It is a constant source of surprise to us that many Shippers and Importers do not hold adequate marine cargo insurance. The most dangerous thing a Shipper or Importer can do is to fail to insure their cargo. Failure to insure cargo can ultimately result in a very expensive exercise.
Many Shippers and Importers are of the belief that in the event that their goods are lost or damaged that they can recover this cost from ocean carriers or other contractors in the transport chain. Do this at your own peril.
Shipping lines, Airlines, Freight Forwarders, Terminal Operators and Road Transport Operators all contract under limited liability thus proving the need for insurance on goods is essential. Apart from the obvious risk of loss or damage to goods there are other hidden exposures that will put you at risk if you do not have adequate insurance in place:-
- General Average – If a ship declares a general average all cargo on board is subject to a lien of the ship and all parties must contribute to the losses incurred. Cargo will not be released until the contribution is made or a guarantee given. The amount of contribution is usually a percentage of the commercial invoice value of the goods on board which is set by a General Average Adjuster. The implications are such that insurance against the risk of General Average is vital.
- Bankruptcy of Carriers – The bankruptcy, or other financial failure of shipping lines or other carriers can involve the merchant in unforseen expenses of substantial proportions, depending upon the quantity of cargo on board vessels which suffer arrest. Goods enroute have to be unloaded from the arrested vessel and then stored pending on carriage by another vessel to ultimate destination. Theses are all additional costs that the merchant has to bear if he does not have adequate insurance in place.
- Transit Clause – All sets of Institute Cargo Clauses incorporate clauses which specify when cover attaches and terminates. These are under the general heading “Duration Clause”. The primary clause in this group is called the ‘transit’ clause. It provides cover from commencement of transit until the goods are delivered to the final destination (commonly referred to as “warehouse to warehouse” cover). Customers should be aware that this clause only operates if their goods are shipped directly to the final destination with no storage other than in the ordinary (normal) course of transit. If the goods are deliberately stored prior to final delivery for distribution or allocation such place is deemed to be the final warehouse and cover terminates on delivery of the goods to such place.
Cargo Insurance whether it be for a single shipment or an annual cover for all shipments can be obtained at very competitive prices.
For further details please Contact our Office.