A deductible in a marine insurance policy is similar to an Excess. Basically it is a sum, usually a fixed or agreed amount or, in some cases, a percentage of the goods in value or weight, which is deducted from any settlement and which is, in the main, used to stop a torrent of claims for very minor amounts.
Although the deductible may be fixed, you may be able to negotiate a higher deductible which would reduce the premium, although at the cost of an increase in your personal risk.
In some instances, particularly with goods exported which are of exceptionally high value (vehicles, boats, works of art, antiques etc), it may be wise to employ independent surveyors who can conduct a pre-shipment survey of the condition of the goods, suitability and adequacy of packing and preparation for the transit, whose report can be used as evidence should a claim need to be pursued against any responsible party, or against insurers under the policy.
In the event of a claim, insurers will, usually, assign a loss adjuster to investigate the circumstances surrounding the loss, damage or expense, with particular emphasis on the proximate cause. Loss adjusters will also advise insurers on policy liability, and adjust the claim if necessary.
Loss adjusters are the people who come to your premises to inspect the goods, acting on behalf of insurers. You might have had experience of loss adjusters following, perhaps, a bump in your car, when a guy comes around, scratches his chin, and announces he can get you half of what you will pay for the repair.
The adjuster will determine if the claim is recoverable under the policy and the extent of liability under the terms and conditions of the policy i.e., he will check to ensure that the cause is one of the risks insured against, not specifically excluded, occurred within the currency of the policy and make adjustments to the claimed amount or amounts to take into consideration any depreciation for wear and tear (if not covered new for old), and any deductible, and advise insurers of their liability.
Although claims adjusters receive their instructions from insurers, they are regarded as independent and, should the claim be recoverable under the policy, they will advise insurers of that fact.
It should be understood that the investigation carried out by loss adjusters can take some time, possibly several months, before the outcome is known.
A few examples of situations where you might claim, and probable outcomes.
1. You ship a full container load (FCL) of your goods from Thailand to your home country; professionally packed and shipped by a reputable freight forwarder. The container is properly stuffed at your premises under your supervision (or independent surveyors if your goods are of exceptionally high value). You take photographs of the entire procedure from beginning to end and have written appraisals for your expensive items. You have effected a marine insurance policy covering All risks including the risks of loading and unloading.
a. The freight forwarder damages your sofa during loading or unloading.
You qualify any documents remarks indicating the nature and extent of damage and obtain evidence of the damage with photographs and statements. You promptly, under the duty of Assured clause, submit a claim to the freight forwarders and to insurers enclosing a copy of the claim letter to the main freight forwarder (sub-contractors being responsible to them). Insurers pay the claim (less any deductible) and can recoup their loss against the responsible party.
b. Damage is discovered upon opening the container (before unstuffing) at the final destination.
Again, you qualify any documents with remarks indicating the nature and extent of damage and take photographs and statements if possible. You promptly, under the duty of Assured clause, submit a claim against the freight forwarder, carrier, packers and insurers, to whom you include copies of the claim letters to the other parties. All parties except insurers will, very likely, reply denying any responsibility, but insurers pay the claim (less any deductible) and can (if they can establish who is responsible) recoup their loss against the responsible party, or bear the loss themselves.
c. You receive a letter telling you that the vessel, along with your goods, was lost at sea.
You submit a claim against insurers who pay the claim in full, less the deductible.
d. You receive a letter saying your container, stowed on deck, fell overboard.
If you specified falling overboard (washing overboard being covered already) in the policy, you submit a claim against insurers who pay the claim in full. If not, the onus is on you to prove it was actually washed overboard, and didn't simply fall overboard. A difficult, if not impossible, task.
2. You ship some goods (not enough to fill a container) of your goods from Thailand to Australia, which are collected from your premises and loaded into a consolidated container at the container yard by a reputable freight forwarder. You have relied on the freight forwarder to effect a marine insurance policy, of which you know little.
a. You learn that damage to your goods is discovered upon opening the container (before unstuffing) at the final destination. The container is in apparent good order and condition.
As above, you qualify any documents with remarks indicating the nature and extent of damage and take photographs and statements if possible, upon receipt of the goods. You promptly, under the duty of Assured clause, submit a claim against the freight forwarder, carrier, packers and insurers, to whom you include copies of the claim letters to the other parties. All parties will, very likely, reply denying any liability.
Insurers will also deny any liability based on the fact that cover under the policy was only while the goods were over the rail and in the container, which was undamaged. Consequently, the damage could only have been sustained as a result of insufficient or inadequate packing or preparation of the goods. Containers received in good order and condition are accepted as not having been subjected to anything other than normal hazards of sea transit.
The onus now lies with you to prove the damage occurred whilst the goods were in the care and custody of any of the parties or was occasioned by the action or inaction of any of the parties (although the likelihood is that the damage was sustained whilst stuffing the container or inadequate packing), in which case you must vigorously pursue a claim against the freight forwarder, container stuffing agent or packer, whose liability insurer will likely prove uncooperative at best.
In my experience, most claims under marine insurance policies result from damage sustained as a result of: insufficient packing or poor preparation of the goods (not recoverable under marine insurance), condensation (inevitable or otherwise), rough handling/impact (recoverable if sustained during the policy and not a result of inadequate packing or preparation), and contact with water (recoverable if sustained during the policy).
Knowing that, its worth bearing some points in mind when shipping your goods from Thailand.
1. Ideally ensure a marine insurance policy is effected which covers all the risks you can envisage, including those associated with loading and unloading etc.
2. Ensure that the goods are properly prepared and suitably and adequately packed to withstand the normal hazards of a sea voyage. Don't compromise on goods you do not wish damaged.
3. Ensure the goods are adequately protected against condensation, using desiccant if necessary, ensuring good circulation of air in any containers. Seek professional advise if unsure.
4. Take photographs of the pre-shipment condition of goods and, if possible, of the stowage of goods within any shipping containers.
5. Ensure freight forwarders negate the risks of movement of goods within containers by use of chocks, bracing, lashing and padding of any spaces.
6. When claiming, ensure you abide by the Duty of Assured clause in the policy by promptly submitting claim letters against any responsible party or parties, and include copies of these and all correspondence when submitting a claim to insurers.