The general exclusions under 4 of ICC-A- CL 382 01/01/2009 are well known to all. At the cost of repetition, the losses, damages or expenses arising out of the following stand excluded:
- Wilful misconduct of the assured ( 4.1)
- Ordinary leakage, wear & tear or loss in weight/volume ( 4.2)
- Insufficiency/ unsuitability of packing or preparation of subject-matter (4.3)
- Inherent vice of the subject matter ( 4.4)
- Delay (4.5)
- Insolvency or financial default of the vessel owners/charterers/ managers / operators (4.6)
- Nuclear group of perils ( 4.7)
The intricacies of each of these exclusions as also how many of these exclusions can be ‘bought back’, can be discussed at length but that is not the purpose of this post. The discussion is around the evolution of these general exclusions.
The initial version of the Institute Cargo Clauses came out in 1982 in the format we all have seen till recently. In 2009,some changes were incorporated while retaining the format. What was the form used prior to 1982? The Marine Insurance Act, 1906 ( in India, Marine Insurance Act,1963) in its schedule laid down the format of the SG policy which could be used by underwriters. The policy wordings were rather bombastic and difficult to understand, leave alone interpret.
The SG policy specified the perils covered but for the exclusions, one had to fall back upon Section 55(2) of the Marine Insurance Act which specified as exclusions — Wilful misconduct of the assured, Delay, ordinary wear & tear, ordinary leakage/ breakage & inherent vice.
These exclusions mentioned in Section 55(2) were duly incorporated into the ICC-A wordings by the Institute of London Underwriters. In addition, they also gave effect to the changing times & business environment by adding the exclusions for insufficiency of packing, insolvency or financial default of the vessel-owner/charterer & the nuclear group of perils.
Interestingly, two other exclusions laid down under Section 55(2) do not find a place under ICC-A:
- Loss caused proximately by rats or vermin
- Damage to machinery not proximately caused by a maritime peril
The intent of the Marine Insurance Act, in case of machinery appears to be that’ handling losses’ should not be paid as it was, and continues to be a big risk in case of machinery. However, with improved packing, handling, lifting & stowing methods, the drafters of the ICC-A wordings possibly did not deem it necessary to restrict coverage for machinery.
As regards rats or vermin, difficult to read the mind of the drafters. Did they feel that in modern vessels, the threat from rats is not there at all? If damages to the cargo are caused by rats on board the vessel, under ICC-A, a claim becomes tenable.
Vermin as defined in various dictionaries are ” small, common harmful animals or insects, difficult to control when in large numbers”. Examples could be bugs, cockroaches, weevils, flies,etc. Was it the intention that under ICC-A, losses proximately caused by vermin are to be paid without question? Do not think it is that simple. If the cargo was loaded in sound condition and during the voyage , if there is a vermin infestation leading to loss, the claim would be admissible. Very often it is found, in case of edible items like grains, oats,etc that tiny eggs of vermin remain in the cargo right from the fields/processing place and at the time of loading itself and during the voyage under ambient conditions, the eggs hatch and the vermin come out damaging the cargo. Obviously such claims cannot be considered for payment as the presence of vermin ( in whatever form) was prior to inception of the transit. The claim could well be hit by 4.3 i.e. inadequate preparation of the subject-matter. However, the dividing line is thin and it will take a fair bit of justifying.
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Very informative
Very informative
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Please advise if you consider the following claim to be cover under ICC (A) or not.
5 shipments of machinery shipped from China to the US is stopped by the local customs authorities due to the cargo is infected by a large amount of snails. The customs requires the cargo to fumigated before it is allowed to leave the port. The snails haven’t damaged the machinery, however the insured still claims the Cargo insurance for additional costs, such as fumigation costs, storage etc.
I would argue that such costs are not covered as the snails haven’t damaged the cargo.
Not sure if the policy was subject to the Fumigation clause. If yes, the costs incurred would be payable ( see my post on Fumigation clause). If the clause does not form part of the policy, your decision would hold good.