Deliberate Damage (Pollution Hazard) clause

Deliberate Damage Pollution Hazard clause is sought by most clients and brokers and invariably insurers provide this clause but not many would know the relevance of this clause. Why? Because they would not have seen claims arising under this extension/clause.

The clause states that should any Governmental agency destroy the cargo deliberately in the welfare of the public to avoid or mitigate a pollution hazard, the assured will be compensated for the loss to the cargo.

This is subject to the following parameters:

1) The cargo should be on board a waterborne vessel or craft.

2) the accident/ incident leading to the governmental action should be such that, it would have resulted in a claim for the cargo under the policy within its terms & conditions. Eg. If an oil tanker with a cargo of crude gets stranded on a rocky bed damaging the hull and let’s say crude starts leaking out into the sea. To prevent large-scale pollution, the government may decide to destroy the crude remaining on board by setting it ablaze or bombing the vessel.