Marine insurance is one of the main insurance classes of business. Under this class of business different policies are available which covers:
Hull & machinery;
Cargo – goods shipped from one place to another
However, in this explanatory note we are dealing only with marine cargo, which means goods in transit by sea, air and land. Hence, this brochure mainly elaborates about cargo by sea and air.
Part I:Marine Cargo Insuranc
One of the special characteristic of marine insurance is that all insurers world wide use the same policies known as Institute Cargo Clause A, B & C. The clauses are mainly differ in the scope of cover they provide. Institute Cargo Clause A provides wider cover while clause B covers lesser and Institute Cargo Clause C provides minimum cover. This is to mean that the risks covered by the policy depends upon the type of clause(s) chosen by the customer.
- Risks Covered
1.1. Institute Cargo Clause A, Covers
- a) all risks of loss of or damage to the subject matter insured except those mentioned in the exclusion;
b) general, average and salvage charges, incurred in connection with the avoidance of loss from any cause;
c) can be extended to indemnify the Assured against such proportion of liability under “Both to Blame Collision clause.%u201D In the event of any claim by shipowners under the said clause, the Assured agree to notify the Corporation (EIC) who shall have the right, at their own cost and expense to defend the Assured against such claim.
2 Risks covered by Institute Cargo Clause BThis clause covers the following risks and all risks covered by cargo clause C too.
Earth quake, volcanic eruption or lightning;
entry of sea, lake or river water into vessel, craft hold conveyance container lift van or place of storage;
total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft.
1.3 Risks covered by Institute Cargo Clause C
The marine insurance policy issued on the bases of cargo clause C covers, 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 vessel, craft or conveyance with any external object other than water;
discharge of cargo at a port of distress;
general average sacrifice;
jettison or washing overboard.
- General conditions2.1 Duration
- This insurance attaches from the time the goods leave the warehouse or place of storage at the place named in the policy for the commencement of the transit, continues during the ordinary course of transit and terminates either,.
1.1 on delivery to the consignees’ or other final warehouse or place of storage at the destination named herein,
1.2 on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the Assured elect to use either.
- i) For storage other than in the ordinary course of transit or
ii) For allocation or distribution,
3 On the expiry of 60 days after completion of discharge over side of the goods hereby insured from the oversea vessel at the final port of discharge, whichever shall first occur.
1.4 If, after discharge over side from the oversea vessel at the final port of discharge, but prior to termination of this insurance, the goods are to be forwarded to a destination other than that to which they are insured, this insurance whilst remaining subject to termination as provided for above, shall not extend beyond the commencement of transit to such other destination.
1.5 This insurance shall remain in force during delay beyond the control of the Assured, any deviation, forced discharge, reshipment, or transshipment and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers.
- 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 delivery of the goods, then this insurance shall also terminate unless prompt notice is given to the Corporation and continuation of cover is requested where the insurance shall remain in force, subject to an additional premium if required by the Corporation, either
2.1. until the goods are sold and delivered at such port or place or, unless otherwise specially agreed, until the expiry of 60 days after arrival of the goods hereby insured at such port or place, whichever shall first occur,
2.2 if the goods are forwarded within the said period of 60 days (or any agreed extension thereof) to the destination named herein or to any other destination, until terminated;
- if after attachment of this insurance, the destination is changed by the Assured, then the cover will continue at a premium and on conditions to be arranged subject to prompt notice being given to the Corporation.
3.1 The following exclusions are applicable to all Institute Cargo Clauses.
- a) In no case shall this insurance cover:
Loss damage or expense attributable to willful misconduct of the Assured;
Ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject-matter insured;
Loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured;
Loss damage or expense caused by inherent vice or nature of the subject matter insured;
Loss, damage or expense proximately caused by delay, even though the delay be a risk insured against;
Loss damage or expense arising from insolvency or financial default of the owners managers charters or operators of the vessel;
Loss damage or expense arising from the use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.
b) In no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft,
unfitness of vessel craft conveyance container or liftvan for the safe carriage of the subject-matter insured.
