Marine Cargo/Transit Insurance

Pair and Set Clause

Coverage:
If one item in a pair or set is damaged, this clause provides compensation for the loss by considering the reduced value of the remaining items.

Ideal for:
Goods that are part of a matched pair or set, such as luxury items or machinery components.

Debris Removal Clause

Coverage:
Covers the costs associated with removing debris after an insured event, such as a shipwreck or cargo spill, ensuring that the insured is not burdened with these additional expenses.

Ideal for:
Shipments involving potentially hazardous or bulky cargo.

Concealed Damage Clause

Coverage:
Provides coverage for damage that is not immediately apparent upon delivery but is discovered later, typically within a specified period.

Ideal for:
Goods that may be susceptible to hidden damage, such as electronics or machinery.

Sue and Labor Clause

Coverage:
Requires the insured to take reasonable steps to prevent or minimize a loss, with the insurer reimbursing the costs of these actions. This coverage encourages proactive measures to protect the cargo.

Ideal for:
Shipments where the insured has the capacity to intervene in mitigating potential losses.

Institute Replacement Clause

Coverage:
Provides coverage for the cost of replacing damaged or lost items with new ones, rather than just compensating for the item’s depreciated value.

Ideal for:
High-value goods where replacement with new items is crucial, such as industrial equipment or high-end consumer goods.

Waiver of Subrogation Clause

Coverage:
Prevents the insurer from seeking reimbursement from third parties who may be responsible for the loss. This clause is often used to maintain business relationships between the insured and third parties.

Ideal for:
Shipments involving long-term partnerships or contracts where maintaining good relationships is key.

Accumulation Clause/200% Accumulation Clause

The Accumulation Clause allows insurance coverage to extend beyond standard limits if goods unexpectedly accumulate during transit due to factors like delays or accidents. The insurer’s liability can increase up to 200% of the original conveyance limit, provided the insured notifies the insurer promptly. This clause is designed to cover unforeseen buildups of goods, particularly at locations like transshipment ports, where the value of goods may exceed the expected limits.

Ideal For: High-value shipments where unforeseen accumulations could occur, particularly at transshipment ports or during delays.

Aircraft Clause

The Aircraft Clause ensures that terms like ‘ship,’ ‘vessel,’ and ‘seaworthiness’ in the policy also apply to air transport, using equivalents like ‘aircraft’ and ‘airworthiness.’ This clause is used when there is a need for restricted coverage for air transits, as there are no specific Institute clauses equivalent to ICC B and C for air travel. It ensures that the policy remains appropriate and avoids disputes about coverage.

Ideal For: Shipments that involve both sea and air transport, or goods transported entirely by air that need specific coverage.

Airfreight Replacement Clause

The Airfreight Replacement Clause covers the costs of airfreighting damaged goods or replacement parts for repair and returning them to the original destination, even if the original shipment was by sea. This clause, also known as the expediting expenses clause, is subject to a specified sub-limit and ensures timely repairs and replacements by covering the additional airfreight costs.

Ideal For: High-value goods requiring timely repairs or replacements, especially when the original shipment was by sea.

Brands Clause

The Brands Clause ensures that if branded or trademarked goods are damaged, the brands or trademarks must be removed before the goods are salvaged or sold. This protects the reputation of the brand or supplier. However, the clause can limit the insurer’s ability to reduce claim amounts through salvage sales, especially when the brand or trademark cannot be removed.

Ideal For: Luxury goods, electronics, or any branded products where maintaining brand reputation is crucial.

Concealed Damage Clause

The Concealed Damage Clause covers loss or damage discovered when containers or packages are opened after transit, assuming the damage occurred during the insured transit unless proven otherwise. This coverage applies if the damage is found within 30 days of the end of transit. The clause addresses the issue of hidden damage that can go unnoticed due to modern packing methods and containerization.

Ideal For: Luxury goods, electronics, or any branded products where maintaining brand reputation is crucial.

Container Clause

The Container Clause assumes that the container carrying the insured cargo is fit for use, unless the assured or their employees are aware of any unfitness. This clause is important because containers can have issues like holes or rust that may cause water damage during transit. While pre-shipment inspections are recommended, they can be challenging to conduct, especially for traders or when dealing with large volumes of goods.

Ideal For: High-volume shipments in containers, where container integrity is crucial to avoid water damage or other issues.

Container Demurrage Charges Clause

The Container Demurrage Charges Clause covers the costs of demurrage charges or late penalties that the assured incurs for the late return of containers. This coverage applies when the delay is due to the insurer instructing the assured to retain the container for inspection related to a claim. The clause ensures that the insured is reimbursed for these charges when the delay is caused by an insured peril during transit.

