insured property and is unlikely to recover it, or (b) an actual total loss appears to be invitable, or (c) the estimated cost of recovering, reconditioning and forwarding to destination would exceed the arrived value.

4. Actual Total Loss:

An actual total loss can occur in four ways (1) Where the subject matter is completely destroyed (2) Where the subject matter ceases to be a thing of the kind Insured. (This is termed loss of specie). (3) Where the Assured is irretrievably deprived of the subject matter, although it has retained its specie. (4) A missing ship and her cargo is deemed an actual total loss when it has been posted as missing at Lloyd´s. The above four points being the main types of losses and is by no means restrictive or final.

The restrictions/exclusions to all forms of Marine Insurance Institute Cargo Clauses (ICC) are briefly outlined as follows : (In certain cases some of the exclusions can be bought back for an additional premium).

In certain cases some of the exclusions can be bought back for an additional premium.

  1. Wilful misconduct of the Assured.
  2. Ordinary leakage (for cargoes with a liquid content).
  3. Ordinary loss in weight or volume.
  4. Ordinary wear and tear (mostly applicable to 2nd hand goods such as machinery, etc.)
  5. Improper packing. (If goods are not sufficiently packed to withstand the normal rigours of transit, then no claim would be payable).
  6. Inherent vice : (mostly applicable to perishable goods).
  7. Delay : Underwriters would not be liable for losses proximately caused by delay, even if the delay is caused by an insured peril (normally occurs in policies covering perishable goods).
  8. Insolvency or financial default of carriers : This exclusion discourages the use of fly by night operators ad no expenses would be recoverable from Underwriters for the costs of discharge, reloading, freight charges, etc. to get the goods insured to their final destination.
  9. Deliberate damage or destruction.
  10. Nuclear weapons : all losses caused by nuclear/radioactive sources, friendly or hostile, are excluded.

The above is a brief outline of Risks covered under a Marine Policy as well as the main exclusions. Furthermore, there is a natural extension to transport policies where the final use of the insured goods are used for gain and that is for a consequential loss Insurance coverage, this is briefly outlined further on.

Cargo consequential loss

Has been available in many different shapes over the years but is now available as a comprehensive package to be offered as a supplement to cargo or other marine covers. This insurance will give the assured protection for costs or liabilities resulting from:

  1. Delay in delivery / Non-delivery of cargo
  2. Delayed loading/discharge of cargo
  3. Stoppage or disturbance in loading/discharge of cargo That have been caused by:
  • Fire/explosion
  • Storms, hurricanes, flooding, ice, fog
  • Earthquake
  • Derailment, marine accidents, collision with other vehicle of transport
  • Blocking/ closure of ports, roads, inland waterways etc. ordered by government
  • Physical loss of cargo in ship or other conveyance
  • Sudden application of export control or local regulations

The indemnity is calculated as net loss plus extra costs incurred and in addition contractual penalties for the delay.

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