Where the Assured or their servants are privy to such unseaworthiness or unfitness, at the time the subject-matter insured is loaded.
c) The Corporation 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, unless the Assured or their servants are privy to such unseaworthiness or unfitness.
d) In no case shall this insurance cover loss damage or expense:
caused by war, civil war, revolution, rebellion, insurrection, or civil strife arising or any hostile act by or against a belligerent power,
caused by capture, seizure, arrest, restraint or detainment, or any attempt thereof,
caused by derelict mines torpedoes bombs or other derelict weapons of war,
caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions,
resulting from strikers, lock-outs, labour disturbances, riots or civil commotions,
caused by any terrorist or any person acting from a political motive.
3.2 Institute Cargo Clauses B&C do not cover:-
Deliberate damage to or deliberate destruction of the subject matter insured or any part thereof by the wrongful act of any person or persons.
4. General Claims Procedures
- 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.
- The Assured shall be entitled to recover for insured loss occurring during the period covered by this insurance, eventhough that the loss occurred before the contract of insurance was concluded, unless the Assured were aware of the loss and the Corporation was not.
- 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 is covered under this insurance, the Corporation will reimburse the Assured for any extra charges properly and reasonably incurred in unloading, storing and forwarding the subject-matter to the destination to which it is insured.
- 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 to the destination to which it is insured would exceed its value on arrival.
- If any Increased Value Insurance is effected by the Assured on the cargo insured, the agreed value of the cargo shall be deemed to be increased to the total amount insured under this insurance and all Increased Value insurances covering the loss, and liability under this insurance shall be in such proportion as the sum insured bears to such total amount insured.In the event of claim, the Assured shall provide the Corporation with evidence of the amounts insured under all other insurances.
- Where this insurance is on Increased Value the following clause shall apply:
The agreed value of the cargo shall be deemed equal to the total amount insured under the primary insurance and all Increased Value insurances covering the loss and effected on the cargo by the Assured, and liability under this insurance shall be in such proportion as the sum insured bears to such total amount insured.
In the event of claim, the Assured shall provide the Corporation with evidence of the amounts insured under all other insurances.
5. General Benefits of Insurance & Minimizing losses
1. This insurance shall not insure to the benefit of the carrier or other bailee.
2. It is the duty of the Assured and their servants and agents in respect of loss recoverable hereunder:-
- to take such measures as may be reasonable for the purpose of averting or minimizing such loss,
b. to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised.
- Measures taken by the Assured or the Corporation with the object of saving, protecting, or recovering the subject-matter insured shall not be considered as a waiver or acceptance of abandonment or otherwise prejudice the rights of either party.
- AVOIDANCE OF DELAY
It is a condition of this insurance that the Assured shall act with reasonable despatch in all circumstances within their control.
- LAW AND PRACTICE
This insurance is subject to Ethiopian law and practice.
INSTITUTE CARGO CLAUSES (AIR CARGO)(excluding sending by post)
The cover provided, exclusions applied, claims procedures, benefits of insurance and other conditions are the same with marine cargo insurance. Their difference lies on the termination of contract of carriage clause.
In air cargo insurance, if due to the circumstances beyond the control of the Assured the contract of carriage is terminated at a place other than the destination named there in or the transit is otherwise terminated, before delivery of the subject-matter insured as, then this insurance shall also terminate unless prompt notice is given to the underwriters and continuation of cover is requested when the insurance shall remain in force, subject to an additional premium if required by the underwriters, either:-
- a) until the subject-matter is sold and delivered at such place or, unless otherwise specially agreed, until expiry of 30 days after arrival of the subject-matter hereby insured at such places whichever shall first occur; or
- b) if the subject-matter is forwarded within the said period of 30 days (or any agreed extension thereof) to the destination named herein or to any other destination, until terminated in accordance with the provisions indicated in ICCA about duration.
In marine cargo insurance in addition to Institute Cargo clauses A, B&C there are also other clauses which provide cover for the risks arising from strike and war. These risks are covered with additional premium and world wide known as Institute Strike Clauses and Institute War Clauses.
The Institute Strike Clauses provide cover any where, while Institute War Clauses Provides cover on the sea only and for 15 days. The strike clause has no difference of duration with other Institute clauses i.e A, B & C.