Ideal For: Shipments requiring detailed inspections post-arrival, particularly when containers cannot be promptly returned.

Cutting Clause

The Cutting Clause specifies that if a portion of a pipe, sheet, or tile is cracked or broken, the damaged part will be cut off, and the insurer will pay the proportionate value of the cut portion. Any salvage value is also considered. This clause is particularly relevant for items like pipes or steel where even minor damage can render the entire piece unusable. It’s important to use this clause carefully, especially in projects where specific dimensions are critical.

Ideal For: Shipments of pipes, steel, or other materials where even minor damage can render the entire piece unusable.

Debris Removal Clause

The Debris Removal Clause extends coverage to include the extra expenses incurred by the assured for removing and disposing of debris from the insured cargo if damaged by an insured risk. However, it excludes costs related to pollution, contamination, or removing cargo from a vessel. The insurer’s liability under this clause is typically capped at 10% of the insured cargo’s value.

Ideal For: Shipments of hazardous or bulky cargo, where debris removal could be costly.

Deck Cargo Clause

The Deck Cargo Clause covers insured goods carried in containers on deck in the same way as under-deck cargo, unless otherwise agreed. For other deck cargo, coverage is typically limited to Institute Cargo Clauses (C), including risks like jettison or washing overboard. It’s crucial to inform the insurer if cargo will be stowed on deck, as coverage for deck cargo is generally more limited unless specifically extended, often with additional premiums and survey requirements.

Ideal For: Oversized or heavy goods that must be stowed on deck due to their size or weight.

Deductible Clause

The Deductible Clause specifies that while deductibles are generally applied to eliminate smaller claims, they will not be applied to claims covered under Institute Cargo Clauses (C), war, strikes, General Average, Salvage, or Sue and Labour Charges. This ensures that the assured is not penalized with a deductible for claims arising from major perils or unforeseen events that are beyond their control.

Ideal For: Policies where major perils or unforeseen events are covered, ensuring that deductibles do not reduce the claim payout for significant losses.

Difference in Conditions Clause

The Difference in Conditions (DIC) Clause provides additional coverage when goods are purchased CIF or on similar terms, and the insurance arranged by the seller offers less protection than the buyer’s policy. This clause ensures that the buyer is covered for the difference in coverage, matching the conditions of their own insurance. It also guarantees the collection of all losses that would be covered under the buyer’s policy, with the insurer advancing the claim amount as a repayable loan. This clause ensures that the buyer is fully protected without creating double insurance.

Ideal For: Buyers purchasing goods CIF or on similar terms, who want to ensure their insurance coverage matches their needs.

Errors and Omissions Clause

The Errors and Omissions Clause ensures that the assured is not penalized for unintentional delays, omissions, or errors in reporting, or inaccuracies in the description of the insured interest, vessel, or voyage. As long as the insurer is notified as soon as the errors are discovered and any premium deficiencies are corrected, coverage remains intact. While this clause is beneficial, it doesn’t protect against all defenses an insurer might raise, such as non-compliance with classification clauses.

Ideal For: Shipments where there is a risk of errors in reporting or description, particularly in complex logistics scenarios.

FOB and FAS Purchases Clause

The FOB and FAS Purchases Clause provides insurance coverage from the moment goods leave the supplier’s premises, even if they are purchased on FOB (Free on Board) or FAS (Free Alongside Ship) terms. This means the insurer assumes risk from the time the goods depart the supplier’s factory or warehouse, regardless of the terms of the sale. The clause allows the assured to subrogate their rights against the supplier for any damage occurring before the goods are officially delivered under FOB or FAS terms. This acts as a contingency cover, ensuring that the buyer is protected even if damage occurs before the buyer has full insurable interest.

Ideal For: Buyers purchasing goods FOB or FAS, ensuring that their goods are covered from the point of departure.

General Average in Full Clause

The General Average in Full Clause ensures that for claims involving General Average (GA) contributions and salvage charges, the insured goods are considered to be insured for their full contributory value. This prevents issues of under-insurance if the goods’ value at discharge exceeds the sum insured, which can happen due to factors like currency fluctuations.

Ideal For: High-value shipments where the full contributory value needs to be protected in General Average situations.

Letter of Credit Clause

The Letter of Credit Clause ensures that the insurance coverage meets the specific requirements outlined in a Letter of Credit (LC). This clause allows the insured to comply with the bank’s instructions, provided they don’t exceed the existing provisions of the insurance contract. Even if the LC requires specific terms or clauses, the insurer ensures that the assured’s interests are fully protected under the broader terms of the original policy. This flexibility accommodates bank requests, such as the use of American Institute Cargo Clauses, while maintaining the intended coverage scope.

