Coverage

It occurs a great many times that, upon delivery of goods, damage is found to have been sustained and, when a claim is submitted under the marine insurance policy, it is rejected by insurers. Contrary to popular belief, however, rejection is not the automatic knee-jerk response by all insurers to all claims, but if the claim is considered to fall outside the scope of policy cover, in 99.99% of cases, it will be rejected.

It pays, therefore, to know what events are covered by the policy and, of particular importance, when cover starts and stops.

The policy generally covers the actual marine transit or voyage. This means that insurers' liability under the policy attaches from the moment the goods pass the rail of the ship upon loading, and again when unloading. It follows, then, that any claim for damage which occurred before or after these times will be rejected. Why, then, should you bother with the insurance at all? Well, taking a ship to sea is an inherently dangerous and risky thing to do. Should something occur during the sea passage, such as a storm, fire on board the ship, piracy etc, then you can rest relatively easily knowing that, during this stage of the transit, liability for any loss, damage or expense lies with insurers.

Depending on the terms and conditions of the policy, coverage is usually for such things as fire or explosion; stranding, grounding, capsizing or sinking; collision or contact with an external object (not water); discharge at a port of distress; general average1 and GA sacrifice; jettison or washing overboard2; entry of sea, lake or river water; total loss of any package (item) etc.

1 Average in insurance terms means loss or damage

2 Washing overboard which is a result of water forcing the goods overboard (and is a very narrow definition), is not the same as falling overboard, which is of wider scope and would not require the interaction of water.

It follows, therefore, that loss, damage, or expense which is not attributable to one or more of the causes listed under the policy, is not recoverable under the policy.

Additionally, there are many causes of loss, damage or expense which are specifically excluded from the policy such as loss or damage as a result of wilful misconduct of the Assured; ordinary loss in weight or volume (i.e., that which would occur naturally); insufficiency or unsuitability of packing or preparation of the subject matter; inherent vice; delay; insolvency or financial default of the carrier etc; weapons of war or nuclear weapons; unseaworthiness of vessel (if you knew about it beforehand) etc.

The likelihood that your sofa could be damaged by a nuclear bomb might be considered slim, but the possibility that your goods were packed in a manner which could be considered insufficient or unsuitable is not. To clarify, imagine that, upon final delivery of your container of goods, you find damage to your sofa. Examination of the goods' stowage reveals that the sofa was placed, unsecured, in the container and with inadequate protection. Consequently, during the normal rolling back and to of the vessel while at sea, the sofa was sliding back and to and happily banging itself against your antique chest of draws.

A claim for damage sustained as a result of this would be rejected by insurers, as it is specifically excluded from the policy. The onus would then be on you as Assured, should you wish to try and pursue the claim under the policy, to prove the damage was sustained as a result of a risk insured against, which would not be easy. In this instance, your only recourse would be to claim against the freight forwarder, or other party responsible for preparing or packing your goods for transit.

It should be borne in mind, then, that the goods should be packed, prepared (and stuffed into a container), in a manner which is sufficient, suitable and well-prepared to meet the normal hazards of transit. Such normal hazards will be expected to include a certain amount of rocking to and fro and possibly a degree of man-handling (but not rough-handling); measures should also be taken to reduce the risk of condensation (i.e., desiccant if necessary), contact with water, taint from other goods etc.

Condensation is a major issue affecting shipments of goods to and from Thailand; cover against such a risk can be included in a marine insurance policy, but not if condensation was inevitable because no measures to negate such were undertaken. Wrapping goods in plastic sheeting reduces airflow and can exacerbate condensation and insurers would, very likely, reject any claim for condensation damage to goods entirely wrapped in cling-film or any type of plastic sheeting.

Similarly, an antique mirror found to be broken upon final delivery, would have to have had exceptional protection for insurers to accept a claim for such damage, as glass is particularly fragile and any damage may be considered inevitable if exceptional measures had not been taken to protect it.

If you haven't employed specialist packers to prepare your goods for transit, you may wish to do this yourself, but hold the above principles uppermost in your mind whilst doing so.

Attachment/Duration of Cover

As mentioned briefly above, cover under the policy attaches when the goods pass the rail of the vessel on loading and ceases when passing the rail upon unloading at the destination. What this means is that any loss or damage which occurs outside of this period is not covered under the policy and, in the event of damage which is not covered, you must claim (as you would do even if covered under the Duty of Assured clause mentioned above) against the responsible party.

A reputable specialised packing company will have liability insurance to cover themselves in the course of their work, as will any other parties to the carriage such as freight forwarders, warehouses, container stuffing agents etc. Should loss or damage be sustained to your goods whilst in the care and custody of any party, you should, in the first instance, formally claim against them and, also, formally claim against insurers under the policy. If you are unsure as to when and how the damage occurred, submit formal claim letters against all parties, holding the recipients fully responsible for any loss, damage or expense incurred and requesting acknowledgment of receipt by return.

However, it is possible to effect a policy of insurance which covers All risks; that is to say cover embraces the risks of loading onto trucks/into containers for carriage to the port (carrying from your premises to the truck and loading thereon), and during stuffing or unstuffing of containers at container yards etc; coverage stopping upon final delivery of the goods at the named destination and including the risks of unstuffing/unloading. Generally speaking, though, this would be for, say, a consignment which fills a container (FCL full container load), rather than, say, a smaller consignment, which would be shipped in a consolidated (or groupage) container. A full container would, generally, be shipped door to door (All Risks) and may or may not include the risks of stuffing or unstuffing it, whereas a consolidated container would be stuffed (along with other goods assigned to other consignees), at the container yard, responsibility and liability for any damage being borne by the party under whose care and custody the goods are under at any given time.

In the case of a full container of your goods, insured under a marine policy covering all risks including the risks of loading and unloading, any loss, damage or expense incurred as a result of the action of a risk insured against and which isn't specifically excluded from the policy, is wholly recoverable under the policy.