Ideal For: Shipments financed through Letters of Credit, where specific insurance terms must be met to satisfy the bank.

Loading and Unloading Clause

The Loading and Unloading Clause extends coverage to include loss or damage to goods during the loading onto and unloading from the carrying conveyance, as well as during the stuffing and destuffing of containers. This protection applies immediately before dispatch and immediately after arrival at the assured’s or consignee’s premises. While the ICC 2009 edition already covers these risks, this non-Institute clause is often added when the policy is based on the older ICC 1982.

Ideal For: Shipments involving complex logistics, where goods are at risk during handling operations.

Packers Clause

The Packers Clause extends coverage to include goods in transit to a packer’s premises, while being packed, and awaiting shipment for a specified number of days. It also covers the transit from the packer’s premises to the final destination. This clause is important because standard warehouse-to-warehouse coverage under Institute Cargo Clauses does not typically include these transits, which are not considered part of the “ordinary course of transit.” Ensuring coverage during these stages is recommended, especially when professional packers are involved.

Ideal For: Shipments requiring professional packing, particularly when warehouse-to-warehouse coverage does not typically include these stages.

Presentation Packing Clause

The Presentation Packing Clause ensures that the insurer will cover the reasonable costs of repairing or replacing the presentation packing of goods if it is lost or damaged during transit, provided the packing was adequately protected against normal transit conditions. This clause is particularly important when the packing is an intrinsic part of the product, such as in the case of perfumes in bottles, where the packing itself is considered part of the insured goods. Typically, insurers do not cover packing damage, but this clause makes an exception when packing is essential to the product.

Ideal For: Goods where the presentation packing is an intrinsic part of the product, such as perfumes or luxury items.

Repacking Clause

The Repacking Clause covers the cost of reasonable repacking expenses if the original packing is damaged during transit, making the goods unfit for onward shipment or distribution. This coverage applies only if the damage occurred due to an insured peril during the insurance period. However, if the goods reach their final destination without damage, repacking costs are not covered.

Ideal For: Goods intended for onward sale, where damaged packing could prevent further distribution.

Seals Clause

The Seals Clause ensures that claims for theft, pilferage, or non-delivery of a whole package will be honored even if the container’s seals appear intact. Such claims will be settled in full upon the production of loading and discharge tally sheets. This clause is particularly.

Ideal For: Goods intended for onward sale, where damaged packing could prevent further distribution.

Duty of Assured Clause

• Coverage: Outlines the responsibilities of the assured to minimize loss, including taking reasonable steps to protect the cargo from further damage after an incident. The insurer may not pay for losses exacerbated by the assured’s negligence.
• Ideal For: All shipments, as it enforces the principle that the assured must take steps to mitigate loss.

Fumigation Clause

• Coverage: This clause covers the costs associated with the fumigation of goods, especially when infestation is discovered during transit or upon arrival. It ensures that the cargo is treated and made safe without the assured bearing the full cost.
• Ideal For: Agricultural products, foodstuffs, or other goods susceptible to infestation.

Held Covered Clause

• Coverage: If the insured inadvertently fails to report a change in the risk that would typically alter the insurance terms, the clause allows the coverage to continue, provided the assured informs the insurer as soon as possible and pays any additional premium.
• Ideal For: Cargo shipments where the nature of the goods or the voyage details may change after the insurance is arranged.

Increased Value Clause

• Coverage: Allows for additional insurance to be taken out if the value of the goods increases after the policy is issued. It ensures that the full, updated value of the goods is covered.
• Ideal For: Goods that may appreciate in value during transit or require increased coverage due to changes in market conditions.

Machinery Clause

• Coverage: Provides specific coverage for machinery items, ensuring that coverage applies even if the machinery is partially damaged. Often includes specific conditions about the extent of coverage, especially regarding repair costs.
• Ideal For: Shipments of heavy machinery or industrial equipment.

On Deck Clause

• Coverage: Specifies the conditions under which cargo stowed on deck is covered. Typically includes coverage for risks like washing overboard, but often with limitations compared to below-deck cargo.
• Ideal For: Cargo that must be stowed on deck due to size, weight, or other considerations.

Pollution Hazard Clause

• Coverage: Provides coverage for liability arising from pollution caused by the insured cargo, including the cost of cleaning up spills and legal expenses. It’s especially relevant for hazardous materials.
• Ideal For: Shipments of chemicals, oil, or other hazardous materials that pose a significant pollution risk.

Unseaworthiness and Unfitness Exclusion Clause

• Coverage: Excludes coverage if the loss arises from the unseaworthiness of the vessel or the unfitness of the transport method, unless the assured can prove they were unaware of the condition.
• Ideal For: Situations where there’s a concern that older or less reliable vessels or transport methods may be used.